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Sheep ranchers caught between drought, low lamb prices

Drought, low lamb prices creating tough business environment across West

Published: Monday, Nov. 12 2012 12:18 a.m. MST

A herd of ewes stand ready to be moved into a neighboring field on Ryan and Jon Cook's sheep ranch outside Fountain Green, Nov. 5, 2012.

Ben Brewer, Deseret News

MILBURN, Sanpete County — The sheep industry across the West is facing what some consider a crisis, threatening the survival of ranching operations.

Extreme volatility in prices has combined with the effects of a harsh drought to make this a brutal year in the sheep business.

"I'm in my 60s and this is the worst year I've ever seen," said Doug Livingston, a retired sheep rancher who now works as a sheep broker.

Livingston is trying to help an eastern Utah rancher sell out his herd and get out of the business.

"I think there's a lot of ranchers, sheepmen, who would give it up if they could," he said. "But there are no buyers."

It's an ironic and baffling twist for embattled sheep ranchers, so much so that some have demanded a federal investigation. A year ago, the price of lambs intended for slaughter was soaring to all-time record levels.

This year, the bottom fell out. As one sheepman put it, "everything went down the toilet."

The price now for lamb "on the hoof" is about half to a third of what it was a year ago, according to Sanpete County rancher Phil Allred. A fifth-generation sheepman, Allred said he's sure many ranchers would sell out if they could.

"It does threaten the future of it," he said. "For me, myself, I'm old enough that if I didn't have three sons working with me, I wouldn't be here."

Utah Woolgrowers Association officials said they are unaware of any ranchers who have actually gone out of business because of the crisis.

"They're used to tough years," said Tonia Fuller, the association's executive secretary. "I think most of them will be able to stick it out."

The causes of the price drop are complex.

"We had priced ourselves out of the market," said Mike Harper, who runs one of the biggest lamb feeding operations in the West.

Harper's feed lot in Eaton, Colo., handles more than 200,000 lambs a year.

Prices for lamb in grocery stores were allowed to go too high, Harper believes, causing consumers to back off in their purchases. That contributed to a growing inventory of slaughtered lambs.

"We killed the business," Harper said. "We killed the demand for the product."

Another factor may be an increase in imported lamb from New Zealand. Some consumers apparently prefer the leaner, imported meat.

Some ranchers have blamed U.S. slaughterhouses for artificially manipulating prices. They note that prices in grocery stores stayed high, while prices paid to ranchers took a nose dive.

The eight U.S. senators who represent North Dakota, South Dakota, Wyoming and Montana have called on Agriculture Secretary Tom Vilsack to investigate the pricing situation.

Harper, though, believes it's off-target to blame the meat packers.

"There's no conspiracy in my mind," he said. "The packers have had too much inventory as well."

Harper predicts an improving situation once the inventory of lamb gets back to normal.

"When the pipeline gets cleaned out, then you'll start to see the business get healthy," he said. "It's going to take some time. We need to just steady the market and sit tight."

Meanwhile, ranchers are caught in a vise between low prices and high costs. Drought and wildfires forced up the cost of animal feed and have drastically shrunk the forage available on grazing land.

Add to that the rising cost of fuel and it's becoming harder and harder for ranchers to afford the cost of maintaining thousands of ewes nobody wants to buy.

"When you get in," Allred said, "it's tough to get out."

Email: hollenhorst@desnews.com

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