Sheep industry looks seeks policy to improve market, protect herd health
Price Support Program for Wool
Lamb and mutton production correlates highly with wool returns, and since meat and wool are joint products, producers keep lambs longer when wool prices are high. When high wool prices are anticipated or continue, producers tend to rebuild their herds. As a result of the herd rebuilding process, fewer animals are sent to slaughter, causing lamb and mutton production to fall. On the other hand, low wool prices tend to cause producers to liquidate their flocks, which often increases the supply of lamb and mutton to the market.
From 1954 to 1993, wool receipts were about one-quarter of the income from sheep production activities. A large portion of the receipts from wool were derived from the National Wool Act of 1954, which instituted a price support program for wool and mohair to sustain domestic production. Support came through incentive payments that rewarded farmers who had more production and/or obtained high market prices. The program was financed with tariffs, and didn’t require any tax dollars. Having a price support program in place likely slowed the sheep industry’s rate of decline.
In 1993, Congress enacted legislation that phased out the wool program in 1995, ending 42 years of support. Wool production declined markedly after incentive payments were terminated in 1995. In January 2000, USDA instituted the Lamb Meat Adjustment Assistance Program, a 4-year assistance package to help producers compete with foreign competitors in the U.S. market. Included in this package were direct payments for ewe lambs purchased or retained for breeding purposes. A separate Ewe Lamb Replacement and Retention Program, was instituted for 2004. This program aimed to assist producers of sheep and help replace and retain ewe-lamb breeding stock by providing payment to producers who had to reduce production and flock size because of low prices and other market conditions.
In 2002, the Farm Security and Rural Investment Act of 2002 reinstituted federal support for wool and mohair, making marketing assistance loans and loan deficiency payments available to wool and mohair producers.
The Food, Conservation, and Energy Act of 2008 continued these programs for crop years 2008-2012, and the Agricultural Act of 2014 (2014 Farm Bill) continues them through crop year 2018.
The loan programs allow producers to receive a loan from the government at a commodity-specific loan rate per unit of production by pledging production as loan collateral. The loan rates, which are specified in the 2014 Farm Bill, are $1.15 per pound for graded wool for the life of the Farm Bill. The loan rate for nongraded wool remains at $0.40 per pound and for mohair, $4.20 per pound.
As the second half of 2017 rolls in, with no sign of the political climate calming, ag industry policy makers continue to wage their own type of storm in D.C. to make sure producers are represented, and that includes the 88,000 producers in the U.S. sheep industry.
From on the farm and ranch to the retail level, the sheep industry has a total retail impact of $2.7 billion and supports nearly 98,000 sheep-industry related jobs, according to the American Sheep Industry (ASI).
The new administration brought with it some hope that a program similar to the wool incentive program might make a comeback, according to Larry Prager, Center of the Nation Wool, from Belle Fourche, South Dakota.
The Wool Act, which was run at no expense to tax payers, was funded by foreign imports, according to ASI. All funds, to the tune of more than $200 million a year, were collected through tariffs on imported wool and wool textile products. Over the program’s lifetime, more than $5.2 billion was put into the federal treasury, according to reports.
The program ran from 1955 through the crop year of 1995, and contributed more than $2 billion a year to the gross national product from farm through wholesale, and more than $6 billion a year from farm through retail.
“I think we took something off the table for those focusing on wool production,” Prager said. “We lost a little in the wool production.”
In 93, when the Clinton administration came in, the democratic senate voted to eliminate it. “While the democratic house saved it twice, it was still phased out,” said Peter Orwick, ASI Executive Director.
Change was in the works, like it or not, and Vice President Al Gore needed the funds elsewhere. “It was really for no other reason. They picked on a small program that wouldn’t have any impact on them,” Orwick points out.
The impact was huge in the first few years.
“The liquidation was well under way,” Orwick said. “There were tens of thousands that couldn’t figure it out. They couldn’t figure out how to make a profit without the safety net.”
The program worked well, in its time. Producers had to be actively in the business, producing and marketing, to be a part of it, according to Orwick. There was no pay for not producing.
While that program is gone, and in today’s market might not be as viable, the industry is hoping to get a couple of programs included in the Trump administrations budget that will help those in the sheep industry.
In a letter to President Trump, ASI President and North Dakota sheep producer said America’s sheep producers are struggling amidst the last eight years of regulatory rampage.
“It is no secret that all of agriculture has been over-burdened with regulation and that has had a significant impact on our ability to compete globally,” said Pfliger.
Between Waters of the United States (WOTUS) rule, to grazing restrictions relating to permits and bighorn sheep habitat, Pfliger says there is lots of room for corrections.
America’s sheep producers are asking the Trump administration to look at ways the USDA, the Department of Interior and the Department of Labor can immediately take action to stabilize the rural economy. These actions include robust Wildlife Services predation management, supporting the work of the U.S. Sheep Experiment Station and delisting wolves and grizzly bears under the Endangered Species Act. Additionally, protecting the health of the domestic herd by withdrawing rules allowing imports from countries with a known history of Foot and Mouth Disease and publishing the final rule on Scrapie in sheep and goats are top priorities, according to ASI.
In March, Bob Buchholz, Texas producer and ASI board of director’s member, testified before the U.S. House of Representatives on producer priorities.
Technologies and pharmaceuticals was on the top of the list, with Buchholz emphasizing the importance of the Food and Drug Administration (FDA) Minor Use Animal Drug Program.
According to the National Research Support Program No. 7 (NSRP), “The Minor Use Animal Drug Program [MUADP] is designed to address the shortage of minor use animal drugs by funding and overseeing the efficacy, animal safety, and human food safety research and environmental assessment required for drug approval. The scope of the program includes animals of agricultural importance and generally excludes companion animals.”
“The targeted use of biologics and pharmaceuticals within a veterinary-client-patient relationship is key to our ability to maintain flock health and provide a safe wholesome product. We urge the creation of a mechanism for [USDA’s National Institute of Food and Agriculture (NIFA)] funding for minor use animal drug research through [NRSP-7]; NRSP-7 has an established record with Land-grant universities and has demonstrated excellent results for minor use drug research for nearly 40 years,” Buchholz told the U.S. House Representatives.
Another priority of ASI is Wildlife Services Funding, hoping that Trump fully funds USDA Wildlife Services.
“Every dollar spent on predation management returns three dollars in livestock value saved. This has a tremendous impact on sheep and cattle producers and the rural economies they support. Predator management also supports abundant wildlife, hunting, and recreation activities on private and federal land,” Buchholz said.
Trump’s proposed budget plan took a big hit at agricultural research, cutting funding by $360 million, and closing 17 research centers. The U.S. sheep industry values the U.S. Sheep Experiment Station (USSES) in Idaho and the Animal Disease Research Unit (ADRU) at Washington State University and the University of Idaho, and support a “merger,” according to Buchholz.
“Both facilities work collaboratively and are critical components of the USDA’s Agriculture Research Service. As our nation’s only experiment station primarily dedicated to sheep production, the work carried out by these researchers and faculty are critical to our ability to remain productive and push back against flawed science on the range and in the area of animal health.In the past, administrative action has worked to limit the scope of these facilities.Such action not only threatens the viability of this resource for producers, but also threatens the USSES’ unparalleled historic sage grouse data,” Buchholz testified.
ASI would also like to see a plan for Foot and Mouth Disease (FMD) vaccine bank included in the budget.
“While we must do everything we can to eliminate the risk of reintroduction of FMD, we must also be prepared in the event of an outbreak. It is critical that U.S. producers have immediate access to a viable vaccine bank.We join with others in the livestock industry in supporting the creation and maintenance of an FMD vaccine bank and continued research.We also urge Congress to provide the authority and $150 million a year in mandatory funding for USDA APHIS to protect the U.S. livestock industry from an FMD outbreak,” Buchholz testified.
While a wool incentive program may not ever see the light of day again, as times have changed, the industry has made a positive impact on the U.S.
“We’ve gone from being an importer of wool to an exporter of wool,” Prager points out. “Commodities, including wool, are very much on an international playing field.”
“In my personal biased opinion, I’d like to see international trade, without government programs,” Prager added.
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