U.S. drought plays role | More lambs were sent to Canada for feeding and slaughter, creating a glut in the market
The best of times have been followed by the worst of times for Canadian sheep producers.
Prices of $1.85 to $2 per pound for lambs in 2011-12 have plummeted to as low as 85 cents to $1.20 per lb.
Many producers agreed that the heady days of top prices weren’t sustainable, but they’ve been surprised at the dramatic drop into the doldrums.
“It’s hit us pretty hard,” said lamb producer Trent Larson, who has a 500-ewe flock near Regina.
“You start to try and cut where you can because the money’s not there. We’re not really making money on the lambs right now.”
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He said high prices were good for producers but not so good for feedlots and processors further along the chain, so something had to give.
“I’ve always thought that right around $1.50 a pound is a pretty good compromise. I still believe for a healthy industry, it needs to be sustainable for all parties.”
Chris Panter, livestock market analyst for Alberta Agriculture, said markets dropped because of greater supply, less demand and higher feed prices that squeeze feeding margins.
Live imports from the United States are part of the picture.
Panter said Canada imported 19,500 head in 2011, down from 33,000 in 2010. Fewer lambs and willing buyers drove prices up.
However, Canada imported 33,000 head from the U.S. last year. Panter said that might seem like a big number, but “it was more that the normal pattern had reestablished itself.”
Doug Verstraete, who manages Beaver Hill Auction Services in Tofield, Alta., said he thinks American imports are having a major effect on the market.
“One outfit brought in lots of American lamb and that has hurt the industry,” he said.
“I don’t mind if they go across the line and pick up a few here and there, but it was huge numbers, so those are all sitting in feedlots and going through the system … so the packers don’t need our lambs right now.”
He said SunGold, the only federal packing plant in Alberta, isn’t contracting lambs because of ample supply.
He, too, wishes for price consistency as the industry tries to encourage production to meet a larger percentage of domestic demand.
Canadian producers now fill only 44 percent of national demand.
“All the producers want is to get paid fairly, (at a value) somewhere in the middle of last year and this year, and keep it consistent or steady, especially for more than one year,” Verstraete said.
“It’s really hard to run a business when you’re running on all cylinders one year and then you just get blasted the next year.”
Larson said the U.S. drought was a big factor in driving more lambs into Canada for feeding and slaughter.
Canadian buyers were able to acquire U.S. lambs for a good price due to Americans’ desire to move their animals.
Canadian sheep inventories have also been rising as producers kept back ewes for breeding.
“There’s been building for a few years now and some of that supply might have just come onto the market because of the larger flocks,” said Panter.
He also said an early Easter and delayed warm weather reduced retail demand for the barbecue.
Spring lamb meat demand is typically higher than it has been this year.
Per capita lamb consumption is 1.04 kilograms, according to Statistics Canada. In 1997 it was marginally higher, at 1.22 kg.
As for feed prices, Larson said all producers are feeling the pinch, and feedlots in particular suffer when barley costs rise.
A good forage and pasture situation this spring and summer could im-prove the picture for producers.
However, there is much talk about producers downsizing or leaving the business, unable to ride out the price slump.
Larson said it’s happening, and Verstraete said even Hutterite colonies with as many as 1,400 ewes are considering their options.
A late April sheep sale in Cookstown, Ont., sold 4,200 head, almost double the average.
“It appears, and this is just an assumption, that there is some dumping going on,” said Larson.
However, he remains optimistic.
“I believe that the price will recover,” he said.
