Many Opportunities for Marketing Lamb
From sheep! November / December 2016 — Subscribe for More Great Stories!
By Gayle Smith – Unique opportunities are out there for marketing the annual lamb crop, but producers may need to do their homework and use a sharp pencil to find them, according to Ron Cole of Cole Consulting.
Producers can basically market their lamb crop three ways. They can:
Sell directly from the farm to a feedlot, buyer or processor; Market direct to the consumer; Sell them through an auction.
Cole notes each individual situation will be different and some of these options may not be feasible for every producer.
Sales to Conventional Buyers
“If you sell your feeder or slaughter lambs to a feedlot or processing facility, you will need to have enough lambs to fill the truck because freight is expensive,” he explained. Feeders also like to keep new arrivals separate. “They don’t like to co-mingle different lots of lambs, because of health issues,” he said. “That restricts you, unless you have some sizable numbers. Most producers typically only sell once a year, and they are highly dependent on the market that one time a year,” he added. “Timing is everything.”
“Over 70 percent of the lambs produced in the U.S. are born in the spring, which causes a huge marketing dilemma,” Cole said. Lambs are now finished on more conventional feeds, rather than crop residues. “Every farmer in Colorado used to graze lambs on sugar beets, alfalfa fields, and vegetable residues,” he said. “You can’t do that anymore because of the potential for E. coli issues. They don’t cater to grazing lambs out like they used to,” he noted.
Some producers are able to market their lambs directly to a processor, but Cole says it is hard to market to someone like JBS, if the producer only has 15-20 lambs.
Producers also need to know how much their lamb is worth. The current marketing system is based on live weight, but Cole sees that changing in the future with the implementation of a new camera system, developed in Australia, that can measure over a 100 different points on a carcass. “Eventually, it will end up with a lean mean value for each lamb,” he explained. “The carcass price will be based on that.”
“Producers who sell directly to the packing plant may not be able to market their lambs at opportune times. Larger processors have to fit them into their schedule,” Cole said. If 70 percent of the lambs are born in the spring, these animals will have to be marketed during the fall, winter, and sometimes even spring months. At times, gluts occur in the market, and lambs may be held over to even heavier finishing weights to avoid price downturns in the market. “You really have to think ahead if you plan to sell directly to a processor,” Cole said. “There are only a few places in the U.S. that process lambs and spots usually need to be reserved at least 30 days ahead.”
Sales to Consumers
“Direct marketing to consumers is becoming a more popular marketing avenue for smaller operators, although some larger operations are also giving it a try,” Cole said. “The biggest problem with farmers markets is determining what your time is worth,” he said. “Farmers markets are becoming more popular, especially on the East Coast. Consumers want to know the story behind the lamb they buy. They want to know the name of the ranch and how the lamb was produced,” he explained. “They are curious. They will want to know if it was fed grass and how it was handled. Those things are interesting to the consumer.”
“Of U.S. production,” Cole says, “50 to 60 percent of conventional marketing is still through large harvesting and processing operations. However, the ethnic market is the fastest growing segment of lamb marketing. Forty to 50 percent of lamb is now marketed unconventionally to ethnic groups,” Cole explained. “This segment is growing as immigrants want fresh American lamb to meet their needs throughout the year, not just during major holidays.”
Muslim, Jewish, Hispanic and Greek buyers each have different ways of processing lamb. “Their customs are totally different. One sheep farmer had four interpreters for each of these groups just to make sure the lambs are handled to each of their standards,” he explained.
Most of these groups have at least one representative at the auction each week buying lambs. “The auction provides sources of lamb to the commercial industry, as well as the ethnic buyers,” Cole explained. “The auction market allows a wide variety of buyers to assemble weekly to purchase a number of lambs that suit their needs.”
Cole says these ethnic buyers have very specific needs, and if producers want to sell to them, he recommends they purchase calendars for each ethnicity listing all their major holidays. Producers should pay particular attention to Hispanic and Muslim holidays, post-Easter Greek holidays and traditional Thanksgiving, Christmas and Easter holidays.
“If you are going into ethnic marketing, you need to produce very specific lamb for certain holidays,” he continued. “During some holidays, one group may only want horned, intact white rams, while others may be looking for black rams and no ewes. When you show them some lambs, the negotiation starts regardless of the price you put on them,” he explained.
“Generally, the key is to select a breed of sheep that can produce 80- to 100-pound lambs most of the year,” he
continued. “Remember that some breeds will not lend themselves to non-seasonal production.” The ethnic trade is also very breed sensitive. When they first started purchasing lambs, Cole says they purchased breeds we had never seen before in the U.S. Now, they prefer textile cross breeds in sheep and Boer-cross in goats.
“Producers should also use their on-farm resources to their best advantage,” Cole recommends. Utilizing farm resources like pasture, stalks, stubble fields and turnips can cheapen the cost of gain. “You don’t want to be buying all your feed, because you are basically marketing a grass-fat animal,” Cole stated. “I would caution against buying high-priced feed when you don’t need to,” he noted.
Producers who plan to produce lambs throughout the year also need to consider additional fencing, shed lambing and additional labor. Cole referred to one producer who lambs from January through June to supply lambs to a specific market. This producer markets grass-fed lambs that finish at about 125 pounds. “If you want to sell to these markets, you have to be willing to change your production style to meet their production needs,” he said.
Cole said, “Producers may want to seek out local meat processors who many times have trouble purchasing enough lamb to meet their customers’ needs. “It may be worth it to approach them and try to work out an agreement to supply them lambs,” he said. “It is a very unique area and market, and generally, you can earn a $10 to $15 per hundredweight premium over the traditional market,” he said.