It is a well appreciated fact that sheep are what opened up the American West. Many ranches across the region can trace their history to a time when it was bands of sheep, not herds of cattle, that paid the bills. The U.S. sheep industry has had its struggles over the years, no doubt, but the recent purchase of the Mountain States Rosen (MSR) processing facility by meat packing Goliath, JBS, is a blow that resonates deep.
MSR was a cooperatively owned lamb processing facility in Colorado with 149 producer members from several different western states. MSR was the second biggest lamb facility in the country, processing around 350,000 lambs or about 20 percent of the market annually. JBS purchased MSR during bankruptcy proceedings and they intend to use the facility solely to process beef going forward.
“It is fair to call this a nightmare scenario. Especially during a time when the COVID-19 pandemic has already made it difficult for producers to access markets for their lambs,” stated Jim Brown, Director of Public Affairs for the Montana Wool Growers Association (MWGA).
The MWGA has several constituents that were also members of the MSR cooperative. After bankruptcy courts ruled the sale to JBS be finalized, MWGA partnered with their parent organization, the American Sheep Industry Association (ASI), in encouraging members of Congress to ask the Department of Justice to look into the sale.
“Two members of Montana’s Congressional delegation, Congressmen Gianforte and Senator Daines, sent a letter at the beginning of August to the DOJ asking them to look into whether or not the sale of Mountain States Rosen to JBS had any anti-trust implications,” Brown explained.
A similar letter, urging an investigation, was also sent to the U.S. Department of Agriculture.
JBS is a giant, global company and this will not be the first time their holdings have come under suspicion of breaking anti-trust laws. There is also conjecture JBS bought MSR in an effort to mitigate domestic competition since JBS is already the largest importer of lamb meat into the U.S.
Ben Lehfeldt, a sheep and cattle rancher from Lavina, Mont., is a member of the MWGA and used to be part of the MSR co-op. He says the sale and ultimate closer of the MSR processing facility is just adding salt to a wound already caused by the COVID-19 pandemic.
Lamb markets saw drastic downward pressure in mid to late spring as the pandemic tightened its noose. A large majority of U.S. lamb is consumed in restaurants, so as social distancing requirements forced eating establishments to close, markets began to crumble. In addition, traditionally large lamb consuming holidays like Passover and Easter happened right in the heart of the pandemic when society wasn’t really in a position to celebrate.
Lehfeldt usually markets about 2,000 lambs through MSR between the months of March and June. When he first started selling lambs in 2020, they were going for $1.60 a pound, but by the time he was selling his last loads the price had plummeted to $0.85 a pound, which is way below the break-even point.
The pandemic certainly complicated matters with the MSR sale. When MSR initially entered bankruptcy, another company bid on it with the intention of keeping the facility for lamb processing, but ultimately their bid was $200,000 less than JBS. Grassroots organizations did all they could to make up the difference between the bids, but money was simply tight.
“As an industry, we really couldn’t lend a hand to a bankruptcy situation,” Lehfeldt said.
There are still several questions surrounding the sale of MSR to JBS, but by far the biggest one weighing on the minds of sheep producers is how things are going to look going forward. Essentially one-fifth of the U.S.’s lamb processing capacity was lost overnight and there are 149 producers out there that no longer have a vertically integrated market path for their lambs.
Lehfeldt was lucky enough to be able to market his lamb crop through MSR this year before the sale was finalized, but from here on out, he is just taking it day-by-day. In a normal year, Lehfeldt retains ownership on all of his ewe lambs and also buys a semi-load of feeder lambs. He plans to do both again this year.
“We will be taking our lambs through the same process as normal, but we aren’t sure right now where we are going to market them through,” Lehfeldt said.
As a fifth-generation sheep rancher, Lehfeldt is no stranger to industry hardships, but even he says the closing of MSR is a pretty devastating hit for feeder lambs in the west.
“Sheep producers are used to dealing with struggles. Between labor, fencing and predator issues it is becoming harder to raise sheep in the west but this issue is a little out of our control,” Lehfeldt added.
The U.S. sheep industry may be a bit rattled by this recent knock to the knees, but ultimately the strength and resiliency of American sheep producers will withstand the test. From a policy standpoint, Jim Brown concluded by saying this issue is of number one concern for the MWGA. They plan to continue working with ASI in the quest for answers.