Bullard: Will tariffs arrive in time to save American lamb?
The U.S. sheep industry reveals what happens when our nation ignores market failure for too long, and it’s a case study applicable to every livestock sector in America. So, let’s examine market failure.
Market failure occurs when a market functions contrary to the forces of competition, meaning when it defies the economic law of supply and demand. Looking at the sheep industry, we see demand for lamb meat has increased substantially for longer than the past decade, beginning in 2012.
Although consumption is not the same as the economic term “demand,” it can be viewed as a proxy for demand when consumption begins a long-term upswing. And that’s exactly what’s happening in the sheep industry – consumers are purchasing more lamb and paying higher prices for it.
If the sheep market was functioning according to competitive forces, according to the law of supply and demand, surely the domestic production of lamb would have likewise increased to keep pace with the long-term upswing of domestic consumption. That’s how a competitive market should function.
From 2012 through 2023, lamb consumption in America increased by more than 40%. Now a functional market would predict that domestic lamb production would likewise grow by about that same amount, but it certainly would not predict that domestic production would decline. But that’s exactly what happened, domestic lamb production fell nearly 17% while consumption grew more than 40%. So, there it is! A crystal-clear example of severe market failure in an important domestic livestock industry.
As a result of the prolonged market failure plaguing our domestic sheep industry, we, as a nation, have all but destroyed one of America’s most iconic livestock sectors, a sector that helped settle the West and that remains vital to the well-being of the West’s culture and economy. Our sheep industry now stands on the point-of-no-return’s threshold.
Domestic sheep inventories have hit a historical low, the number of sheep producers has fallen to an historic low, and the handful of the few remaining domestic sheep packing plants are reported to be operating at between one-third to one-half capacity due to a lack of sheep. The West is losing farmers and ranchers, jobs, and manufacturers and this weakening of our national economy and national food security should not be tolerated.
So, we just made a formal request to the highest levels of our government to take immediate action to save what’s left of our all-but-destroyed sheep industry and to reverse its alarming decline. We’ve asked U.S. Commerce Secretary Howard Lutnick to review the domestic sheep industry and to adjust the debilitating imports that have broken our domestic market and that are destroying America’s critical food production infrastructure.
And we know we’ve waited too long to do this. You see, if we were to cutoff the continuing flood of cheaper, imported lamb today, there would not be enough lamb meat in America to meet America’s appetite for this important protein. That’s because we’ve let global importers capture a full 70% of the American market.
So, we need a phased-in approach to begin rebuilding our domestic sheep infrastructure without causing shortages for American consumers. And that’s what we’ve proposed.
We provided Secretary Lutnick with a schedule for the gradual reduction in imported lamb over a 10-year period to incentivize investment and expansion in our domestic sheep industry while ensuring lamb remains on America’s menu. And we’ve asked the Secretary to increase tariffs on all lamb and sheep meat to $1.25 per pound. This proposed $1.25 per pound tariff represents an increase from zero tariffs that currently apply to the flood of cheaper imports coming from Australia.
Between 2020 and 2022, Australia alone grew its sheep flock by an additional 6.7 million sheep, which represents a greater increase of their flock than all the sheep left in America, which is only slightly over 5 million head. The reason Australia is increasing its sheep flock is to further capture more of the U.S. lamb market away from our domestic producers.
If you agree that it’s in our national security interest to maintain near self-sufficiency in the production of such an important protein as lamb, and if you support family-scale farmers and ranchers in the United States, then we need your help to rebuild our domestic sheep industry and to support America’s family farmers and ranchers.
Here’s what you can do: First, call your members of Congress and any friends or contacts you have in the federal government to urge them to support the plan to save America’s sheep industry that R-CALF USA submitted to the Secretary of Commerce. Second, when you go to your grocery store to buy lamb, tell the grocer that you want American lamb because you want to support American family farmers and ranchers.
-Commentary by Bill Bullard, CEO, R-CALF USA
