Date of Award

Fall 12-7-2016

Degree Type

Report

Degree Name

Master of Science (MS)

Department

Applied Economics

First Advisor

Dr. Man-Keun Kim

Abstract

The U.S. sheep and wool industry is one of the oldest agricultural industries within the country. Since the mid 1940’s the industry has witnessed dramatic annual declines in sheep inventories. Many factors have contributed to the decline of the sheep industry including declining consumption of lamb and mutton, the growth in man-made fiber use, scarcity of labor, and predator losses. The U.S. congress has attempted to slow this decline throughout the years with various policy including the use of wool marketing loan programs. Such programs are intended to help bring stability as well as to mitigate price risk within the industry. However, despite these efforts the industry continues to experience annual declines in inventory.

The United States has vast quantities of public land especially within the western states that is utilized for grazing of livestock every year. Public-land grazing is an important element within the sheep industry with a large portion of sheep producers utilizing the resources available through public-land grazing. For the vast majority of this public land, the fee to graze livestock is charged on a per AUM (animal unit month) basis and is established annually through the use of a set formula. Public grazing fee policy is a widely debated topic with many opposing viewpoints. This research will attempt to evaluate the effects on the sheep and wool industry of policy change in regards to increasing or decreasing the public grazing fee.

This analysis uses capital stock inventory accounting methodology to create an econometric model of the U.S. sheep and wool industry. The model is then used to quantify the impact of different levels of public grazing fees under three scenarios which represent a baseline (current level of grazing fee), an increase in the public grazing fee, as well as a decrease in the grazing fee, respectively. Results indicate under a baseline no change scenario the sheep industry will remain relatively stable with some modest decline in numbers expected within the next five years. Abolishment of the public grazing fee would be expected to bring added stability to the sheep and wool industries with total sheep inventories expected to remain fairly constant with some modest growth projected within the next five years. This suggests that lowering the public grazing fee could be a possible policy alternative which could be implemented to help bring stability to the sheep and wool industries. Conversely, projections indicate that raising the grazing fee would have an adverse effect on these industries and contribute to a projected increase in the rate of decline of the sheep and wool industries.

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Agribusiness Commons

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