The sheep industry in the United States has been on a long decline. Sheep were popular here since the Pilgrims landed, but post World War II, the inventory started to tank. And has been ever since. In recent years, components of the Farm Bill have invested in figuring out why, and how to reverse the trend. This National Academy of Sciences consensus report, written in 2008, outlines an analysis of the problem and indicators of where things look to head in the future.
The Lamb Board was established in 2002, and has been investing significant effort in branding lamb (not the hot iron kind, but rather the marketing kind) to help it make a comeback. Given the beef industry’s powerful Beef, it’s what’s for dinner campaign, at some point, somebody must have realized lamb needs the same marketing oomph. Plus some, because it’s so far off the radar of most Americans, we can’t just encourage them to eat more of it; we really need to re-introduce Americans to the meat to get them to start eating it.
Of course this initiative needs to be paid for. So a law was introduced to tax sheep at the time of slaughter. It’s called the Lamb Checkoff. The beef industry also has a Checkoff program.
I think I had some vague awareness of this, but being a small producer and not that long in the lamb industry, it wasn’t really on my radar screen. Until last week, that is, when I received a letter from the Lamb Board Compliance Department in the mail personally addressed to me, reminding me of my responsibilities as a “First Handler.” 
I’m not sure how they even knew little ol’ me existed; except perhaps that since I’d joined the American Sheep Industry Association, they may cross- reference members of that against those who are paying the Checkoff.
I had to call the Compliance Department because I found the literature a little confusing, and I also wanted to know how it applies to small producers. The documentation is written with the assumption that the reader is handling hundreds or thousands of sheep, so it’s hard to see how it applies for people selling less than a dozen sheep at a crack. Here’s what I learned.
How It Works
It’s an interesting tax in that everyone who handles a lamb or sheep is required to “pay forward” some of the tax to the next handler (buyer). The final assessment is always due to the Lamb Board at the time the animal is slaughtered. So, each time we sell a sheep, we are supposed to pay forward to the buyer a fee of $.005 per pound. If that buyer were to later sell the sheep to someone else, he also, in turn, would pay this same tax to his buyer. And you can see how, if any of these handlers had added weight to the sheep while it was in their possession, their tax would go up a little bit from whatever was paid to them when they bought it. Thus each person who is making money on the sheep and “adding value” has to pay a small fee, which will eventually go to the Lamb Board.
The collection from all sellers “passes through” all buyers. When the animal is finally slaughtered, the $.005/pound fee is due, along with a flat fee of 30 cents per head. For most sheep and lambs, the fee will be a little less than a dollar. “First Handlers” are defined as people who buy sheep for slaughter, or a sheep producer who markets sheep directly to consumers. First Handlers are the ones who will submit the Lamb Checkoff payment, since they own the sheep at time of slaughter. First Handlers are required to remit Checkoff fees monthly. If they are late, a 2% late payment is compounded monthly.
Seems simple when you consider the role of large scale producers and meat packers. But I had some questions about how this applies to my situation.
Seed Stock Application
The fee applies to all sheep, whether they are butcher lambs or seed stock which is culled later in life. So when I sell breeding animals, I should be paying forward to the buyer the $.005/pound fee. And if I cull a breeding animal in my possession, I should pay the final fee of $.005/pound plus 30 cents Lamb Checkoff fee to the Lamb Board. If I purchase breeding stock from others, technically I should be discounting the Lamb Checkoff fee from their sale price ($.005/pound), or otherwise requiring the seller to remit this fee to me.
USDA Slaughter and Auctions
If I have lambs butchered at a USDA facility, and then market the meat by the cut, I would be considered the First Handler in this case, and would remit the Checkoff fee at the time of slaughter. Apparently also at auctions, the auction house typically does the accounting to acknowledge the Checkoff fee being paid forward from seller to buyer. I’m sure they do this just to be sure nobody is breaking the law under their roof, by “forgetting” to pay the fee, purposely or inadvertently.
So, seed stock, USDA by-the-cut sales, and auction transactions are pretty straightforward.
Non-USDA Direct Market
Here is where it gets a little interesting. We know that there is a growing market for direct sales, where the lamb buyer either does their own slaughter, or has the animal butchered at a local custom butcher. This is where all my butcher lamb sales go, because I don’t have easy access to a USDA slaughter facility. But the Lamb Checkoff law doesn’t really account for this, at least not yet.
In theory, the law requires that these buyers pay the Checkoff at the time of slaughter, because they are the First Handler in this situation. But of course, we can’t expect these types of buyers to even know what the Checkoff is, let alone be motivated to pay it. The Checkoff is designed around the concept that people in the sheep industry are motivated to fund it, because it’s there helping us market our product. And they are subject to enforcement and auditing if they are of large enough scale to be under scrutiny. But certainly the Seattleites who buy a single lamb from me can’t be expected to send a check for sixty five cents to the Lamb Board. 
Paying in Good Faith
In theory, I have no obligation to do anything about this odd loophole, because the law says the First Handler must pay the fee, period. But, one could conclude that the right thing to do is to go ahead and collect the Checkoff from the buyer, or include it in the sale price, and remit it on their behalf.
I am considering doing this, because I leverage materials from the Lamb Board quite a bit in my own marketing. I am honestly wowed by the Lamb Board’s stuff- gorgeous pamphlets and artwork with an early American Way Out West feel, emotion-invoking Celebrate With American Lamb byline sentiments, not one but three slick websites with recipes, health facts, and where-to-buy info for lamb buyers, and a well-monitored Facebook and Twitter campaign. The past is the past, but today I would say the Lamb Board is giving the Beef Producers a run for their money in effective advertising campaigns.
At least, to Americans. The only thing lacking in their campaign, IMO, is helping the ethnic market locate lamb and have it butchered it the way they want it done. Since we know the ethnic market is currently where the biggest growth lies, I feel we could be doing more to reach these people and make lamb available for their needs and cooking styles. We are so busy trying to convince Americans to rediscover lamb that we may be forgetting the biggest potential market that’s right under our noses. That is, the people who already eat lamb, and a lot of it; but who don’t know how to find us very well, and have a hard time understanding the way we move food animals through the system and the laws involved.
Lamb Checkoff literature claims that their campaign is generating an additional $44.14 in lamb sales for every Checkoff dollar invested. I’m not a marketing expert, but I believe that 44:1 is considered a very good ROI for advertising.
When to Pay
I mentioned that the Checkoff remittance is due monthly, and this was my final question. I estimate that this year, about 1700 liveweight pounds of lamb and mutton will enter the meat channel from my farm, coming from about twenty-two animals. That adds up to a fifteen dollar Lamb Checkoff fee. But in any given month, it might only be $.65, if I sell one small lamb to a local buyer midsummer. Surely it doesn’t make sense for me to send such a tiny check; it doesn’t warrant the stamp on the envelope, or the processing time at the Lamb Board office.
The Compliance Department representative agreed, and said in this case, just use my judgment, send it once a year, or whatever makes sense. And no 2% late fee required. He asked that I just cross out the “assessment remitted during the month of…” line and write “… year of…” instead, so they can keep accurate records of the income.
So, there you have it, the Lamb Checkoff explained!
December 8, 2011 at 2:41 pm
> I’m not sure how they even knew little ol’ me existed;
Scrapie program, most likely.
December 8, 2011 at 3:01 pm
Thanks for the post – your praise for the ALB made me check their website again and they actually have some good stuff there now (last time I was there I was not impressed to put it mildly).
December 8, 2011 at 5:42 pm
Love the long complected law with the loophole at the end. Nice. It’s stuff like this that keeps me on the fence with respect to growing animals for other folks…
December 8, 2011 at 9:08 pm
For me, lamb would be a great choice for dinner, except for one thing… Price. I can buy NY strip steaks and sometimes filet cheaper than a leg of lamb at the market, if they even have it. Last winter, I wanted to make a lamb curie and I had to go to 3 stores before I finally found something other than pairs of ultra thin lamb chops. They had a semi-boneless leg for $6.89/lb. Needless to say, we had chicken instead. It’s even worse buying from our local farms. A local CSA has a meat share which is approximately $10/lb. for whatever meat they have which rotates through chicken, ground beef, pork and occasionally lamb. Until price drops, I can’t justify the expense. If I could find it for less than $5/lb., it would be an occasional meal.
December 9, 2011 at 12:34 am
Michelle, I think you’re right to pay the checkoff fee yourself instead of expecting the end purchasor of your lambs if they’re private citizens buying an animal or two for their own use. Even if you tell them about the tax, I’d hazard a guess that the vast majority (if not all) of them wouldn’t pay it and if anyone tried to make them pay it, they’d tell that person or organization to take a long walk off a short pier to put it mildly.
I’m of two minds on checkoff programs. While I understand the value of marketing, I’m also not in favor of one group of producers to use the federal government as a tax levying device to pull money out of their fellows. I feel that if sheep ranchers, growers and marketers of lamb and mutton want to promote their products and animals, then they should pony up the cash voluntarily.
I feel the same way about the proposed Christmas tree tax. If the Christmas tree growers want to promote their trees, then they should get together, agree to pony up the cash, and do their marketing. Sure, not everyone will agree to participate in the program, and those people will benefit without paying, that’s the way it goes. I still think it’s better than using USDA and a federal law as a group’s collection agency.
December 9, 2011 at 12:56 am
Hmm,well good to know.. thankfully we only grow what we can eat.. selling looks like a minefield! c
December 9, 2011 at 2:27 am
Leon- I dunno about what elicited the “personal” letter- I wish I would have remembered to ask when I called. I’ve been in the scrapie program since 2008/2009. But I joined the ASI more recently, maybe in the last year, so I was assuming that triggered it. The organization seems to be geared more towards large-scale producers (and many of them aren’t in the SFCP), so maybe the Checkoff is assuming that people there are worth targeting.
December 9, 2011 at 3:26 am
Bill, so true- with lamb, supply does not meet demand, so that’s part of what’s driving the price up in grocery stores- they know they can charge it. And auction prices are very high nationwide- double from a year ago. I saw a lamb crown roast at Easter for over $100- whoo! And there really isn’t very much meat on a crown roast either… Our local butcher said that their cost was rising, forcing them to bump up their ground lamb to $10.99/lb. They thought nobody would pay it, but it turns out, nobody is batting an eyelash!
As far as local meat goes, our lamb is cheaper than the grocery store by a long shot. But for one, when you buy a big batch of meat at once, it becomes apparent that meat in general is pretty expensive; where it doesn’t get felt as much when we buy a little each week at the store. And, it’s definitely true that factory farms can produce food for the lowest prices, no doubt about it. Small scale, diversified businesses can never compete with consolidation and specialization. And you’re right, most of America can’t afford the localvore movement, even if they believe in the principles. It’s a dilemma, for sure.
December 9, 2011 at 3:32 am
joannerigutto, I think you’re right, it is an odd manifest that a law would impel you to participate in a group advertising strategy, and how strange it seems when presented in other contexts. But the Farm Bill and all of its tentacles is a complicated beast with many fingers in the pie. And stabilization of the food supply is an even more complicated thing that separates it from other commercial industries. I can’t even pretend to understand how it all works, or should work!
December 9, 2011 at 5:46 am
I’m seeing local lambs at auction for ~160 per head, with some up to 200, live weights in the 80-100lb range. So that’s $1.60 a pound.
(Toppenish and Everson auctions)
December 9, 2011 at 9:34 pm
Perhaps the woolies have been replaced by horses??? Appears to be an excess of them. In my younger, masochistic days I used to do a “fifteen pounds in fifteen days” diet. My favorite meal during that duration was one lamb chop (even more than the one cup of ice cream!). Unfortunately, my wife won’t eat anything that once bleated. One of my favorite lines from the movie “My Big Fat Greek Wedding” was where the maternal mother-in-law to be, having discovered her s-i-l to be was a vegetarian:”Well, that’s all right…I’ll cook lamb!” (Or something to that effect.) TMJ
December 10, 2011 at 4:17 am
Bruce, that seems consistent with what the Lamb Dashboard says for national auction averages right now: $167/cwt. After dress-off, a 100 lb lamb renders about 40 lbs of meat, so at auction price, plus ~$100 for butcher, cut & wrap, that’s $6.22/lb. So I can see how stores are marking up even the cheapest cuts to $10/lb. They may be buying nicer animals for starters, and animals pass through more hands before they end up on store shelves. So consumers can sometimes do a little better buying straight from the farmer (or auction) and only paying a custom butcher. But compared to beans and chicken, oof, it’s still expensive!
December 10, 2011 at 5:15 am
TMJ, yeah, the report lists a bunch of possible reasons for the decline in sheep #s in this country. I’ve always heard that during WWII, military men were fed nasty canned mutton, and it turned off a whole generation to the meat (and the report alludes to that possible cause as well). And, they say, we are cursed with the only meat where the name of the meat is the same as the cute baby animal! ;-[
December 10, 2011 at 1:42 pm
I’ll add to the information on how much it costs to produce a lamb for slaughter. I raise bummer lambs when I can get them. I only raised one this year for myself. I just recently had the lamb slaughtered and I had the slaughterhouse do the cut/wrap. I originally was going to do it myself, but I was busy and the cut/wrap charge was pretty reasonable so I had them do it.
The live weight was 85# and dressed weight I think was 30#. He was pretty wooly when I took him in and being in the morning his wool was damp. Anyway, between what I paid for the lamb, the milk for 3 months, and then the kill/cut/wrap, vaccinations, etc. it cost me $3/lb for 30# of cut wrapped lamb. That’s just paying essentially for ‘materials’, not my time to feed and care for the lamb, transport time, etc. If I was to figure my time, I’d have to get over $6/lb hanging weight for live animal sale and that would be figuring my time at Oregon’s current minimum wage without the added expenses that would be incurred if I had an employee careing for the animal (unemployment insurance, workers comp insurance, FICA withholding, etc.)
If I were to sell cuts of meat I’d have to get more to cover licensing (federal and state licenses are required to sell meat by the cut) storage, transport to a farmers market, liability insurance, etc.
December 10, 2011 at 3:41 pm
joannerigutto – I think that’s about right (that’s $3/lb live weight, right?), I keep struggling with the math of bottle lambs. I know some producers say they are worth keeping, but I’m still not sure on that.
I think the bottom line is that a ewe eating medium quality hay and grazing grass can make milk a lot cheaper than a manufacturer can;
and the labor picture is much lower for caring for a maternal ewe versus bottle babies. But they sure are cute, anyway, I suppose the enjoyment they bring is worth something.
December 10, 2011 at 4:32 pm
Well, I buy the bottle babies so I don’t have to feed sheep year round. I only buy bummers and with those, it’s either the sheep rancher has to raise them, or someone else has to raise them, or you just have to kill them right away.
If they sell the bummer to someone like me, they still get some money out of the lamb. And they don’t have the trouble and expense of feeding the lamb, I do that. The advantage for me is that I don’t have the trouble and expense of maintaining a sheep herd year round.
I only have an acre or so of open land for the lambs to graze on. Then I have other areas where I can graze the lambs (and my few goats) on tethers. So it works out great for me. I get the lamb(s) in before there’s much grass, by the time they’re old enough to graze full time, there’s plenty of grass to feed them and I actually need more animals in the pens than I have to control the grass and brush, and by the time the grass is all gone, it’s time for the lamb to go to slaughter.
I’m planning on doing the same thing with 1 or 2 veal calves in 2012.
My materials costs to purchase and raise the lamb were $3/lb for the finished cuts. If I’d taken the head, liver and heart the price per pound would have been a little less. Here’s the breakdown of my expenses –
$40 for the lamb
$50 for the kill/cut/wrap
Maybe a buck for the CD&T vaccine ( I do my own vaccinations and banding and I buy enough vaccine for the goats I have too).
I already had milk replacer and frozen goat milk, although I’ll have to buy replacer next year so my cost will probably go up to $4/lb for the meat. Now, if I had done the cut/wrap myself, I would have saved $30 on the cut/wrap. And actually, I could have done the killing and dressing of him myself too. I have the experience and skill set to do that, and I slaughter poultry, rabbits and the occasional goat for myself as well.
So it cost me $90 for 30 pound of meat/bone. If I’d done my own slaughter and processing, I’d have gotten 30 pounds of meat/bone for say $40. But I think it’s not realistic to compare what a homesteader could raise meat for vs what the majority of people would do. Most people aren’t going to be interested in raising, then killing and processing their own animal.
When I figure the value of cut wrap, I estimate how long it would take me to do the work myself. For the time and money, I can make enough money seeding trays for micro greens to pay my wages and pay for the kill/cut/wrap. Plus, I’d probalby keep putting it off till ‘tomorrow’ for so long that he’d have been mutton by the time I’d finally gotten around to it.
December 10, 2011 at 5:36 pm
Wow, joannerigutto, you have a cheap, cheap butcher! Here the least expensive butcher is $88 min, for kill, cut & wrap, and the next nearest one is $100 min; and it goes up if the lamb is over 90 lbs. I am not very deft at cutting, and even at $100, I figure it’s worth paying someone else to do it well versus my clumsy cuts and the several hours it would take me to wrap. But at $50, holy cow, that’s even better. You are doing well on your other costs too.
People usually sell bottle lambs here for $50. Milk replacer on store shelves here is very expensive, I figure about $70/lamb, so that erodes the profit margin pretty bad as compared to a dam-raised lamb. This year I tried a homemade milk recipe using cow’s milk from the grocer. I thought it performed better than the powdered stuff, was easier, and I’m pretty sure it’s cheaper. But I have yet to do my year-end math to figure that out.
I read an article about a Katahdin producer that has a high rate of triplets, and they get a LOT of “bonus lambs” as they call them. They feel the economics work out for keeping these extras around; that though their margin is lower than a dam-raised lamb, it’s still something. And you’re right about the labor overhead of both avenues- I imagine that bottle lambs probably add up to a similar amount of labor as caring for ewes, but it’s concentrated into a shorter time span, versus being spread out all year.
December 10, 2011 at 8:50 pm
I’m very fortunate to have that slaughter house. They’re USDA inspected and only 7 or 8 miles from my house to boot. I was on a land use advisory commitee for my county a few years ago and the planning department was considering allowing development around the slaughterhouse. Scared the tar out of me. If they went out, I’d have to go to Mt. Angel or Sandy. Farther away and I think that between the 3 facilities, since they’re already close to running at capacity, it’s overload the two left.
I got the goats last year to milk specifically to feed bottle lambs. But with all the hastle and storage, I’m just going to use either milk replacer or milk from the store. I’m going to look at different recipes (there are a lot of them out there) to make my own mix.
I’m phasing out the goats. I’ve got several left from having over 20 during the summer. I had nothing but trouble with hoof rot over the last winter and I’m having to deworm them every 2-3 months. I figure it’s better to just work the pasture during the warm and dry months when the grass is growing like crazy, and then let the pasture rest over the winter. Even selling the kids, it’s still cheaper to buy milk or milk replacer than it is to feed the goats over the winter. And then there’s the labor to milk (I was milking 3 or 4 goats twice a day summer before last). And then I get 25 gallons of milk put up and only have one bummer to raise. Waste of time and money. I could have put the cow in the freezer instead of milk….
When I do my own butchering, I debone the whole carcass. I don’t bother with steaks, roasts, etc. I normally use meat as an ingredient in recipes, so the bones just get in the way anyway. The lamb I raised last year, the CSA member I grew him for did her own cut/wrap (they’re used to processing all their own game animals from back when they used to hunt a lot), so they saved a lot of money.
Wow, those slaughter prices are high. They’re actually higher here for the mobile slaughter than they are for the slaughter house. Of course the mobile guy has expense as well as time to come to the farm, and then has to haul the carcasses back to the cut/wrap facility.
The place I use, I think they slaughter 2 or 3 days/week. The rest of the days I think they’re doing cut/wrap.
December 11, 2011 at 12:32 am
joannerigutto, OMG, that is amazing that your USDA slaughter is that cheap- or do they charge more if it’s inspected? The few opportunities for USDA slaughter here are very expensive; but I only know prices from the mobile units, and I think you’re right, their overhead is more. We just lost one local custom butcher who retired, and the remaining one in town is currently turning away work, they cannot handle the demand. The guy who retired said that it just doesn’t pay- horrendous hours and hard work, and not very good income. Sad!
December 11, 2011 at 3:02 am
It shouldn’t be any more for inspted than it is for uninspected. Inspection is mandatory for sheep slaughtered for public sale of the meat. Given that inspection is mandatory, it’s USDA who pays the inspector’s wages. Not the slaughterhouse. Given that they are an inspected slaughterhouse, they already have to maintain an office for the inspector on site. So it doesn’t cost them any more for inspected slaughter than uninspected.
I have an idea that the mobile slaughter is higher also because their volume is lower. The mobile slaughter here is higher than the slaughter house also. They’re $50/head for small ruminants like sheep and goats and $100/head for cattle. The slaughter house is $20 or $30/head for small ruminants and I think $50 or $80/head for cattle. There’s no minimum. But of course you bring your animal(s) in the day before they’re to be slaughtered and they’re held in the lairage (I think that’s the right word). In the morning when the crew is ready to start slaughter the animals are brought in, killed and processed. I think they have more than one person working on the kill floor and so they can probably kill and dress more animals in a few hours than the mobile guy can in a day unless he’s working all day long at one farm.
I’ve asked for, and gotten permission to come watch on one of the slaughter days. I asked for sheep as when I do ruminant slaughter it’s small ruminants. Can’t wait to go and watch. It’s best to learn from people who already know what they’re doing. I’ve only slaughtered and dressed one ruminant by myself and I need to learn the skill.
December 11, 2011 at 5:28 pm
joannerigutto, it sounds like it is different there than here. Everyone I’ve talked to here who has access to USDA slaughter pays more for it; so the end customer always pays more per pound for meat by the cut than if they buy an animal on the hoof.
In our area, I don’t know if the mobile slaughter has lower volumes, as the custom butchers here also drive out to do most kills (some include it in their price, some charge extra), so they’re all driving around a lot. But the mobile slaughter units are six-figure investments, where a regular butcher truck is much more modest. They all end up driving back to a brick & mortar location to do the cut & wrap, so I think the overhead costs are different.
The butchers near me don’t hold animals- they are slaughtered immediately if I drop them off. The one I use the most is in a downtown area, so having livestock standing in the parking lot would not fly!
It’s interesting how different it is between locales- aren’t you in Oregon?
December 11, 2011 at 9:03 pm
Yup, I’m in Oregon. Mulino is 20 or so miles south of Portland. I can understand how a butcher in an urban area wouldn’t be able to hold animals.
I wonder if perhaps the differences in price might also have to do with different costs as far as licensing, taxes, etc. between our two states?
The mobile prices that were quoted to me in my area were more in line with what your mobiles charge.
Regarding the higher price for meat sold per pound by the cut, there are expenses associated with that method of marketing that don’t apply to those of us selling live animals. For instance, when we (regardless of the state we operate in) sell meat by the cut/per pound, we have to jump through many hoops and have higher overhead than when we sell live animals (even if the final price is based on hanging weight). Some examples are (in Oregon) – federal prepackaged meat sellers licence, suitable storage facilities, cost of aquiring/building/maintaining the storage, transport of meats from the slaughterhouse to the storage and/or marketing locations, etc.
The potential margin is higher per pound of meat sold by the cut/pound, but the risk is higher also. In my experience in business, the higher the risk, the higher your margin should be.