Excerpts from the report: The American sheep industry could be on the verge of a major change in its role as a producer of meat and wool. High prices in world grain and petroleum markets are believed to favor the production of lamb relative to pork and beef, and to favor wool relative to synthetic fibers. Yet the sheep industry must also wrestle with a rapid and persistent decline in sheep production that has closed many marketing, processing, and distribution facilities. In view of recent developments and the concerns of many sheep producers, the leadership of several national sheep associations requested that Farmer Cooperative Service develop and analyze alternative marketing-processing-distribution systems for sheep and lambs. The specific objectives of the study are: (1) describe the current economic situation of the industry; (2) describe several alternative marketing-processing-distribution systems; (3) compare advantages and disadvantages of alternative systems; and (4) recommend one or more alternative marketing-processing-distribution systems for U.S. sheep producers.