Big sheep producers expand as small producers leave

Manitoba’s sheep industry may be entering a period of consolidation after a year of relatively low prices.

Mitch Millar, who farms near Lundar, Man, said some small-scale producers are leaving the industry but farmers with large flocks are expanding.

“It seems like some of the smaller flocks, where the producer doesn’t depend on sheep for their income … are exiting because it’s not profitable right now,” said Millar, a Manitoba Sheep Association director.

“Personally, I’m expanding and I know of others who are expanding,” said Millar, who runs 1,000 ewes and plans to increase his flock to 2,000 to 2,500 ewes.

Manitoba’s sheep industry needs ambitious producers such as Millar because the province’s sheep population has been stuck in neutral.

According to Statistics Canada, the Manitoba flock has been around 60,000 sheep and lambs in the winter and 70,000 in the summer since 2009.

In contrast, Jan. 1 stocks for on-farm sheep and lambs in Alberta jumped from 137,000 in 2009 to 158,000 in 2013.

However, Mamoon Rashid, Manitoba Agriculture’s business development specialist for sheep and goats, said the provincial sheep industry is stable despite the lack of growth.

“I am encouraged. I think we are moving in the right direction. Maybe not at the speed that other provinces are,” Rashid said.

“We’re not there yet… but our producers are hanging in there.”

Rashid said the industry is progressing partly because farmers now view sheep as a business instead of as a weekend hobby.

“Previously, 10 years ago, the sheep industry was mostly small producers (where) the business (of raising sheep) was not the primary focus,” he said.

Now, that has changed. (Now) they are willing to crunch numbers…. They are (approaching) it as a business enterprise.”

Sheep producers have been forced to think about the bottom line because lamb prices have dropped 50 cents a pound over the last year to $1 to $1.30 per lb. from $1.50 to $1.80 per lb. Prices were even higher in 2011 and early 2012, topping $2 per lb.

Millar said U.S. imports and high feed costs have severely cut into margins for sheep producers.

“The drought in the U.S. caused an influx of (American) lambs to come in here over the last year … so that obviously affected our market.”

Millar recently evaluated his sheep operation and realized that expansion was necessary to efficiently use the land, barns and equipment.

“My base cost is the same whether I’ve got a 100 (ewes) or two or three thousand,” said Millar, who operated a pregnant mare’s urine ranch before entering the sheep business.

“The land, the buildings and the tractors, all that stuff costs me the same.”

Rashid said only a few Manitoba sheep producers want to run 2,000 animals, but flocks are definitely getting larger.

Fifty to 60 ewes was the average flock size in the province several years ago, but now it’s closer to 70 to 100.

Millar said flock size may be increasing, but Manitoba has only a few farmers who solely raise sheep. Alberta and Saskatchewan have more dedicated sheep farms.

The industry grows more quickly when those producers add 200 or 300 ewes to a large-scale sheep farm.

“I’m guessing that’s why you’re seeing the stats (showing) there’s more growth there.”

Millar has also joined the Canadian Lamb Producers Co-operative, which he hopes will have a positive influence on his bottom line.

The co-operative intends to pay producers five cents more per lb. than Ontario prices, which Millar said are typically 20 to 25 cents higher than Manitoba prices.

On top of its pricing policies, Millar said the co-operative should pull the overall lamb market higher.

“There are 10,000 lambs committed to the co-op, last I heard. So if those 10,000 lambs don’t go through the existing system … then that’s going to create a little more demand.”

The co-operative plans to start buying lambs this fall.

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