Washington, D.C. – Rep. Kristi Noem today joined the push for a United States Department of Food and Agriculture (USDA) investigation into the decline of the U.S. sheep market. In a letter to USDA Secretary Tom Vilsack, Rep. Noem expressed concerns with the collapsing prices in the lamb market and requested that the Grain, Inspection and Packers and Stockyards Administration investigate the cause of the price collapse as well as seek solutions to strengthen the industry and pursue opportunities to expand the U.S. sheep market. Rep. Noem’s letter echoes a similar letter sent by Senators Thune and Johnson today.

Rep. Noem wrote, “While the drought has impacted the entire agriculture industry, the sheep industry has been hit particularly hard. In order to ensure a thriving, robust sheep industry here at home, I am asking that the USDA take immediate and thorough action.”

Full text of the letter below:

October 17, 2012

The Honorable Tom Vilsack

Secretary of Agriculture

U.S. Department of Agriculture

1400 Independence Ave., SW

Washington, D.C. 20250

Dear Secretary Vilsack:

As you are aware, the drought in combination with high feed costs has impacted farmers and ranchers across the country. The lamb market has been seriously impacted in recent years and has collapsed to less than half of last year’s prices, severely impacting our sheep producers and the industry. I ask that the U.S. Department of Agriculture (USDA) investigate the cause of this collapse in prices as well as seek solutions to strengthen the industry and pursue opportunities to expand the U.S. sheep market both domestically and abroad.

The U.S. sheep industry is facing substantial market decline. In some cases, lambs weighing relatively the same weight are selling for less than half the price of last year’s auction at the same sale barn. It also appears there are large differences between the prices sheep producers are receiving on-the-hoof and the over-the-counter lamb prices paid by consumers. The difference between the cutout or carcass price and the live lamb prices was much higher in July of this year compared to the same time last year. Unfortunately, although live lamb prices have dropped by more than 50 percent, over-the-counter meat product prices have not dropped accordingly. I am concerned that this unusually high price spread could be a result of market manipulation.

Another concern is how the low live lamb prices are impacting the Risk Management Agency’s Livestock Risk Protection – Lamb (LRP-Lamb) policies. Because the lamb price prediction model under the “Livestock Risk Protection Policy Specific Coverage Endorsement-Lamb” is not consistent with current market prices, LRP-Lamb policies are being restricted. This is further hurting the sheep producers who rely on this important risk management tool.

I appreciate the Department’s purchase of surplus lamb meat to aid in drought assistance for livestock producers who were unable to sell their product. However, one way to ensure a strong U.S. lamb industry is to expand the market here at home and abroad. The U.S. lamb industry has been seeking to expand export opportunities beyond North America and has petitioned the USDA to reopen the lamb market in Japan, which was closed due to the Bovine Spongiform Encephalopathy (BSE) crisis nearly 10 years ago. The industry is also seeking to develop trade with Europe, Taiwan, and Russia.

While the drought has impacted the entire agriculture industry, the sheep industry has been hit particularly hard. In order to ensure a thriving, robust sheep industry here at home, I am asking that the USDA take immediate and thorough action to address the concerns mentioned above.

Specifically, I request:

  1.  An immediate, full investigation by the Grain, Inspection and Packers and Stockyards Administration (GIPSA) of the drastic change in the price spreads of meat and live market lamb prices. Further, I request that GIPSA actively monitor the lamb market to ensure that benefits of commodity purchases reach the producer.
  2. A full review of current LRP-Lamb policy and procedure, including making any necessary adjustments by RMA to allow the program to function as intended.
  3. Exploration by the USDA of all opportunities for opening and reopening new markets for the U.S. lamb industry.
  4. Continued support of voluntary market reporting of the Agricultural Marketing Service and reporting by the National Agricultural Statistics Service to ensure access to accurate and unbiased market information.

Thank you for your prompt attention to this request.

Sincerely,

Kristi Noem

Member of Congress

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