Michigan State University Extension
Ag Experiment Station Special Reports - SR479201
07/28/98
Margaret E. Benson Department of Animal Science Michigan State University
Introduction
Sheep production is a relatively small enterprise in Michigan's agricultural sector. The average annual gross income from the production of sheep and lambs in Michigan was $5,073,200 from 1986 through 1990. Although small, this diverse industry is found in all but 5 of the 83 Michigan counties and involves 2,600 individual operations. Sheep enterprises frequently exist in association with other agricultural enterprises such as livestock and crops. The primary role of the ewe flock or lamb feeding operation is to provide additional income while using existing facilities and land more efficiently.
Nationally - according to USDA January 1, 1991, inventory - Michigan ranked twenty-third in total number of sheep and lambs, twenty-fifth in stock ewes and tied with Illinois for sixteenth in number of lambs on feed. Although the majority of the sheep industry in the U.S. historically has been comprised of the range sheep operations found primarily in the southern and western ranges, farm flock production has become increasingly important in the last 10 years and is expected to be the site of future growth and expansion. In addition, farm flock production continues to play an important role with purebred producers furnishing seedstock for the U.S. and foreign countries.
The location of the lamb feeding industry in the U.S. is responsive to the availability of lambs and the location and number of packing facilities. For these reasons Texas and California, leading the nation in total numbers of sheep and lambs, also rank 3 and 1 respectively in lamb feeding. The Southern and Great Plains also represent centers of lamb feeding. Michigan, home to the fifth largest lamb-processing facility in the U.S., (Wolverine Packing, Detroit) has increased its lamb feeding industry by 58% from 1987 to 1991. Michigan has several advantages which appear to be responsible for this increase. These include: 1) availability of lambs at economical prices; 2) in-state processing facility; 3) abundance of feedgrains and relatively low feed costs; 4) favorably located near areas of high lamb consumption (Great Lakes, east coast). These advantages appear to hold potential for future expansion as well.
The Purebred Industry
Michigan has traditionally been a leader in the production of seedstock with a number of nationally recognized purebred producers in several different breeds. It is estimated that purebred producers represent 55 - 65% of the sheep producers in Michigan. Purebred production represents approximately 40 - 45% of the total sheep and lamb numbers. Downsizing of the purebred industry has occurred in Michigan as well as nationally over the last 10 years. This trend is expected to continue slowly through the year 2000. A strong and viable purebred industry will remain an important part of the Michigan sheep industry and will continue to serve several important functions including: 1) Providing a source of superior seedstock for use in- state, nationally and internationally; 2) Playing an important role in stimulating youth to become active and contributing members of the industry; 3) Providing the vehicle for many new producers to become acquainted with and knowledgeable of the industry with expansion into the commercial sector.
The purebred industry will continue to lead in application of newer reproduction technologies. Estrus synchronization, artificial insemination and embryo transfer are examples of existing technologies which will be applied more extensively in the reproductive management and genetic improvement of purebred flocks. Currently, application of estrus synchronization techniques is limited only by commercial availability and cost. Artificial insemination has experienced a rapid increase in popularity with the improved success rates realized with laproscopic methodologies. Artificial insemination has become the main method of breeding in some purebred flocks today. Banks now store semen from popular stud rams in most breeds. This technology has and will continue to change the purebred industry. Flock size and location are no longer the determining factors in sire selection with the availability of artificial insemination. Widespread use of breed leading sires will continue to grow. This will also have an impact on marketing seedstock. Many small flocks will opt for artificial insemination rather than purchase a stud ram and as a result the demand for rams as purebred flock sires will decrease. Interest in embryo transfer will continue, however, application of this technology will lag far behind artificial insemination. Flock genetics and production will be followed more precisely in the year 2000 by seedstock producers and will be aided by computer models. With or without the National Sheep Improvement Program (NSIP), seedstock producers will monitor flock production and genetic progress when making selection decisions. Expected Progeny Difference's (EPD's) used now by some for within-flock comparisons will advance to allow across-flock comparisons. Electronic identification will also be adopted as a means of permanent identification.
The Commercial Sheep Industry
The commercial sheep industry represents 55 - 60% of the sheep and lambs in Michigan. This portion of the industry is itself diverse; while the average flock size is 35 head, commercial flocks range in size from less than 10 to more than 500 ewes. An estimated 1,040 producers in Michigan are involved in the commercial production of sheep and lambs.
Michigan has in excess of 1 million acres of pastureland. Sustainable forage-based production systems will increase because sheep can use previously under-utilized land while conserving energy, preventing soil erosion, and conserving water quality. Sheep are adaptable to either intensive or extensive forage-based systems both of which are currently used to produce sheep and lambs in Michigan. New knowledge and technologies which allow producers to take advantage of Michigan's resources in a cost effective way will facilitate expansion in the future. Implementation of cost effective animal production and management practices along with the application of new fencing practices, grazing management, plant species management and selection will be key in economical sheep production in the future.
Economics will be the largest factor in determining the extent to which the commercial sheep industry can and will expand. Incorporation of cost effective production practices which increase profit potential will become increasingly important. Seasonality of the ewe and ram, prolificacy, rate and efficiency of lamb growth, milk production, maternal abilities of the ewe, carcass composition emphasizing lean tissue deposition and product safety (absence of residues) are areas in which management practices will result in significant advances in the production of lamb by the year 2000. Adoption of new management practices will further exploit the genetic potential and diversity which already exist within and among breeds for highly productive ewes. This whole concept of cost effective management practices identified by complete financial and production record keeping systems is the central theme of "Integrated Resource Management" (IRM) which is a component of the 1990 Farm Bill and needs to be widely used in the sheep industry in the future.
Computer technology will play an important role in the collection, acquisition and interpretation of data necessary for informed production, financial and marketing decisions. Newer technologies in the area of reproductive management will not find widespread application in commercial sheep production primarily because it will remain cost prohibitive and labor intensive. The Lamb Feeding Industry
Michigan's lamb feeding industry represented 82,750 lambs sold for slaughter in 1990 and included slaughter lambs produced by commercial and purebred flock producers and those brought into Michigan from out-of-state as feeders. Michigan has the advantage over many farm flock states in that it is home to a sizeable slaughter industry which slaughtered a total of 291,000 lambs in 1990. These statistics indicate that Michigan's slaughter capacity far exceeds current production. If all of Michigan's lambs were slaughtered in state, it would represent only 28% of this states slaughter capacity.
Growth in the number of lambs on feed (19,000 in 1987 to 30,000 in 1991) indicates renewed interest in this sector. Current statistics used to define sheep and lamb numbers may considerably underestimate the lamb feeding industry in Michigan due to seasonality of production. In many cases, lambs born after the first of the year are marketed before the end of the year and, therefore, never show up on the USDA census. Expansion potential in this area looks favorable through 2000. The extent to which the expansion will occur will depend on: cost and availability of feeder lambs in state and out; feed costs; and market stability. Northern Michigan will become a larger supplier of feeder lambs for southern Michigan feedlots. Forage- based ewe flock production will contribute desirable grass-fed feeders to be finished on concentrate diets in southern Michigan feedlots. This will facilitate and promote expansion in both sectors of the industry.
To remain competitive in the lamb feeding industry, Michigan producers must utilize all cost-effective techniques and technologies available to them. Accurate monitoring of animal performance, costs of production and marketing details will aid successful operations in dealing with often small profit margins.
National efforts currently underway to implement a price discovery and recording system in the lamb industry will be adopted. Lamb will be marketed on yield grading system in the future with emphasis on lean lamb. Carcass weights will continue to increase at a slow rate as the industry adapts to larger, leaner carcasses up to 140-150 pounds. Niches within the market will remain important to supply ethnic and hotel-restaurant-institution demands.
Current Issues
There are a number of issues that the sheep industry is or will be dealing with in the future which will have a significant effect on the future of the sheep industry both in Michigan and nationally. These include:
LAMB CONSUMPTION: Predicted per capita consumption of
retail lamb for 1992 is 1.5 pounds. This represents 1.2%
of the predicted total red meat intake and .7% of combined
meat and poultry consumption. The majority of lamb
consumption has traditionally been by ethnic populations.
Consumer demands for convenience, leanness, product
consistency and quality must be addressed if increased
consumption by the general population is to be realized.
An increase in lamb consumption would likely be at the
expense of other red meats. Vegetarianism for perceived
health benefits and/or animal rights issues is likely to
increase and affect all segments of the red meat industry.
LAMB PROCESSING: The number of lamb processing plants
has steadily declined as sheep inventories have shrunk. At
present, Con Agra which operates 3 processing plants and
the Denver Lamb and Iowa Lamb groups are responsible for
processing the vast majority of the lambs produced in this
country. Wolverine Packing, Detroit, ranks as the 5th or
6th largest lamb processor while processing considerably
less than 10% of the kill. Expansion of the few larger
processors into international markets further complicates
the issue. The net affect of packer concentration and
international trade is not well defined in the sheep
industry. Alleged price fixing and market control within
the industry were the subject of a Federal Justice Bureau
investigation. Conclusions of the investigation are not
yet available, however improvements in price discovery and
market reporting within the industry were identified as
lacking and definitely needed. The closure or termination
of lamb processing by small, local slaughterhouses has
reduced viability of the custom freezer lamb option for
marketing lamb.
MAJOR/MINOR SPECIES CLASSIFICATION: Product
availability is a major limita-tion for advancing sheep
production in the U.S. New technological and
pharmaceutical advances in animal production and animal
health are available for sheep producers elsewhere in the
world but unavailable to U.S. producers because of current
FDA procedures. At present, sheep are classified as a
major food producing species but classified as a minor
species for efficacy testing. Market potential for a
relatively small livestock industry does not warrant the
expenditures required to obtain approval of new products
under the present classifications.
WOOL ACT: The Wool Act of 1954 provides an incentive
for American producers to produce and market a high quality
wool clip. This federal program, administered by the USDA,
derives funds from taxes and tariffs imposed on imported
wool and wool products. With current pressures to
eliminate governmental intervention and support of
agricultural programs, the passage of this bill every 5
years has become increasingly difficult. Loss of this
incentive payment would have a devastating effect on many
fine wool producers primarily in range producing areas
where the majority of their income is generated from the
sale of wool (as opposed to lamb). Loss of the Wool Act
would likely force a portion of the range producers out of
production. Farm flock producers in Michigan are better
positioned to accept this loss of income as these flocks
rely to a much greater extent on the income generated from
the sale of meat. Decreased production in range areas may
increase competition for remaining lambs and even stimulate
production. However, the industry is so small already that
major declines in production in the range-producing sector
may not be compensated for by increases in farm flock
production and the net result could be an even smaller,
weaker industry.
GRAZING OF FEDERAL LANDS: Many Michigan producers
have little concern about the current legislative actions
regarding the Bureau of Land Management grazing fees for
federal lands. This issue however, is critical to the
entire sheep industry because of it's direct impact on the
economic viability of many range sheep operations. As
stated earlier, changes affecting range sheep production
indirectly affect farm flock production. Sheep production
on federal lands will decrease in the future. If the
industry is to remain viable and gain significance in the
agricultural economies, farm flock production will have to
expand.
SCRAPIE PROGRAM: Some form of the voluntary federal
scrapie certification program will be implemented in the
future. The extent of participation will be directly
correlated with the marketing requirements. Required
participation for marketing lambs in Michigan could cause
a significant reduction in lamb production. Steps are
currently underway exploring alternative means of
processing lamb offal which may eliminate or reduce the
need for Michigan's uniform participation in this program
especially by the commercial producers. An outbreak of BSE
in the U.S. with it's association to scrapie, would place
much added pressure on the marketing and handling of lamb
offal in the U.S. Farm flock producers marketing primarily
to smaller processors would be affected most severely.
FOOD SAFETY: The food safety issue will continue to
grow in the future. Consumer perception of safe and
healthy foods will continue to influence consumption
patterns. Lamb has enjoyed a very favorable reputation in
this light and efforts must be taken to retain that
standing. Safety assurance must remain a high priority to
the industry even though few feed additives or growth
promotants are available. Antibiotic residues in lamb
carcasses must not be tolerated if consumer confidence is
to be retained.
ANIMAL WELFARE: Animal welfarists will become much
more politically active in the next decade. Although the
sheep industry will not be impacted as much as some other
animal industries, it will come under fire. Analgesia or
anesthesia may be required eventually for management
practices such as docking and castrating.
ENVIRONMENTAL CONCERNS: The sheep industry will be
less impacted by environmental concerns than many other
animal industries primarily because of the small size of
most operations and the extensive nature of production.
Even so, producers must be aware of regulations dealing
with manure management, odor, surface run-off, and
groundwater contamination.
Strengthening the Michigan Sheep Industry
Michigan's sheep industry has the need and the potential to expand. This industry can and should use Michigan's natural resources (abundant pasture lands and water supply), favorable climate, availability of feed grains and packing facilities to increase the production of sheep and lambs. In doing so (while using sustainable agricultural practices) under-utilized land resources will become more productive (pastures and use of crop residues) and increased amounts of harvested forages and grains will be used in-state rather than exported for use as animal feeds elsewhere. The products produced from this industry - meat and wool - are located near population and consumption centers. Michigan has a reputation for producing lean lamb and wool products that serve several market niches. Both of these areas have the potential and need to expand in size to stabilize their role as viable agricultural enterprises.
Production economies in the last three years have caused producers to seriously evaluate the cost effectiveness of current production, management and marketing practices. As a result, producers of today and tomorrow are keenly aware of what is required for profitable sheep production in a volatile industry. Michigan has the opportunity to be a leader in farm flock production of sheep and lamb. Economic opportunities abound for this industry to supplement other agricultural enterprises or to exist as the primary enterprise.
Strong national leadership and representation are needed for this industry to not only survive but prosper. Recent changes and restructuring in this regard appear to place the sheep industry in a position with strong representation at the federal level to deal with current and upcoming issues which will impact production in the future.
The diversity of the production systems in the sheep industry in Michigan must be viewed as an asset and preserved. Expansion opportunities exist in all areas (large and small flocks; purebred and commercial flocks; ewe flock and lamb feeding operations; lamb and wool production). Current trends and shifts in agriculture appear to position this industry as an increasingly important agricultural enterprise. Essential to a strong sheep industry in Michigan in the year 2000 is concerted effort in defining, evaluating and implementing cost effective production and management practices for profitable production.
Continued University support of teaching, research, and extension are essential to maintaining a viable and growth sheep industry. Support of regional efforts in research (NC-111 project) and extension need to be continued and expanded to make maximum use of limited resources and shared expertise.