Wednesday, August 7, 2013

The price of lamb

The price of lamb is down this year. For years, we’ve ignored the market price of lambs at the stockyard because we sold our lamb for $1 per pound, a price that the Bosnian refugees, who had so little to remind them of home except traditions like roast lamb, could afford. It wasn’t until several years ago that we increased our price to $1.25 per pound live weight at the suggestion of our CPA. It followed the market price to $1.50 the next year and two years later to $2 per pound. Our lamb sales stayed steady. Obviously, our Bosnian friends were doing well in their new lives. Our lamb sales were finally covering the cost of feeding a ewe and raising her lambs.

This year, the first man who called for lamb told us that the stockyard price was $1.25 a pound in South Dakota. Dave said our price was $2 and politely suggested that he buy his lambs in South Dakota. The second man who called also said $2 per pound - $140 for a lamb roasted and eaten on a Sunday afternoon - was too expensive. In theory, I agreed with him. In practice, I need my lambs to bring in enough money to pay for their upkeep.

“If nobody buys them because they’re too expensive, we’ll have to sell them at the stockyards,” Dave said, “and who knows what the price will be then. I think we should sell them for $1.50 per pound.”

“We’re losing one quarter of our lamb income,” I said. “We sold all our lambs last year at $2 per pound. If we sell them all this year at $1.50 our income will be down 25%. You’d quit your job if they docked your pay 25%.”

It was a true statement, but hardly relevant. Selling lambs allows us to pay for the upkeep of our sheep. We “pay” ourselves nothing. If we dock our “pay” by 25% it doesn’t change a thing - 25% less than nothing is still nothing. However, the farm wouldn’t pay for itself in 2013.

Prices paid by farmers rarely go down. Farm prices fluctuate all over the place and the farmers have to absorb the difference. One of our successful business friends told us that lamb was a luxury and we should price it that way. If we drop our price by 25% we move from the luxury market into the commodities market, those necessities which are priced like milk and corn. Lamb isn’t like those commodities; the government won’t pay me a subsidy to make up for low prices.

Dave and I talked and talked over the problem. Neither of us could persuade the other.

We sold our first lambs to two of our oldest local customers, friends. Dave made the sale. They wouldn’t have complained about $2 per pound, but he only charged them $1.50. We couldn’t charge them $2 and then drop the price for the rest of our customers if the lambs didn’t sell. So this year, our price for lamb is $1.50 per pound. I feel like we have taken a giant step backward. Our farm on which we expend so much effort, so much time, so much money, looks like a hobby instead of a business, just because of the price of lamb.

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