by Malinda Geisler, content specialist, AgMRC, Iowa State University, malindag@iastate.edu
Profile reviewed March 2008.
Supply
As of January 1, 2008, U.S. farms had 6.06 million sheep and lambs, down 2 percent from 2007. The U.S. sheep inventory peaked in 1942 with 56 million head. About 80 percent of the sheep produced in the United States are geared toward lamb production. The top five sheep and lamb producing states are Texas, California, Wyoming, Colorado and South Dakota.
China is the world’s largest producer of sheep followed by Australia.
Demand
Lamb consumption has remained steady over the past decade. According to a USDA report, most Americans do not consume any lamb. Per capita lamb consumption was 0.8 pound on a boneless equivalent in 2005. Overall U.S. consumer lamb preference is for high-value lamb legs, racks and loin cuts. In contrast, New Zealanders consume 50 pounds of lamb and mutton per year followed by Australians, who consume about 37 pounds annually.
Lamb and mutton are the principal meats in regions of North Africa, the Middle East, India and parts of Europe. The European Union claims to be the world’s largest consumer and the number one importer of lamb.
Imports
The United States imported 159 million pounds of lamb into the United States during 2007. There were 92 live animals imported in 2007. Live sheep imports come primarily from Canada as slaughter lambs. Since May 2003, live sheep imports from Canada have been banned as a result of a reported BSE-infected cow.
Lamb and mutton imports account for nearly half of U.S. lamb consumption. About 70 percent of lamb imports originate from Australia. About 29 percent are from New Zealand. The grass-fed lambs are marketed at smaller weights and have found consumer acceptance in the United States. Favorable currency exchange rates in recent years have also made the U.S. lamb market profitable for Australia and New Zealand.
The U.S. lamb market continues to be pressured by the removal of tariff-rate quota (TRQ) on imported lamb meat from Australia and New Zealand. The United States removed the tariff on lambs from Australia and New Zealand to comply with the World Trade Organization ruling.
Exports
The United States exports just 2 percent of its lamb and mutton production. In 2007, the United States exported 1.2 million pounds of lamb. Another 8.1 million pounds of mutton (meat from sheep one-year-old or older) was exported with more than half going to Mexico. Total live sheep exports during 2007 were 116,579 head, valued at $8.1 million.
The American Sheep Industry Association supports mandatory country-of-origin labeling or COOL. The labeling program, which was included in the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill), is mandatory as of Sept. 30, 2008. The Agricultural Marketing Service is responsible for enforcing and regulating the country-of-origin labeling.
Competitiveness
Sheep producers in Australia and New Zealand have a competitive edge over other producers. According to USDA, the comparative advantage these two countries have is due to the cost of production, trade, exchange rate, consumer preference and advertising.
Australian exports 43 percent of the lamb it raises and 75 percent of its mutton crop. The 2006-2007 exports were valued at $779 million. Australia's sheep flock in 2006 was 92.7 million, down from 173 million in 1990.
The United States is the number one market for Australian exports and accounted for 27.5 percent of Australia's total lamb exports in 2006. The number two and three markets for Australian lamb are Japan and the United Kingdom. Australia exported 4.1 million live sheep in 2006. Key markets for live sheep exports include Saudi Arabia and Kuwait.
New Zealand exports 80 percent of its lamb crop annually and 84 percent of its mutton. New Zealand’s total sheep inventory was nearly 30 million in 2006. Lamb sales in 2006 were valued at $2.5 billion in exports. The high U.S. exchange rate is affecting farmgate revenues for New Zealanders.
The European Union accounts for 48 percent of New Zealand’s volume of lamb exports. Top European destinations include the United Kingdom, France and Germany. The United States and China are also regarded as top destinations. New Zealand focuses on Saudi Arabia for live sheep exports.
Profile originally created February 2003 and reviewed March 2008.
Sources
American Sheep Industry Association
Australian Trade Commission
Livestock, Dairy and Poultry Outlook, Economic Research Service, USDA.
Livestock Slaughter Annual Summary, National Agricultural Statistics Service, USDA.
Meat & Livestock Australia
New Zealand Exports, New Zealand Ministry of Agriculture and Forestry.
New Zealand Lamb Exports Hit Record High
Brighter Lamb Outlook for Australia, Farm News for NZ Farmers, February 5, 2008.
Sheep and Goats, National Agricultural Statistics Service, USDA.