Sheep Industry News October 2022

mixed bag. After a downturn in consumption from 1999 to 2011, the lamb industry experienced steady growth in con sumer consumption from 2011 to 2019 with significant growth during 2020 and 2021. In 2011, per capita con sumption was 0.84 pounds, then rose to 1.14 pounds in 2019 and topped out in 2021 at 1.36 pounds. That represents a 16-percent increase in consumption from 2019 to 2021. Per capita consumption is expected to be 1.29 pounds in 2022 and forecasted to be 1.27 and 1.18 pounds in 2023 and 2024, respectively. These consumption numbers by themselves are not necessarily con cerning, as we will typically consume all that is produced and imported.

It is significantly above the 17.4 million pounds representing the July five-year average from 2016 to 2020.

However, when we add price into the mix it helps us under stand these figures more and provides a more realistic picture of demand. When we add in price, we begin to understand how strong demand was for lamb during the consumption growth period of 2011 to 2021. During this time, price was generally trend ing up and spiked similar to the consumption graph in 2021. When consumers are willing to eat more lamb at higher prices, this indicates strong demand. Currently, it is estimated that consumers will be reducing per capita consumption, while price is also projected to flatten, See MARKET REPORT on Page 8

DEMAND Now, let’s look a little deeper at the demand side issues. It is important to remember that demand is not just consump tion or price, but is a combination of the two. To gain a better understanding of the market impacts, both must be analyzed. It is also important to note that traditionally consumers have been price sensitive regarding lamb. With that in mind, here are some of the current factors. Consumer confidence dropped to its lowest levels in the time frame of 1978 to 2022. Chart 1 (at left) shows the domes

tic U.S. consumer sentiment during that time frame. While this is not specific to lamb, it is helpful in under standing consumer behavior. A big factor in consumer senti ment is the inflation rate. As inflation increases – and without an increase in wages – consumers have less money for discretionary spending and sav ings. As you can see from Chart 2 (above), the consumer price index on all items – an indication of inflation – began to rise in 2021 and continued to rise at an increasing rate in 2022. Charts 1 and 2 can help us under stand the recent changes in lamb con sumption. If we look at the lamb and mutton consumption data in Chart 3 (at right), we can see that it is a real

October 2022 • Sheep Industry News • 7