By Malinda Geisler, content specialist, AgMRC, Iowa State University, malindag@iastate.edu.

Profile revised January 2011. 


Overview
As of July 1, 2010, U.S. farms had 6.9 million sheep and lambs, down 2 percent from July 2009. 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.

The United States processed 2.5 million sheep in 2009. About 92 percent were processed in the 504 federally inspected sheep slaughter facilities. There is a heavy concentration in sheep processing facilities. More than 80 percent of the sheep were processed in plants that slaughter more than 100,000 per year. Colorado, Iowa, Michigan and New Jersey are significant sheep and lamb processing states.

Production
Nearly all lamb produced in the United States is sold in supermarkets and restaurants. According to the American Sheep Industry Association, lamb consumption is heavier on the East and West Coasts of the United States because of higher ethnic populations. Greeks, Hispanics and Middle Easterners, as well as Native Americans, account for more lamb consumption than other groups.

More than 40 percent of U.S. lamb and mutton consumption is supplied by imports from Australia and New Zealand.
 
Demand
Lamb consumption has remained steady over the past decade. According to a USDA report, most Americans do not consume any lamb. In 2008, per capita lamb consumption was 0.74 pound on a boneless equivalent. Overall U.S. consumer lamb preference is for high-value lamb legs, racks and loin cuts. In contrast, New Zealanders consume 26.5 pounds of lamb and another 26.5 pounds of mutton per year. Australians consume 23 pounds of lamb and another 3.7 pounds of mutton annually.

The National Lamb Promotion, Research and Information Board, a program designed to increase the demand for lamb, was established by the Agricultural Marketing Service in 2002. The 13-member board conducts coordinated programs of promotion, research and information to maintain and expand lamb and lamb product markets. To fund the program, domestic lamb producers, feeders, seedstock producers and exporters pay one-half cent ($0.005) per pound of live lambs sold. In addition, first handlers, primarily packers, are assessed 30 cents per head purchased for slaughter. Importers of lamb are not assessed.
 
Value-added Opportunities
While lamb production might be regarded as a niche in itself, some U.S. producers are taking proactive approaches at selling their own products directly to customers and foodservice operators. Others are converting to organic production systems.
 
Direct Marketing
Several producers have turned to direct marketing their lamb enterprises by developing and expanding on the niche to market directly to consumers, bypassing traditional marketing channels. Some are reaching consumers using their own Web site. Freezer market lambs are another direct marketing method. Lambs are sold live to customers. Arrangements are made with a custom slaughter facility for processing and packaging.

Please see Direct Marketing Lamb for additional information.
 
Organic Lamb
In 2008, consumer sales of organic foods reached $22.9 billion or 3.5 percent of total U.S. food sales. That same year, the United States had more than 11,200 organically certified sheep and lambs, up from more than 4,470 in 2005. Colorado had the most organic lambs and sheep.

USDA standards for organic food were implemented in 2002. Organic lamb is raised in a production system that promotes and enhances biodiversity and biological cycles. It is based on minimal use of off-farm inputs. Lambs are raised without the use of antibiotics and growth hormone stimulants. The lambs intended for meat products must be raised organically from the last third of gestation. In general, organic foods are minimally processed with artificial ingredients or preservatives.

Please see Organic Lamb for additional information.
 
Exports
The United States exports just 2 percent of its lamb and mutton production. In 2009, the United States exported 6,975 metric tons (MT) of lamb and mutton valued at $21.5 million. Top buyers were Mexico and the Netherlands. Total live sheep exports during 2009 were 157,337 head, valued at $10.2 million. Live sheep exports went to Mexico and Canada.

Imports
The United States imported 70,146 MT of lamb and mutton into the United States valued at $432 million during 2009.  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.
 
Competition
Domestically, lamb continues to compete with other protein sources such as beef, pork, veal and poultry for retail space and sales. Lamb tends to get substituted for other protein sources since it is generally higher priced.

Internationally, demand is increasing for specialized prime lamb cuts geared to different export markets. Australia’s sheep flock was 72.7 million as of June 30, 2009, the lowest level since 1920. About half of the flock is breeding sheep. There is strong demand for Australian lamb from the United States, the Middle East and North Asia. Total lamb exports in 2009-10 were $932 million and mutton exports were $456 million. 

New Zealand’s total sheep inventory as of June 30, 2009, was 32.4 million. For the year ending June 2010, lamb exports were valued at $2.8 billion. The European Union is New Zealand's largest market, accounting for 57 percent of total sheep meat exports by value. North America is New Zealand's number two export market with 14 percent of total exports.  


Sources
American Lamb Board

Australian Bureau of Agricultural & Resource Economics

Australia's Sheepmeat Industry

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, 2010.

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, 2010.

Stock Number Survey, Meat and Wool New Zealand.