You’ve no doubt heard the metaphor about the canary in a coal mine. The phrase refers to the canaries that miners used to take with them into the coal mining tunnels as an early warning system against noxious fumes. It’s hard to know for sure but the phrase supposedly began being used after a deadly explosion in a Welsh coal mine in 1896. Afterwards an engineer named John Haldane invented a type of bird cage that allowed the miners to carry canaries deep into the tunnels of British coal mines.

Usually the tiny happy canaries spread joy wherever they went but because they’re much more sensitive than humans to the deadly carbon monoxide gas that was often found between coal seams, the small birds became the first carbon monoxide testers, not unlike the ones found in homes now days, except you don’t have to clean the cages of the newer models. Canaries are no longer needed in the mines but cattlemen sure could use a dependable canary in their coal mine.

Some would argue that the proverbial canary in the coal mine for cattlemen is the sheep industry. Cattlemen had better hope not. The sheep industry isn’t dead yet in this country and the canary hasn’t died either, but it is in critical condition with a raspy and deadly smoker’s cough.

Mortgage Lifters

                    The relationship between cattlemen and sheepherders in this country has been a rocky one. A century and a half ago cattlemen claimed that sheep overgrazed the lower-elevations in the West making the land unsuitable for cattle, while at the same time the sheepmen accused cattlemen of using up all the water and being the first to fence the western range. The sheepmen may have had a good case in court but the only pleading they did was too often at the end of a cattleman’s noose.

For 150 years sheepmen called their sheep “mortgage lifters” and claimed they were far more profitable than the cattle they shared the range with. The sheep had greater reproductive efficiency, earlier puberty, a shorter gestation period, and more often had multiple births. Sheep are efficient foragers and can produce wool, milk and quality USDA inspected carcasses all on pasture alone but the one thing that sheep cannot do is create the demand for lamb that beef enjoys. And what demand the sheepmen do create is most often filled by foreign lamb, so even when they win, they lose.

Deader Than Disco

                    We’re not the only ones who think that sheep are beef’s canary in the coal mine. At the time I was writing this story Bill Bullard, the CEO of R-CALF USA, came out with a timely essay on the same subject. So are we to expect an R-LAMB splinter group in the future? No, that was not the purpose of Bill’s column. It’s just that he too believes that sheep are the canary in the coal mine for cattlemen and he backed it up with statistics that ranchers should find sobering.

  • According to Bullard, “The U.S. sheep industry, an industry representing the economic cornerstones of rural communities across America, has been decimated. Today 74% of the lamb meat in the domestic market comes from foreign countries. In just the past few decades the sheep industry in America lost 62% of its sheep, 60% of its full-time sheep producers, and the packing plants that manufacture lamb are operating at an estimated one-third to one-half capacity.”
  • During the same time period we were losing six out of every ten sheep producers Bullard said, “Imports of lamb and mutton into the United States from Australia and New Zealand increased 2,363% in dollar value and 543% in quantity.”
  • According to the USDA there are an estimated 5.2 million sheep in the United States. Compare that to Australia with 75 million sheep or India with 54 million sheep and you’ll see that the U.S. is a minor player on the world sheep stage.
  • Australia and New Zealand alone are responsible for 75% of world lamb exports.
  • Due to all the continuing problems faced by domestic sheep producers, many of which are shared by cattlemen such as concentration, imports, higher feed costs, and lower consumption, sheep no longer rank very high in importance making up less than 1% of the American livestock industry.
  • It’s not like lamb has fallen out of favor across the world. In other countries consumption is thriving. There are about 1.176 billion sheep in the world. China makes the biggest contribution to this figure with the largest sheep population in the world. China produces 42% of the global sheep population.
  • When it comes to sheep American producers are playing against a stacked deck. “For example,” says Bullard, “the poison compound 1080 is widely used in Australia and New Zealand to kill predators, but it has been all but banned in the U.S. due to environmental concerns.” Said Bullard, “We also found that the global sheep market is severely distorted by three factors: First, is because foreign imports do not have to meet America’s higher sheep production standards. Second, the global sheep packing and processing industry is highly concentrated. And third, the much weaker value of the Australian dollar versus the U.S. dollar allows foreign imports to severely undercut the value of domestic lamb for no other reason than misaligned currency values.”
  • It’s not just the lamb market that’s sick. Before COVID, China was buying 75% of the world’s wool, much of it black and contaminated wool like the U.S. produces in volume because of the heavy use of the Suffolk breed. Then in 2019 China placed a 25% tariff on all imported wool which absolutely killed the market for American wool in China. The price for medium grade wool wouldn’t even pay for the shearing. It’s akin to the befuddled cattle feeder who was losing a hundred bucks a head but figured he’d make it up on volume.
  • There were other reasons the worldwide wool market cratered. After COVID hit people working from home didn’t need so many nice woolen suits. And the wool industry faced the same problems other industries did: snarled supply lines, a lack of truckers, and wool warehouses worldwide were crammed full. It didn’t take long before the wool market was flooded and at a standstill.
  • One statistic more than any other explains why the sheep business is in critical condition in the U.S. Sheep producers this summer and fall experienced a downturn in meat prices of 60% compared to last year’s prices.  Could you take such a hit and survive?

Didn’t think so. And this didn’t happen because the sheep industry didn’t have a checkoff or COOL.  They have both. The canary in the coal mine for American sheepherders may already be deader than disco. The bigger question is, is the sheep industry the canary in the coal mine for cattlemen?

Do The Math

                    At this point you may be asking yourself the same question Bill Bullard did. “How did this all happen?”

According to Bullard, “The U.S. has historically protected its domestic sheep industry from global market distortions through the use of tariffs. These tariffs were put in place in 1890, 1921, and 1922, and then were increased under the Tariff Act of 1930. Back then, the tariffs were $3 per head for imported live sheep and seven cents per pound for lamb. But that was the last increase, meaning there haven’t been any adjustments for inflation for nearly 100 years.

“When those seemingly low tariffs were applied back then,” says Bullard, “the U.S. sheep industry flourished, supporting hospitals, Main Street businesses, places of worship, schools, and the social infrastructure of rural America.”

According to Bullard, “By 1942, while protected from global market distortions, the inventory of sheep and lambs in America reached 56 million!” Didn’t we say earlier that the inventory today is barely over 5 million head? Do the math, that equates to over a 90% loss in numbers!

“That’s because there’s been no adjustments for inflation, rendering those 1930 tariffs immaterial today,” says Bullard. “Consequently, and aided by global market distortions such as weaker foreign production standards, global meatpacker concentration, and a huge disparity in monetary exchange rates, the domestic lamb market has been overrun with cheaper, substandard imports.”

Bullard says, “If Congress had adjusted those 1930 tariffs for inflation, the $3 per head tariff on live sheep would be $53 per head today and the seven cents per pound on lamb meat would be $1.25 per pound!”

Falling Out Of Fashion

                    If sheep raisers benefitted because sheep produced both wool and meat, they also suffered greatly when both markets crashed simultaneously.

Historically, wool clothed Americans both in peacetime and in war. So important was wool that lamb and mutton were viewed as byproducts of wool production. But after World War II that formula changed as the demand for wool plunged. There weren’t near as many soldiers who needed uniforms made from wool. Prior and during the World War II the primary buyer of American wool was the U.S. military. Soldiers liked the fiber because it was flame resistant, durable, odor resistant, fast drying and breathable. But when the military downsized so did wool demand. At the same time, the increased use of synthetic fiber in clothing became fashionable.

The new synthetics were cheaper than wool and this was at a time when consumers had less money to spend. Casinos in Vegas switched from carpets made from wool to synthetic carpets even though they would later pay the price when fire struck the casino floor. One of the problems with wool was that it lasted longer in a throwaway society where women wanted to be seen constantly wearing a new outfit, not the same old woolen one. I hate to admit this but I have Pendleton shirts in my closet that are still presentable 30 years after they were purchased. This may speak to the quality of wool but it sure makes for a lousy marketing plan.

With warehouses filled to the brim, wool marketeers had to get creative. So we now have wool being used as biodegradable fertilizer because it retains water while making better compost. But wool fertilizer will not be the savior of the American sheep industry.

Headshaking

                    Cattlemen who run their cattle on public lands will have a very easy time seeing that sheep are cattlemen’s canaries. The two once-opposing factions find themselves on the same side in court these days against the greenies. We could cite numerous species but what the spotted owl did for the foresters the Bighorn sheep is now doing to sheep operations in the west. Evidently the two sides, domestic sheep and wild sheep, cannot peacefully coexist. And in this divorce it’s easy to see which one gets the house.

In this case the judge is often the BLM and the Forest Service. Both agencies and also tribal councils are having a hard time keeping the wild and the domestic sheep a safe distance apart which is necessary due to a disease called mycoplasma Ovipneumoniae. (For now can we agree to just call it M. ovi?). It turns out that Bighorn sheep are extremely susceptible to M. ovi whose symptoms range from coughing, nasal discharge, extreme headshaking, fever, lethargy, and sudden death. Unfortunately M. ovi has been found in the respiratory tracts of domestic sheep who don’t suffer the symptoms quite as bad as wild sheep do. And that’s the reason the two must be kept apart at all times, at least according to the greenies. That’s why state, national and tribal wildlife agencies are so intent on getting rid of the domestic sheep under their jurisdiction.

“We recognize that this disease issue poses significant challenges for wild sheep, but our research suggests that a minimum 400,000 domestic sheep, and the families who raise and care for them, may be affected by M.ovi-related impacts too,” said American Sheep Industry Association Senior Policy and Information Officer Chase Adams. “The effects are serious, not only on sheep operators and their employees, but also meat packing plants and woolen mills.”

It’s estimated that half of the domestic sheep in the west spend at least some time on public land. It bears repeating that M. ovi will do to the sheepherder what the spotted owl did to the forester. We wonder, what species will it be for the cattle? The wild horse, maybe? The BLM and Forest Service have a plethora of likely candidates to choose from.

It’s no wonder then that the kids and grandkids of today’s sheep operators are showing such little interest in carrying on the family tradition. How fortunate for them that the greenies are excited about the prospect of buying out the woolgatherer’s grazing rights.

We hope we have made it clear that sheepmen and cattlemen share many of the same problems and for the sheepmen it may already be too late. To reverse the trends the American sheep industry needs time to work through these issues. “Congressional legislation,” says Bullard, “must be drafted that would update the 1930 tariffs and establish a permanent tariff rate quota system to effectively level the domestic sheep industry’s playing field.”

Bullard concludes, “Because they haven’t been updated, the tariffs intended to protect the domestic sheep industry against global market distortions have done nothing to prevent the U.S. sheep industry from becoming the first livestock sector in America to fall completely to competition by imports.”

One wonders, will beef be next? Needless to say, the time to work on these problems is while the canary still sings.

***Article originally published in the Livestock Market Digest October 15.