Progress 10/01/02 to 09/30/05
Outputs
In order to search for alternative marketing systems for California domestic lambs, interviews and site visits of lamb producers in the Northern California to study their production and lamb marketing practices were conducted. In addition, small or large-scale lamb slaughtering facilities were visited and their slaughtering procedures, pricing mechanisms, and distribution/marketing of products to retail markets were studied. Carcasses were lean (0.45 cm backfat) and muscular (2.2 USDA yield grade, low Prime leg conformation) with acceptable marbling score (2.8 on 1-5 scale) and quality grade (high Choice). Approximately 75% of lambs were marketed to a large-scale meat packer for national distribution and 25% to small-scale local packers for a high-end niche market. Approximately 55% of lambs were sold on carcass grade and yield basis and 45% on live animal basis. The survey indicated that lamb producers in Northern California have expressed concern over the low prices
they receive for their lambs of high quality when the lambs were sold to a large national packer in Dixon on live animal basis. They were trying to market their lambs to local processors and high-end buyers for a greater profit in spite of higher slaughter cost ($15 per head). Because of small slaughter capacity and antiquated facility, however, the volumes of lambs they can market through local processors are limited. Based on the survey of current marketing practices, the following alternative marketing strategy was suggested to the producers. Option 1: The producers must negotiate with a large national packer to adopt carcass grid pricing instead of traditional live animal pricing. Considering the superior carcass traits produces in the Northern California, selling lambs by carcass grid pricing would capture approximately $2.75 more return per head to the producers. However, the producers must recognize that in order to capture the advantages of grid pricing system, they have to
avoid "outliers" of too light, too heavy, too fat or other problems that make them difficult to see through the normal marketing channels, because these lambs are heavily discounted. Option 2: Another alternative marketing is selling more lambs to high-end buyers at a greater profit. However, antiquated slaughtering capacities and limited kill capacity of local small-scale processors is a major stumbling block to this marketing option. Therefore, it was strongly recommended to the producers that they must invest their money collectively in remodeling and expanding the capacity of existing facilities owned by local slaughterers as a long-term marketing strategy. In conclusion, there is a viable alternative marketing opportunity for lamb producers if they are willing to invest their capital in expanding and remodeling antiquated slaughter facilities to develop and expand high-end niche markets for California fresh lamb meat of superior quality as compared to imported lambs of lower
quality.
Impacts
Northern California lamb producers produce heavy, lean and muscular lambs of high Choice quality. Because of highly concentrated packing industry (only one large packer in California), they have to sell their lambs either to one large packer in the region at a give-take live animal price or to antiquated local packers with limited capacity that are charging high processing cost. Thus, the producers do hot have a lot of options in selling their animals for a greater profit. The study demonstrated that the development of alternative marketing system through collective investment in expanding and remodeling of antiquated small slaughter facilities would expand the opportunities of selling high quality domestic lambs to high-end niche markets at a greater profit to the producers. It will strengthen the position of California fresh lamb in the marketplace against the imported lambs.
Publications
- Lee, Y.B., 2005. Carcass traits and meat quality of California-grown lambs. Asian-Australasian Journal of Animal Sciences. Accepted for publication.
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Progress 01/01/04 to 12/31/04
Outputs
Alternative marketing systems for California lambs were further investigated and explored. One alternative marketing strategy for a greater return and fairer pricing is carcass grid pricing. As compared to the traditional live animal pricing, carcass grid pricing is a value based marketing program in which the seller is paid based on the actual quality and yield grades of the lambs, not the buyers estimates. Considering the excellent carcass traits of lamb carcasses produced in the Northern California, selling lambs by carcass grid pricing would bring approximately $2.75 more return per head to the producers. However, the producers must recognize that the risk of lambs producing carcasses that are inferior in grades from what is expected are shifted to the producers. Conversely, if the lambs perform better than expected 'on the rail,' the producers reap the benefit of the increased value and price. This makes the knowledge of the lambs' genetics, feeding regime and
past carcass merit extremely important when evaluating the use of a grid pricing system. Based on this logic, it was strongly recommended to the producers that the genetics of the lambs should be improved to increase ribeye area from the current average of 2.8 square inches to 3.0 for the average carcass weight of 32 kg. Another alternative marketing system is selling lambs to high-end buyers at a greater profit. However, antiquated slaughtering facilities and limited kill capacity of local small-scale lamb processors is a major stumbling block for the selling of lambs to high-end buyers. Therefore, it was strongly recommended to the producers that they must invest their money collectively in remodeling and expanding the capacity of antiquated slaughtering facilities owned by small local slaughterers as a more profitable alternative marketing system and as a long-term marketing strategy. In conclusion, there is a strong and viable alterative marketing opportunity for lamb producers if
they are willing to invest their capital in expanding and remodeling antiquated slaughtering facilities to develop and expand high-end niche markets for California fresh lamb meat.
Impacts
Northern California lamb producers produce heavy, lean and muscular lambs of high Choice quality. Because of highly concentrated packing industry (only one large packer in California), they have to sell their lambs either to one large packer in the region at a give-take live animal price or to antiquated local packers that are charging high processing cost. The development and investment of alternative marketing system through long-term investment in expanding and remodeling of antiquated small slaughterers would expand the opportunities of selling high quality lambs to high-end niche markets at a greater profit to the producers.
Publications
- Lee, Y.B. 2004. Alternative marketing system for California lambs. Asian-Australasian Journal of Animal Sciences. Accepted for publication.
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Progress 01/01/03 to 12/31/03
Outputs
In order to better understand the current situation of the northern California lamb industry, interviews and site visits of seven lamb producers in Solano County, San Joaquin County, and Napa County were conducted in 2003. Carcass traits of domestic lambs grown in central California were also studied: average carcass weight, 72 lbs; backfat thickness, 0.18 inch; ribeye area, 2.8 square inches; leg conformation, low prime; yield grade 2.2; marbling score 2.8 (1-5 scale); quality grade, high Choice with low Prime. The carcasses were lean and muscular with reasonably high quality grade. About 75% of lambs were marketed to a large-scale meat packer for national distribution and 25% to small-scale local packers for a high-end niche market. Approximately 55% of lambs were sold on carcass grade and yield basis and 45% on live animal basis. Regardless the market channel, the proportion of lambs sold on carcass-basis was slowly increasing. The survey indicated that lamb
producers in northern California have expressed concern over the low prices they receive for their product of high quality. They believe they could receive a better price if they could sell more lamb to their current high-end buyer or decrease slaughter costs. The slaughter cost at a local packer was $15/head. Producers and processors agree that a high-end niche market exists for local lamb meat. However, lamb producers believe that they are prevented from reaching this market by a lack of local slaughtering facility. While local producers have one of the largest slaughtering facilities within only a few miles of their farms, they are receiving lower prices (average $2/head) based on carcass grade and yield basis. There are a limited number of other slaughtering options. Slaughter facilities in Meridian and Panizarra is antiquated and at capacity; and Pacific Lamb Sales lasted only 30 months. In addition, Niman Ranch (lamb fabricator and distributor) indicated that they would use a
slaughter facility located in this region and is projecting an increase in sales. In conclusion, there is a need and interest in alternative marketing to high-end niche markets among California lamb producers for their high quality product. The next task is to explore and develop a viable model of alternative marketing system.
Impacts
Due to the highly concentrated packing industry, producers have to sell their lambs either to one large packer in the region at a give-take price or to antiquated small local packers at a high processing cost. It is necessary for them to develop a viable model of alternative marketing system to sell their high quality product to high-end niche markets for a greater profit and for their survival.
Publications
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