Demand is flying high. Lamb isn’t a niche anymore. It’s everywhere on mainstream meat counters. But it isn’t on the farm, and in 2010, Newmarket Meat Packers (NMP) found only 10 per cent of Ontario lamb sales were being met with Ontario-grown lamb.
Surely, that sounds like an opportunity.
“Our demographics have changed,” says Newmarket’s Maggie Pearce. “Sixty per cent of the world eats goat, but our new immigrants can’t get enough here (in Toronto) so they are turning to lamb.”
The problem was escalating because the number of sheep producers — mostly hobby farmers — was shrinking. Most of the flocks were lambed on grass once a year, which creates lumpy supplies into the market. Also, mutton entered the meat supply marketed as lamb, causing confusion and dissatisfaction among consumers and retailers.
Equally bad, said the Newmarket study, was that the supply chain was deeply fragmented into farmers, auctions, processors, retailers and consumers, with little or no communication between these parts.
At the time, Pearce was literally knocking on doors looking for supply for their small-ruminant abattoir, and she was holding meetings to encourage more farmers to expand into the sheep business. Yet while a few more signed on, it didn’t address the consistency problems at their plant.
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Now four years later, a solution has been built, centred on open communication and collaboration.
Six large-flock, year-round lambing producers have formed a company to establish a stable price contract based on consistent quality and quantity of lambs. NMP has installed handling and traceability technology and can track the meat from farm to checkout. It’s giving carcass information back to the producers and has been the conduit to link these farmers with a large family-owned retailer. Now, the large retailer is starting to market the meat based on the farmers’ photographs and stories.
It’s a value chain management success story that started on a trip overseas. In 2012, a dozen large-flock operators from Ontario toured Great Britain, including the Cotswold region an hour and a half northwest of London, designated an elite producer of sheep like the Champagne region of France. At one stop, the tour was told how the Cotswold Sheep Group (a group of lamb producers in the region) had hired a marketing person to liaise between the producers and the abattoirs.
The Canadian farmers nodded. That’s what we need, they thought, i.e. someone to organize marketing and transportation because we’re too busy operating our own farms. After the trip, the Canadians went home to tend to those flocks, but didn’t forget the Cotswold lesson.
Shortly after returning, Marc Carere from Lindsay, Ont. was asked to join a sheep industry strategy task force, which included transportation suppliers, processors, extension, retailers and farmers. The conversations started with issues. “We didn’t understand each other’s businesses, so we talked, asked questions and learned,” says Carere.
Again they went home to tend their flocks. But a link had been forged, and it would become a catalyst for a new business model.
NMP’s Pearce was on that task force too, and she kept the conversation with Carere going long after the task force meeting. He and two other larger year-round producers met one of the owners of NMP, Nick D’Elia, and started delivering directly to the plant. D’Elia liked the consistency and quality this group delivered, and wanted more.
A more formal think-tank was formed with Pearce. One producer dropped out, but more large-flock farms signed on, all from the nearby area and each producing lambs year round with RFID tags. The group of six now includes Miklin Farms (Mike and Linda Thompson), Ryan Van Loon, Maple Winds Farm (Ken Lamb), Eden Lane Farm (Dick Kuiperij), Carncroft Farms (Jenny and Luke Carnaghan and Zach Grove) and Ballinahistle Farms (Marc and Helen Carere).
The six shared ideas and asked questions. They all wanted a steadier price and knew they needed a more consistent supply of quality lambs to drive demand. They soon learned that neither the processors nor the producers were making huge profits off the backs of the other parts of the supply system.
“We started by building the relationship, the trust,” says Carere.
Martin Gooch, chief executive officer of Value Chain Management International, believes those first steps were exactly right. “They started small and involved only people with the right attitude,” Gooch says. “The power of this group is the power of wanting to learn.”
The group also wanted to inspire industry-wide change to improve the quality, reputation, quantity and ultimately the demand for Ontario lamb. Led by Pearce, the group organized a learning day to connect buyers, processor and producers. At the abattoir they saw what the animals eventually looked like as carcasses and discussed how that related to grade and what buyers wanted. With some Green Belt funding, they even made a video of it as a teaching tool for the industry. (The video is available via the Ontario Sheep Marketing Agency’s website.)
For the producers it was a kind of revelation. Suddenly they could appreciate the impact of their production methods. “It gave us the ability to see what our premium animals looked like compared to mutton,” says Jenny Carnaghan from Blackstock, Ont. “They showed us how they graded them, and what quality means.”
However, it’s not a simple case of good and bad. Demand for lamb in Ontario is driven by large, growing ethnic communities, each wanting something different from their meat. During the video, retailers and wholesalers explain what they’re looking for.
NMP now addresses the segments of the market based on its buyers’ needs by shipping more boxed cuts targeted for specific uses. “Instead of selling only whole carcasses, one carcass now does two or more markets,” says Pearce.
Recently, the company has started stamping “MUTTON” on the old ewes that come through their plant, whereas normally mutton goes into the mainstream under the “Ontario Lamb” moniker. Selling mutton for lamb prices makes for big margins, but can also turn customers off eating lamb, hurting the entire industry.
“The consumers drive the bus,” says Pearce. “They put the money in; the rest of us just move it around. If they don’t buy, we don’t play.”
To use the less marketable cuts, NMP has also created a value-added division, and has planned another expansion for the spring. “We need to sell the whole carcass,” says Pearce. “The profits are what’s left over in the cooler.”
The farmers went home from the learning session with a commitment to keep the learning and the conversations going. NMP organized a meeting with one of its large retail customers, and when the small group of sheep farmers from rural Ontario sat down in the retailer’s swanky downtown Toronto office, the conversation once again started with the issues of steady supply and quality.
The sheep farmers explained the challenges of year-round lambing and price swings. To their surprise, they discovered the suits were a multi-generational family business wanting stable, sustainable business relationships, just like them.
“The discussion was honest and open, with no hidden agendas,” says Carere. “Their mindset was like ours; we are here and we are not going anywhere, so let’s help each other.”
NMP and the farmers hosted a bus full of meat counter staff at one of their sheep farms, followed by a tour of NMP’s abattoir and value-added facilities. They ate together and asked each other questions. Most of the butchers had never set foot on a farm and were surprised by the scale and professionalism.
Key shifts in perception began to happen. The butchers and farmers learned what was chopped off before they get chops, and how waste impacts profits all the way along the value chain. The retailer realized how much more was involved for farmers to produce lamb in the winter, and that they couldn’t just turn on volume like a tap. The abattoir saw how certain production practices produced better-quality, more uniform lambs and better final yields. The farmers learned that a consistent, traceable supply was valuable, and by working together it was doable.
Most significantly, the farmers were inspired to formalize their supply loop. With some assistance from a federal Growing Forward 2 grant, they started a new company called Trillium Lamb Inc. The six original farms are shareholders and board members, and they have an annually established price contract with NMP.
They’ve also added a few more producers to ship about 100 lambs a week, but still aren’t totally filling the demand. Trillium Lamb Inc. is in the process of expanding the number and geography of farmers supplying lambs, and they are setting formal quality requirements to ship under the Trillium Lamb agreement.
According to Gooch, for a value chain management to have staying power everyone involved must follow an agreed set of practices. And if someone doesn’t, there must be repercussions.
Trillium Lamb is in the process of hiring a person to handle the links between them, NMP and the retailer and to do their marketing, as they had seen in Cotswold. “Bringing people in with the right attitude, someone who understands the vision, can help make it sustainable,” says Gooch, although he says it doesn’t always happen. “Generally, farmers don’t want to invest, to cover the costs in human resources to maintain it.”
Christoph Wand, OMAF livestock sustainability specialist, has seen other initiatives last only a few years. “What sets this one apart is the idea of the field person who communicates along the supply/value chain but is an employee of the producer group.”
Together with NMP, the Trillium producers want to have a formal pricing-and-supply contract directly with the retailers. Normally the price paid for live lambs is set every Monday at Cookstown auction market and varies from week to week. However, the price in the grocery store is set once a year based on discussion between the abattoir and the retailers, and varies depending on the size of the order.
Trillium shareholders and suppliers all use RFID tags so each carcass can be traced back to their farm, and with some grant money NMP has updated its equipment to read and share that information with the farmers. The Trillium producers can then use those numbers to select genetics based on carcass traits, such as percentage cut-out or shipping weights. NMP asked the group for its data wish list and shares its own quality assurance values, such as cleanliness of the animals. Most recently, Growing Forward 2 has also helped NMP update its gating and sorting system.
As well, the farmers’ photographs and stories are going to be part of the marketing and packaging program led by the retailer.
In the end, the value chain has been short-linked and information flows freely from producer to abattoir to retailer and soon to the customer. Yet without government grants and behind-the-scenes help from Wand, it probably wouldn’t have happened.
Still, the grants and extension work are only the starting points for change.
It takes an investment in the vision from all parties to recreate long-established marketing routes. “It’s been a team effort to get this off the ground,” says Carere.
They are all aware of other supply loops that have failed because processors went broke, or because retailers or farmers didn’t have loyalty to the program. What makes this one different? Probably it’s because now, they all know more about each other’s businesses. “To be fair, we do not chase the market price,” says Carere. “We all have to be reasonable.”
“Our business model is based on openness, honesty and loyalty,” agrees Pearce. “Without that, it would all fall apart.”
It’s also based on recognizing both the market and the players at every level, including that the number of slaughter plants in Canada has plummeted by a third in the last decade.
Over those same years, much hot air and government money got pumped into the concept of value chain management. Perhaps inevitably, a lot of the initial projects came to learn their feet weren’t solid enough, and their hopes sank into the mists.
But others made progress quietly, eventually, including Trillium Lamb.
Some lessons also emerged. Most important may be that value chain management takes commitment, openness, trust and a champion to lead the cause.
And yes, it can also help if the change in supply is pulled by customer demand, not pushed by producers.
