Tough times for lamb producers are getting worse as the owner of Canada’s largest sheep feedlot stops buying until slaughter prices improve.
“It’s a total disaster. The losses are just unbelievable,” said Roy Leitch, who estimates he loses $100 a head on every lamb he sells.
“We’ve never been in a mess like this in our life.”
Normally Leitch’s sheep feedlots hold 50,000 lambs, with 4,000 head moving in and out of the lots in Brandon and Craven, Sask., each week.
Now there are only 15,000 in his lots and he refuses to buy more.
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“We’re not buying. We think they’re cheap and (then) they drop as much as 20 cents in a week,” said Leitch, referring to the Feb.16 sale at the stockyards in Cookstown, Ont., where heavy lamb prices dropped 20 cents from the 60 cent per pound range a week earlier.
Since the American border closed to sheep and lambs last year after BSE was discovered in a northern Alberta cow, Canadian sheep producers have had only two main markets: Sunterra Meats in Innisfail, Alta., and Eastern Canada’s ethnic market. Neither of the domestic markets is large enough to absorb the 140,000 sheep that used to be exported to the United States.
“The markets are so saturated,” said Leitch of Brandon.
Wray Whitmore, sheep specialist with Manitoba Agriculture, said the closed American border has caused a crisis in the industry, especially for heavy lambs over 115 lb.
In the United States, heavy lambs are selling for 90 cents US a lb., compared to 40 cents Cdn, in Canada, he said.
“It’s a very, very bad situation,” said Whitmore, who predicts prices are going to drop further.
For lamb producers who have already seen their inventory rise because of poor markets, the slowdown in feedlot buying will cause more backups.
So far the ewe breeding flock has increased by only 1.5 percent to 622,000 head, according to Statistics Canada. But even a small increase is unwanted when prices are falling.
“A significant increase in sheep number can be mostly attributed to the withholding of females,” said Whitmore.
“The increase is being forced on them. It’s not by choice.”
Brian Pascoe, salesperson for Ontario Stockyards in Cookstown, said heavy lamb prices have dropped the most, mainly due to increased shipments from Western Canada.
“It’s just flooded what market we have and it’s not a product everyone can use,” said Pascoe.
In the U.S. there is a market for pork chop sized chops from heavy lambs. In Canada, the demand is for loonie-sized chops from smaller lambs.
Normally the Cookstown market sells 500-600 sheep and lambs each week. Because the American border is closed, it is getting twice that number.
Randy Smith, a buyer with Sunterra Meats, said the federal government BSE program that tied aid to finished animals is partly to blame for the collapsing Canadian price.
Instead of selling the lambs as feeders last fall, producers fattened them to take advantage of the BSE slaughter program money.
Others held their lambs, gambling that the border would reopen by February. The U.S. market has always been an alternative market for Canadians with heavier lambs up to 190 lb.
Normally in February, Sunterra Meats slaughters 1,100-1,200 lambs a week, mostly from feedlots. Instead, it is killing 1,300-1,400 head and is booked until the end of March with lambs from producers, not feedlots.
“Forty to 50 percent of the ones we’re seeing now would normally be sold as feeder lambs,” said Smith.
At Johnston’s Auction Market in Moose Jaw, Sask., feeder lambs sold between $35 and $55 a head at the Feb.14 sale, the same price many producers bought them for in the fall.
Bred ewes sold for $50-$70 a head, about two-thirds of last fall’s price.
