RCALF’s Sheep Analogy: Similar to the previous column, my plan was to move on from international trade. But then…RCALF posted the graph above on X with the following explanation:
…four decades of data depicting the cattle industry’s canary in the coal mine – its sister sheep industry…until the early 90s, production (blue columns) followed consumption (red line). But after the start of the free trade frenzy in the 90s, production began decreasing at about the same rate that imports (maroon columns) were increasing, even while consumption remained relatively high!
Data: First, let’s address the quantitative aspect. Annual lamb (and mutton) disappearance (i.e. “consumption”) represents about 0.5% (~1 lb retail weight) of total red meat and poultry consumption in the United States. Even the most ardent lamb proponent wouldn’t describe “consumption” as “relatively high”.
Second, RCALF doesn’t provide the pertinent history. The graph below details data going back to 1960. Domestic production fell by 444 M lb between 1960-and-1980 (while imports were bottoming). That’s over 5 ½-times bigger than the production decline between 1980-and-2000 (depicted in RCALF’s chart). Meanwhile, imports didn’t surpass the peak of the 1960s until 2002.
To that end, USDA, in 1990, noted, “The U.S. sheep inventory declined from 49 million head in 1942 to 9 million in 1989. Lamb imports have also declined and, in relation to U.S. production, are not seen as a major cause of the sheep industry’s problems.” [emphasis mine]
History: Now the qualitative part. Some historical facts of importance: one, USDA’s wool incentive program was ended in 1995; and two, the sheep industry was slow to adopt a checkoff program (the first attempt failed; the second approved in 2002).
With that, let’s go back to 1998 (the same year beef demand was bottoming – more on that later). The Sheep & Goat Research Journal compiled a special issue highlighting the industry’s challenges. Some of Dr. Purcell’s key observations are as follows (emphases mine):
- …the industry is in a state of decline…There is frustration in the industry…Coming out of that frustration and the recent failure to vote positively on a check-off referendum, industry leaders are now asking what the future of the sheep industry can and will be.
- The loss of the wool deficiency payment a few years back [1995] may have been the proverbial straw that broke the camel’s back for many producers… Shortly after that…the industry saw another significant dip in total inventory numbers. Lambs generate about three-fourths of the total revenue to the sheep enterprise, but wool had been a stabilizing component of that revenue stream. The wool incentive payment appears, in an ex post context, to have been much more important to producers than was apparent during the time the legislation that eliminated the payment was being discussed.
- Thus, if the objective is to move back to viability, it is important that producers, processors and retailers – especially producers – understand the need to organize themselves in the form of alliances that provide the critically important coordination of activity that the pricing mechanism has not been able to provide.
Less Talking, More Doing: Again, that was 1998; note Purcell’s emphasis on alliances and price signal alignment. While the sheep industry was talking, the beef industry was busy doing.
For instance, because of the Checkoff, two Beef Quality Audits had been completed. Meanwhile, NCA had facilitated the Strategic Alliance Field Study. And real alignment was happening in the business. For instance, producer-owned U.S. Premium Beef’s first year of business? Yep, 1998.
Wool Blind: The protectionists are plagued by wool blindness. An incessant focus on imports, and haste to declare the beef industry’s demise, has them leaning on the sheep industry as a business case study. With all due respect to sheep producers, the analogy isn’t even close. And given RCALF’s history related to the Beef Checkoff, the comparison is especially riddled with irony.
What about those efforts cited above to make the beef industry better? They’re paying dividends even today. Year-to-date, beef production on the fed side of the business is running ~2% ahead of 2023 – and still just this past week, the fed market established yet another new price record.
The canary is alive and well and singing loudly. Let’s get to digging!
Nevil Speer is an independent consultant based in Bowling Green, KY. The views and opinions expressed herein do not reflect, nor are associated with in any manner, any client or business relationship. He can be reached at nevil.speer@turkeytrack.biz.
