Senator Says Move Forward on Sheep Support

November 17, 2000

Australia and New Zealand sheep producers have gained an unfair competitive advantage over U.S. producers and U.S. programs to combat the problem should move forward despite World Trade Organization "questions," according to U.S. Senator Mike Enzi (R-WY). Enzi, who chairs the Senate Banking Subcommittee on International Trade and Finance, submitted testimony Thursday to the U.S. International Trade Commission (ITC) as part of an evaluation of the U.S. Department of Agriculture's 201 sheep assistance program.

Enzi said the steps the U.S. has taken to help domestic producers will benefit Wyoming, which ranks among the top sheep producing states in the nation. "I support the implementation of this program and commend the International Trade Commission (ITC) and Administration for determining that the industry's survival was threatened by imports of lamb meat to the extent that temporary relief was warranted," said Enzi. "Unfortunately, while the program is more than a year old, delivery of the production incentive and assistance funding has only recently begun."

The 201 USDA program, Enzi said, provides for payments to sheep ranchers for rams purchased and ranch facility improvements made during the first year of the program. The maximum combined payment per farm for year one, which ran from July 21, 1999 to Sept. 30, 2000, was $5,500. Producers received $100 for every ram purchased during the year ($2,500 maximum payment per producer); 20% cost share on all facility improvements (again, a $2,500 maximum payment); and $.50 per head entered in a sheep improvement program ($500 maximum payment).

During the second and third years of the program, farmers are eligible for payments of $3 for each feeder lamb and $5 for each slaughter lamb. There will be no maximum payments or herd limits during years two and three of the program, though lambs will have to meet certain USDA musculoskeletal or carcass grade requirements.

Recently, however, the World Trade Organization (WTO) indicated that this program does not comply with global trade agreements, threatening the continuation of the assistance program. Enzi said the ITC should not be influenced by the recent WTO panel preliminary finding that the import relief is unjustified. "I disagree with the ruling of the WTO and believe that this assistance program, both the tariffs and the production incentives, is a necessary and fair means to counteract the destructive effects of the cost imbalance in the lamb market," said Enzi. "The Commission should recommend that the relief be continued for its full three year duration and be strengthened to compensate for the effects of the devaluation of the Australian and New Zealand currencies against the dollar so that growers and feeders get the price relief that was originally intended."