10 Mar The Future of California’s Sheep Industry: Economic Challenges, Consumer Trends, and Sustainability
California’s agricultural landscape is undergoing significant shifts due to increasing regulatory costs, rising labor expenses, and evolving consumer habits.
In a recent conversation with economist Dr. Lynn Hamilton, we explored the challenges facing the state’s sheep industry and broader agriculture. From the impact of policy changes to consumer purchasing behaviors, Dr. Hamilton provided valuable insights into what the future might hold for California sheep producers.
Economic Challenges: The Cost of Doing Business in California
Over the past two decades, California’s agriculture sector has seen a dramatic rise in operational costs due to regulatory changes and wage policies.
“Since 2006, regulatory costs in lettuce production have increased by over 1,300%,” Hamilton noted. “We documented all these laws, and most of them are state-level regulations.” These rising expenses aren’t limited to crop agriculture—they significantly affect livestock producers as well.
One major factor in the rising costs is labor. While minimum wage increases draw attention, Hamilton points out that other workforce-related regulations, such as overtime policies and mandatory benefits, play an even larger role. “People focus on minimum wage, but that’s only part of the picture. For many businesses in California that rely on H2A workers, the adverse effective wage rate is actually higher than minimum wage,” she explained.
And caring for livestock is more than a 9-5 job. The American Lamb Board, a national research and promotional organization overseen by the USDA explains, “The sheep demand 24/7 attention, and sheep producers have built their lifestyle around this commitment and are dedicated to the job of looking after their animals and keeping them healthy.”
Considering the large amount of time and effort it takes to raise livestock, many companies are seeing labor increases of over 30%. This is a cost that many producers must somehow absorb. And the impact reaches beyond ranch owners to the workers who also are helping care for the animals. Joe Pozzi of Pozzi Ranch says, “The labor issue is a serious concern… If a producer goes out of business, the workers who people think they’re helping are gone. They don’t come back because there’s no sheep to herd.”
American consumers can agree that costs are rising everywhere. Superior Farms, a company that processes and sells lamb in North America sees this impact on the sheep industry. “Almost all input costs are going up, cost of labor, H2A wages are drastically higher, especially in California, fuel, insurance, equipment, etc. Imports, exchange rates with Australia and New Zealand,” they explain. And being a California company, they have also felt these increases personally. “We are a California company that has had wages increase significantly since the onset of COVID and labor continues to climb. In addition, all of our suppliers, producers, and vendors have increased their pricing to compensate for the aforementioned wage increases. So naturally, we need to raise the price of American lamb to cover the changes. Unfortunately, it is at a time when retailers are not accepting price increases.”
In addition to wage-related policies, compliance with environmental regulations further strains small and mid-sized farmers. “If you operate agricultural vehicles, use irrigation pumps, or irrigate, you must comply with strict water and air quality laws,” Hamilton emphasized. “And there’s no carve-out for being a small producer—you have to comply, no matter what.” It’s understandable that every person is responsible for their impact to the planet. But these regulations can impact farming operations to the point of diminished profits. And what we’ve learned is that sheep producers are doing this because they truly love the animals and their industry. Joe quotes, “I love working with sheep. It’s part of my social fabric, my lifestyle. It’s what I do, and I love it.” But is this labor of love sustainable in the long term?
A Shrinking Industry: The Decline of Sheep Producers
The economic pressures facing sheep producers have led to a steady decline in the number of farms.
“The number of farms and farm employees has continued to decline,” Hamilton said. “We dropped below two million farms for the first time ever in the 2022 Agricultural Census.”
In California, small sheep producers make up the majority of the industry. “Approximately two-thirds of farms have fewer than 24 sheep, and when you include farms with 25-99 sheep, small operations account for nearly 90% of the industry,” Hamilton noted. However, these smaller farms are the most vulnerable to regulatory and financial pressures as well.
“For most small farms, the farm itself is a side hustle,” she explained. “Statistically, 80% of farmers have off-farm income because it’s simply not feasible to rely on farming alone. Unless they can scale up, offset costs with alternative revenue streams, or absorb the financial burden, many of these small operators will go out of business.”
And larger producers who rely on H2A workers can’t continue to absorb large wage increases and regulations that impact their ability to properly care for their animals. Florence Cubiburu of Cubiburu Livestock explains, “I’m a third generation sheep producer from the central valley of California. I am disheartened by the wage increases that we’ve had to incur for our sheepherders. Unfortunately in our industry, we are price takers, not price setters. So we need to absorb these additional costs and it’s driving us out of the business of sheep production.”
Without meaningful change, the sheep industry will continue to shrink, taking with it a valuable part of California’s agricultural heritage and environmental benefits. Supporting local producers and advocating for balanced policies will be essential to ensuring the future of domestic sheep farming.
Consumer Trends: Do People Really Care About Buying Local?
While there is a push to support local agriculture, Hamilton argues that most consumers prioritize price and convenience over the origin of their food.
While consumers agree that they want to support local agriculture and small businesses, budget constraints can often sway buyers in the grocery store. Otherwise, Walmart would not have the success that it does across the U.S.
This reality poses a challenge for California lamb producers, who struggle to compete with imported lamb from New Zealand and Australia. “Most of the lamb consumed in the United States is imported,” Hamilton pointed out. “And without clear American Lamb labeling, many consumers don’t even realize where their meat comes from.”
While there are niche markets for domestic lamb, such as ethnic and religious communities with specific requirements for purchasing locally raised meat, these markets remain relatively small compared to the broader consumer base.
A Path Forward: Sustainability & Environmental Benefits
Despite the economic and regulatory hurdles, there are opportunities for the sheep industry to reposition itself as an essential part of California’s environmental sustainability efforts.
“Agriculture needs to start focusing on its positive environmental contributions,” Hamilton suggested. “The public needs to understand the benefits of having sheep grazing in fire-prone areas, reducing fuel loads, and preventing wildfires.”
In addition to wildfire prevention, sheep provide valuable ecosystem services, a term used in European agricultural policy to describe the benefits that livestock grazing brings to biodiversity and land health. “Sheep grazing supports soil health, naturally fertilizes the land, and reduces the need for mechanical mowing and chemical herbicides,” Hamilton explained. Many American farmers utilize regenerative grazing practices which improve soil health and biodiversity while reducing reliance on chemical fertilizers. Many also use targeted grazing practices that contribute to land stewardship and wildfire prevention. There are tons of great resources on the American Lamb Board’s website that discuss the role sheep play in managing vegetation, reducing invasive species, and promoting biodiversity.
Sustainability is another factor. Hamilton pointed out that sheep farming is among the most sustainable forms of livestock production. “Sheep require minimal confinement, they don’t have the same methane concerns as cattle, and they can graze in areas that aren’t suitable for other livestock,” she said. “If you want the most eco-friendly livestock product, eat lamb.”
And we agree! And there are certainly many benefits to purchasing domestic lamb. Supporting local ranchers and farmers keeps the money circulating within the community. And considering a majority of sheep producers are smaller, family-run operations, purchasing locally means consumers help ensure these farms remain in business. It’s good for the land and the community!
Animal welfare is another. American farms follow USDA and state guidelines that prioritize the health and well-being of animals. The American Lamb Board emphasizes the dedication of American sheep producers to ethical and sustainable practices. “No matter the farm or ranch, American sheep producers have committed to raising lamb responsibly and with respect for the land and animals. The American sheep industry is committed to the most appropriate husbandry, health and nutrition practices that positively impact the care and well-being of our sheep.”
Purchasing local reduces the environmental impact. Choosing local or domestic meat reduces the distance food must travel, cutting down on emissions from shipping and transportation.
Locally sourced meat reaches consumers faster than imported alternatives, preserving its freshness, flavor, and nutritional value. This is especially important for perishable products like lamb, where shorter supply chains enhance taste and texture. While cost is often a key factor for consumers, the benefits of choosing local meat go far beyond price. Supporting domestic producers means investing in ethical farming practices, strengthening local economies, and promoting sustainable agriculture. The sheep industry, in particular, plays a vital role in land stewardship, fire prevention, and regenerative grazing, making its impact far-reaching.
Conclusion: A Crossroads for California Sheep Producers
The California sheep industry is at a crossroads, facing rising labor costs, increasing imports, and shifting consumer habits.
Yet, this industry is rich with opportunity—from the environmental benefits of sheep grazing to the deep-rooted dedication of ranchers to their land, animals, and communities. You can help shape the future of American lamb by making conscious choices:
Buy Local
Choose American lamb at grocery stores, farmers’ markets, and restaurants to support local producers and keep your dollars in the community.
Ask for It
If you don’t see American lamb at your local store or restaurant, request it! Consumer demand drives availability.
Learn & Share
Educate yourself about the benefits of sustainable sheep grazing, fire prevention, and ethical ranching—and share what you learn with others.
Support Policies That Matter
Advocate for policies that minimize unrealistic labor increases as well as recognize and reward sustainable practices of small producers.
The future of the California sheep industry depends on awareness, advocacy, and action. By choosing local lamb and spreading the word, you help ensure a thriving, sustainable future for both the industry and the land it helps protect.