Canadian lamb producers waste $millions

by SUSAN MANN

The Canadian lamb industry is producing an inconsistent product at limited and fluctuating volumes. That’s costing farmers and processors money plus preventing them from grabbing opportunities to capture greater value, it says in a recently-released study from the Value Chain Management Centre.

The problem also prevents the lamb industry from securing exports markets, say study authors Martin Gooch, Dan Laplain and Abdel Felfel.

In an email, Centre director Gooch says conservatively farmers are losing $42 million annually in farm gate sales while $250 million a year in retail sales are lost from both lack of supply and lack of coordination along the value chain.

Those conclusions don’t surprise industry representatives. Markus Wand, chair of the Ontario Sheep Marketing Agency board, says he wasn’t shocked by the findings of the study, Adding Value to Lamb. But he was intrigued by how in-depth researchers identified barriers to the industry’s potential success.

“We have known for years that Canadian producers are not meeting the demand for Canadian lamb,” says Jennifer MacTavish, Canadian Sheep Federation executive director.

From 2005 to 2007 lamb consumption in Canada grew by 10 per cent while the number of lambs processed in Canada dropped by eight per cent. Canadians eat an average of 1.22 kilograms of lamb per person each year with more than 50 per cent of that being imported product, she explains.

MacTavish says to increase supply the federation has held value chain meetings so farmers, processors and retails can meet and talk plus develop an action plan. “An important first step in increasing supply is to deal with production issues, such as predation and access to medications for small ruminants. We also need to get people excited about the sheep industry.”

She adds that it’s important for the sheep industry to start viewing itself more like a business “and that we work towards getting everyone making decisions from that point of view.”

One of the study’s findings is too few farmers take a financial or operational approach to managing their farms. Gooch says they were told that “many don’t make a direct link between production and tracking financial performance.”

Wand says the biggest priority for the industry is to stop the Canadian flock’s decrease, which has been occurring since 2004. The decrease is slowing down and he expects numbers released soon will show that. “I think we need to ramp up the supply,” he notes.
The researchers found the lamb value chain operates as five distinctly different units (production, auction, processing, retailing, consumers) with many of the management processes at each unit operating in relative isolation to the others. They also found that farmers, sales agents, processors and retailers each expect the other “to exhibit predatory business approaches should they share all but immediate transactional information,” it says in the study.

Each chain member tends to sell rather than market products, communication between chain members isn’t effective in motivating them to continual adopt market-focused improvements and the physical structure of the chain leads to business decisions being based more on politics and opinion rather than processes and data.

The study also found that “opportunities to add value to fresh lamb are currently being missed as the chain focuses mostly on transactional elements, particularly costs and price, ahead of determining how it could deliver superior value to fresh lamb consumers.”

What does this mean for farmers producing premium lamb on a full-time commercial basis? They have few opportunities to capture the value that they could, it says in the study. In addition, supermarket chains are hampered in establishing and promoting a line of quality-assured Canadian lamb. BF