US Sheep Industry and the Public Grazing Fee

Since the mid-1940s US sheep inventory has experienced dramatic declines, which has weakened the sheep industry significantly, making it increasingly important to analyze potential policy implications that could affect US sheep inventories in the future. Public grazing lands are often used in sheep production, especially within the western United States. The public grazing fee is, therefore, a cost within the production of sheep. A US sheep model applying capital stock inventory accounting methodology is developed to model both the supply and demand within the joint sheep and wool industries. The model is used to create a baseline projection for the next several years. Various public grazing fee policies are created to demonstrate the effects of the policies on the levels of sheep inventory and sheep and wool production within the country. Results indicate removing the public grazing fee (set at $0/animal unit month) may slow the rate of decline but would not be effective at reversing the declining trend. This suggests reducing the public grazing fee is not a viable policy option to help bring stability to the sheep and wool industries. However, projections indicate raising the grazing fee would have a substantial adverse effect on the industries. Consideration should be given to these results as grazing fee policy is adjusted moving forward.