COMMENTS

Cattle Market & Farm Reports, Editorials
Apr 11, 2005
by WLJ
It= s quite a contrast when you consider that the sheep industry just re-approved their promotion checkoff program by an 80-20 percent margin. In the beef industry the Supreme Court is expected to hand down a decision very soon that could overturn the beef checkoff by finding it unconstitutionalC essentially killing it.

I= m relatively certain that if the beef industry had it to do over, we might not be in the situation of possibly losing the beef checkoff. At the time the Livestock Marketing Association (LMA) went after the checkoff, there was an entirely different board of directors, and mind set. Today, I don= t think it would have gone this far. In retrospect, all LMA wanted was to reconfirm that producers really wanted a producer-funded promotion program, which is exactly what sheep producers did.

Once the courts got into the act, everyone lost control. Think about itC after some producers took it to federal court the checkoff issue took off on an uncontrollable journey, one that producers who devised and paid for the program couldn= t do anything about. This is the kind of stuff that worries me whenever groups in the beef industry take their own issues to court. Once the courts get it, producers lose all control. I certainly wouldn= t want that for my business. As a matter of fact, I= m allergic to lawyers and courts.

During World War II, the sheep industry reached its largest point with 56 million head. Wool played a stronger role in that market; today that aspect is essentially non-existent. Perhaps with oil prices going through the roof, natural fibers like wool and cotton will make a comeback. Anyway, today= s sheep industry has an inventory of only 6.1 million head.

Funny how that works, whittle your industry to 10 percent of its original size and now fed lambs are trading at an all time highC $1.30 a pound. Now that supply and demand have actually met, real demand for lamb is growing, primarily due to growing ethnic populations and their religious traditions.

Imports played a significant role in today= s lamb business. Imported lamb was everywhere and U.S. producers were getting trounced because of the lower cost and younger product. U.S. producers were taking such a beating that the World Trade Organization (WTO) provided sheep producers with some injunctive relief from lamb imports. The tariffs lasted for roughly two years, then U.S. producers were forced to compete with imports.

The interesting point about the sheep business is that it appeared to go to the very edge of dying before turning around. Clearly supply had to meet demand, and the industry went from 56 million head to six million head in a 60-year period. With a down trend like that, it would have been hard to get out of the way fast enough.

I= m not sure just how much lamb is imported to the U.S. today, but it certainly seems to be a much different product than U.S. lamb. New Zealand and Australia are the big players in the global lamb markets, and they have always offered a much smaller lamb that was grass fed. I think it would be safe to say that the lamb industry, particularly U.S. lamb, has had to rebuild its market.

What does this have to do with the beef business?

There has been much concern over beef imports, even though the Canadian border situation is getting all the headlines.

It would be difficult to imagine the U.S. beef industry following the path of the lamb business. U.S. grain fed beef is a unique product. One that grass fed beef will never be able to fulfill. For the most part, beef imports have been limited to a high-lean product, a product U.S. cattlemen have had difficulty producing. Not because we can= t, but because our industry is focused on producing high-value, high-quality fed beef.

The lamb industry realized that promoting their product is vital and are investing in their future to create demand. It= s perplexing that some in the beef industry have determined promoting beef through a producer-funded program is a violation of free speech and doesn= t represent their view.

The beef industry, has always been a supply-driven industry, except for the last few years. At some point in time the lamb industry had some demand. But, to see that industry at just 10 percent of its maximum size is mind boggling. C PETE CROW


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