Supply/demand lamb?

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Tom Nichols
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Re: Supply/demand lamb?

Postby Tom Nichols » Mon Jan 10, 2011 8:08 pm

With a little Googling, I found this tidbit included in a report of the Lamb Feeder's Leadership School in the Texel Times:
"Fifteen of the participants, located in the eastern part of the US were involved in marketing lamb direct to the non traditional ethnic markets and all were looking to expand. They are marketing their lambs in the 60 to 80 lbs. range. The Texel rams, for the terminal sire, really fit that market. Superior, the largest packer in the US, projects that by the year 2050, 50% of the US population will be ethnic. What about all of the growth in the ethnic groups between now and 2050? The first generation of those groups eats lamb."
I think this shows that Superior is well in tune with the current market and future market trends and I will reiterate that I believe Superior bought the plant for its profit potential and not, as some would have you believe, out of the goodness of their heart for the good of the industry. I think they have come to realize (after many years of watching marketers like Niman Ranch and others) that they weren't really doing an adequate job of marketing lamb. I think they are now doing a much better job and that is the big change I see in Superior.
Once again, it appears that Superior is optimistic, why are others negative?
Tom
Last edited by Tom Nichols on Mon Jan 10, 2011 10:44 pm, edited 1 time in total.
Tom Nichols
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cjhiemke
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Re: Supply/demand lamb?

Postby cjhiemke » Mon Jan 10, 2011 8:31 pm

Phil, you’ve certainly hit the nail on the head regarding the primary reason Superior is looking to rectify their mistakes. Fewer sheep numbers have hampered business. Of greater concern is that the fewer lambs have nearly all “major” plants (read Superior, Swift/MSR, the former IA Lamb facility, Strauss/the former Chiapetti plant, and Wolverine) at or near critical capacity.

However, having learned from those mistakes Superior has realized that to have a sustainable industry all profit sectors must be in the black. The “us” and “them” scenario in the typical meat industry doesn’t work in the small niche meat world - in which lamb is included – particularly when infrastructure is being maintained at a critical level.

I judge individuals and organizations on my own personal experiences with them, even if I have reason to be suspect. It is logical to be suspect of a co-packer that has 50%+ of the market share, but don’t write them off because of it or because of actions taken by previous management. Superior may not need to give a rats ass, since they over half of the lamb market, but they do.

Ultimately, all sectors of the industry need to figure out how to maintain positive relations when the market isn’t as high as it is now.

~#~#~

Before submitting this post I noticed Tom’s comments. Certainly Superior has noticed the Niman Ranch Lamb “propaganda”, as they liked to call it. I don’t think it’s appropriate to speak to the marketing abilities - or inabilities - that you refer to. However, if my previous post led people to believe Superior was buying IA Lamb out of the goodness of their heart that wasn’t my intent. My intent was to relay that Superior was buying IA Lamb because it was a profitable venture – the bottom line is that it needs to be.
Cody Hiemke
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Muleflock
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Re: Supply/demand lamb?

Postby Muleflock » Mon Jan 10, 2011 9:16 pm

Superior, the largest packer in the US, projects that by the year 2050, 50% of the US population will be ethnic. What about all of the growth in the ethnic groups between now and 2050? The first generation of those groups eats lamb."



I suspect that part of the equation for such a venture in Midwest market lamb is that the second generation of the "ethnic" population in NA will not be as likely to have the desire to preside over slaughter. They will likely want to eat lamb just the same so that lamb will then come on market shelves.

Tom Nichols
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Re: Supply/demand lamb?

Postby Tom Nichols » Mon Jan 10, 2011 11:36 pm

Here's the article that I distinctly remember and that I was trying to find when I found the previous one.http://www.livestockweekly.com/papers/96/11/14/14crippen.asp
The article makes some very timely points since we are now in a similar situation but I think it is also interesting to note that the 90 cent lambs and $2 carcass prices that were deemed to be so disastrous were soon a new threshhold price. It took a shortage of lambs before the packers were finally forced to ask the consumer to spend more of their dollar for lamb. Without that shortage back then, we might have never gotten the packers out of a $120 carcass price mentality. (How many remember being told, "You've gotta raise these lambs for 60 cents?")
I'll retract my comments about Superior's marketing, but say congratulations and thankyou to all of the marketers who have found a way to sell so much lamb to so many people. (At an ever increasing price.)
Tom
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Bill Fosher
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Re: Supply/demand lamb?

Postby Bill Fosher » Tue Jan 11, 2011 4:12 am

Tom,

You're welcome. :mrgreen:

Seriously, I am not negative. I am just a Yankee and a bit of a contrarian. While I see this as a great time for the sheep market, I am also aware that a.) unless we expand production wisely, it will be unprofitable when the price stabilizes, and we'll be trapped in a boom and bust cycle like the beef boys and 2.) as long as Superior buys half the lambs grown in the US, they have us by the uncomfortable bits and anything we can do to erode that market share by "diverting" lambs to "non-traditional" channels is going to accrue to the good of the producer in the long run.

Funny thing is, selling lamb is easy. I couldn't sell cold lemonade in hell, but I can sell lamb.
Bill Fosher
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Muleflock
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Re: Supply/demand lamb?

Postby Muleflock » Tue Jan 11, 2011 6:30 am

What I'd like to know is, if the price to buy a lamb has gone up and stayed up during the typical downward market trend of the past price cycles and the price at the retail level hasn't changed appreciably is that because somebody is losing their shirt or is it because somebody's been taking us to the cleaners and can still hang on despite it all? I can't believe there's that much lag between forward contracts and market value.

cjhiemke
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Re: Supply/demand lamb?

Postby cjhiemke » Tue Jan 11, 2011 11:33 am

Muleflock wrote:if the price to buy a lamb has gone up and stayed up
Muleflock wrote:and the price at the retail level hasn't changed appreciably

Cost/prices have gone up throughout the entire system - at the retail shelf too.

Generally the retailer is making a set margin (30%+) on the product they sell. The producer and packer level is usually a very tight margin business.
Cody Hiemke
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Tom Nichols
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Re: Supply/demand lamb?

Postby Tom Nichols » Tue Jan 11, 2011 11:43 am

Mark,
I can't answer that question, but it does appear that a lot of money has been left on the table over the years, money that would have fit real nicely into producers pockets.
All I know is there have been damned few times in my life when sheep producers have been in a position to push for a higher return on their labor, management skills, feed resources and etc., in other words, receive more for the assets we utilize to produce lamb. We are now in one of those situations and I don't want to see the producer side of the industry acting like a beat down step brother who is afraid to stand up for what is rightfully his. I just don't want to see industry leaders headed off to a convention with the mindset that this price is good enough, lets move on to different things. The mindset needs to be how do we maintain this price!
In full disclosure on the Superior end of things, I received a scholarship in the name of Superior's founder my freshman year of college and I have always been thankful to them for it, although, in my excitement of entering college I may not have properly thanked them at the time.
Tom
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Bill Fosher
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Re: Supply/demand lamb?

Postby Bill Fosher » Tue Jan 11, 2011 3:13 pm

Spoke with one of the owners of the local butcher shop that I sell to. When he can't source local lamb, he buys Superior, and occasionally Niman. He's starting to feel the squeeze. His cost on legs this week was $5.10/lb from Superior via a regional distributor. He's been reluctant up until now to pass the increases on to his customers, but he's going to have to.

Even with his prices rising, though, he has not seen any softening in the consumer demand for lamb. Of course, if they're in his shop they aren't looking for $1.49 hamburg and 69-cent chicken in the first place.

It'll be interesting for the first time in years to be able to market the local product as being at least price-competitive, if not actually a bargain, compared to Superior's.
Bill Fosher

Westmoreland, NH

Tom Nichols
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Re: Supply/demand lamb?

Postby Tom Nichols » Tue Jan 11, 2011 3:45 pm

Bill,
That's exactly what I want to hear; that the butcher is putting the squeeze on the consumer and not back on the farmer. We have to begin getting more consumer dollars for our production or we will forever be plagued with an industry of part time farmers/ranchers in poor rural communities.
Tom
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Re: Supply/demand lamb?

Postby Island Shepherd » Wed Jan 12, 2011 7:03 am

Bill Fosher wrote:Spoke with one of the owners of the local butcher shop that I sell to.


When I was in Cork City Ireland a few years ago there was an Olde English Market. It was like walking back in time. There were various stands for each type of meat and produce. Picture men clad in white aprons, the customer approaches the counter, the clerks barks out the order. This is quickly followed by the sound of a clever whacking onto a butcher block, a gigot of lamb sails through the air, and is nimbly caught by another person with wrapping paper outstretched. In a blink the leg is wrapped, taped, weighed and presented to the bemused customer. There were sides of beef, and pork hanging for all to see, as well as lengths of artfully packed sausages. Then there was the poultry section where all manner of cleanly plucked fowl from Cornish game hens to turkeys was displayed. The fish section had about everything that swims or crawls in the ocean neatly placed on beds of snow white ice. The smells were fresh with a hint of smokehouse. The trade was brisk. This wasn't just buying food for sustenance it was theater.

As people choose to eat less meat, but of a higher quality perhaps more will choose the local butcher shop experience over trudging mindlessly through the aisles of Super-mart to purchase their rock bottom priced, meat flavored product from Uruguay. I hope they watch a cooking show, then get to slobbering, and head to the butcher shop to buy some chops off one of Bill's lambs at premium prices that will keep Superior, Niman, Bill, and the butcher in business.

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Re: Supply/demand lamb?

Postby Muleflock » Wed Jan 12, 2011 9:05 am

Hey Dave

Now you got me slobbering to cross the pond again!

One of my earliest memories involving livestock came from one such place, being that I was raised in the sterility of suburbia. I remember as a young lad (5?), every now and then when we visited Grandpa in Detroit, he'd grab me and we'd walk down Woodward Ave. to a butcher shop that was in many ways similar. He'd take me around back to see the chickens, ducks and turkeys still running about while he would chit chat with the men carving up cuts of meat and butchering chickens. Occasionally a large man with one of those aprons would come out and grab a bird or two. It got processed right then and there and went out the door ten minutes later with the customer. As I recall, nice healthy looking buggers they were.Then he'd share stories on the way back of the Bulls he raised in the foothills of the mountains in Italy as a boy. I've often wondered why he always took me and never any of my other five siblings.

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Re: Supply/demand lamb?

Postby Bill Fosher » Wed Jan 12, 2011 9:30 am

Lets see, if they were Italian, it wasn't in Hamtramck, probably. Sounds like great memories -- in some ways I wish these places still existed, but on the other hand, there were probably a lot of them where you wouldn't like what you saw if you went around back.
Bill Fosher

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Kathy Lewis
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Re: Supply/demand lamb?

Postby Kathy Lewis » Wed Jan 12, 2011 9:36 am

Hi Dave,
I know what you mean....this brings back memories too.

Years ago we used to sell lambs to Alice Waters at Chez Panisse in Berkeley, CA. She notified us and her other suppliers that Chez Panisse was going to put on a "food street fair" on Shaddock Ave. in Berkeley. My first thought was "you can't do that!". Well, evidently you can....if you have enough political pull. We got issued one day permits, processed about a dozen lambs, set our prices high, loaded up the truck with ice and a makeshift display case and headed to the big city.

The crowds were thick and it was like a big party. As I remember there were about three others selling lamb, but there was sausage, bread, cheezes, homemade olives, etc. It was a madhouse and luckily we had our daughter helping us or we couldn't have kept up. I remember at one point her looking over at me and commenting "this is wonderful.....people are just throwing money at us."

We sold out quickly ..... only a box of tongues left and they were dark grey (Suffolks). Someone spotted them and these quickly sold too. After we closed Alice Waters took all the venders to a rented hall and put on a wonderful dinner for us. It was a good time and nice to meet customers face to face.
Kathy
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