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Commodity Lamb Profile

Revised April 2012 by Gary Brester, professor, Department of Agricultural Economics, Montana State University, gbrester@montana.edu

 

Overview

Relative to the beef, pork, and poultry sectors, the U.S. sheep and lamb industry is quite small.  The January 1, 2012, inventory of all sheep and lambs totaled 5.3 million head (compared to 91 million head of cattle).  Sheep and lamb inventories have been declining since their peak of about 56 million head in 1942, and totaled just over 7 million head in 2000.  Breeding sheep are maintained on pasture and range throughout the calendar year.  Lambs are usually born in the spring of each year and weaned after about 8 weeks.  Lambs then graze on pastures (backgrounded) before entering grain-finishing feedlots.  Lambs are slaughtered between the weights of 90-140 pounds at about the age of one year.   Mutton production refers to meat obtained from the harvest of culled ewes and rams.  Mutton is a lower-valued product relative to lamb meat.  Developing countries represent the primary market for mutton.

Most U.S. lamb and sheep production is targeted towards the production of lamb meat rather than wool.  The value of wool production has become a relatively small component of lamb production.  The top five sheep and lamb producing states are Texas, California, Wyoming, Colorado and South Dakota.

World sheep and lamb numbers are similar to those that existed in the 1960s.  However, productivity increases have caused total world production to climb from 11 billion pounds in 1965 to 18 billion pounds in 2011.  Nonetheless, lamb and sheep inventories have declined about 18% in the two major lamb exporting countries of Australia and New Zealand during the past 5 years.  In addition, current European Union production is similar to 1965 levels.  Declines in the demand for wool and drought conditions are the likely causes of declining inventories in each of these regions. 

Lamb and mutton production has increased in both India and China, but world population growth and increasing incomes in developing countries have caused demand to increase more than supply.  As a result, U.S. slaughter lamb prices have exceeded $150/cwt the past two years, whereas they averaged about $125/cwt between 1996 and 2009.

Production

Approximately 3.2 million U.S. breeding ewes produced about 3.5 million lambs in 2011.  The lambing percentage exceeds 100% because of the proclivity of twin lambs.  In 2007, there were 83,000 ranches in the United States that produced sheep and lambs.  Of these, 800 had herd sizes that exceeded 1,000 head.  Collectively, these 800 ranches represented almost one-half of the U.S. sheep and lamb inventory.

The United States slaughtered about 2.2 million sheep and lambs in 2011 and produced 149 million pounds of carcass weight lamb meat.  Although 205 plants slaughter at least 50 head annually, most of these establishments are quite small.  Four firms slaughter about 65% of U.S. lambs.  Over 80% of lambs are slaughtered in plants with annual capacities that exceed 100,000 head.  Colorado, Iowa, Michigan, and New Jersey are major sheep and lamb processing states.  Most of these plants slaughter lambs rather than culled ewes and rams (i.e., mutton).

Demand

U.S. per capita lamb consumption declined from 1.6 pounds in 1990 to 0.88 pounds in 2011.  In contrast, annual per capita consumption in Australia and New Zealand totaled 26 pounds and 25 pounds, respectively.\

However, per capita consumption numbers mask the importance of this product to many consumers.  That is, the majority of U.S. residents do not consume any lamb.  Lamb consumption is concentrated on the East and West coasts and within various ethnic populations. Those of Greek, Middle Eastern, Hispanic, and Native American descents account for the majority of lamb consumers.  U.S. consumers prefer high-valued lamb cuts such as leg roasts, racks, and loin cuts.  In addition, lamb consumption is highest during seasonal spring and fall holidays.

Exports

The United States exports only minimal amounts of lamb (about 2% of domestic supplies).  However, the U.S. sheep industry exports cull ewes and rams to Mexico where they are slaughtered to produce mutton.  Total live sheep exports were 80,000 head in 2010 but only 13,000 head in 2011.  The reduction in live animal exports was primarily the result of lower U.S. culling rates in response to record lamb prices.

Imports

U.S. lamb imports totaled 130 million pounds in 2011 which represented almost one-half (47%) of the U.S. lamb supply.  Over the past decade, imports frequently represented more than 50% of total U.S. supplies.  Almost all U.S. imports originate in Australia and New Zealand.  About 35% of U.S. imports are supplied by New Zealand and 65% by Australia.   

Competitive Analysis

Domestically, lamb is not a strong competitor with other animal-sourced proteins such as beef, pork, and poultry.  Given that most meat consumers never consume lamb, its substitutability with other red meat products is quite limited.  However, lamb must compete for retail shelf space with other meat products. 

U.S.-produced lamb is quite different from imported lamb because it is generally grain-fed.  This results in a milder flavored product, larger portion cuts, and more marbling.  Conversely, imported Australian and New Zealand lamb is primarily grass-fed.  This results in smaller animals, smaller portion cuts, and leaner lamb products relative to U.S. production.
The National Lamb Promotion, Research and Information Board was established by the Agricultural Marketing Service in 2002.  Its purpose was to increase the demand for lamb through the coordination of promotion, research, and information.

The program is funded by a $0.005/pound check-off that is applied to live lamb sales between lamb producers, feedlots, seedstock producers, and exporters.   In addition, lamb packers are assessed a $0.30/head check-off when purchasing lambs for slaughter.  Importers of lamb are not assessed a check-off fee.

Over the past several years, the U.S. lamb industry has evolved from producing and marketing of lamb as a commodity towards meeting niche market demands.  Given that lamb consumers are particularly concerned with quality, the industry has developed feeding strategies, genetics, and a variety of alliances to improve product consistent and quality.

Value-added Opportunities

Although the U.S. lamb market is characterized as a niche market, some producers focus on meeting specialty demands within the overall niche.  Examples of this strategy include producing dairy sheep, directly marketing lambs, producing natural lamb products, and producing organic lambs. 

Sources

American Lamb Board

Australian Bureau of Agricultural & Resource Economics

Australia's Sheepmeat Industry

Census of Agriculture, USDA.

Global Agricultural Trade System, Foreign Agricultural Service (FAS), USDA.

Livestock, Dairy and Poultry Outlook, Economic Research Service (ERS), USDA.

Livestock Slaughter Annual Summary, National Agricultural Statistics Service (NASS), USDA.

Meat Industry Association (MIA) of New Zealand Annual Report.

Organic Agriculture, ERS, USDA.

Organic Trade Association

Sheep and Goats, NASS, USDA.

Sheep and Wool, ERS, USDA.

Situation and Outlook for New Zealand Agriculture and Forest. MAE.

Stock Number Survey, Meat and Wool New Zealand.

The Mountain States Lamb Cooperative, AgMRC.

Links checked December 2013.

 

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