Brazil-based JBS, one of the “big four” meat packing companies, purchased Mountain States Rosen, the second-largest sheep processing facility in the US. MSR filed for bankruptcy in June 2020. How does this affect the better meat supply chain?

The processing plant is located across the road from JBS’ Greeley, Colorado facility and entered bankruptcy recently. The facility has the capacity to process roughly 6,000 head per week or nearly 800,000 head per year and is cooperatively owned by 145 US lamb producing families. It served sheep ranchers from 15 states, including Utah, Montana, South Dakota, Wyoming, and California.

JBS will not use MSR for sheep processing, however, and will instead use it to grind burger and cut steaks. With MSR accounting for one-fifth of the entire US lamb market, this is a devastating blow to American sheep producers. 

The immediate impact is particularly crippling for sheep producers who have lambs that are ready for butcher. One estimate suggested that the plant closure leaves 350,000 lambs without anywhere to be processed this season and depriving sheep ranchers of the resulting income. For many sheep producers, selling lambs for butcher in late Summer and early Fall is their sole source of income for the year.

Lamb producers are not only concerned about the lack of access to the largest processing facility but fear that the purchase may be JBS attempt to dominate the US lamb market. JBS imports lamb to the US and by eliminating MSR has reduced market competition for its imported lamb.

In response to the purchase, a group of legislators have asked the Department of Justice Antitrust Division to investigate JBS’ acquisition of the facility. Another potential buyer had expressed interest in continuing the operation of the facility but JBS submitted the winning bid during bankruptcy. According to the legislators, JBS is preparing to shut down all lamb processing and destroy the lamb processing equipment immediately.

Another group of legislators wrote an open letter to US Secretary of Agriculture Sonny Perdue asking him to provide relief to the sheep producers affected by the purchase and subsequent closure of MSR.

“This closure comes at a time when the sheep industry was already forecast to lose more than $350 million due to COVID-19-related market declines, and feedlots are already at peak capacity in many places,” the letter reads. “We must do everything we can to support the families, who make up the sheep industry in our states, as they weather these significant and pressing challenges.”

Most calls to action encourage the USDA to assist the 20% of affected lamb producers with finding new markets for their lamb. But in the midst of the Covid-19 pandemic, which has crippled processing for beef and pork, finding new routes to market and access to processing will be an uphill battle.

Building a better meat supply chain

Lamb may be less popular than beef, chicken, and pork, but it is gaining attention as consumers seek out local food and a deeper connection with the food system. A number of cattle producers raise sheep alongside their herds to improve pasture diversity, soil health, and animal health in a multi-species grazing system. But without access to processing facilities, there is less of an incentive for producers to add sheep or goats to their grazing management plans. 

Access to processing has not just been an issue for lamb producers, it’s been a widespread issue stymying the growth of local food. Producers who want to break up with the conventional supply chain of selling animals at auction or to a feedlot must have access to processing at an appropriately regulated facility. The number of processors open to small and mid-size producers has dwindled. Some farmers and ranchers drive several hours to reach the nearest processor. 

Consolidation in the meat industry is the primary driver behind farmers’ and ranchers’ struggles to access new markets for their meat products outside the conventional supply chain. Earlier this year, after several months of complaints and calls to action from stakeholders across the beef industry, the Department of Justice launched a probe examining whether the four main packers who control 80% of the meat supply are engaging in unfair collusion and price-fixing. 

Want to learn more about sheep and building a better meat supply chain that provides farmers and ranchers with the wages they deserve? Check out 7 Things You Didn't Know About Sheep and 8 Things You Didn’t Know About Goats here. To learn more about the importance of ruminant animals for our planet and our health, order your copy of Sacred Cow: The nutritional, environmental, and ethical case for (better) meat here.

Lauren Manning, Esq., LL.M., is a cattle farmer, an agricultural law professor at the University of Arkansas School of Law, food journalist, and contributor to the forthcoming documentary and book project Sacred Cow: The environmental, nutritional, and ethical case for better meat.