What goes up must come down, and while the lamb market is no exception, no one in the industry was prepared for just how fast or hard it would crash. “In the last three weeks it went from $1.75/lb to $1.35,” Howard Paulsen, Zone 1 director for Alberta Lamb Producers said earlier this month.
“I didn’t really think there would be that much of a correction because we can’t supply the amount of lamb we need, but if it’s starting to come in from the States and forcing everybody’s play, there’s not much we can do about it.”
The American lamb market has been struggling for several months, but prices stayed stable in Canada until very recently. Some lamb feeders were caught by the correction, such as Pete Walter, the sheep boss from the Cayley Hutterite Colony. “I sold one liner load, but I have 300 left. You can’t give them away,” Walter said.
He said most of Alberta’s finished lambs were going to SunGold Specialty Meats at Innisfail, formerly Sunterra Meats, and still Canada’s largest lamb processor.
The plant was purchased last year by Canada Gold Beef, as a means to ensure slaughter facilities would be available for its niche beef exports. Walter said SunGold sent a contract offer to lamb feeders earlier this year, offering a variety of pricing in between $1.61 – $1.77, depending on the month of delivery. “Very few signed because there were so many restrictions on the contract,” Walter said, citing overfat penalties, and a new three-day wait for payment.
Lamb feeders wishing to sell now are being offered approximately $1.35 after a large number of cheaper lambs were imported from the U.S.
Roy Leitch, a major lamb feeder operating out of Brandon, Manitoba, says the price needed to come down.
“Lambs became way overpriced last year. We paid way too much for them and the whole market got out of hand. We way overpaid for the lambs and we couldn’t get the money out of them from the public, and the public couldn’t afford to eat them and basically, North America wide, we’ve lost 50 per cent of the consumers who eat lamb.”
Leitch said recent high lamb prices brought more production and new producers into the market, compounding the current market glut.
“With 100,000 more lambs in Canada than we usually have, and less people eating them, we’re in a serious correction,” said Leitch. “We didn’t get off scot-free. There was a tremendous amount of money lost in the feeding industry this year.”
Rick Paskal, CEO of SunGold Specialty Meats, was out of the country and unavailable for comment.