Drought, high feed costs hurting sheep ranchers

SEVERANCE – John Bartmann is facing some of the toughest times he’s seen in sheep ranching.

A sheep rancher near Severance in Weld County, Bartmann has cut his flock of 2,000 by a third while losing more than $80 for every lamb he sells.

“It’s something like a perfect storm to get us where we are today,” Bartmann said. “What the drought did is it exaggerated things.”

Beyond drought, consolidation of the sheep-packing business, increased feed costs and plummeting lamb prices have created hardship among sheep ranchers across Northern Colorado. The situation has deteriorated so much for ranchers that the federal government is investigating whether meat packers have played a role in the market’s collapse.

Ranchers enjoyed a bountiful 2011 when lamb prices soared above $2 per pound. But Bartmann said he can fetch only 85 cents per pound these days, while raising a lamb costs him more than $1.30 per pound.

Sheep ranching represents a small slice of the livestock industry in Northern Colorado. Beef and dairy cattle get the most attention, with 550,000 cattle in Weld County alone.

But every segment of the livestock industry has suffered a similar struggle lately: the rise and fall of commodity prices from year to year. Sheep ranchers in particular have faced difficulty during the past year, with both large and small operations struggling.

As Colorado lamb prices declined in 2012, demand also softened. The U.S. Department of Agriculture responded by pledging to buy $10 million in lamb meat as part of a recent drought aid package for livestock producers.

The move doesn’t appear to have spelled relief for Northern Colorado ranchers.

“It’s tough to make a living when you don’t know ahead of time where your market’s going to be,” Bartmann said.

Additionally, a federal insurance program was supposed to insulate ranchers from the price fluctuations, but Bartmann said the policies aren’t worth buying unless the price of lamb increases.

Other ranchers shared similar stories.

Roy Dow has raised sheep near Ault since 1982. He has cut his herd from 200 to 75 because of the soaring price of feed.

Dow paid $250 per ton of grain to feed his flock in 2011; he was paying $400 per ton in 2012.

“It’s just getting more difficult every year,” he said.

The problem may stem in part from meat packers purportedly holding onto supplies of sheep and manipulating on-the-shelf prices, according to an October letter signed by U.S. senators from Wyoming, Montana, North Dakota and South Dakota.

The lawmakers asked the USDA to look into whether meat packers were breaking the law by manipulating supplies and prices.

“Packers last year, out of concern that they may not have enough lambs to keep their plants producing at levels to ensure profitability, purchased lambs and placed them in feedlots,” the senators’ letter reads. “This action appears to be in violation of Packers and Stockyards Act that prohibits price manipulation.”

Lawmakers also encouraged the USDA to take steps to reopen lamb trade with Japan, which was closed to American lamb following a mad-cow disease outbreak a decade ago.

Neither Sens. Mark Udall nor Michael Bennet signed the letter.

“Sen. Udall was not asked to sign the letter, but he is a longtime supporter of rural Colorado and its livestock industry,” his office said. “Sen. Udall is committed to monitoring this situation and the recent fluctuations in prices.”

Bennet didn’t sign the letter because his office wanted to gather more information to determine the best path forward, a spokesman said. A five-year extension to the Farm Bill that federal lawmakers have sought to pass would reinstate livestock disaster programs that would ease struggles of sheep ranchers.

The USDA’s Grain Inspection, Packers and Stockyards Administration nonetheless has agreed to investigate.

“USDA takes very seriously any allegations of anti-competitive behavior in the livestock, meat, and poultry industries, and we have opened an investigation into the matter,” USDA spokesman Matt Herrick said in an email. “We encourage anyone with specific information about anti-competitive behavior to contact USDA’s Packers and Stockyards Program.”

Herrick did not comment further.

The two largest meat packers in the state, JBS USA in Greeley and Superior Farms in Denver, did not return messages seeking comment.

For sheep ranchers, the situation may not improve any time soon.

The still-high cost of feed and the lingering effects of lower consumer demand will keep prices lower, according to the University of Colorado Leeds School of Business’ 2013 Economic Outlook.