The $7.99 Leg of Lamb

A week ago, I made the case that a new livestock farmer should focus on wholesale auction sales rather than jumping immediately into the retail market. You can read that article here.

My reasoning was simple: before a farmer starts worrying about customers, marketing, farmers markets, and retail sales, they need to develop solid production systems and understand their costs. Through my own experience—and conversations with many other farmers—I believe there is a strong case for starting with wholesale sales.

Recently, however, I came across something that highlights just how difficult the retail market can be.

One of our family’s favorite cuts of lamb is a butterflied leg of lamb. Back when Beth and I sold lamb at farmers markets, it was one of our best-selling products.

During the cooler months, we typically had the butcher leave the legs whole. But once summer arrived, we switched to butterflied legs because customers loved grilling them. The cut is tender, flavorful, and easy to prepare.

To help promote sales, Beth and I would cook a butterflied leg of lamb at the market and offer samples to passing customers. Almost every time we did this, we sold out.

At the time, we sold our lamb for $17 per pound. Most legs weighed between 2½ and 3 pounds.

A few days ago, Beth was shopping at Aldi when she found one of their seasonal specials: a seasoned Australian butterflied leg of lamb. She brought one home, and we decided to give it a try.

The package weighed 3.02 pounds and sold for $7.99 per pound, for a total cost of $24.13.

That caught my attention.

Back in 2022, I was selling a similar cut for $17 per pound. Aldi was offering imported Australian lamb for less than half that price.

This is where retail becomes challenging for a small sheep producer.

When you enter the retail market, you are not just competing with the farm down the road. You are competing against entire sheep industries in countries like Australia and New Zealand.

Those countries have spent decades developing genetics suited to their environments and building highly efficient production systems. They also operate on a scale that most American sheep producers can hardly imagine.

While large sheep operations certainly exist in the western United States, Australian farms often manage thousands of sheep in a single enterprise. That scale allows them to produce lamb at costs that are difficult for small American farms to match.

The result is that imported lamb frequently appears in American supermarkets at prices that leave little room for local producers to compete strictly on price.

I learned this lesson firsthand.

When I calculated my production costs in 2018, excluding my labor, I estimated that I was producing lamb for approximately $5.99 per pound. Yet I held my prices low because I was trying to build a customer base.

Looking back, I was essentially absorbing part of the cost myself in order to grow the business.

So how did the Aldi lamb compare to ours?

Honestly, it was quite good.

The flavor was excellent. If I were being critical, I would say it wasn’t quite as sweet as our lamb, and the texture seemed slightly more fibrous. Our lamb tends to be softer and more tender. Some of that difference may simply come from breed genetics and production methods.

But there was nothing wrong with the product. It was enjoyable and represented good value for the price.

That observation leads me back to my original point.

For most beginning sheep farmers, it probably makes more sense to focus on production first and retail second.

Retail marketing can certainly be profitable. Some farms do it exceptionally well. But before you reach that point, you need reliable production systems, good record-keeping, a strong understanding of your costs, and enough volume to justify the extra work.

Selling wholesale allows a new farmer to concentrate on improving genetics, pasture management, facilities, flock health, and overall efficiency without also carrying the burden of direct marketing. (I provide more information about time management, labor requirements, processing logistics, and other fireman surprises that I was engaged in on my farm that suffered due to my focus on retail sales all can be found in the article that I wrote here provide the link.)

If your goal is eventually to sell retail, I would encourage you to pursue it. Just start by reverse-engineering the process. Begin with the customer experience and work backward through processing, pricing, production, and marketing.

Build the systems first.

Then build the market.

For many beginning sheep farmers, that approach may be the difference between building a sustainable business and becoming overwhelmed by the demands of retail sales.

If you are raising sheep—or thinking about getting started—I would be interested in hearing your thoughts. Have you found success selling retail, or do you prefer the auction market? Let me know in the comments.

In a previous article, I explained a little bit about time management, labor requirements, processing logistics, and the focus of other farm enterprises on our farm and how selling retail affected each, please check out my article here.