Colorado rancher says American sheep industry targeting the wrong market

By Allan Nation

Ignacio, Colorado, sheep rancher, Richard Parry, told attendees of SGF’s Grassfed Sheep Production School that American lamb will never sell well in supermarkets.

“Lamb is the most expensive red meat and nothing emphasizes this fact more than putting it in a supermarket meat cooler next to a 79-cents-per-pound chicken,” he said.

“The primary market for lamb is the upscale consumer and the supermarket is the wrong place to sell to her.”

Parry said this realization and a visit to Australia and New Zealand sheep production areas convinced him that there was no future in commodity lamb production in North America.

“In the commodity business prices are global but costs remain local.”

He said to be competitive in commodities required two things - low production costs and scale.

“We can’t get scale because housing developments are pushing land prices up and fractionalizing large land parcels.

“I believe that if you are going to own land you have to fertilize and irrigate it. You can’t afford to run privately owned land like government range.”

And while government range leases are seemingly inexpensive. Parry said that there is no cost-effective way of preventing lamb predation in an extensive operation.

“We can’t compete with New Zealand on cost because of our predator-rich environment. New Zealand’s ultimate unfair advantage is that they have no mountain lions, bears or coyotes.”

Parry said he had gotten his flock up to 1600 ewes trying to achieve commodity scale.

He sold off all of his machinery, subdivided his home ranch into 50 paddocks, irrigated it, stopped feeding hay, sent his lambs to California to custom graze in the winter and it still wasn’t enough to produce a professional level of income.

“I finally realized our domestic unfair advantage is not in production. Our unfair advantage is that we have a large number of wealthy consumers.

“In America, the money in agriculture is made in marketing.”

At the school Parry showed a chart that illustrated that marketing has taken an every-increasing portion of the consumer’s food dollar since World War II.

And, all of this gain has come out of the farmer’s share.

“You can either gripe about this or you can try to capture some of these marketing dollars for yourself.”

Parry said they started direct marketing in 1998 with a total annual sale that year of just 30 lambs.

“Our original intention was to gradually transition from commodity to direct marketing but the 2002 drought derailed that plan.”

During the horrendous drought the reservoir the Parrys depend upon for ranch irrigation and stockwater went dry and they were forced to liquidate the majority of their commercial flock.

“The only thing I saved were 200 Coopworth ewes,” he said.

“Luckily, we got an excellent price for our commercial ewes in California.

“We decided Nature had just quickened our transition to direct marketing and never looked back.”

However, he said rebuilding the ranch’s production to be 100% direct marketed required some changes.

One, he decided to go to a Dorper-based hair sheep genetics and to totally discontinue wool production.

“The Dorper has about a 60% meat yield compared to a 48% yield for wooled sheep.

“Plus, New Zealand research has shown a 25% increase in overall ranch efficiency due to ending shearing and concentrating on meat production.”

Two, he had to re-incorporate some farming into his operation in order to provide year around grazing for grassfed lamb finishing.

“I had totally bought into Stan Parsons’ theory of ‘nothing but a wheel barrow’ but that minimalist approach doesn’t produce a quality grass-finished meat product year around.”

GREEN GRASS YEAR AROUND

An Argentine style forage chain of cereal rye, annual ryegrass, cowpeas and white clover-rich perennial pasture now provides green pasture year around despite the ranch’s 6500 foot elevation and severe winters.

In 2005, Foxfire Farm became Certified Organic.

“We were using a ‘natural’ label but that is really a meaningless label and offers no competitive differentiation,” Richard said.

“To have a niche you have to not only look but actually be different.”

The Parrys said there were three major reasons they went to Certified Organic.

These were: to obtain the highest price premium; to give the customer assurance from outside vetting and because it resonated with deeply held personal values.

Linda Parry said that she and her family firmly believes the adage “You are what your animals eat” and they produce their own organic poultry, eggs and dairy products just for family consumption.

In 2006 the Parrys sold over 700 lambs for between $300 and $350 a piece.

Thanks to this level of income, Richard and Linda have recently been able to bring two of their grown children and a son-in-law into the business.

Daughter Bronwyn handles the books and billing, son Evan is developing a vineyard and son-in-law Brent handles meat marketing.

Brent recently did a survey of other grassfed lamb producers and found the Parrys were under-pricing their product.

Richard said they subsequently raised their prices without a single whimper from their customers.

Brent’s current project is to develop a premium pet food market for carcass residuals and old ewes.

A YEAR AROUND SUPPLY OF LAMB

The Parrys have fresh grassfed lamb from their own flock from November to May and supplement this with outside lamb purchases. However, a majority of their product is sold frozen year around.

“We charge a premium for non-frozen lamb,” Richard said.

“We have inventory available year around and that makes our marketing efforts much more cost-effective. There’s no profit in creating a customer for someone else.”

The two primary direct market sales venues for the Parrys are the Durango and Telluride farmers’ markets and the Internet.

Richard said the two farmers’ markets average $2000 a week in retail sales.

The Internet provides a majority of their sales and becomes the major sales venue during the winter when the farmers’ markets are closed.

Eatwild.com and some limited food magazine advertising are used to attract customers to the ranch website.

“You have to continually be reworking your website to keep it fresh and attractive,” Richard said.

Restaurants, delis and health food stores are used to sell periodic surpluses of ground lamb and lamb shanks.

“We would much rather sell all of our production retail but some wholesale sales are necessary to avoid having to discount our retail prices,” Richard said.

The first rule of direct marketing is to never lower your published retail price. This is why you always need two separate markets to maintain a premium price.

SHEEP NEED COWS

The Parrys also take in beef cattle on a custom basis during the summer months to balance the forage curve and to remove sheep parasites from the pastures.

“With irrigated pasture, if you don’t have cows, you have to mow the grass to keep it short enough for the sheep.

“We now get paid $2000 a month for grass we used to pay to have mown down.”

The Parrys said they do not intend to ever try to push the envelope on maximizing lamb production again.

Instead, they plan to diversify into what they call “entertainment tourism.”

Keeping the upscale consumer in mind, the whole ranch is being reconstructed to resemble a Tuscan farm in Italy.

A 20 acre vineyard, wine tasting room, on-farm store and an event center for weddings are on the drawing board.

A new Tuscan-style main house has recently been built with a great view of the ranch’s 750 acres of irrigated pasture.

“Eventually, we would like to sell all of our lamb direct off the farm to consumers who come here primarily for the ambiance,” Richard said.

© by The Stockman Grass Farmer

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