Lamb market faces harsh reality again

For the past three years, the lamb industry was the price darling of the livestock sector.

For the past three years, the lamb industry was the price darling of the livestock sector. As cattle prices stayed in the doldrums and hog prices all but collapsed, lamb producers were in price heaven.

Lamb prices steadily increased to unimaginable highs of more than $2.50 per pound. It wasn’t too many years ago when $1/ pound was the goal of most producers.

But as the saying always reminds us — what goes up must come down — and lamb prices have been on a steady downhill skid for the past couple of months.

At press time, they were down to $1.80/pound, and even then buyers weren’t too enthusiastic as they anticipate even lower prices.

As what seems like a never-ending cycle, the higher the lamb price — the more new producers wanted to enter the business or established producers wanted to expand.

That drove the price of commercial breeding ewes to more than $200 per head, with purebreds going even higher. That was up about 100 per cent from earlier years. The inevitable has happened, with new producers trying to make a dollar with high-priced breeding stock with low-priced market lambs.

Sounds familiar, and it will surely see a number of eager new producers quitting the business as low prices begin to set in for the next few years.

It’s an old story in the sheep business. I would suggest the industry has probably seen a 300 per cent turnover in the past 30 years. But there were ominous signs of a more serious decline in those years as some Hutterite colonies, the backbone of commercial lamb production in Alberta, exited the business for good.

That decline knocked this province to third place in lamb production in the country, after Ontario and Quebec. Numbers have crept back during the most recent boom, but it will depend on new producers staying in the business during the upcoming depressed years.

There are some signs of hope. In the past, most commercial-sized sheep operations were run by Hutterite colonies, but now there are a number of single-family commercial sheep operations beginning to get established. The reality is that if you want to make a full-time living off sheep production, it’s  going to take at least 1,500 ewes, and the farm better be paid for. But that’s no different from the other sectors in agriculture, as only the large operations will be able to survive; 500 to 800 cows is now the baseline for cow/calf operators, at least 5,000 acres for commercial cereal/oilseed production.

If it wasn’t for supply management, there would probably be a lot of 800- to 1,500-head dairy operations in Alberta. At one time, there was a large commercial sheep industry in the province, and it was based on large range bands of about 2,000 or more head.

I believe the largest sheep operation on the continent at one time was a 40,000-head operation run by the old Knight Sugar Company near Raymond.

But all of that was many years ago and it was based on grazing cheap leased land and low-paid shepherds. It was as close to raising sheep on sunshine as you could get and, yes, fortunes were made even with wool.

Interestingly, the wool prices have remained remarkably impervious to any price increase for the past 100 years.

During all of that time, wool prices averaged between 30 cents to $1.50 a pound and haven’t changed much to this day. If one takes inflation into account, those were good prices 100 years ago.

Today, though, wool has become somewhat of a nuisance by-product to most producers.

But there has always been a way to make money in sheep — low cost of production. I was told years ago that those that made a dollar in sheep production accepted that they couldn’t rely on the marketplace for a living, but instead relied on driving their cost of production as low as possible.

That might not be easy nowadays, and maybe economies of scale are the only answer to sustained commercial lamb production in this province — it’s a back-to-the-future idea. That concept is nothing new, but perhaps sheep organizations and government advisors need to drive that point home. Otherwise, we will see another turnover of small-sized new sheep operations in the very near future.

Will Verboven is the editor of Alberta Farmer.

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