Members sign for three years | The co-op will arrange transportation and slaughter and develop its own product brand
A new national co-operative plans to buy and market lambs from across Canada and improve returns to sheep producers.
The Canadian Lamb Producers Co-operative last week announced it had approvals from the Canadian Securities Administration to proceed with national co-op operations, a process that has been in the works for about three years.
The co-op is now forming a subsidiary, the Canadian Lamb Company, as the marketing arm for lamb provided by co-op members.
Terry Ackerman, chief executive officer for the co-op, said about 200 producers from seven provinces have already sent requests for information. The goal is to sign up 650 to 1,000 producers over the next three years.
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Pat Smith of Steinbach, Man., one of the largest lamb producers in Canada, is president of the producer-owned co-op and will also chair the marketing company board. Head office for the co-op is in Saskatoon and the marketing office will be in Guelph, Ont.
To join, producers must buy a membership for $500 and sign on for three years. There is a one-time fee of $30 for each lamb they commit to selling to the co-op, and producers will be limited to shipping a number of lambs equivalent to 25 percent of their ewe flock.
For example, producers with 1,000 ewes would be able to ship a maximum of 250 lambs to the co-op.
“We’re not looking for all the lamb producers in the world. We need commercial producers,” said Ackerman. “If you know the name of every lamb, you’re probably not for us.”
The co-op intends to start buying lambs this fall.
Ackerman said the pricing model will be based on the average price for each weight category in Cookstown, Brussels and Kitchener, Ont., plus five cents per pound live weight.
“We want it to be transparent,” he said. “It’s based on a simple formula that producers can check online.”
The price paid to producers will include shipping. The co-op will not own any infrastructure and will arrange transportation and slaughter at federally approved plants.
The co-op has an agreement with one slaughter plant in Ontario and is working with an Edmonton plant that is expected to get federal certification this fall.
The co-op initiative was spearheaded by the Saskatchewan Sheep Development Board.
“We’re excited that we finally got there, that we got our approvals and stuff in place. We’re looking forward to moving forward,” said SSDB executive director Gord Schroeder.
“We were working on something like this a number of years ago and then we needed a wider base. We needed more producers. It couldn’t just be in Saskatchewan. So this is pushing it to the next level.”
Schroeder said producers themselves devised the cost structure and share price.
Sheep producers have been suffering from a drastic drop in prices, which are about half what they were in 2011-12.
Prairie producers also suffer from the “western discount,” a term for the lower prices typically received for lambs compared to those in eastern Canada.
Herman Bouw, chair of the Manitoba Sheep Association, said when he heard about the co-op idea several years ago, it sounded almost too good to be true.
However, he has gained confidence in the concept and is encouraged by Smith’s involvement.
“I think what it does for Manitoba sheep producers is it levels the playing field a little, because the markets are typically either east or west,” said Bouw, who farms with his sons near Anola, Man., and has 330 ewes.
He and his sons anticipate a significant cash advantage because the co-op pays the freight and there will be no sales commission.
Ronald den Broeder, chair of Alberta Lamb Producers, said the co-op may become a useful tool to obtain stable pricing.
“If they are able to pull it off … it might actually work out,” he said.
Bouw said the marketing arm of the co-op will be a major benefit.
“(Sheep farmers) are good at production and not so good at marketing. We’re just glad to deliver them someplace and let somebody else market them. To have someone who’s going to be actively doing the marketing makes a lot of sense.”
Ackerman said the co-op’s marketing arm will develop its own brand and products designed to make full use of the carcass.
The lamb company has licensed 12 formulas including lamb kabobs, meatballs, ready to eat meals and lamb hamburgers. Prime cuts will also be part of the array.
Ackerman said the marketing arm will pursue both domestic and export markets for Canadian lamb, and has already been approached by interested parties in the U.S., Asia, England and New Zealand.
He said the co-op has also applied for funding through the federal western diversification department to implement an electronic carcass grading system. Working with the Agriculture Canada research centre in Lacombe, Alta., the co-op wants full traceability, with carcass information available to producers so they can improve their genetics and production.
Schroeder said the co-op hopes to have the grading system in place by fall 2014, but that will depend on funding. Once in place, the system would provide financial incentive to produce high quality lambs through price premiums of up to 16 percent.
Now that the lamb co-op has broken barriers for national-scale co-ops rather than provincial ones, Ackerman said other commodities have indicated their interest.
Pork, beef, vegetable and fruit producer groups have been in contact.
“The spotlight is on us,” said Ackerman. “The precedent’s been set.”
