industry to the U.S. agricultural economy and the potentially industry-transforming changes currently in process, such as the emergence of direct marketing, growth in ethnic demand, and other market forces creating some optimism about the future of the industry.

This chapter takes a close look at the U.S. lamb industry, with particular interest in the current status of and changes taking place in lamb production, marketing, consumption, and trade, along with the market forces and government policies that influence their patterns of change. The discussion is based on a wide range of research on the lamb industry, including supply issues (e.g., Whipple and Menkhaus, 1989; Purcell et al., 1991; Van Tassell and Whipple, 1994), demand issues (e.g., Whipple and Menkhaus, 1989; Williams et al., 1991; Byrne et al., 1993; Purcell, 1998), marketing margin and packer concentration issues (e.g., Menkhaus et al., 1989; Brester and Musick, 1995; Capps et al., 1995; Viator et al., 2007); trade issues and foreign lamb markets (e.g., Richie, 1979; Reynolds and Gardiner, 1980; Babula, 1996, 1997; U.S. International Trade Commission (US ITC), 1999; Vere et al., 2000; Muhammad et al., 2007); and the welfare implications of government policies (e.g., Whipple and Menkhaus, 1990). The chapter concludes with a summary of the major accomplishments, opportunities, and challenges facing the lamb segment of the U.S. sheep industry.

LAMB SLAUGHTER AND PRODUCTION

Even as slaughter has declined over the years, the average live weight of slaughter lambs has grown, particularly since the mid-1990s, so that lamb production has declined somewhat more slowly than slaughter (Figure 4-1). From 10.5 million head in 1970, federally inspected sheep and lamb slaughter dropped by more than half to 5.0 million head only 9 years later in 1979. Following a brief upsurge over the next few years to nearly 6.8 million head in 1984, slaughter began to decline once again, reaching only 2.5 million head in 2006 (USDA, 2007b). Over the same period, however, the average live weight of slaughter lambs increased from 47.5 kg to around 63.5 kg and dressed weight from 23.45 kg to about 31.75 kg (ASI, 2007). The heavier weights of the slaughter lambs helped slow the decline in lamb production from 250 million kg in 1970 to 80 million kg in 2007.

One consequence of the decline in slaughter has been a decline in the number of packers buying sheep and a drop in public and non-public auctions by over 70 percent between 1980 and 2005 (Figure 4-2). In turn, the decline in the number of packers has led to both regional and structural concentration in sheep and lamb slaughter. Regionally, about three-quarters of the 2.5 million head slaughtered in 2006 were concentrated in the Midwest and Mountain states (Table 4-1). Another 9.5 percent occurred in the Northeast, with the rest scattered among a large number of other states



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