Fall 2018
Lara Nauwelaerts
Section 103
Table of Contents
Nauwelaerts 1
How the Product Will Enter Canadian Markets & Where It Will Be Grown 4-5
Export Potential 7
Conclusion 13 - 14
Appendix 15 - 19
Works Cited 20 - 22
Product Description
Nauwelaerts 2
The Canadian sheep industry is currently a rather small and unestablished livestock
industry. In order to combat this situation, Canada needs to look at the root cause of why the
sheep industry is so far behind other livestock industries. One of the largest issues the Canadian
sheep industry faces is that there are no designated sheep genetics companies that conduct
research on sheep breeds and identify the most optimal breed for Canadian climates.
Sheep are mostly raised for the purpose of lamb meat. Currently, Canada produces just
under 40 percent of the lamb that the country consumes, and over 60 percent is imported from
Australia and New Zealand (ALP, 2018). However, one of the largest factors that is preventing
the Canadian sheep industry from growing and fulfilling this large market demand, is that fact
that there are not enough large-scale producers; “the lamb sector is dominated by small-scale
producers and hobby farmers who lamb in the spring”, simply because they do not have enough
ewes to lamb continuously throughout the year (Finstad, 2018). If Canada were able to increase
their lamb production to a larger scale and have lambs continuously throughout the year, the
country would be able to support a larger amount of its lamb meat demand.
Unlike the hog or cattle industries, Canada does not have any sheep genetics companies
which actually place scientific research in genetics. Rather, sheep farmers purchase their ewes
from breeders or, if the farmer is more advanced, will import semen and embryos from other
countries, such as New Zealand. Currently, the most professional method of purchasing sheep
domestically, rather than from a hobby farmer or animal sale, is through the Canadian Sheep
breeders across the country and represents over 40 different breeds of sheep (CSBA, 2013).
Canadian sheep breeders determine their sheep breeds through GenOvis, which is a “home-based
evaluation program that allows sheep breeders to identify and select individuals with high
genetic potential” (CSBA, 2013). Although Canada has some options for purchasing ewes,
Canadian farmers are expressing a need for scrapie resistant genotypes, inbreeding prevention,
Nauwelaerts 3
and performance tested stock (CBSA, 2013). Due to the fact that this is not yet available in
Canada, farmers are turning to importing semen and embryos from countries with more
In 2016, Canada’s sheep industry was valued at $302.2 thousand, this figure includes
both wool and lamb (GOC, 2018). As stated earlier, Canada imports over 60 percent of its
demand for lamb, and approximately 95 percent of that total comes from New Zealand (Wood,
2018). As of 2017, the New Zealand lamb industry was worth $2.5 billion (Beef & Lamb, 2017).
Based on these numbers, it is evident that New Zealand has a far more progressive sheep
industry than Canada. If Canada were to adopt some of New Zealand’s sheep practices,
specifically genetics, the Canadian industry would have the potential to grow significantly. The
largest red meat genetics company in New Zealand is currently Focus Genetics. The company
has “the biggest DNA recorded gene pool coupled with a large team of animal breeding
scientists [to stay] abreast of what the industry requires both now and [in] the future” (Focus
Genetics, 2018). Due to the fact that Canada purchases such a significant amount of lamb from
New Zealand and uses the countries genetics as a benchmark, it could potentially be feasible to
expand Focus Genetics into Canada. By expanding the genetics company into Canada, it would
allow Canadians farmers to make more informed decisions about their sheep genetics and thus
Thus, the Canadian sheep industry has the potential to grow and become more recognized
if Canada were to adopt a known genetics company. By giving farmers a trusted source for
genetics with scientific research, more people will invest into the industry and thus giving it a
boost in production and allowing the country to fulfill more of its demand domestically.
Nauwelaerts 4
How the Product Will Enter Canadian Markets & Where It Will Be Grown
Canadian sheep farmers are limited as to where they can purchase their ewes. The two
most trusted sources for purchasing ewes is through the Canadian Sheep Breeders’ Association
or through importation of semen and embryos. When importing semen and embryos, farmers
will most likely purchase from large established genetics companies. Rather than continuing to
purchase genetics from other countries, Canada could benefit from having a domestic sheep
genetics company which places research into breeds that are most optimal for the Canadian
industry. Due to the fact that Canada already relies so heavily on the New Zealand sheep
industry in order to fill its own demand, it would be logical to work with an established genetics
company from New Zealand. Currently, Focus Genetics is the largest red meat genetics company
in New Zealand (Focus Genetics, 2018). Due to the fact that this company is very advanced in its
industry, it would most likely have the capability to expand internationally and help Canada
reach its goals within the sheep industry. Thus, rather than continuing to import genetics that are
designed for a different country, market, and climate, Canadian farmers could have the
As of 2013, Ontario and Quebec were the largest producers of ewes and market lambs in
Canada, refer to Figure 1 (Kennedy & Copeland, 2013). Alberta is also a large producer in
market lambs, but lags in terms of ewes, rams, and replacements, refer to Figure 1 (Kennedy &
Copeland, 2013). Although Alberta is the third largest producer, its production is quite small in
comparison to Ontario and Quebec. Thus, when bringing Focus Genetics into Canada, it would
be most optimal to start in Ontario and Quebec, with the potential of later expanding across the
country.
Nauwelaerts 5
The Canadian sheep industry was valued at $303.2 thousand as of 2016 (GOC, 2018).
However, Canada’s sheep industry has significant potential to grow, as the country is currently
importing over 60 percent of its lamb meat demand (Wood, 2018). Sheep are mostly raised for
the purpose of lamb meat due to the fact that wool has little commercial value. It is stated that
lamb meat provides a more tender texture, is more firm than chicken, and offers a fattier, meatier
and stronger flavour (Carpenter, 2017). Lamb meat consumption amounts to about one kilogram
per person annually, while beef consumption, for example, is approximately 20 kilograms per
person annually (Castonguay, 2015). However, lamb meat consumption has been increasing
within the last 10 years and is expected to display a large growth in demand through to 2020
(Castonguay, 2015). According to a 2017 survey, lamb options on Canadian restaurant menus
has increased by 17 percent since 2015 (Wood, 2018). This is primarily due to the increase in
immigration, as well as consumers seeking to add more variety and diversity to their diets. Jason
Wood from Alberta Lamb effectively describes these recent trends by stating:
over 60 percent is imported from Australia and New Zealand (ALP, 2018). However, one of the
largest factors that is preventing the Canadian sheep industry from growing and fulfilling this
large market demand, is that fact that there are not enough large-scale producers; “the lamb
Nauwelaerts 6
sector is dominated by small-scale producers and hobby farmers who lamb in the spring”, simply
because they do not have enough ewes to lamb continuously throughout the year (Finstad, 2018).
If Canada were able to increase their lamb production to a larger scale and have lambs
continuously throughout the year, the country would be able to support a larger amount of its
A new and more recent trend within the sheep industry is the production of cheese
manufactured from ewes milk: “the production of ewe milk for cheese manufacturing is
blooming, particularly in Quebec and Ontario. Ewe milk is about twice as fatty and has 40
percent more proteins than cow or goat milk, which makes it particularly suitable for cheese
It is evident that the sheep industry has several opportunities, specifically in meat and
dairy. However, the industry struggles to grow due to the limited supply of sheep. When
attempting to grow an animal industry, it is important to look at the root cause of the situation.
Animal production begins with genetics, thus it would be beneficial for the sheep industry to
invest into genetics in order to help the industry grow and fulfill its potential.
Export Potential
Canada exported $420.6 billion US worth of products around the globe (Workman, 2018). The
majority of this trade, approximately 77.4 percent, occurred through the North American Free
Trade Agreement, which includes the United States and Mexico. Of that total, about 76 percent
of total exports went to the United States (Workman, 2018). Canada and the United States have
Nauwelaerts 7
been significant trading partners to one another throughout history in several industries. The
agriculture industry, and specifically the sheep industry, are not exempt to this. In 2017, Canada
exported 82 tonnes of lamb and mutton and 5,651 live head of sheep to the United States, refer
to Figure 4 (AAFC, 2018). Canada’s total lamb and mutton exports for that year was 153 tonnes
(AAFC, 2018). From this, it is evident that 53.6 percent of Canada’s total lamb and mutton
Thus, if Canada increases its sheep production, the country would be able to increase
their exports of lamb and mutton to the United States. This would provide a better balance
between the imports and exports of the two countries, as Canada is currently in a trade deficit
with the United States in terms of the sheep industry, refer to Figure 4 (AAFC, 2018).
On July 20, 2018, Alberta based SunGold Specialty Meats announced their plans to
merge with Fresh Canada Meats to form North American Lamb Company, and thus establish an
integrated lamb supply chain (Glenn, 2018). SunGold Specialty Meats is the largest federal lamb
processing plant in Canada which ships its products both domestically and internationally. Fresh
Meats Canada is a fully owned subsidiary of the New Zealand agribusiness, Integrated Foods.
The company completes the majority of the shareholders of Canada Sheep and Lamb Farms Ltd.
in Stony Mountain, Manitoba. The purpose of the North American Lamb Company is to “control
lamb production and marketing of lamb from genetics through to breeding, finishing, processing
and sales”, in order to provide Canada with a more stable market supply of lamb (Glenn, 2018).
The company’s target is to process 200,000 head per year, which is a major increase in
comparison to SunGold’s expected 84,000 head this year. In addition, “Canada Sheep and Lamb
Nauwelaerts 8
Farms in Manitoba [have] a breeding flock of more than 35,000 ewes and [plan] to increase that
The purpose of this merger is to bring the standards and practices of New Zealand sheep
farming to Canada, in order to grow the Canadian sheep industry. Due to the fact that Integrated
Foods is a New Zealand based company, it is possible that Focus Genetics is affiliated with the
company. A strong marketing tactic for Focus Genetics would be to work with the North
American Lamb Company. This would allow for Focus Genetics to enter into Canada and
instantly gain a large customer base. This method of entering the Canadian market would be
The largest competitors for this venture would not be domestically, since this venture
would be the first of its kind in Canada. Also, in terms of competition, there would not be much
competition present between genetics companies, due to the fact that Focus Genetics is one of
the largest and more prevalent sheep genetics companies. Rather, if competition were to exist it
would be based on lamb meat exports. As of 2014, the global sheep population stood at one
billion, with approximately 19 percent found in Asia and Africa (Sheep Site, 2014). 60 percent of
all global exports go to China, the European Union, and the United States, and 85 percent of
those exports originate from Australia and New Zealand, refer to Figure 5. For example, China
imports approximately 309,000 tonnes of sheep meat, of that total 25 percent comes from
Australia and 35 percent comes from New Zealand (Sheep Site, 2014).
Nauwelaerts 9
However, Canada’s sheep industry is still relatively small and thus does not currently
have the capability of competing with Australia and New Zealand’s exporting capacity. Rather,
Although the idea of expanding Focus Genetics into Canada can be easily conceived, the
venture also includes several costs and possible flaws. Essentially these issues could have the
As of 2018, the average price of a ewe in Quebec was $131 to $158, refer to Figure 2
(GOC, 2018). Prices tend to drop during the spring and summer, and rise again during the fall
and winter months. In comparison, the average price of a ewe in New Zealand is $160 for one
offering of capital stock, and lesser types are between $100 and $140 (Harding, 2017). These
prices convert to approximately $90.44 to $144.67 in Canadian currency. Thus it is apparent that
ewe prices in New Zealand are significantly lower than Canadian prices, even though New
Zealand has genetic innovation. One of the reasons why New Zealand is able to charge less per
ewe is due to the fact that their wages are significantly lower than in Canada. The average salary
of a geneticist in Canada is $286,000 per year (Neuvoo, 2018), meanwhile in New Zealand a
geneticist earns $70,949 which is equivalent to $64,162 in Canadian dollars (Salary Expert,
2018). The current minimum wage in Canada is $14 per hour and is $16.50 per hour in New
Based on these figures, Canada would need to be able to sell about 1,821 to 2,183 sheep
per year in order to pay the salary of one geneticist, in comparison to New Zealand who only
Nauwelaerts 10
needs to sell 443 to 709 sheep per year. Also, considering that all other employees within the
company are paid minimum wage, work 40 hours per week, and work 52 weeks in the year,
Canada would need to sell about 185 to 222 sheep per year to pay the wage for one employee. In
comparison, New Zealand would need to sell 214 to 343 sheep per year for one employee. Thus,
Canada would need to sell 228.61 percent to 305.33 percent more sheep than New Zealand for
The figures above only display what can be anticipated for labour costs. This venture will
require significant funding, as the idea is to import Focus Genetics into Canada for their research
and not just their products. Like any start up business, this will require a significant amount of
investment. In order to present an idea of how much this venture will cost, it can be compared to
other genetics companies. In 2018, Topigs Norsvin, a Dutch swine genetics company, built a $15
million research facility in Winnipeg (Real Agriculture, 2018). Although Topigs Norsvin has
been established in Canada for several years, and this new research facility is simply an
The Canadian sheep industry has witnessed a growth rate in ewe numbers of zero percent
between 2010 and 2015 (CSF, 2015). At a closer glance, Ontario’s ewe population has increased
by four percent and Quebec’s ewe population decreased by a sharp eight percent, refer to Figure
3 (CSF, 2015). Due to the fact that the Canadian ewe population is not growing, it would be
difficult, and most likely impossible, sell enough sheep to cover the expenses of a genetics
provider.
a State-Owned Enterprise with a nationwide portfolio of farms that produce milk, beef, lamb,
wool, venison, deer velvet, wood and more” (Pamu, 2018). During the 2015/2016 fiscal year,
Nauwelaerts 11
Landcorp Farming Ltd. earned a net profit of $51.9 million, which converts to $53.4 million
Canadian dollars (Parliament NZ, 2018). Although it can be noted that the company is rather
large and established, expansion into Canada may be too great of an investment due to Canada’s
Although this report provides some evidence as to how Focus Genetics could progress
within Canada, there are still several unknown factors. In order to continue to evaluate the
potential of Focus Genetics in Canada, a more in-depth cost analysis and profitability analysis
This report provides the reader with some context as to how much labour will cost,
however several other costs remain unknown. For example, the price of ewes was determined,
but these prices only reflect that of ewes without any scientific research towards genetics. If a
farmer were to purchase a ewe from a genetic provider, the price of a ewe would be significantly
different than if they were to purchase a ewe from a breeder or animal sale. Other costs, such as
the cost of building a research station, remain unknown. In this report the new Topigs Norsvin
research station was used as an example as to how much a research station can cost to build.
However, this does not imply that building a sheep research station will cost the same amount.
Also, one of the final and largest undetermined costs would be the actual cost of the research
itself. This is dependant on what exactly the company wants to research, for how long they want
to conduct this study, and the required resources needed for the study. Along with a more in-
depth cost study, a more significant profitability study will also need to take place. It should be
Nauwelaerts 12
determined how much profit actually lies within sheep farming. The industry as a whole remains
quite small within Canada, but this could be due to the fact that it has already been determined
that the industry is unprofitable or, as suggested in this report, that not enough innovation has
Considering that Focus Genetics becomes successful within Canada, several studies
could take place in order to improve or adapt the companies presence within Canada. These
studies include in-depth sustainability and profitability analysis of the Canadian sheep industry.
One of the largest unknown factors within this venture is if the Canadian sheep industry will be
able to support Focus Genetics. As of currently, the sheep industry may still be too small and it
may be too early to expand Focus Genetics into Canada. However, as time progresses the risks of
bringing the company into Canada may be eliminated. Thus, in order to fully determine this, a
Conclusion
In conclusion, it can be stated that the Canadian sheep industry is a rather small and
unestablished livestock industry. One of the largest issues the Canadian sheep industry faces is
that there are no designated sheep genetics companies that conduct research on sheep breeds and
identify the most optimal breed for Canadian climates. Also, Canadian sheep farmers are limited
as to where they can purchase their ewes. The two most trusted sources for purchasing ewes is
Nauwelaerts 13
through the Canadian Sheep Breeders’ Association or through importation of semen and
embryos. When importing semen and embryos, farmers will most likely purchase from large
established genetics companies. Rather than continuing to purchase genetics from other
countries, Canada could benefit from having a domestic sheep genetics company which places
research into breeds that are most optimal for the Canadian industry, such as Focus Genetics.
It is evident that the Canadian sheep industry has several opportunities, specifically in
meat and dairy and thus an expansion of the industry could be of great benefit. However, this
report indicates that bringing Focus Genetics would not be the current solution to Canada’s slow
growing sheep industry. Although it can be noted that Focus Genetics is a large and established
company, expansion into Canada may be too great of an investment due to Canada’s high labour
costs and low sheep population growth. In order to completely evaluate the potential of this
venture, more studies would need to take place, such as a more in-depth cost analysis and
profitability analysis. However, based on the current findings within this report, it can be
concluded that bringing Focus Genetics to Canada would not be profitable for the company as
well as the farmers who would then need to pay more per ewe.
Nauwelaerts 14
Appendix
Figure 1.
Provincial Flock Size. Shows the current flock size and make-up for each province.
Figure 2
Ewes, Quebec, 2018
December
Nauwelaerts 16
(GOC, 2018)
Figure 3
Canadian Ewe Population, 000 head, 2010 - 2015
Figure 4
Sheep and Lamb Trade - Canada vs The United States
Lamb and mutton exports - Canada 321 131 150 131 154
(tonnes)
Percentage of exports of lamb and mutton 64.43% 59.07% 48.54% 40.58% 53.60%
from Canada to the United States over
the total exported (%)
Lamb and mutton exports - United States 3,042 2,760 1,779 2,239 2,421
(tonnes)
Lamb and mutton exported from the 380 407 154 101 224
United States to Canada (tonnes)
Percentage of exports of lamb and mutton 12.49% 14.75% 8.66% 4.51% 9.25%
from the United States to Canada over
the total exported (%)
Lamb and mutton imports - Canada 17,118 18,101 19,118 18,550 22,526
(tonnes)
Lamb and mutton imports - United States 78,529 88,393 96,943 97,939 114,117
Nauwelaerts 18
(tonnes)
Live sheep exports - Canada (head) 3,945 4,054 5,513 14,284 5,870
Live sheep exported from Canada to the 3,404 4,054 5,509 14,272 5,651
United States (head)
Live sheep exports - United States (head) 54,496 75,693 44,508 51,638 30,379
Live sheep exported from the United 21,910 38,916 21,109 112 121
States to Canada (head)
Live sheep imports - Canada (head) 18,604 10,331 6,554 175 380
Live sheep imports - United States (head) 3,404 4,054 5,674 14,272 5,668
(AAFC, 2018)
Figure 5
Global Sheep Top Tens
Works Cited
AAFC (2018, November 6) Supply comparison by species between Canada and the United
States. In Agriculture and Agri-Food Canada. Retrieved November 21, 2018, from
http://www.agr.gc.ca/eng/industry-markets-and-trade/canadian-agri-food-sector-
intelligence/red-meat-and-livestock/red-meat-and-livestock-market-information/supply-
sheets-by-species/supply-comparison-b
ALP. (2018). Some Facts about the Sheep Industry in Canada and Alberta. In Alberta Lamb
Producers. Retrieved October 16, 2018, from https://www.ablamb.ca/images/docume
nts/promotions/Sheep-industry-in-Alberta-facts.pdf
Beef & Lamb. (2017). Annual Report 2016-17. In Beef & Lamb New Zealand. Retrieved October
16, 2018, from https://beeflambnz.com/knowledge-hub/PDF/blnz-annual-report
Carpenter, V. (2017, October 21). What Does Lamb Taste Like? You Should Know This First!.
In
Cooking is Passio. Retrieved November 21, 2018, from https://cookingispassio.com/wh
at-does-lamb-taste-like/
Castonguay, F. (2015, May 28). Sheep Farming. In The Canadian Encyclopedia. Retrieved
November 21, 2018, from https://www.thecanadianencyclopedia.ca/en/article/sheep-f
arming
CSBA. (2013). About Us. In Canadian Sheep Breeders' Association. Retrieved October 16,
2018, from https://www.sheepbreeders.ca
CSBA. (2013). GenOvis. In Canadian Sheep Breeders' Association. Retrieved October 16, 2018,
from https://www.sheepbreeders.ca/genovis.html
Nauwelaerts 20
CSBA. (2013). Semen & Embryo Importation. In Canadian Sheep Breeders' Association.
Retrieved October 16, 2018, from https://www.sheepbreeders.ca/semen---embryo-i
mportation.html
CSF (2015)The Canadian Sheep Industry Information for Lenders. In Canadian Sheep
Federation. Retrieved November 20, 2018, from https://www.ablamb.ca/images/docu
ments/resources/Lenders-Report-With-Notes-Sheep-Value-Chain-Roundtable-Nov-2015
pdf
Finstad, D. (2018, September). Merger a Game Changer for the Canadian Lamb Sector.
Farmtario, 1(10), p. 7.
Focus Genetics. (2018). About Focus Genetics. In Focus Genetics. Retrieved October 16, 2018,
from https://www.focusgenetics.com/why-focus-genetics/
Glenn, B. (2018, July 26). Sheep company merger hopes to boost supply. The Western Producer.
Retrieved from https://www.producer.com/2018/07/sheep-company-merger-hopes-to
-boost-supply/
GOC. (2018, February 14). Sheep Farming. In Government of Canada. Retrieved October 16,
2018, from https://www.ic.gc.ca/app/scr/app/cis/summary-sommaire/11241
GOC. (2018, November 20). SHEEP AND LAMBS: Sales and Weighted Average Prices - per
100 lbs. In Government of Canada. Retrieved November 20, 2018, from http://aimis-sim
ia.agr.gc.ca/rp/index-eng.cfm?report_format_type_code=31&action=gR&signature=37A
0404BF87697858E29B0EF13EE68DE&pdctc=&r=69&pTpl=1&btnDownload=View
Harding, R. (2017, June 15). Lamb and ewe prices rise. In NZ Herald. Retrieved November 20,
2018, from https://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid=
11876573
Kennedy, D, & Copeland, S. (2013, September). State of the Ontario Sheep Industry. In Ministry
of Agriculture, Food and Rural Affairs. Retrieved November 20, 2018, from http://www.
omafra.gov.on.ca/english/livestock/sheep/facts/13-061.htm
Minimum Wage (2018, June 12). In New Zealand Government. Retrieved November 20, 2018,
from https://www.govt.nz/browse/work/workers-rights/minimum-wage/
Neuvoo. (2018) Geneticist salary in Canada. In Neuvoo. Retrieved November 20, 2018, from
https://neuvoo.ca/salary/?job=geneticist
Pamu (2018) About Pamu. In Pamu. Retrieved November 20, 2018, from
https://pamunewzealand.com/company
esource/en-NZ/SCR_77694/043367ce0db4c9d6783a6ab41c220d230f3f3499
Real Agriculture (2018, June 28) Topigs Norsvin opens $15 million boar testing facility in
Manitoba. In Real Agriculture. Retrieved November 20, 2018, from https://www.rea
lagriculture.com/2018/06/topigs-norsvin-opens-15-million-boar-testing-facility-in-manito
ba/
Salary Expert. (2018). Geneticist Salary in New Zealand. In Salary Expert. Retrieved November
20, 2018, from https://www.salaryexpert.com/salary/job/geneticist/new-zealand
Sheep Site (2014) Global Sheep Meat Market. In The Sheep Site. Retrieved November 22, 2018,
from http://www.thesheepsite.com/focus/5m/99/global-sheep-meat-market-thesheepsite
Wood, J. (2018, April). Canadian Lamb Slaughter, Imports and Export Update. Retrieved
October 16, 2018, from https://www.ablamb.ca/images/documents/marketline/201
8/Spring-2018-Lamb-Article-Jason-Wood.pdf
Workman, D. (2018, November 16). Canada's Top Trading Partners. In World's Top Exports.
Retrieved November 21, 2018, from http://www.worldstopexports.com/canadas-t
op-import-partners/