Submission Deadline: September 15, 2019 Grant Application ...nsiic.org/Grants-2019/2019-1004.pdf · Enable USDA to meet confidentiality requirements and resume Mandatory Price Reporting

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National Sheep Industry Improvement Center Grant Application

Submission Deadline: September 15, 2019

Grant Application Submitted By

Colorado Lamb, LLC

$500,000 Request for Infrastructure Funding

Construction Project:

New Harvesting Plant in the Western United States for American Lamb

[Special Notes: 1) On July 1, 2019 Colorado Lamb, LLC requested permission and received approval from Steve Lee to submit this application as an expanded version of the standard fillable form in order to provide adequate explanation and documentation of the project and requested funding. 2) Colorado Lamb, LLC prepared a $2 million grant proposal to the USDA Agricultural Marketing Service Sheep Production and Marketing Program (deadline June 24th). However, due to the federal government’s backlog of processing Grants.gov/SAM.gov accounts; and even though Colorado Lamb, LLC filed in a timely manner, they did not receive final authorization from Grants.gov/SAM.gov until July, and were unable to submit their application. Consequently, Colorado Lamb, LLC is requesting assistance from the NSIIC.]

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National Sheep Industry Improvement Center Grant Application

Date Submitted: September 4, 2019 Legal Name of Applicant: Colorado Lamb, LLC EIN: 83 – 2500867 Name: Colorado Lamb, LLC Address: 37949 WCR 49 - Eaton, CO 80615 - Morgan County Project Title: New Harvesting Plant in the Western United States for American Lamb Person to be Contacted about Application: Zacharias Raftopoulos – (970) 629-0053 [email protected]

Project Abstract (250 – 400 words)

Problem or Opportunity Colorado Lamb, LLC is a state-of-the-art harvest facility (under construction) located in northeast Colorado, the largest lamb feeding region in the United States. To our knowledge, this is the largest infrastructure project underway in the United States to benefit the American sheep industry. Keystone principles of this new and innovative plant include strict adherence to all applicable federal/state regulations for employees; food handling and storage; and best management practices for animal welfare and humane handling. There has not been a new packing plant built in the region for over thirty years. The Colorado Lamb, LLC harvest facility will help alleviate the constricted flow of lambs from pasture and feedlots that bottleneck into the limited capacity of existing processing plants. The bottleneck at the packer level periodically creates a backup of lambs in feedlots and on pasture, resulting in a less desirable product when lambs must be held on feed and can’t be slaughtered on time. Colorado Lamb, LLC will provide a much-needed source of lamb carcass availability, giving breaker-only businesses a new opportunity to buy American Lamb. Lambs from all over the western and mid-west United States flow through Colorado feedlots on the way to processing plants. Packer concentration is a problem in the lamb market, as only a few large-scale slaughter plants exist in the U.S. Reduced competition drives down market prices, cutting into the profitability of lamb producers, feeders, and breakers. A new processing plant will give American lamb producers and feeders expanded marketing opportunities for their lambs.

Project Objectives The Colorado Lamb, LLC harvest plant for American lamb has very positive alignment with the USDA NSIIC’s mission statement, “to improve the infrastructure of the U.S. sheep industry by strengthening and enhancing the production and marketing of sheep and sheep products.” Project objectives include:

• Colorado Lamb, LLC harvest facility completed and operational by January 2020

• Reduce the amount of overfat lambs that enter the U.S. food chain

• Enable USDA to meet confidentiality requirements and resume Mandatory Price Reporting (MPR) for U.S. lamb carcasses

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• Provide new source of U.S. lamb carcasses for the breaker industry

• Reduce packer concentration in the U.S. lamb meat industry

• Create a more competitive marketplace for U.S. lamb

• Reduce market volatility by expanding processing options

• Meet diverse consumer preferences by providing Halal and Kosher processed lambs

• Provide excellence in animal handling and welfare standards

• Provide educational opportunities for students and organizations

Description of Efforts – Anticipated Results (Benefits for the American Sheep Industry)

Colorado Lamb, LLC harvest facility completed and operational by January 2020 The opening and operation of Colorado Lamb, LLC will provide expanded processing capabilities to the American lamb industry at a time that “fall-run” lambs can be backed up in the feedlots and on pastures. Processing lambs at optimal weight will help ensure that consumers are receiving the best product our industry has to offer. Reduce the amount of overfat lambs that enter the U.S. food chain The Colorado Lamb, LLC harvest facility will help alleviate the constricted flow of lambs from pasture and feedlot that bottleneck into the limited capacity of existing processing plants. The bottleneck at the processing level periodically creates a backup of lambs in feedlots and on pasture, resulting in a less desirable product when lambs must be held on feed and can’t be slaughtered on time. Overfat lambs are a severe detriment to the U.S. sheep industry ultimately providing an unsatisfactory product to consumers and eroding the reputation and profitability of the U.S. lamb meat industry. There are many external factors that impact the viability of the sheep industry, and sometimes these factors are beyond the control of the industry; but it’s the responsibility of the U.S. sheep industry to fix this internal problem. Building a new processing plant will significantly reduce the bottleneck that currently exists, enabling lambs to be harvested at their optimal weight, increasing profitability, and providing a better-quality product to consumers. Enable USDA to meet confidentiality requirements and resume Mandatory Price Reporting for U.S. lamb carcasses The Colorado Lamb, LLC harvest facility will help the industry fully utilize mandatory price reporting (MPR). As a result of increased packer concentration and confidentiality thresholds, the U.S. sheep industry has been without mandatory price reporting of carcasses for over two years. The operation of Colorado Lamb, LLC will provide increased market data for the packer reporting requirement, which should enable the MPR program to meet the confidentiality threshold and allow the USDA to publish carcass prices again. Mandatory price reporting is a valuable tool for all segments of the lamb meat industry that enables businesses and individuals to make informed marketing decisions about their product. Colorado Lamb, LLC will begin mandatory price reporting upon meeting the USDA minimum reporting requirements. Provide new source of U.S. lamb carcasses for the breaker industry The Colorado Lamb, LLC harvest facility will provide a much-needed source of U.S. lamb carcass availability, giving breaker-only businesses a better opportunity to buy American Lamb. Under the current U.S. lamb marketing structure, the primary source of carcasses for breakers (businesses that buy whole carcasses and break down the carcasses into retail cuts for consumers) are the large

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packer/breaker facilities (a facility that both slaughters and then breaks down the carcass into consumer cuts). This puts the breaker-only businesses at a competitive disadvantage, as they are buying carcasses from the same company that will market retail cuts from the carcasses they already own. Breaker-only businesses are typically offered whatever is left over after the packer/breaker has chosen the carcasses they want to keep for processing; and the leftover choice is oftentimes imported lamb carcasses. Reduce packer concentration in the U.S. lamb meat industry In the western United States, there are only two major packing companies that process lamb. The addition of a third, large packing plant will greatly increase the marketing flexibility and options for producers, feeders, and breakers. It’s anticipated the Colorado Lamb, LLC harvest facility can process 1,800 head/day. Fair trade is the foundation for a strong agricultural economy, and the opening of the new Colorado Lamb, LLC harvest facility will be a catalyst for leveling the playing field in this segment of the American lamb industry. Create a more competitive marketplace for U.S. lamb The Colorado Lamb, LLC harvest facility will create a more competitive marketplace, which should enable producers and feeders to receive a higher price for their lambs. It is anticipated that the efficiencies gained with the new slaughter process can flow back as increased purchase prices for lambs entering the facility. The Colorado Lamb, LLC harvest facility will provide a new and expanded market opportunity for producers and feeders. Lambs from all over the western and mid-west United States flow through Colorado feedlots on their way to their final destination at a processing facility. Increasing the available harvest capacity in the western United States will give the industry increased flexibility in processing, that can help reduce seasonal peaks in supply and better distribute a more consistent, readily available, year around product. Historically, Colorado feedlots have fed lambs from Arizona, California, Colorado, Kansas, Idaho, Iowa, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming. Reduce market volatility by expanding processing options Seasonal production combined with not enough packers in the marketplace periodically causes a backlog of lambs in the feedlots and on pastures that cannot be processed on time, creating an overfat, less desirable product. Feeders and producers that do not have a standing relationship with a packer when the pipeline is full, usually don’t have an option to get their lambs processed on time. The backlog of unprocessed/overfat lambs can cause the cash live market for lambs to crash. Expanding the industry’s processing capacity should help diminish the volatility of the cash live market. Lambs can be processed in a more-timely manner, and then placed in cold storage. Cold storage vs. maintaining live lambs on feed increases profitability through expanded flexibility in marketing; and preserves the optimal quality and flavor of American lamb. Meet diverse consumer preferences by providing Kosher and Halal processed lambs In addition to meeting USDA standards for processing lambs, the Colorado Lamb, LLC harvest plant will have the ability to process lambs for the Kosher and Halal specialty markets. Colorado Lamb, LLC will also work with customers for other custom processing options on demand. Provide excellence in animal handling and welfare standards The live animal handling system at Colorado Lamb, Inc. was designed by Grandin Livestock Handling

Systems, Inc. Based in Fort Collins, Colorado it is an international design and consulting company

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specializing in handling system design and animal behavior consulting. The company combines

construction engineering and principles discovered by animal behavior research to ensure the humane

treatment of all livestock, wildlife, and zoo species. Grandin Livestock Handling Systems, Inc. specializes

in primarily cattle, bison, pigs and sheep handling and processing systems.

When the plant is operational, it’s anticipated that the Quality Assurance Manager will be PAACO

certified (Professional Animal Auditor Certification Organization), and all yard personnel will complete

humane handling training through the American Meat Institute (AMI) training program.

Provide educational opportunities for students and organizations The Colorado Lamb, LLC state-of-the-art harvest facility will include a teaching area where students and organizations can learn about the lamb meat industry. Plant tours and educational seminars can be tailored to meet the needs of each group.

Grant Budget Amount Requested from NSIIC: $ 500,000 Applicant Matching Funds: $ 29,968,143 Local/State/Federal Funds previously awarded for Project: $ 0 TOTAL: $ 30,468,143 [Note: Colorado Lamb, LLC has secured a lending option to ensure the completion of the harvest facility, the project is financed with a 15-year loan.] Providing financial assistance through grant dollars is a strategic investment in the long-term sustainability of the U.S. sheep industry. Colorado Lamb, LLC waited to apply for USDA grant dollars until the company had secured a lending option to ensure the successful completion of this project.

If grant money is awarded to Colorado Lamb, LLC the money will be used to pay for expenses identified in the budget as completed after the award date, either by direct payment to contractor(s) and suppliers, or payment to Rabo Agrifinances, LLC to be applied to the construction loan (loan period – 15 years). Allocation of grant money will be at the discretion of the Chief Financial Officer and/or as agreed upon in the Terms and Conditions of the award.

The total construction budget for Colorado Lamb, LLC harvest facility is shown on page 6. The work plan and December 2019-January 2020 budget summary is shown on page 9.

Provide a qualitative summary, or justification for budget expenditures The line-item total budget narrative is listed on pages 7-8.

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Total Construction Budget

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Budget Narrative

Special Purpose Equipment [1] Four 15,000 CFM air make-up units with 1.5million BTU gas fired heaters, galvanized exhaust fans, gas fired

radiant tube heaters, wall louvers, labor for installation and freight from manufacturer to jobsite. [2] 200 horsepower natural gas fired steam boiler, boiler water feed system, hydro thermals, 105-degree mixing

station and 8,000-gallon hot water storage tanks. [3] Carcass coolers, evaporator units, condensing units, freezer with evaporator units, condensing unit, offal

cooler with evaporator, condensing unit and a loading dock with evaporator and condensing units. [4] Total of 151 separate equipment units used in the facility. [5] Concrete sewage collection pits, sewage pumps, roto screen, DAF separator, labor to install and freight from

manufacturer to job site. [6] Steel posts, steel piping, steel gates, steel plates and concrete water tanks with electric heaters and

overflows. [7] Floor drains, underground plumbing, steel piping, hose drops, pipe insulation, air piping, air compressors,

storage tanks and labor and equipment required to install. [8] Required lighting, exit signs, dock lights, back-up lights, electrical duplex receptacles, welder outlets, switch

gear, motor control center, disconnects, conduit, temporary electrical, labor and equipment to install and freight from manufacturer to jobsite.

[9] Office partition wall, fire retardant, doors, frames, cabinetry, store front windows and labor to install. [10] Concrete block walls, elevated locker bases, primed and painted walls and aluminum man doors & windows. [11] Under slab insulation, insulated wall panels, insulated roof panels, equipment and labor to install and freight

from manufacturer to jobsite. [12] Total of 74 doors, labor to install and freight from manufacturer to jobsite. [13] Overhead door, manual operated equipment, dock levelers, dock seals, labor to install and freight from

manufacturer to jobsite.

Contracts/Contractors [14] Required engineering and architect services required to obtain the building permit and construction

drawings. [15] Corner Stone Construction & Excavation was contracted to haul fill material to the jobsite. [16] Earth Engineering Consultants covered sub soil investigation, soil compaction testing and concrete strength

testing. [17] RWT Excavation & Demo was contracted to remove manure from the job site and grading work that

occurred prior to construction. [18] The Wells Resource, LLC was contracted to carry out the study and report of the sewage lagoons. [19] Western Engineering Consultants, LLC was contracted for the engineering and architecture that was needed

for the subdividing of the lots. [20] Vauhn Concrete Products was contracted to construct the manholes that were required along the sewer

and water lines. [21] PROaND was contracted out of New Zealand to design the lamb harvest plant. [22] Empros Financial, LLC was contracted to build the business model used to obtain financing for the project.

Other [23] Concrete floor, manure drainage pit and unload chute with ramp. [24] Pre-engineered metal building, structural frame, rib roof panels, eave and purlin trim and raised open ridge

vent. [25] Material and labor to install concrete foundation, floors per engineered plans, required construction

equipment and forms to pour concrete.

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[26] Material and labor to install approach to dry dock, approach at the carcass load and approach at inedible and hide storage.

[27] Total of 392 columns and panels of various sizes, rail system, rooftop units, labor and crane services to erect and freight from manufacturer to jobsite.

[28] Pre-engineered building, boiler room, electrical room, freezer & dry storage, labor and crane to erect building and freight from manufacturer to jobsite.

[29] Materials and labor to caulk vertical seems, horizontal seams, floor to wall seems and floor saw cuts. [30] Thermoplastic roofing system, insulated crickets to roof scuppers, trim and downspouts, material and labor

warranty, labor, required construction equipment and freight form manufacturer to jobsite. [31] Galvanized stairways, guard posts, roof ladder and labor to install. [32] Total price paid for land including all closing costs. [33] Estimate per engineers report for permit and construction of wastewater treatment facility. [34] Wastewater equivalent treatment units, half of the water tap fee and City of Brush building permit fee.

Indirect Costs [35] Payments derived assuming total $7,000,000 amount financed at 6.43% annual percentage rate over a 7-

year term paid semi-annually. [36] Payments derived assuming 70% of total $4,000,000 maximum commitment amount outstanding over

twelve-month period financed at 4.25% annual percentage rate. [37] Payments derived assuming $8,000,000 total amount amortized over 15-year period at 4.25% annual

percentage rate. [38] Payments derived assuming $8,000,000 total amount amortized over 15-year period at 4.25% annual

percentage rate.

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Work Plan & December 2019 - January 2020 Budget Summary

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Technical Objectives

Responsiveness to NSIIC Stated Priorities (from website) The construction and operation of the Colorado Lamb, LLC harvest plant strongly aligns with the NSIIC funding priorities.

“Strengthen and enhance the production and marketing of sheep and sheep products in the United States through the improvement of infrastructure, business, resource development and the development of innovative approaches to solve long term problems.” To our knowledge, Colorado Lamb, LLC is currently the largest infrastructure project under construction in the United States to benefit the American lamb industry. This state-of-the-art harvest facility will have an 1,800 head/day capacity. “Provide leadership training and education to industry stakeholders.” Colorado Lamb, LLC partners and lead staff are actively engaged with the American Sheep Industry Association, American Lamb Board, National Lamb Feeders Association, U.S. Meat Export Federation, Professional Animal Auditor Certification Organization, Western Range Association, Mountain Plains Agricultural Service, Colorado Wool Growers Association, Colorado Sheep & Wool Authority, and other organizations. Participating with these industry leaders allows for the exchange of information for the continual advancement of the American sheep industry. “Enhance sheep and sheep products in the United States through assistance to all segments of the industry to address sustainable production and marketing of sheep and sheep products.” Streamlining the conduit from the ranch gate to the dinner plate will benefit the industry nationwide. Overfat lambs that enter the food chain, give consumers a less desirable product that can deter future purchases of American lamb. Processing lambs at their optimal weight will help ensure that consumers receive our very best product; while reducing the amount of additional feed for live lambs, and the associated cost of trimming fat to make a case-ready product. Improving the processing timeline, creates a more desirable product which translates into increased consumer demand for American lamb. Improving infrastructure, reputation, and consumer demand for American lamb provides more marketing opportunities for all sizes of sheep operations.

“Promote marketing of sheep and sheep products through an organized method that can measure tangible results.” Colorado Lamb, LLC will report data to the USDA as soon as the minimum thresholds are met for the mandatory price reporting program. The USDA publishes this measurable outcome and it will be available for the entire sheep industry to utilize.

“Enhance the sheep industry by coordinating information exchange and by seeking mutual understanding and marketing within the industry community.” The Colorado Lamb, LLC harvest facility will help the industry fully utilize mandatory price reporting (MPR). As a result of increased packer concentration and confidentiality thresholds, the U.S. sheep industry has been without mandatory prices reporting of carcasses for over two years. The operation of Colorado Lamb, LLC will provide increased market data for the packer reporting requirement, which should enable the MPR program to meet the confidentiality threshold and allow the USDA to publish carcass prices again. Mandatory price reporting

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is a valuable tool for all segments of the lamb meat industry that enables businesses and individuals to make informed marketing decisions about their product. Colorado Lamb, LLC will begin mandatory price reporting upon meeting the USDA minimum reporting requirements. Mandatory price reporting data is also useful to determine value for indemnity loss payments, insurance policies, and for evaluating the need for federal regulations. Prior USDA or other Federal Support None Identification and significance of the issue being addressed From the Ranch Gate to the Dinner Plate: The American Sheep Industry Association (ASI) estimates that of the nation’s ~3.82 million inventory of breeding sheep, approximately 50 percent of our nation’s ewes spent at least part of the time grazing our federally managed, western rangelands (U.S. Forest Service and Bureau of Land Management). Furthermore, according to the 2011 USDA APHIS VS National Animal Health Monitoring System (NAHMS) report, 85.5 percent of the U.S. ewe inventory is represented by 22 states. More than 50 percent of the 22 states listed in the NAHMS report have sent lambs to Colorado feedlots. Providing another regional processing plant will more efficiently channel American Lamb from the extensive production areas of the west and mid-west to the concentrated consumer market on the east coast and other parts of the country. Ron Cole of Cole Consulting is retired from the USDA. He worked for the USDA for 37 years, 33 of them

reporting commodity prices in 7 locations in the U.S.; the last 15 years with an emphasis on lamb and

wool reporting. Cole offers the follow insight on the U.S. lamb market, "The seasonality of supply in the

lamb and sheep industry is a major problem that has yet to be overcome. Directly related to the

estimated 70 % of all lambs born in the US from January to June. Normal marketing of finished lambs

then becomes burdensome from November thru the following March. Currently only 3 companies,

which operate 4 harvest plants and 3 fabrication facilities, cannot orderly process and market this

volume of lamb during this time frame. Decreasing supplies of winter born lambs in CA, AZ and TX are

insufficient to supply the demand for lamb meat during the 3 summer months, which result in these

processing plants holding over old crop lambs to fulfill supply needs into mid-summer. Often times these

lambs are over-fed with very heavy market weights and additional backfat, resulting in lower net dollars

to those that feed those lambs. In the past, old crop lambs have been carried into the fall months, further

adding downward pressure on new crop lamb prices.

Recently, a major harvest and fabrication facility was told by their efficiency experts that the ideal lamb for their operation was a Yield Grade 3.6 ( on a scale of 1 to 5 with 1 being no exterior fat and a 5 having in excess of 0.46 inches of backfat ) and carcass weight of 83.5 lbs. This translates into an over finished lamb which would weigh in excess of 167 lbs. From a meat buyers perspective, this lamb carcass is over-fat and results in meat cuts that are larger than what most consumers chose in their market places. The harvest and processing plants goal is simply to " lower cost of production (per pound) by increasing pounds of lamb meat being processed" in their facility rather than focus on quality and customer preferences. Also of concern is the increasing supply of imported lamb led by subsidized government payments (Ron Cole and others opinions which cannot be verified) by both Australia and New Zealand. Increasing

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supplies are now coming from Iceland and Uruguay with smaller amounts from Canada and Mexico. Nearly all of the major chain stores in the U.S. are using this imported meat as costs are significantly lower via long term supply contracts with companies in those countries. The American Lamb Board has stated: ‘Imported lamb meat now supplies 70% of the total lamb consumption in the U.S.’ There is a very substantial price difference between imported lamb and domestic lamb.’” Strategically located in the heart of the largest lamb feeding region in the United States, the Colorado Lamb, LLC harvest plant will impact the U.S. sheep industry nationwide by improving the quality of American lamb available to consumers, create a more competitive marketplace for American lamb by reducing packer concentration, and increase industry marketing tools by participating in Mandatory Price Reporting (MPR). What are the goals to be achieved with this grant funding? The goal of Colorado Lamb, LLC is to provide the U.S. sheep industry with a new state-of-the-art harvest facility for lambs that will be a crucial conduit to provide quality American Lamb to consumers. The plant is located at 1625 Agripark Road in Brush, Colorado (Morgan County). Work Plan The work plan is shown on page 9.

Related research or other efforts in this area of which you are aware, including an analysis of the competitive landscape if the award is for a commercial application To our knowledge, Colorado Lamb, LLC is the largest packing plant infrastructure project currently under construction in the United States. There has not been a new packing facility built in this region in the last 30 years. Currently, there are only two large volume packers in the western United States. Bringing a third, large volume packer online will significantly contribute to the reduction of packer concentration in the United States.

Potential post application in this area of development of research or commercial endeavor This landmark industry infrastructure project will provide significant and long-term benefits to the U.S. sheep industry. Providing an essential processing and marketing component to producers, feeders, and breakers will strengthen industry stability and provide an opportunity for increased growth of all sizes of U.S. sheep operations.

Background and rationale (citation of publications if any) Reduce the amount of overfat lambs that enter the U.S. food chain

“If surplus lambs in the feedlot during winter and spring cannot be harvested on time, they will remain in the feedlot until supplies diminish. These lambs are harvested at much heavier weights (85+ pound carcass) than ideal for their frame size. Notice in the figure below that the average carcass weight increases as the bulk of western lambs reach slaughter. These overly-finished lambs have a lot of extra fat that needs to be trimmed (at a cost to the producer, packer, and consumer) and there are concerns that eating quality is diminished.” “At times, lambs are kept on feed past the point where they are market-ready. As noted earlier, this can result in a backlog of slaughter lamb supplies or old crop, overly finished lambs, which tends to have a negative impact on the industry.” [United States Lamb Resource Center – A Review of Current Information Seasonality of the U.S. Lamb Industry]

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Enable USDA to meet confidentiality requirements and resume Mandatory Price Reporting for U.S. lamb carcasses “Livestock Mandatory Reporting was developed to facilitate open, transparent price discovery and provide all

market participants, both large and small, with comparable levels of market information for slaughter cattle,

swine, sheep, boxed beef, lamb meat, and wholesale pork.” [USDA Agricultural Marketing Service website]

“3/70/20 Confidentiality Guideline - The Livestock Mandatory Reporting (LMR) Act of 1999 requires the USDA to

publish mandatory data on livestock and meat price trends, contracting agreements, and supply and demand

conditions in a manner that protects the identity of reporting entities and preserves the confidentiality of

proprietary transactions.

3 - At least 3 reporting entities need to provide data at least 50 percent of the time over the most recent 60-day

time period.

70 - No single reporting entity may provide more than 70 percent of the data for a report over the most recent

60-day time period.

20 - No single reporting entity may be the sole reporting entity for an individual report more than 20 percent of

the time over the most recent 60-day time period.” [USDA Agricultural Marketing Service website]

Reduce market volatility by expanding processing options

“Seasonality of lamb production is an issue that causes inefficiencies and market volatility in the U.S. lamb industry. Each sector of the industry should consider management alterations to better supply a more consistently available product.” [United States Lamb Resource Center – A Review of Current Information Seasonality of the U.S. Lamb Industry]

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Relationship to industry, including technical, economic, and social benefit. Colorado Lamb, LLC has a truly unique opportunity to service several vital segments of the American sheep industry: producers (large and small), feeders, breakers, and American lamb consumers. Colorado Lamb, LLC is a brand new, from the ground up, state-of-art lamb harvesting facility. New construction offers the benefit of increased efficiency over retrofitting older plants. The live animal handling system is designed by Grandin Livestock Handling Systems, Inc. which is the gold standard in humane, low-stress livestock handling. The pens are designed to efficiently handle small lots of lambs, and that’s very beneficial to small flock producers. The harvest floor design includes the latest ergonomic improvements, evisceration improvements, streamlined process flow, and better sanitation throughout the harvest process, including cleanup. Environmental sustainability includes the most current technology for controlling and monitoring utility usage for water, effluent, and electricity both on and off-site. The latest design standards for improved efficiency of hot boxes and freezers are incorporated into the plant design. Kosher and Halal processing capabilities have been designed and built from the ground up. The plant will utilize a cloud-based ERP (enterprise resource planning) computer operating system for real-time operating information and data capture; and the plant has the capability to expand to individual animal ID tracking. A conservative estimate of 50 percent of the nation’s ewe production will have the opportunity to consider using the Colorado Lamb, LLC processing facility. Northeast Colorado is the largest lamb feeding region in the United States. This provides a readily available source of finished lambs near the Colorado Lamb, LLC harvesting facility for those producers and feeders that want to take advantage of a new and efficient marketing opportunity for their product. Breakers will now have a greatly expanded opportunity to purchases carcasses from a breaker only supplier, creating a more competitive environment for pricing. American lamb consumers benefit by receiving a more reliable, consistent, high-quality product they will want to purchase again and include in their at-home and restaurant dining choices. The western range sheep industry is besieged with the constant onslaught of attacks from radical anti-grazing groups; and the livestock industry as a whole is often targeted on social and mainstream media by individuals and groups that do not like or understand production agriculture. The opening of the new Colorado Lamb, LLC processing facility is a nationwide statement of commitment to the sustainability of the American sheep industry. It is a long over-due and much needed investment in the future of American agriculture, and will play a pivotal supporting role in the success of farms and ranches throughout the U.S. With the creation of new jobs at the Colorado Lamb, LLC harvest facility, the plant will be a major economic contributor to Morgan County and rural northeast Colorado. The packing plant will employ an estimated 60-75 skilled laborers, administrators, and professional during normal operations. The projected annual payroll is $2-4 million, and the economic impact to the city and community of Brush is expected to be approximately $4-5 million annually. In addition to paying property taxes and direct salaries and benefits to employees, the plant will bring in money to the community that will help support local businesses. Businesses that will benefit as a result of the plant operations include trucking, feed and farm supplies, fuel, and groceries. The harvest facility will help revitalize this rural, agricultural-based community.

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Cost benefit analysis An estimated cost benefit analysis is shown below. At this time, it would be extremely difficult to assign a dollar value to cost savings such as utilizing mandatory price reporting, on time harvesting, the benefits of a modern facility with less stoppage and down time, and increased competition to purchase lamb. Therefore line #43 is listed as TBD (to be determined) and the spreadsheet does not show a dollar value for those anticipated cost savings measures.

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Quantitative Analysis Summary [Line #43 Cost Savings TBD]

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Policy or decisions affected by results Mandatory price reporting data can help determine value for indemnity loss payments, insurance policies, and for evaluating the need for federal trade and marketing regulations. Mandatory price reporting is also a valuable tool for all segments of the lamb meat industry that enables businesses and individuals to make informed marketing decisions about their product.

Bio sketch of each principal person

Spence Rule – General Manager

• Lamb feedlot operator farmer and rancher (Brush, Colorado) – family operation including wife, Connie, three sons and their wives and children that are committed to the sustainable future of the American sheep industry

• Forty-two years of experience in the sheep industry, including production, feeding, and packer/breaker (fabricating)

• Currently owes a flock of ewes to produce rams for western range sheep ranchers

• Own and operate feedlot with a 35,000 head capacity, and feed lambs on pasture based on availability

• Thirty-five years of experience in the packer segment of the industry (co-owner/manager of Iowa Lamb Company and Denver Lamb Company), both facilities had an associated breaker/fabrication business

• Former co-owner Iowa Lamb Processors (lamb fabrication facility)

• Industry Involvement: Served on the American Sheep Industry Association (ASI) Executive Board, American Lamb Board (Past Chairman), National Sheep Improvement Program (Board Member), Colorado Wool Growers Association (Past President)

Mike Harper – Chief Procurement Officer

• Third generation lamb feeder, the Harper family has been feeding lambs since the mid-1970’s, and the fourth generation is interested is the business as well

• Own and operate feedlot with a one-time capacity of 65,000 lambs and ~3,000 head of cattle, able to run 2.5 times the capacity through the feedlot on an annual basis

• Long-standing working relationships with producers that supply inventory to the feedlot (some relationships for over 40 years)

• Industry Involvement: Served on American Sheep Industry Association (ASI) Lamb Council, Colorado Wool Growers Association (Past President), Colorado Sheep and Wool Authority (Board Member), National Lamb Feeders Association (Board Member)

Steve Raftopoulos – Chief Financial Officer

• Bachelor of Science, Accounting, University of Colorado 1975

• Involved in range sheep production since 1975, and lamb feeding since 1984

• Owner/manager of Two Bar Sheep Company, an open range sheep operation utilizing private, State, BLM and forest service lands in Colorado and Wyoming (Two Bar Sheep runs 9,000 - 10,000 producing ewes with 2,000 replacements)

• Owner/manager Raftopoulos Brothers Enterprises, a feeding operation that feeds ~40,000 lambs and 400 cattle annually

• Previous co-owner of Iowa Lamb Corporation (packer) and Iowa Lamb Processors (breaker/fabricator)

• Industry Involvement: Served on the American Sheep Industry Association (Past President), Colorado Wool Growers Association (Past President), and Colorado Sheep and Wool Authority (Past Chairman), and Western Range Association (Past President and Board Member)

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Zacharias Raftopoulos – Financial Consultant

• 2019 Certified Management Accountant (CMA)

• 2018 Certified Public Accountant (CPA), State of Montana

• 2015 Bachelor of Science, Business Administration, Accounting – University of Montana (Missoula)

• 2015 Bachelor of Science, Business Administration, Finance – University of Montana (Missoula)

• 2015 Bachelor of Arts, Psychology – University of Montana (Missoula)

• Graduated with Honors, 3.5 GPA

• 2018-current – Lead Consultant, Empros Financial

• 2018-current – Controller, CoreVenture

• 2016-2017 – Staff Accountant-Internal Audit, Hein & Associates, Business Advisory Services Dept.

• 2016-2017 – Jr. Analyst-Financial Valuations, Hein & Associates, Business Advisory Services Dept.

• 2014 – Client Associate-Summer Intern, Infinity Financial Services

Kevin R Quam – Consultant (Plant Management and Procurement/Sales)

• Bachelor of Science, Agricultural Business, Colorado State University 1980

• 1976 – Production – Monfort, Inc. (Greeley Beef)

• 1978-1980 Night Crew – Monfort, Inc. (Kuner Feedlot)

• 1981 – Quality Assurance – Monfort, Inc. (Grand Island Beef)

• 1981 – Lamb Buyer – Monfort, Inc.

• 1993 – Lamb Carcass Sales – ConAgra

• 1995 – Lamb Division, Vice-President, Sales and Procurement – ConAgra

• 2002 – Lamb Division, Vice-President, Swift & Company

• 2007 – Head of Lamb Division, JBS

• 2015 – Lamb Sales – Mountain States Rosen

• 2016 – Consultant, Colorado Lamb, LLC/Colorado Lamb Processors – Brush)

• Industry Involvement: Served on American Lamb Board (Board Member), National Lamb Feeders Association (Member), Sheep Industry Taskforce (Member), and U.S. Meat Export Federation (Executive Committee)

Wayne Schmeeckle is the President of Schmeeckle Bros. Construction Company and will be the project manager for the construction of the Colorado Lamb, LLC harvest facility. Mr. Schmeeckle started in the construction industry in the mid 1970’s with his father’s construction company which specialized in commercial and agricultural metal buildings, grain storage, and grain handling equipment. He began as a crew foreman and eventually became one of the top salesmen with the company before leaving in 1985 to start his own company. In 1989, he also started a very successful crane service company which he later sold in 2011. Schmeeckle Bros. Construction Co. continues to focus mainly on animal harvest facilities.

Nick Heitkemper – Rabo Agrifinances, LLC Mr. Heitkemper is Vice-President, has been an agribusiness banker for

ten years providing loans and leases to medium/large size farms and agribusinesses. He began his career in 2008

with Bank of the West’s Agribusiness Group in the Central Valley of California providing financial services to

dairies, vineyards, orchards, and vegetable farmers. In 2013 Mr. Heitkemper took a position with Rabobank in

Loveland, CO concentrating on providing loans and financial services to farmers and ranchers. He is passionate

about helping farms and agribusinesses grow in size as well as fulfilling Rabobank’s mission, “To help farmers feed

the World.” Mr. Heitkemper holds a degree from Gonzaga University in Finance and Economics.

Colorado Lamb Processors, LLC is comprised of senior partners, Spence Rule, Steve Raftopoulos, and Mike Harper, and minor percentage holder Kevin Quam, and will operate the plant after the construction phase has been completed.

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Financial Feasibility Colorado Lamb, LLC has secured a lending option to ensure the completion of the harvest facility, the project is financed with a 15-year loan.

Business Soundness Refer to Work Plan (page 9). The Project Management Team holds Progress Report Meetings every 2-3 weeks, and on an as-needed basis to address any problems and to ensure timely completion of each phase of construction. Colorado Lamb, LLC bonded the project at 10 percent base pay, and the remaining 90 percent is paid upon completion of the advancing phases of construction. Colorado Lamb, LLC has secured a 15-year lending option to ensure completion of the project.

Colorado Lamb, LLC has both a Chief Financial Officer and a Financial Consultant to ensure that proper accounting procedures are followed for all financial aspects of the business, including meeting the accountability requirements for any federal dollars received. Quarterly and year-end (and upon request) financial statements, and budget vs. actual comparisons are prepared for the partners of Colorado Lamb, LLC.

Colorado Lamb Processors, LLC - is a subsidiary of Colorado Lamb, LLC and will be the company in charge of the plant operations after the construction phase is complete. Colorado Lamb Processors, LLC has the same managing partners, and plant manager as Colorado Lamb, LLC.

Management Ability

Project Management Team The key to success for maximizing processing volume and sales at the plant rests upon the well-earned reputation, and extensive experience of the Colorado Lamb, LLC management team. The management team is vertically integrated with its working knowledge of sheep raising and management, lamb feeding, packing, breaking, and marketing. This extensive knowledge of all segments of the lamb meat industry is the nexus for providing fair prices to producers and feeders for lambs entering the plant; and brokering fair deals for carcass sales; while maintaining a sustainable business model with the capacity to expand to meet future demand.

Spence Rule (Rule Feeders, LLC) – General Manager Entrepreneurial and driven, Mr. Rule’s extensive background in the sheep industry is an ideal fit as General Manager for Colorado Lamb, LLC. Over the course of his career, he has been directly involved in the sheep industry as a producer, feeder, packer, and breaker which provides an unparalleled depth of knowledge. With years of experience of both buying and selling at multiple levels within the lamb meat industry, he is successfully launching the build of this state-of-the-art harvest facility. Mr. Rule was a joint owner/manager of the Denver Lamb Company (~1984 – mid-1990’s). He was also joint owner/manager of Iowa Lamb Corporation (packer) and Iowa Lamb Processors (breaker/fabricator) from the mid-1990’s until the companies were sold to Transhumance, Inc. in 2010. Mike Harper (M & M Holdings, LLC) – Chief Procurement Officer Mr. Harper’s well-earned reputation of integrity and fairness has created long-standing working relationships with sheep producers throughout the western United States. His solid track record of securing a high volume of lambs for feeding and processing will enable Colorado Lamb, LLC to have the inventory backing necessary to get the plant operational and move it forward in processing. Mr. Harper is a third-generation lamb feeder, and some of his working relationships with lamb suppliers date back over 40 years.

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Steve Raftopoulos (Raftopoulos Enterprises, LLC) – Chief Financial Officer Analytical, detail-oriented, and respected throughout the sheep industry, Mr. Raftopoulos’ has the bottom-line responsibility of maintaining the financial accountability of Colorado Lamb, LLC. His business acumen has contributed to the successful management of one of the largest range sheep operations in Colorado, as well as successful lamb and cattle feeding operations. A vertical integration specialist, he was also a joint owner/manager of Iowa Lamb Corporation and Iowa Lamb Processors until it was sold to Transhumance, Inc. in 2010. Zacharias Raftopoulos (Empros Financial, LLC )Financial Consultant - Graduating with honors in 2015, Zacharias Raftopoulos has three degrees for the University of Montana, and is a Certified Public Accountant. Responsibilities with Colorado Lamb, LLC include business model formulation to obtain bank financing; managing protocols for Generally Accepted Accounting Principles (GAAP); Enterprise Resource Planning (ERP) selection and implementation; budgeting, and ensuring data accuracy.

Kevin Quam – Consultant (Plant Management and Procurement/Sales) - Colorado Lamb, LLC is utilizing the expertise of Kevin Quam to help ensure the Colorado Lamb, LLC harvest facility is set up to run as efficiently as possible. Mr. Quam is a leading expert in the packing industry with a career dating back to 1976. His diverse management background includes quality assurance, best management practices (animal handling and welfare; food safety and handling), Hazard Analysis Critical Control Point plans (HACCP), Occupational Safety and Health Administration regulations (OSHA), and both buying and selling of lambs and lamb meat at various levels of the industry.

Schmeeckle Bros. Construction – Wayne Schmeeckle (Plant Design and Construction) - Colorado-based Schmeeckle Bros. Construction was founded in 1985. They are the industry leaders in the design and build of beef processing facilities using only the highest quality material, machines, and processes known to the industry. Their projects are built with consultation from the leading experts in the industry and the latest innovations available to give the customer the best value. For over 35 years, Schmeeckle Bros. Construction Company has been in the business of specializing in animal harvest facilities. They have designed and built numerous operations throughout the United States and Canada, emphasizing both employee and animal safety. One of the largest projects completed included the $200 million beef processing facility in Kuna, Idaho which was recently awarded the 2018 Plant of the Year award. A well-known ally and supporter of Schmeeckle Bros. is Dr. Temple Grandin, and the company has worked with her on numerous projects. The Schmeeckle Bros website (schmeecklebros.com) features major packing projects completed, as well as a comprehensive list of 39 other projects completed.

Rabo Agrifinances, LLC – Nick Heitkemper (Finance Company) - Rabo Agrifinances, LLC (RAF) is a finance company headquartered in the USA. RAF’s mission is to provide financial services including loans and leases to the top 25 percent of farmers and ranchers in the United States. RAF is a wholly owned subsidiary of Rabobank. Rabobank is headquartered in The Netherlands and is the largest lender to the agricultural industry in the world. Rabo Agrifinances, LLC is providing the financial backing for Colorado Lamb, LLC.

This diverse and experienced leadership team is paving the way for expanding marketing opportunities for American lamb!

Potential Industry Impact The Colorado Lamb, LLC harvest facility will help alleviate the constricted flow of lambs from pasture and feedlots that bottleneck into the limited capacity of existing processing plants. The bottleneck at the packer level periodically creates a backup of lambs in feedlots and on pasture, resulting in a less desirable product when lambs must be held on feed and can’t be slaughtered on time.

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Colorado Lamb, LLC will provide a much-needed source of lamb carcass availability, giving breaker-only businesses a new opportunity to buy American Lamb. Lambs from all over the western and mid-west United States flow through Colorado feedlots on the way to processing plants. Packer concentration is a problem in the lamb market, as only a few large-scale slaughter plants exist in the U.S. Reduced competition drives down market prices, cutting into the profitability of lamb producers, feeders, and breakers. A new processing plant will give American lamb producers and feeders expanded marketing opportunities for their lambs.

Industry Support (Need for Project)

“All segments of the industry are losers as a result of heavy, over-finished lambs which were not harvested at the correct time and weight ranges.” [Historic Overview of the U.S. Lamb Market – Ron Cole, Cole Consulting, August 22, 2019] The need for this project is best demonstrated by the previously presented information: From United States Lamb Resource Center – A Review of Current Information Seasonality of the U.S. Lamb Industry -

• “Seasonality of lamb production is an issue that causes inefficiencies and market volatility in the U.S. lamb industry. Each sector of the industry should consider management alterations to better supply a more consistently available product.”

• “If surplus lambs in the feedlot during winter and spring cannot be harvested on time, they will remain in the feedlot until supplies diminish. These lambs are harvested at much heavier weights (85+ pound carcass) than ideal for their frame size. Notice in the figure below that the average carcass weight increases as the bulk of western lambs reach slaughter. These overly-finished lambs have a lot of extra fat that needs to be trimmed (at a cost to the producer, packer, and consumer) and there are concerns that eating quality is diminished.”

• “At times, lambs are kept on feed past the point where they are market-ready. As noted earlier, this can result in a backlog of slaughter lamb supplies or old crop, overly finished lambs, which tends to have a negative impact on the industry.”

USDA Agricultural Marketing Service website:

“Livestock Mandatory Reporting was developed to facilitate open, transparent price discovery and

provide all market participants, both large and small, with comparable levels of market information for

slaughter cattle, swine, sheep, boxed beef, lamb meat, and wholesale pork.” [USDA Agricultural

Marketing Service website]

“3/70/20 Confidentiality Guideline - The Livestock Mandatory Reporting (LMR) Act of 1999 requires the

USDA to publish mandatory data on livestock and meat price trends, contracting agreements, and supply

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and demand conditions in a manner that protects the identity of reporting entities and preserves the

confidentiality of proprietary transactions.

3 - At least 3 reporting entities need to provide data at least 50 percent of the time over the most recent

60-day time period.

70 - No single reporting entity may provide more than 70 percent of the data for a report over the most

recent 60-day time period.

20 - No single reporting entity may be the sole reporting entity for an individual report more than 20

percent of the time over the most recent 60-day time period.”

Historical Overview of the U.S. Lamb Market – Ron Cole, Cole Consulting – August 22, 2019 [see attached

report]

Colorado Lamb, LLC would like to thank the National Sheep Industry Improvement Center for the opportunity to submit our project.

Certification To the best of my knowledge and belief, all data in this application is true and correct. The document has been duly authorized by the governing body of the applicant and the applicant will comply with all grant requirements if the assistance is awarded.

Name of authorized representative: Spence Rule Title: General Manager Email: [email protected]

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Historical Overview of the U.S. Lamb Market Prepared for Colorado Lamb, LLC

By Ron Cole, Cole Consulting Aug 22, 2019

I was asked to provide a historical overview of the U.S. lamb market, noting recent changes in structure and

vertical integration, in order to provide a comprehensive analysis of the present challenges being faced by the

sheep industry and how the new Colorado Lamb, LLC facility will have a positive effect on the general market.

Historically, 80-85 percent of all lambs born in the US are from January thru May, with the western states lambs

which utilize public lands, from March thru June. This results in a large volume of this production needing to be

marketed and processed from November of the current year thru March, of the following year. 10-15 years ago,

in order to meet weekly retail customers’ needs, lambs were often grazed out on alfalfa, corn stocks or other

previously harvested crops, in order to “spread out supply” over a longer time frame. However, as farming

intensified, only a small % of lambs can be grazed in this manner due to lack of available crop residues. This results

in too many lambs needing to be harvested and marketed in a 3-5 month winter period. Grocery stores, retailers

and food service necessitate a 52-week supply of consistent lamb products. However, the past 10 years or so,

this concentration of lambs has not been able to be harvested and marketed in a timely manner, often resulting

in over fed, over-weight and over finished lambs, which are carried into the summer months. Numerous times

in the past 10 years, old crop, heavy weight lambs were still being harvested from August thru October. During

this same time frame, the number of available new crop spring lambs has been sharply reduced in Texas, Arizona

and California, resulting in the marketing chain trying to spread out this supply of old crop lambs to meet the short

available supplies of new crop lambs during the summer months.

The direct result of these actions has resulted in lambs which weigh is in excess of 180 pounds with a higher

percentage of YG 4 & 5’s than lamb customers prefer. This extra weight and finish results from too many days on

feed on high energy rations because of the lack of capacity to harvest these lambs in a timely manner. Currently,

3 companies who operate 4 harvest and processing facilities, cannot orderly harvest and market the lambs at the

desired weight and yield grade preferred by lamb customers. This is a highly vertical, but small industry, in relation

to other meat industries. It is compounded by the fact that not all of these companies purchase lambs on a weekly

basis. One company is a cooperative with the majority of the supply coming from its members, other companies

purchase and graze out lambs that they own or those that they put into custom feedlots to meet their needs at

certain times of the year. When marketing time arrives, preference is for their own lambs, not outside lambs.

Also, some companies contract lambs from producers, some with set forward contracts, others to be negotiated

at delivery time. The point is this – when excessive supplies exist, some companies cannot purchase additional

lambs to harvest due to supply agreements. The long term, downstream effects have been very detrimental to

the sheep industry.

Increased costs of feeding lambs past timely harvest, as well as increased trimming of excess finish in processing,

as well as the significant price discounts associated with heavier carcass weights over 85 lbs and over YG 3’s cost

this industry an enormous amount of money- this includes retail customers, processors, feeders and producers of

the feeder lambs.

Retailers reported to me that in 2018, lambs were being trimmed which had from 25-50 lbs of excess fat on racks

and loins before sales could be made. The increased cost of trimming product, the out of weight specifications

for each cut, as well as the discounts that were suffered as a result excessive weight and size, were historical

amounts. This all relates back to harvesting lambs at the correct weight and finish. An additional harvest facility

would help increase overall harvest capability during this time. Compounding the problem were 2 fires at the

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same harvest facility, as well as physical and internal harvest issues at an additional plant. These additional

problems resulted in several weeks of no harvest at these facilities this past year, further compounding the

industry’s ability to harvest lambs in a timely manner.

During the past 15 years, market weights of lambs have continued to increase for several reasons: producers

needed additional revenue to cover increasing costs; improved genetics with more information available on

selection of ewes and rams with emphasis on twinning ability and growth traits; the need by feeders to “ reduce

overall “ cost of finished lambs by increasing weight gains and market weights; a desire by the fabrication sector

of this industry for larger middle meat cuts; and the ability to further process more lamb meat into case ready

product. Efficiency of plant operations has become a # 1 priority rather than quality of product produced! Ten

years ago, average live market weights were in the 130-150 lb range while today they have now increased to 145-

170 lbs being the norm, often weights up to 180 lbs are not uncommon. In response to these larger lambs,

discounts have increased on these heavier weight carcasses: now 75-85 lb carcasses are included in the normal

mix at no discount, however, 85-100 lbs are now being discounted $ 10.00-15.00 per cwt normally, at times during

the year as much as $ 30.00 per cwt. Discounts on over 100 lb carcasses range from $20.00-30.00 per cwt with

larger discounts with more than ample supplies of lamb are available. (Reminds us of the similar situation in the

cattle industry as carcass weights increased dramatically in the early 2000’s and the meat could no longer fit into

the prepared boxed beef containers. The emphasis at this time was to lower costs of production by being more

efficient through processing heavier cattle resulting in lower cost per lb. processed.) This same trend has now

entered the sheep industry as well.

However, increased weight usually results in price discounts to the producer, and feeder and less profitability of

major feeding operations: 10-15 years ago, YG 4’s were part of the normal trade ( 8-12% of consist on yearly

basis) and YG 5’s were discounted $ 10.000-12.00 per cwt on top of any weight discounts. Today, the industry

has moved to heavier weights and with that comes lambs with more external finish. One major company has now

shifted its production goal to be a YG 3.6 and 83.5 lb carcass. As a result, an increasing number of lambs have

shifted into the YG 4 and 5 categories. During the heavier marketing months, the inability to harvest these lambs

on time has resulted in excessive weights over 200 lbs with 25-30 % of production finalizing as YG 4-5’s.

Currently, discounts for YG 4’s are $ 7.00-12.00 per cwt and an additional discount of $ 10.00-20.00 on YG 5’s.

This is in addition to the carcass weight discounts. Thus YG 4-5 which are heavier than 85 lb carcasses are being

discounted $ 17.00-27.00 per cwt or an average of $ 19.80 per head. Over 100 lb carcasses are discounted $

27.00-42.00 per cwt or an average of $ 38.00 per head. This does not include trimming losses incurred by the

fabricator of the product or the extra cost of feed that was used resulting in the excess weight and finish.

This results in an excessive amount of trimming by processors and retailers with little return in value, increased

processing costs, lower meat yields and less efficiency throughout the entire marketing system – All segments

of the industry are losers as a result of heavy, over finished lambs which were not harvested at the correct time

and weight ranges.

The weekly US F.I.S. (Federal Inspected Slaughter of sheep) averages 38,000 head. This new plant, when fully

online, will be able to increase weekly slaughter levels by 8-10 %. This increase will be significant in helping to

keep the industry more focused on weekly market weights and movement of lambs thru the entire market system.

The final result will be a more “current supply” of lambs, eliminating many of the discounts received by overweight

and over finished lambs currently being marketed. This will eliminate many of the current price discounts being

received on these lambs and result in more profitability for all segments of the industry – producers, feeders,

harvest and processing facilities – as well as more satisfied customers!

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I am firmly convinced that the addition of a new harvest facility will significantly help with harvesting lambs,

especially during the critical winter months when supplies usually exceed the current industries ability to process.

It will also offer an opportunity for a variety of local ethnic market lamb and goat suppliers to additional facilities

to harvest lambs for several ethnic communities and provide local produced meat products which was processed

in a USDA Inspected and Graded facility and can be marketed anywhere in the US to meet their customer’s needs.

Appendix:

# 1 Graphed relationship of USDA Mandatory Price Reporting (LM-352) of weekly weighted averages of

lambs – both price and weight (Comprehensive report)

# 2 Comparison graph using same data comparing prices for 2018 and 2019 of weekly weighted price vs

weekly average weights

# 3 Weekly graph of US FIS (Federal Inspected Slaughter of Sheep) for 2010-2018

#1 USDA Mandatory Price Reporting (LM-352) Weekly Market Weights – Comprehensive Report

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#2 USDA Mandatory Price Reporting Data LM-352

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#3 Weekly Graph of U.S. Federally Inspected Slaughter (US FIS) 2010-2018