Testimony of Frank Moore

On behalf of the

American Sheep Industry Association

Regarding

Issues of the Livestock Industry

Before the

Committee on Agriculture, Nutrition, and Forestry

United States Senate

Washington, D.C.

May 26, 1999

Mr. Chairman and members of the Committee, on behalf of the nation's sheep industry I appreciate your holding this hearing on issues of the Livestock Industry including mandatory price and volume reporting and meat labeling.

I am a sheep producer from Douglas, Wyoming and serve as secretary/treasurer of the American Sheep Industry Association. The devastation continues in the U.S. lamb industry with the collapse of the lamb market in the fall of 1997. The market has been seriously depressed at levels below the cost of production for most lamb producers and feeders. To address the unprecedented surge in lamb imports and the severe underselling in price of imported lamb, the domestic lamb industry filed a petition under Section 201 of the Trade Act of 1974. This trade case has met with unanimous rulings from the U.S. International Trade Commission during the injury phase, as well as resulted in the entire Commission requesting trade restrictions on lamb imports for Australia and New Zealand.

We appreciate the support of members of this Committee in requesting the President to implement effective trade relief under Section 201. The President's decision is due by June 4, 1999.

The price reporting and meat labeling provision for the lamb industry are clearly issues involving imports as well.

Price Reporting

The priority for mandatory price reporting in the lamb industry, Mr. Chairman, is to secure the wholesale boxed and carcass lamb prices of imported lamb.

Nearly 30 percent of the U.S. lamb market is now controlled by imported lamb, yet we have no price reports available from this huge section of lamb trades. The domestic industry and the U.S. Department of Agriculture have requested lamb importers since 1997 to provide weekly lamb cut price information on a voluntary basis similar to the price information provided by domestic lamb companies. This refusal of importers to cooperate with USDA on a voluntary basis makes it imperative that a mandatory system must be implemented. We believe, Mr. Chairman, that it is not healthy for a market to dismiss price discovery for such a significant share of the market. Importers indicated to USDA that rejection of voluntary price reporting was based on concerns that providing price information would invite trade action. The U.S. lamb industry was aware of the dramatic underselling of imported lamb in the market, but in actuality the degree of the underselling provided by the recent U.S. International Trade Commission investigation was startling. The Commission concluded that in eight product categories; such as racks, ribs, loins, legs and shoulders, imported lamb prices undercut U.S. prices 79 percent of the time by margins averaging 20 to 40 percent.

It is important that lamb meat price reporting include carcass and boxed lamb prices and volume for both imported and domestic product.

The live lamb market reporting involves many of the same issues of other livestock with the exception that there is not a futures market for sheep.

Regarding formula or contract purchases, reporting should accommodate yield grade and weight categories. An average price reported on a live animal basis could be utilized for formula or carcass sales by a company.

There is limited request for information regarding mutton prices or volume so the emphasis should be on lamb. For volume reporting of lamb, particularly imported lamb, USDA should report imported lamb volume separate from imported mutton.

Retail price reporting for lamb meat is strongly supported by the American Sheep Industry Association and we urge the Committee to support a retail price series for lamb.

Meat Labeling

Lamb cuts at the retail level should be labeled for origin. The mixing of imported and domestic lamb cuts in the meat case continues to increase in frequency. Brand names now in use clearly aim to indicate the product may be domestic when it is not. Again, meat importers and foreign meat producer organizations have refused industry requests to identify their entire product to accurately inform the consumer. With 30 percent of all lamb in the U.S. market being imported and the vast majority being muscle cuts and lacking origin identification, labeling becomes a larger issue. American Sheep Industry Association policy established in 1995 calls for positive identification of foreign lamb due to concern with consumers' confusion between foreign and domestic lamb.

An additional labeling issue that has grown in importance during this surge of imported lamb is allowing foreign lamb carcass to be USDA quality graded and labeled at retail as USDA Choice lamb. Since nearly 90 percent of domestic lamb is consistently quality graded, customers infer that graded lamb is domestic. This practice of grading foreign lamb carcasses, Mr. Chairman, is widely protested by many producers, feeders, lamb packing and processing companies and we urge every recourse be sought to end this deceptive practice.

The American Sheep Industry Association joins with Ranchers Lamb Inc., a lamb packing company in San Angelo, Texas in support of meat labeling to assist marketing of lamb.

Securing an equitable position in the U.S. lamb marketplace for the domestic industry is foremost in our requests. Labeling and price reporting are two measures that assist in that goal. Full enforcement of our trade provisions is also critical with the President's decision on implementation of effective trade relief due June 4.

We greatly appreciate the Committee conducting this hearing not only for the important issues being discussed for the crucial timeliness of the hearing. There is no question that with the severe market conditions facing America's sheep industry, the immediate future of thousands of farms and ranches, as well as lamb companies is very much at stake.