Is Alberta’s sheep industry ready for expansion? That’s the debate circulating in livestock circles this fall.
On the one hand, there is the bold development of Sungold Meats. On the other is a somewhat cautious group of producers.
The Alberta processor is betting two major projects along with pricing incentives will boost production in the province and spur increased demand for lamb meat.
Along with a $3.5-million plant update at Innisfail, Sungold is putting the finishing touches on, and starting to accept lambs, at its own 50,000-head feedlot near Iron Springs. A former beef feedlot was levelled and rebuilt specifically for lamb, at a cost of close to $5 million.
“We’ll buy feeder lambs at 60 pounds and up,” said Sungold general manager Miles Kliner. “We’ll contract them or buy them for cash. In the future, retained ownership will be offered under a custom feeding arrangement. For some loyalty requirements, when the animals are slaughtered if they meet the premium grid, we’ll share up to 50 per cent of the premiums with producers.
“We’re giving producers some options to consider using in managing risk, and still add value downstream. We’re offering creative ideas to producers that lead to win-win business relationships and opportunities.”
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Providing such options may lead to some of the segmentation common to other livestock streams. For instance, if a sheep producer chooses to sell lambs as feeders, and not finish them out, that could make room for expanding the farm’s ewe flock.
Alberta’s flock took a big hit after BSE, but since then, the trend has been to rebuild.
“About six years ago, high prices got people into sheep again,” said Alberta Lamb Producers chairman Ronald den Broeder. “But with the last price drop, it looks like some of that same group got out. Our total numbers aren’t in yet, but annual tag sales haven’t shown big changes. We’re thinking if some got out, others picked up their stock.”
Sheep producers who entered the business after BSE and had only known rising market trends were especially shocked by the lamb price drop of two years ago. Even though the crash was short lived and prices have recovered, they’re still in ‘careful’ mode.
But den Broeder noted Canadian sheep producers only supply about 45 per cent of the lamb meat consumed in the country, which means 55 per cent is imported. So that shows a lot of room to grow.
Sungold’s new feedlot may be a step along that trail, he said.
“It might give better marketing options to producers in Alberta and other provinces, and then the whole supply chain could adapt as the lamb population gets bigger,” said den Broeder. “In the big picture, it’s good for the industry to grow and expand.”
Nathanael Polson is one producer in expansion mode.
After converting a pig barn east of Ponoka to a sheep facility in 2012, he’s grown his flock to one of the largest in the province. He’s been breeding upwards of 1,700 ewes this summer, with lambing sessions in January, March and June.
“I have a pretty good relationship with Sungold,” said Polson. “I contract with it and ship lambs weekly. I think the feedlot is smart for it. For smaller producers without the facilities or feed availability, it could be an option to retain ownership and get in on premiums. As a larger producer, I wouldn’t use it as much.
“But the signal I get is that it shows me Sungold is committed to a longer relationship with the industry here. It’s investing heavily in the business, and wants to see it sustainable.”
A few years back when cattle prices were still depressed, some livestock producers were considering a switch to sheep, said Polson. But then the cattle markets began to rebound, while lamb prices slid, and they stayed with cattle.
“That’s when I went into sheep deeper than ever,” he said with a chuckle. “They are more management intensive, especially at lambing. But I’d put my numbers against cattle any day. For the overhead and investment, I’m more comfortable in sheep than cattle.”
While Polson is among the younger, more business-focused sheep producers, traditionally a significant amount of the animals have been raised by smaller farmers as a sideline business or hobby. Taking the industry to the next level will probably mean more development of mid-size flocks, where there’s an emphasis on lowering production costs and building a long-term business.
Sungold is looking to the future, said Kliner, and that means being able to provide its customers across Canada with a reliable, year-round supply of quality grain-fed lamb. The feedlot will allow for more control in the feeding program, as well as treatment of the animals.
“When all the pens are finished, every one will have an enclosure,” he said. “We want to achieve Certified Humane Status, because we believe it is good for our industry, and that will open doors for our product with retailers and food-service operators alike.”
The company expects to be able to fill the lot, which has a state-of-the-art handling system, to capacity with lambs, and will look beyond Alberta if necessary to do that.
“We have one collection point in Saskatchewan now, and another one in the north will be coming.”
The firm will also achieve some trucking efficiencies in moving feeders and market lambs around.
As the largest federally inspected lamb processor in Canada and the only national brand, Kliner said Sungold has a vested interest in seeing producers succeed.
“Lamb is the only red meat protein growing in consumption, and it’s expected to continue growing as lamb becomes more mainstream,” said Kliner.
“The industry needs to be sustainable for all parties, which is why we came up with creative options. We hope to be processing 2,000 head a week by the end of the year.”
There is already at least one other lamb feedlot in the province, so there has been concern about the effect of the enlarged feeding capacity.
“It’s hard to say what the impact will be until it starts running,” said den Broeder. “It’s a positive signal for the industry because it guarantees a supply for the facility and shows it is convinced the plant will be running in the future.”