Since the 1940s, sheep and lamb production has been on the decline in the U.S. No single factor is responsible for the decline; it stems from several forces, such as globalization and growing competition from other meat and fiber industries in the U.S. The sheep industry has adjusted, investing in new technologies and improving efficiency. Signs of change include the introduction of hair sheep, the growth in direct marketing, and the emergence of the dairy sheep industry.

Although the U.S. sheep industry has been on the decline, recent developments have kept the industry profitable for some, including improvements in production efficiency, leaner meats, new processing and packaging techniques, a decline in Australian and New Zealand sheep, depreciation of the U.S. dollar, and the emergence of new and niche markets.

The two types of commercial sheep operations in the United States are range sheep operations and farm flock operations. Farm flock operations are smaller and involve improved pastures and feedlots, however, each method accounts for about one half of U.S. lamb production.

In addition to meat, other products of sheep production include wool, pelts, and milk. Wool production has declined more than lamb production, having been mostly exported to countries with expanding textile industries. Sheep pelts are used for consumer products or are exported. There is also a small but growing dairy sheep industry in the U.S.

Challenges to growth and sustainability of the U.S. sheep industry include an infrastructure that may suffer from the decline in volume, increasing predation problems, industry pricing, the lag of the sheep industry in adopting genetic improvement technologies, and the declining share of public and private support for new technologies relative to other animal sectors.

Wool, which was at one time was a primary textile product, is now sometimes considered a liability in production. A more detailed description of the wool production and distribution process is included in the attached report summary.