Meat plant sale threatens Johnson County sheep producers

BUFFALO — According to Wyoming Department of Agriculture statistics, 34,000 sheep and lambs call Johnson County home. They outnumber the county's human population four to one.

For every lamb born, another is sent away to be slaughtered and processed at plants like the Mountain States Rosen lamb processing facility in Greeley, Colorado. It is all a part of the Johnson County circle of life.

Now the circle could be disrupted. With JBS USA Holdings - one of the country's "Big Four" meatpackers — acquiring the Mountain States Rosen facility and threatening to discontinue lamb slaughter and processing, the lamb processing capacity of the United States could be cut by nearly 20%. This means there could be nearly 350,000 more lambs nationwide than existing processing plants can handle.

Matt Rabel works with his uncle Jim Forbes at Forbes, Rabel and McGivney Rambouillets selling stud rams, range rams and ewe lambs. He said that the sale of Mountain States Rosen to JBS has caused uncertainty that has reverberated through every corner of the local sheep industry.

“The sale is a huge concern for anybody in the sheep industry,” Rabel said. “MSR had 20% of the kill capacity in the United States, so the effect it will have on local ranchers is directly proportional. There is no other plant close by that can absorb that 20%. The number of lambs that can be processed will dramatically fall, which means producers will have to feed longer and try to transfer their lambs to another place if there even is one. It just causes huge uncertainty about where those lambs will go, or if they will be able to go anywhere at all.”

The sale and subsequent cessation of lamb processing capabilities at Mountain States Rosen couldn’t come at a worse time for the sheep industry, which has been rocked in recent months by the economic impacts of the COVID-19 pandemic. Over 50% of the lamb consumed in the United States is eaten at a restaurant, local rancher Mike Curutchet told the Bulletin earlier this year, and that industry has experienced more than a 75% decline in sales since the middle of March.

Like cattle and hog producers, sheep ranchers experienced a price collapse during the pandemic. Unlike the beef and pork businesses, though, the sheep industry had already lost well over half its market share to foreign products, and that looks likely to continue if JBS is allowed to convert the lamb processing facility to ground beef processing, according to Shaun Sims, Wyoming Board of Agriculture chairman and a sheep rancher near Evanston.

“If this happens, it’s going to have a huge impact on the lamb industry in the near and long term,” Sims said. “It would take many years to replicate that plant, and in the meantime, the foreign markets would step in to fill the gap.”

JBS has publicly stated that the Mountain States Rosen plant will be converted to a ground beef processing plant.

The company also indicated that it plans to fill the gap in lamb processing with imported lamb from their plants in countries like Australia and New Zealand, Sims said.

The MSR plant, which was the second-largest lamb and sheep slaughter facility nationwide, was owned by a cooperative of 149 sheep ranching families in 11 Western states. The cooperative bought the processing plant four and a half years ago from JBS after JBS announced that it intended to stop processing lambs there.

Facing financial struggles brought on by the coronavirus pandemic, MSR was forced into bankruptcy. On July 16, Wyoming’s bankruptcy court heard arguments and purchasing offers from both JBS and Greeley Fab, a new company partially composed of members of the MSR co-op.

JBS was awarded the right to purchase the plant for $14.25 million. Greeley Fab fell short with an offer of $14.05 million.

Back in Wyoming, local politicians aren’t accepting the sale without a fight. Gov. Mark Gordon, himself a Johnson County rancher, wrote a July 30 letter to U.S. Secretary of Agriculture Sonny Perdue opposing the sale to JBS.

“As a businessperson, today I see a giant getting bigger; as a rancher, I wonder where my neighbors will take their lambs; as a father, I worry for those next generations; and as Governor, I worry about what this loss means to our state and our producers as a whole,” Gordon wrote.

Sims and the board of agriculture also wrote an Aug. 1 letter to Perdue, asking for the secretary’s intervention.

“This is bad news for American agriculture, American consumers and ultimately our national security,” Sims wrote.

In an Aug. 7 letter to Assistant Attorney General Makan Delrahim, Johnson County Commission Chairman Bill Novotny urged the Department of Justice to investigate JBS for antitrust violations and market manipulation.

“JBS is the largest importer of lamb in the United States,” Novotny wrote. “Eliminating the processing capacity at MSR will enable JBS to further manipulate the American lamb market to its advantage much to the detriment of American consumers and producers. … America’s ability to provide a safe, reliable source of protein is in jeopardy if you allow the sale of MSR to JBS. Immediate attention must be given to this matter.”

A week earlier on July 29, Sen. John Barasso and Rep. Liz Cheney also sent a letter to Delrahim, alongside 10 other senators and representatives from Montana, Utah, South Dakota and California.

“We are told that many of these family-operated sheep ranches in the Western states may go out of business after this deal, costing the lamb industry potentially hundreds of millions of dollars per year,” they wrote. “We urge you to immediately open an investigation into this acquisition and take appropriate steps to prevent irreversible actions that might harm the ability of American sheep ranchers to get their products to market.”

Spurred on by the letter-writing campaign, the Department of Justice has opened an investigation into the sale. While JBS finalized its acquisition of the plant on July 31, it agreed to not make any changes to the facility for 30 days while the Department of Justice reviewed the case.

For now, local sheep producers like Rabel just have to watch and wait and hope that the circle of life for Johnson County’s sheep can continue unencumbered.

“It’s just really uncertain at this time,” Rabel said. “A lot depends on what happens over the next 30 days. If JBS is allowed to continue with their original plans, I don’t know how many sheep producers will be affected locally, but it’s going to be a large number. There will be an impact, for sure. But it’s hard to say just what that impact will be at this point.”