Montana Wool Growers gather in Billings for annual meeting
Billings, Mont. – With a full schedule for their three-day meeting, the Montana Wool Growers Association (MWGA) convened the 133rd Annual MWGA Convention on Dec. 1 with a presentation by Bridger Feuz, University of Wyoming Extension livestock marketing specialist, who looked at the state of sheep markets across the West.
Beginning with the economy, Feuz said, “An economist is someone who will know tomorrow why the things predicted yesterday didn’t happen, but I’m going to provide a lot of data so sheep producers can make up their own minds in terms of where they think the market is headed.”
Economic trends
Feuz noted that, since the recession of 2009 and the subsequent four consecutive quarters of a declining economy, the U.S. has not seen either impressive recovery or remarkable continued decline.
“It’s been a stable, steady economy over the last several years, but nothing to really get excited about,” he said.
Looking at consumer trends, Feuz also noted that there is general unease from U.S. consumers on the economy.
“There’s not a lot of consumer confidence,” he continued, “but we’ve had some relatively stable times.”
However, the growing consumer base is a positive signal in terms of red meat production.
Demographics
For the sheep industry in particular, changing demographics in the consumer sphere are relevant to production and potential sales.
“Changing demographics can’t hurt us as more ethnic groups that consume lamb come into the U.S.,” Feuz said. “That’s a good thing, but I think as an industry, sheep producers can’t rest on their laurels with those groups.”
He continued, “It takes heavy marketing and targeting to effectively sell to those groups, and research shows it doesn’t take very long to assimilate to a U.S. diet.”
Ethnic groups can’t be counted as “free consumers,” he added, also noting that, as generations change, continued marketing is necessary.
Global economy
Looking to the markets of the future, Feuz noted that the exchange rate is an ever-changing factor to consider.
“When we look at the U.S. dollar against the Australian dollar, things were good in 2011-13,” he explained. “The dollar was weak. We couldn’t buy a lot of Australian and New Zealand lamb.”
At the same time, other factors meant that Australia didn’t have a lot of lamb to sell.
However, as the U.S. dollar strengthened, the U.S. was able to purchase more lamb at cheaper prices, and lamb imports have increased.
“The other issue is timing,” Feuz said. “Australia is finally coming out of drought and starting to build their herd. As the dollar strengthens, that’s an issue for us.”
The increase of the dollar has begun to taper off, which is positive, but Feuz noted that it remains to be seen whether it is a true trend or simply a minor break.
Demand
Feuz explained that consumption is defined as demand multiplied by price, or how much people want to eat combined with how much they are willing to pay.
“In 2016, we have done really well in terms of per capita consumption, which is pretty unusual for red meat,” he said. “If we look at the beef industry over the same period of time, they’ve been on a fairly continual downward slope.”
Feuz continued, “That is good news for the lamb industry.”
Looking forward, Feuz also noted that the Livestock Marketing Information Center projects that sheep producers will see these gains maintained.
“It’s a good story for lamb,” he said. “People are currently eating a little bit more lamb per capita each year.”
At the same time, he noted that consumers are also willing to pay more in terms of retail price.
“It’s always good news when we can raise the price and raise consumption,” Feuz noted. “2016 was really strong in terms of consumption and price, so that is one of the reasons for really good price support in terms of the industry.”
Looking forward
Feuz summarized, “This level economy has lead to consistency in terms of stable retail prices and demand.”
“Changing demographics also help, but we need to be aware that locally produced products aren’t captured in data,” he continued. “There’s not a lot of hard data we can look at in terms of changing consumer patterns. I would say anecdotally that there’s a growing market from ethnic groups and millenials, but there isn’t a lot of data to support that.”
Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.
