Sheep, goat industry takes a hit from COVID-19
Like most of the U.S. economy, the sheep and goat industry is expected to take a few hard knocks from the COVID-19 epidemic as restaurants close temporarily, and more people work from home.
Texas A&M AgriLife Extension Sheep and Goat Specialist Reid Redden tells producers that COVID-19 is causing major market disruptions in the sheep and goat industry. The disease couldn’t have worse timing, striking during the biggest peak in the supply-demand season for lamb, Redden said. A few weeks ago, the American Lamb Board had indicated retail sales of lamb increased 50 percent before COVID-19 started impacting the U.S. economy.
Since then, the disease has progressed, and lamb prices have dropped amidst restaurants in many states having to temporarily close dining areas, shutdown or focus on takeout or curbside pickups. In response, Redden said many restaurants are canceling orders because they are utilizing a fraction of the meat they would have. “It is very concerning, because the restaurants utilize half of the traditional lamb sales,” he said. “Now, we are going to have to depend upon retail grocery stores to increase sales.”
Can grocers pick up the slack?
“Retail sales almost double during the Easter holiday, which is really concerning now because we’re expecting consumers to buy a lot of lamb at Easter. However, churches are shutdown, and a lot of people are unemployed, short on money,and stuck at home. A lot of them may have ample time to cook a leg of lamb, but it’s whether or not they can afford it,” he said. “Many people may be looking at cheaper meat purchases in the months ahead.”
David Anderson, PhD AgriLife Extension livestock and foods marketing specialist, expects loss of demand and lower prices driven by fear of a recession. “The big question is how much we can recapture in the grocery store market,” he said. What could help is a steady demand for ethnic lamb that exists year-around, and major upcoming ethnic holidays, like Ramadan and the Festival of Sacrifice, that are focused on lamb and goat meat, he said.
A non-traditional supply of lamb, focused mostly on hair sheep breeds, is also born mostly during the first five months of the year, according to Bill Thompson, Texas A&M AgriLife extension economist. However, these lambs are harvested in roughly half the amount of time. In Texas, they can be marketed as early as April, but the supply builds in May through September, when prices decline due to an excess supply, he said.
Non-traditional lambs are not typically sent to a feedlot or harvested at large, centralized processors, Thompson said. They are usually harvested at smaller processors who are looking for a smaller carcass. “There is less risk right now for non-traditional markets. They usually buy a whole or portion of the carcass rather than individual cuts,” he said.
Will lamb imports be impacted?
Lamb imports have also increased during the last decade, and easily exceed domestic production. With COVID-19, Redden said travel restrictions could limit imports, but if they continue to funnel into the U.S. from countries like Australia and New Zealand, it could put more strain on an already stressed lamb market.
The exchange rates have an impact on imports into the U.S., according to Thompson. The strong dollar makes our product less competitive with imported lamb. It also makes our market more attractive to countries like Australia and New Zealand, because they get more money when they exchange our dollar back into their own currency, he said.
The economists all worry about the market staying current. From a demand and supply perspective, about 85 percent of the domestic lamb supply are born the first five months of the year. Finishing those lambs has to be slowed down or sped up to produce a year-long supply for the processor. “The biggest volume of lambs come to market the first five months of the year, around a year of age,” Redden said.
With the economy impacting the lamb market, Anderson is concerned about supplies backing up, and lambs being held longer in hopes of higher prices. “It will lead to lambs being marketed at higher weights, and more over-finished lambs coming to market. The question is if we will also continue to be an attractive market for lamb, with depressed retail and wholesale prices, to importers like Australia and New Zealand,” Anderson wondered.
If production backs up and imports continue, Anderson said more lamb may be placed in cold storage stocks, which could keep prices depressed for a longer period of time. “I would expect some higher priced cuts like racks and loins to end up in stocks, but lower priced cuts, like ground lamb, may still move in retail,” he said.
Up until the coronavirus outbreak, non-traditional markets were comparable to last year or even higher. Since then, prices have come down, but are still above where they were last year, Thompson said.
Keeping the market current will be key in getting through this economy. “I don’t recommend holding tight, setting on things, and letting the coronavirus get past us. If too many of us do that, it may flood the market. I would recommend marketing early rather than later,” Thompson said.
Though the goat market also has some seasonal patterns, it is less likely to be impacted by the economy. “Goat meat is seldom seen in restaurants or on the menu, so the temporary closure of restaurants won’t have much impact on the goat market,” Thompson said. “The supply chain may be more resistant to outside influences. Because of the seasonal patterns, I would still recommend marketing earlier rather than later.” ❖
— Clark is a freelance livestock journalist from western Nebraska. She can be reached by email at email@example.com.