By DOUG SCHMITZ
Iowa Correspondent

AMES, Iowa — Despite the U.S. sheep inventory dipping two percent from 2007, Iowa sheep numbers were up 25,000 head since last year and are now at their 2003 levels, according to John Lawrence, Iowa State University agricultural economist.
“Perhaps part of the explanation is that [Iowa] lamb producers are recovering from other declines,” he said.
The USDA’s National Agricultural Statistics Service’s (NASS) Farms, Land in Farms and Livestock Operations Report, released last month, stated while the total U.S. sheep inventory was down to 6.6 million head, Iowa sheep producers increased their flocks by 10.6 percent from 2007, to a total of 260,000 head.
The Feb. 1 report said as of Jan. 1, 2008, the number of U.S. sheep operations reached 70,590 in 2007, up two percent from 2006 and up three percent from 2005. The states where sheep numbers increased were Colorado, Iowa, Oregon, Tennessee and Virginia, the NASS’ Feb. 1 Sheep and Goats Report stated.
But while Iowa’s two percent increase may look somewhat buoyant, the state’s sheep industry leaders – such as Marsha Spykerman, executive director of the Iowa Sheep Industry Assoc. (ISIA) in Sibley – are suggesting cautious optimism.
“If you look at the numbers, the breeding sheep increased by 5,000 head and the market lambs by 20,000 head,” she said. “Some of the market lamb increase may be from feeder lambs coming into Iowa from other states to be finished. If lambs are finished on grain in states out west, there is added cost for shipping the grain to the lambs.”
Spykerman said Iowa has a few advantages since the corn that feeds flocks is grown here, the byproducts are here and one of the major lamb packing facilities in the U.S., Iowa Lamb Processing, is located in Hawarden.
“Breeding sheep numbers may have increased in Iowa because raising lambs has been very profitable for a number of years,” she said. “Many Iowa producers, who in the past had 50 to 100 ewes, have become more educated on raising sheep and realized it as a profitable part of their farming enterprise, and increased their ewe numbers.”
Nationally, sheep numbers are down five percent in five years and 18 percent in 10 years, which Lawrence said weren’t trends of a profitable industry.
“All of animal agriculture has been hit by higher feed costs, and lambs would not be different,” he said.
Spykerman said it’s difficult to determine how the higher grain prices forecast for this year would affect lamb production in 2008, since a great deal will depend on what price sheep producers receive for their lambs when they’re marketed.
“Lambs are not traded on any futures market, so most producers are not able to lock in a price for their lambs,” she said. “There are a number of Iowa producers and lamb feeders who are large enough to deal directly with the packers and enter into a contract with them.”
As a result, the lamb feeding sector is feeling the economic bite from high grain costs the most, said Dan Morrical, ISU extension sheep specialist.
“Feeder lamb supplies are always tight and large-scale feeders tend to overbid for these lambs, creating a very large buy-sell margin,” he said. “Traditionally with low-cost feed, one could overcome the buy-sell margin with cheap cost of grains.
“That is no longer possible. Long-term feeders will pay large western operations significantly less for their lambs. Efficient, well-managed sheep flocks are still profitable in Iowa, but the magnitude of profit per ewe has been drastically shrunk.”
Despite some U.S. sheep producers being able to lock in prices last summer, Spykerman said she was unsure if those products would follow past trends and return to cost-effective prices again this summer. She said lamb feeders and producers, however, have a new risk protection product that became available last September: The Livestock Risk Protection-Lamb (LRP-Lamb), which gives producers and feeders an opportunity to protect themselves from an unexpected decline in the market prices.
The American Sheep Industry Assoc. (ASI) said LRP-Lamb is designed to insure against unexpected declines in market prices of slaughter lambs in 27 states. With it, sheep producers may select 13-week, 26-week or 39-week insurance periods, as well as coverage levels ranging from 80-95 percent of the expected ending value to correspond with their general feeding, production and marketing practices.
“The success of the LRP-Lamb will be dependent on the support producers and feeders show for this program,” said Burdell Johnson, ASI president. “The higher the demand for the product, the greater the chance it will have to thrive and become a permanent product.”
Yet, ironically, despite the safeguard of the LRP-Lamb, U.S. sheep producers have actually had a difficult time keeping up with the demand for sheep exports as well as domestic demand, according to the Iowa Farm Bureau Federation. One of the reasons Morrical said U.S. lamb demand is up is due primarily to the nation’s changing demographics.
“More variation and more adventurous eating experiences are leading people to select lamb off the menu,” he said. “The sheep industry has implemented a national checkoff, which is creating demand as well.”