Sheep group ponders national lamb co-op


Putting producers in driver’s seat | Producers not getting benefits of rising retail price for lamb

The Saskatchewan Sheep Development Board is testing the waters to see if there is enough interest in forming a national lamb co-operative.


“There is an $18 spread of what the producer is getting and what lamb is selling for in the marketplace,” said Terry Ackerman, an Ontario-based consultant who has been hired to develop a business model for a new co-operative. “Our job is to eliminate that spread.” 


Ackerman said sheep producers have become “price takers, not price setters,” and he believed a national lamb co-operative will help producers make more money.


“The reality of it is, in most markets in Canada, producers use terms like, ‘we got rid of my lambs.’ They sell lambs for maybe $2 to $2.25 a pound. The price at retail is $22 to $25 a lb.,” he said. 


“In effect, what they’re doing is foregoing an incredible opportunity to make more money to increase their farm cash receipts.… While the market is doing very well in lamb, the producers’ real income hasn’t shifted that much.”


Gord Schroeder of the development board said the organization’s members asked it to investigate ways producers can add more value to their lambs. 


The marketing co-op is one thing the board is investigating.


Ackerman said 200 producers raising 30,000 lambs a year would be needed to form the co-op. Meetings in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario have attracted more than 300 lamb producers, processors and retailers, he added.


The new generation co-op would include membership and production shares. 


A membership share would cost $500 and would give the owner one vote in the co-op. A production share would cost the lamb producer a one-time fee of $30 for each lamb committed to the co-operative and would need a minimum of 25 production shares, or 25 percent of the number of ewes in the flock.


Ackerman said the co-op wouldn’t build its own plant. Instead, it would channel lamb production from three provinces into an existing plant and help raise the price.


“When we book plant time, the model works.”


Ackerman said the Canadian Lamb Co-operative would also establish extension services to help new producers enter the industry and existing producers expand.


Establishing a co-op would also develop a Canadian lamb brand that would help regain Canadian market share now filled by Australian and New Zealand lamb imports.


“There is virtually no marketing for Canadian lamb in the market,” he said. “The only brand is New Zealand lamb. That is the brand of Canada.”


Ackerman said he hoped to finalize incorporation plans in the next month and then present an offering statement to producers for shares. The co-op could begin purchasing lambs by this spring or summer.


“This is truly an operation that is appealing to producers across the country,” said Ackerman.


Roy Leitch isn’t one of them.


“I’m not interested in it at all in any shape or form,” said Leitch, who owns Canada’s largest sheep feedlot near Brandon.


He said he is tired of moneymaking offers from people who are not putting up any of their own funds.


“I want to see their money up front, not mine. I have seen it all before.”


Leitch said he recently had a proposal from an Ontario processor that promised an increased price to Leitch, but the proposal collapsed.


“If it is such a great idea, why don’t they put up the money? If something goes wrong, they walk away.”


Leitch isn’t sure an extra $20 a head is available to producers just by moving the marketing around. What he does know is Canada is facing its largest shortage of lamb in years.


“The shortage of lambs is unbelievable,” said Leitch, who hopes the offspring of ewe lambs kept back for breeding last year will soon be coming to market.


“We’ve got to have numbers to run a business,” said Leitch, who ships his lambs to five slaughter plants in Ontario and Quebec.


“I can’t get enough lambs.”


Albert Schemers, a sheep producer from Big Valley, Alta., said his feedlot is almost empty for the first time in years, which he blames on strong demand for lamb at auction markets. 


“The price is so high I can’t even afford to feed them,” said Schermers, who believes more packing plant capacity, rather than a co-op, is needed to help boost sheep numbers.


“We had a co-op at Innisfail, but that didn’t work,” said Schermers, referring to the Alberta Lamb Co-operative plant that has been sold several times and is now operating as SunGold Specialty Meats.


The number of sheep and lambs in Canada has started to climb after years of decline. Statistics Canada reported ewe numbers increased by almost four percent from 81,000 head in January 2010 to 84,200 in January 2011.

7 Responses

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  1. A national lamb co-op is something that should have been organized a long time ago. The spread between farmgate price and retail is huge. If growers can retain some of those profits and grow the industry numbers I think we will all be better off. It’s no surprise that a feedlot operator/buyer would not be in favor of leaving more money with the primary producer!

  2. With the downfall of the wheat board and more monopoly held co-ops this is the
    Ast thing the producer wants. We want to market our products on our own, and if you ant able to do that on your own in this day and age with the Internet and a telephone you are in the wrong business. This is just another way for the sheep board is trying to skim money from the producer to up Gord Schroeder’s wage so he can go on another free producer paid trip to China.

  3. Gord is pulling another cash cow move. Leitch knows what he’s talking about.

  4. Gordon Wells on

    Between 1980 and 1985 I was the Sheep Specialist for Alberta Agriculture. During the last year I worked with the Alberta Sheep and Wool Commission developing lamb marketing options including the design. construction and finally start up and first general manager of the Innisfail lamb plant. A week before we opened the plant, live lamb prices were 30cents a pound. Two weeks after we opened the plant, Canada Packers (main competitor) at that time was offering over 50 cents/pound. The sheep producers who promised faithfully to support the new lamb plant quickly switched their loyalty to the higher prices and as they say the rest is history. Sheep farmers like most primary producers are price takers and will go where the prices are highest. The industry will never change and any attempt to establish a cooperative will fail,not because the concept is wrong, but because of the nature of the individuals. Let’s hope history does not repeat itself. As a Certified Management Consultant, I am more than willing to save the industry the cost of a study that should not be needed.

    • Dwane Morvik on

      Gordon, the way I understand the co-op to work is that if you have purchased a share in the operation and are marketing lambs through it, you will be the benefactor of higher prices gained between the producer and the plate. The difference here may be that if you’ve paid to be a part of it for the long run any short term price spikes would have to be rather large to get you to switch to a different buyer and offset your Co-op costs. Everyone wants to buy lambs when prices are high but when they are low no one will, except at a price that still makes them money regardless of the producer’s costs. We’ve seen that.
      We have been in the sheep business a long time and this is something I think will change the way things are done. Look at other countries and their co-operatives. (New Zealand) We been price takers for too long.

      • Gordon Wells on

        Dwane – The problem in this case was shares were only a $100 each so any producers that did buy shares only bought one raising very little money. Only a small number of producers even bought shares. The second problem was predatory pricing. When confronted with the facts, the farmer board of directors would not challenge the fact that the main competition had set aside over a million dollars to break the plant at the time. We were all naive at the time. This project would make a great case study for a management class. Important lessons were learned but as I said history tends to repeat itself which is unfortunate.

  5. Dayton on

    How does this new Co-op plan to get a premium if the imported New Zealand lamb is selling cheaper than domestic? Are they planning on lobbying for a tariff on imported lamb? Not likely to happen when there is already a shortage.

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