Compare and contrast the Australian and US sheep industries ...

Compare and contrast the Australian and US sheep industries,providing opportunities for market growth for the Australianindustry?Isaac Allen, Charles Sturt University Wagga WaggaIntroductionSheepmeat is a staple source of protein around the world, with sheepmeat accounting for4.6% of the worlds meat consumption (Barnard, 2006). The Australian and United States ofAmerica’s sheepmeat industries are different in terms of size, breed dominance, productionsystems, processing methods and target markets. Australia is one of the worlds leadingproducers of both lamb and mutton, the largest exporter of mutton and live sheep and thesecond largest exporter of lamb (MLA/ABS/ABARE, 2012). In comparison, the United Statesis a net importer of sheepmeat, in particular a major consumer of Australian sheepmeat.Interestingly, more than 40% of the lamb and mutton consumed in the United States ofAmerica is imported, supplied by either Australia or New Zealand (Geisler, 2011).This paper explores the differences between the Australian and the United States ofAmerica’s sheepmeat industry, describes the current situation in both industries anddiscusses possible future opportunities for Australian sheepmeat into the United States ofAmerica.Historical Comparison of the two IndustriesHave you ever heard of the phase ‘Australia, riding on the sheep’s back’? For most of acentury the Australian Sheep Industry gave the nation one of the highest living standardsinternationally. From the humble beginnings of Sir John Macarthur and Reverend SamuelMarsden and the importation of Spanish Merinos in 1797, the industry has experiencedtriumphs and accolades as well as hardships.From a national flock of 2 million head in 1830 to a record high set in 1970 with 180 millionhead of sheep, the sheep largely shaped Australia’s future. The success of early Australiacan be largely attributed to the wool industry, however due to a combination of factorsincluding the demise of the wool industry due to the Reserve Price Scheme and theavailability of synthetic fibres. Currently the Australian sheep industry has diversified intodual purpose sheep breeds and as such, Australian sheepmeat exports nowadays contributesignificantly to our national economy with lambs and sheep contributing to 6% of the totalfarm value of $48.7 billion in 2011-12 (Live Export Care, 2009; MLA, 2012).In Australia, the main sheep breeds include the Merino, Dorset, Suffolk, Border Leicesterand Romney. As dual-purpose breeds continue to increase in popularity so to does thedevelopment of new breeds such as the South African Meat Merino (SAMM) and theDohnes. These breeds are continuing to play an important role in shaping the futuredirection of the sheep industry within Australia and offer producers versatility aroundcommodity marketing.More specifically, the Australian prime lamb market is shaped upon an animal that isextremely productive, high yielding whilst having quality carcase attributes. This ‘lamb’ isobtained using a unique breeding system whereby Merino ewes are joined to maternal siresgenerally from a British breed decent, predominately Border Leicester to produce a BorderCompare and contrast the Australian and US sheep industries, providing opportunities for market growth for theAustralian industry? Isaac Allen, Charles Sturt University Wagga Wagga1

Leicester/Merino or first cross ewe. These ewes are then joined to terminal meat sire breedssuch as the Poll Dorset or White Suffolk, to yield a second cross lamb. This second crossprogeny is the iconic ‘Australian prime lamb’.The United States is home to more than 47 breeds of sheep, with several having originatedin the country. These breeds can be categorised under six types; meat breeds, fine woolbreeds, long wool breeds, dual purpose breeds, hair and double coat breeds and minorbreeds. American sheep breeds have a diverse range of performance attributes rangingfrom growth, carcass attributes reproduction, and milk and wool characteristics. The mainsheepmeat breeds in America include: the Cheviot, Dorset, Hampshire, Southdown, Suffolkand Texel (ASI, 2013).The Current SituationPer capita, the Australian population are among the world’s largest consumers of lamb.Consuming 9.0 kg of lamb and 0.5kg of mutton in 2010-11 (MLA/ABS/ABARE, 2012). Instark contrast, Americans consume only approximately 0.74 pounds or 0.34 kilograms oflamb per person per annum. (Geisler, 2011). The disparity of lamb consumption betweenthese two nations is reflective of the size of the sheepmeat industry in each countryrespectively.After travelling around America, I was interested to hear the views of American producersand processors, as too why lamb consumption in America was so low. They believe thatsome consumers are unaware that lamb offers an alternative red meat protein source apartfrom beef. The harder issue to overcome is that of eating experience. Some believe thatconsumers have previously had a negative eating experience from lamb, whether that iseither because they purchased a product that was substandard or poor choice of cookingmethod. Some consumers believe that American lamb has a distinct taste and this againcontributes to a negative eating experience. All of these factors much be considered whenattempting to increase lamb consumption in the United States.Producing approximately 7% of the worlds lamb and mutton supply Australia has a nationalflock currently at 73.1 million head, significantly lower than the record highs of 180 millionhead in the 1970’s (Live Export Care, 2009). However our current flock is considerablylarger then that of the United States, which is currently at 5.35 million as of January 2012,America’s lowest recorded number in over a century. (USDA Sheep and Goats, 2012). InAustralia, there are 43 828 properties producing sheep, where 41.8 million breeding ewesone year and older nation wide (MLA, 2011). In comparison, the United States has 82 000sheep producers (ASI, 2011). From this we can deduce that America has many more sheepproducers, while the average producer or ranching family has a much smaller flock size.Sheep production in Australia can be divided into two production systems, prime lambproduction which is generally concentrated around the wheat- sheep zone including highrainfall areas such as the Riverina and Central West zones of New South Wales as well asVictoria and parts of South Australia. Dheep producing areas are generally found in lowerrainfall areas such as Western Australia, South West Victoria and Western New SouthWales (MLA, 2012).Sheep production in the United States occurs in all 50 states, however the larger sheepranches are concentrated west of the Mississippi River, while the eastern states support agreater number of smaller, pastured based production systems. The American sheepmeatindustry heavily relies on intensively grain feeding in a feedlot environment to finish lambs.This has historically differed from the Australian industry, as extensive pasture basedfeeding systems are the dominant production system. However, due to changing consumerCompare and contrast the Australian and US sheep industries, providing opportunities for market growth for theAustralian industry? Isaac Allen, Charles Sturt University Wagga Wagga2

demands, market specifications and seasonal conditions, intensively finishing lambs inAustralia has increased in popularity over recent years. Most of the lamb consumed in theUnited States is consumed on the East and West coasts where there is a distinct increase inper capita income as well as higher end or ‘white tablecloth’ restaurants. Other key marketsfor American lamb include those of Greek, Hispanic or Middle Eastern cultural descentwhere lamb proves a key animal protein source (Geisler, 2011).Seasonal conditions are important factors in any primary industry and the sheep industry iscertainly no exception. Presently there is a severe drought occurring throughout the UnitedStates, which is heavily impacting upon sheepmeat production. Specifically, due to thereliance on grain finishing and the currently lack of surplus grain in order to finish lambs,producers are faced with finding alternative feed sources. These have been in the form ofdistillers’ grain that is a by-product of the fermentation process used in ethanol plants. Thisfeed base alternative is also being used in the beef and swine production industries.The Australian Sheepmeat Council of Australia (SCA) regulates our national Sheepmeatindustry. This is the nations peak body representing the national and international interestsof lamb and sheepmeat producers around Australia, providing policy advice both at the farmgate and industry level. The goal of the SCA, funded by membership from State FarmerOrganisations is to enhance the integrity, profitability and sustainability of our nationsSheepmeat industry (SCA, 2013).In the United States, the equivalent body is the American Sheep Industry Association (ASI);representing the interests of sheep producers throughout America. The ASI includes 45state sheep associations in combination with individual members and its chief goals include:creating strong national and international markets for wool through advertising, promotionand marketing, The ASI has roots dating back to 1865, with the formation of the NationalWool Growers Association, which was the first national livestock association within theUnited States (ASI, 2013). From this it is clear to see that similar to Australia, the UnitedStates of America has a rich history embedded around with sheep production.There is a shared concern across both American Sheepmeat producers and processorsabout the future of the industry. The lowest national sheep flock in over a century andcombined with the widespread drought, producers are finding it difficult to increase thebreeding stock numbers. The current drought has also in turn lead to high gain prices, whichare forcing producers to look to alternatives fro protein sources such as distillers grain.However this proves difficult fro the American industry as the industry is heavily reliant upongrain finishing in comparison to the Australian industry in which a pasture feed basesignificantly contributes to production.Recently in 2011, two announcements were made which are encouraging signs for theAmerican Sheepmeat industry. Kroger, one of America’s largest supermarket chainslaunched an American branded lamb campaign; and Walmart made a formal commitment toexclusively stock American lamb. This has secured a small place for American lamb uponsupermarket shelves and coupled with heightened consumer awareness, ensures lamb hasa place upon shelves and in consumer trolleys (ASI, 2013).In Australia, the SCA has released the Sheepmeat Industry Strategic Plan (SISP) outliningthe council’s goals of driving the industry forward into 2015. Moving forward, the SISP ornational blueprint provides a link between the Australian red meat industry and theproducers, agencies and corporates servicing and contributing to the Australian SheepmeatIndustry. Importantly, the SISP will be regularly evaluated against key performance indictors(KPI’s) identified by the SCA (SCA, 2013).Compare and contrast the Australian and US sheep industries, providing opportunities for market growth for theAustralian industry? Isaac Allen, Charles Sturt University Wagga Wagga3

likely to increase in market share and as consumers watch spending ‘value for money cuts’such as the short loin, will certainly increase in popularity (MLA, 2012).As previously mentioned lamb consumption is a niche market. Substantial growth can occurif markets are expanded; how exactly this will be achieved is uncertain. Many producers andprocessors in America have tried to increase consumption through raising consumerawareness. From talking first hand to both producers and processors, it is clear that there isno one definitive solution. Instead market accessibility proves to be an important factorlimiting lamb consumption, as two is the supply of a consistent and reliable product, whichensures consumers are getting a good eating experience ‘every time’. It is then no surprisethat this continual battle is reflected in pricing at the market place, with lamb retail pricesexpected to be lower in 2013, interestingly this is the only meat protein source forecast tohave a negative trend (ASI, 2013).Overall, while the United States is expected to remain the largest export market forAustralian lamb in 2013, growth of this market is likely to be limited due to watchfulconsumer spending and lower lamb prices within the United States, in combination with anincrease in demand for Australian lamb in China and the Middle East. These two alternativemarkets will continue to play a key role in the future of Australian sheepmeat exports.ConclusionThere are distinct differences between the sheepmeat industries of Australia and the UnitedStates of America. This paper has explored these differences and highlighted the possiblefuture opportunities the Australian sheepmeat industry may be able to capitalise on. As welook to the future, Australia is in the box seat. We have a great ability for our Agriculturalindustries to provide food and fibre for both our nations needs and also the worlds. Thisposition, if managed efficiently and sustainably, will ensure the future of AustralianAgriculture is bright through calculated marketing and exportation strategies. One suchstrategy is to find appropriate avenues in order to increase the market share of Australianlamb within the United States.Compare and contrast the Australian and US sheep industries, providing opportunities for market growth for theAustralian industry? Isaac Allen, Charles Sturt University Wagga Wagga5