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Study finds strains in lamb value chain

Canada’s lamb producers are missing out on up to $42 million in farm gate sales and $250 million at retail, thanks to domestic supply shortfalls and “ineffective management” of the lamb value chain, according to a new study out of Guelph.

The study, released Wednesday by the Value Chain Management Centre, a division of the George Morris Centre ag think tank, noted a 100 per cent increase in the Canadian lamb market between 1997 and 2008, during which time domestic lamb production rose only 30 per cent.

In short, “an overall lack of supply severely limits the market opportunities for Canadian lamb,” the study said.

And many Canadian lamb producers “do not adequately consider market or customer requirements when determining the flock’s genetics or production systems,” study author Martin Gooch wrote. “This is largely due to lack of information and capabilities necessary to make informed management decisions.”

The value chain today leads to revenue-limiting inconsistency in condition, size, quality and overall composition of Canadian lambs in the system, Gooch wrote. Live U.S. lambs are often more consistent in size and meat quality while processed lamb from New Zealand and Australia is more consistent in quality.

“It has become increasingly apparent that providing value-added products to consumers can lead to increased market share, higher overall product value, and improved profitability,” Gooch and the study’s co-authors wrote.

“However, convincing an industry focused on maximizing the productivity of individual businesses to shift from making decisions based on cost and volume to those based on working together to increase the value proposition for consumers remains a challenge.”

“Cohesion, critical mass”

For the performance of a lamb value chain to improve in a significant way might only mean “minor improvements” at multiple points of the value chain, the study noted. However, “sustaining any advancement relies on the existence and application of an improved performance reporting system.

“It also relies on the chain possessing the discipline to reward those who are performing beyond minimal requirements while penalizing those who are not.”

Opportunities exist, but are not realized, to capture potentially significant added value through developing more “detailed insights” into consumers’ desires and behaviours, the centre said.

Those insights could then be used to establish more effective performance criteria along the value chain and encourage increased lamb production.

Opportunities to add value to fresh lamb in Canada are being missed, the study said, because the chain doesn’t have the “cohesion and critical mass” needed to encourage meat processors to invest in the infrastructure necessary to develop higher-value lamb products.

Opportunities are also being missed for the processor to develop an extensive marketing program for Canadian lamb with retail and foodservice customers.

And right now, the study said, “operations at multiple points along the chain are managed according to transactional measures that have little correlation to consumer demands toward meats they choose to consume.”

Furthermore, “key participants of the chain possess information that, if shared, could guide improvements at multiple levels of the chain.”

The study also notes that while livestock auctions can provide a “valuable service” by acting as a clearinghouse for many types of lamb, “the combined impact of visually grading live animals and spot market pricing limits the entire chain’s ability to capture value and continually improve performance.”

And the design of the auction barn itself, along with the buying, selling, transportation and handling practices for lamb, has a “direct negative impact on the quality of approximately three per cent of lambs,” the study said.

“This includes lack of access to water for perhaps 18-24 hours, and bruising,” the study quoted one lamb processor’s CEO as saying.

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