Lamb markets –Nov 1986

What has happened to the lamb
market?
Seems a bit strange in this land where
supply and demand rule supreme, that
with over eight percent fewer lambs com-
ing to market this year than last, we have
seen prices slide from the $84 per cwt.
level last May to $59 per cwt. this past
week (mid October).
That kill figure for the year is a bit
deceiving, however, because actual
volume of lamb is down only a little over
five percent due to heavier carcasses.
Most of these heavier lambs have come
to market during the last six weeks, and
that has been a major factor in the steep
decline during that period. As usual, most
of those heavy lambs have come out of
Colorado feedlots, but they have soured
the price for everyone.
Something else that I believe is drag-
ging on our market this year is the loss
of two major lamb packing plants from the
Midwestern scene: one, Mid-American
Lamb at Paullina, Iowa; the other, Detroit
Veal and Lamb in Michigan. To be sure,
we still have adequate slaughter facilities
nationwide to get all our lambs killed. But
here in the Midwest, at least, it has meant
the difference between scarcity and plen-
ty. In the past, there was always
somebody who needed at least a few
lambs. This summer there have been
times when nobody wanted any!
Iowa Fourth District Congressman Neal
Smith has said for years that in many
areas of the country, limited competition
in live markets has meant substantially
lower prices to cattle producers. Now a
University of Wisconsin study has solid-
ly confirmed that contention and has
urged the federal government to chal-
lenge any attempts at further mergers in
the already monopolized cattle packing
industry.
Mergers haven’t been the rage in the
lamb packing business but it is a fact that
fewer than a dozen major plants slaughter
virtually all the lambs we produce. And
what’s more scary is the fact that many
producers, especially smaller ones in the
Midwest and East may have only one bid-
der. Then, in effect, the “bid” becomes
an offer-take it or leave it. Teleauctions
and electronic marketing have helped
greatly, but as the number of packers
continues to decline, bids become more
scarce, even through those mediums.

The Wisconsin study concerning cat-
tle stated that “with very high levels of
concentration, packers are expected to
tactily or explicitly collude in an effort to
jointly maximize profits.” I’m not sure, but
I think that means they’re putting one
over on us …
It went on to say that prices paid for cat-
tle were extremely low in areas where a
few big packers deal with smaller farmer-
feeders, and slightly better in areas where
big feedlots have a stronger bargaining
position.
Refuting the bigger is better philos-
ophy, the study went on to say that
though larger plants are generally be-
lieved to be more efficient, this efficien-
cy apparently doesn’t translate to higher
prices to producers. It cited the presence
in one area of IBP, one of the biggest and
most efficient cattle packers, as having
“a significant negative effect on live cat-
tle prices during 1971-78.”
The lamb slaughter situation today is
not an exact parallel to the beef business,
but it does seem headed in the same gen-
eral direction. When live prices fall as far
and as quickly as they have recently,it’s

perhaps wise to look at factors in addi-
tion to pure supply and demand.
I have too often heard sheep referred
to as dumb animals. Perhaps that’s true.
But maybe it just depends on your per-
spective. After all, producers nationwide
voted down the recent 1986 Wool Refer-
endum. But the sheep approved it-and
their vote counted more than yours!
I don’t know, but I think I’d feel a little
sheepish about the last part of that …

Originally published The Shepherd Magazine November 1986