Nationwide co-op to buy lambs this fall

The Canadian Lamb Producers Co-operative is ready to launch.

Notices have been sent out to lamb producers, who have until Aug. 6 to sign a 36-month production agreement committing them to sell a minimum of 25 lambs each year, buy a $500 share, and pay a one-time $35 per head fee for each lamb they intend to sell to the co-op.

“With prices being the way they are, I’m suspecting that a lot of people will want to give this a try,” said Pat Smith, operator of Sarto Sheep Farms near Steinbach.

“Essentially, they are buying a lifetime quota to deliver through the co-op’s marketing organization.”

Smith said 166 lamb producers have expressed interest in joining the first-ever, nationwide farmer-owned co-op that aims to market its members’ production via a national and international brand.

Government restrictions prevent lamb producers from committing more than the number of lambs equivalent to 25 per cent of their ewe flock.

The co-op’s subsidiary, the Canadian Lamb Company, is also moving into the active business stage, said Terry Ackerman, the new company’s CEO.

“That’s actually being formed today. We just met with the lawyers,” Ackerman said in an interview last week.

Seed money for the company will come from share sales as well as the $35-per-head fee, but further capitalization will come from additional shareholders.

Forming the co-op, first conceived 2-1/2 years ago, required exemptions from having to file a prospectus in each province, which would have cost about $250,000 per province.

That has implications for other commodities, Ackerman said.

“Every single province had to agree,” he said. “Now the pork guys can set up a co-op. They couldn’t do that before. They had to set up little co-ops in each province.”

It took about 18 months to gain the exemptions, which come with the caveat that all shareholders must have a similar interest — in this case, restricting membership to those actively involved in lamb production — and be aware the investment is risk capital and could vanish if the business is not successful.

“That’s what took so long. The regulators knew they were opening a door,” Ackerman said.

The co-op plans to buy as many finished lambs this fall as it is capable of financing — possibly 10,000 head, pick them up at mustering points in each province, and then slaughter them at two federally inspected facilities, one in Ontario and the other in Alberta. The plan is to have a contract processor make 12 products, including kebabs, sausages, and lamb burgers.

“Before we got started, we had to figure out what to do with the grind, the rumen, the head, and other parts,” said Ackerman. “Anybody can sell racks of lamb, but you go broke with what you don’t sell.”

A five-cent-per-pound premium over the average Cooks-town price will be paid for members’ lambs, regardless of their province of origin, and investors will be eligible for dividends after the first three years. The co-op’s head office will be in Saskatoon, with a regional office in Guelph.

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