The federal government is investigating rancher complaints that lamb prices have collapsed for producers while market prices are rising.
The Grain Inspection Packers and Stockyards Administration notified producers that its Denver office is investigating the collapse.
Ranchers have seen lamb prices fall from more than $2 a pound a year ago to less than a dollar this fall, while retail prices have reached as high as $7 a pound in some areas.
The U.S. Department of Agriculture purchased $10 million worth of lamb this summer and fall, but ranchers say the benefits aren't reaching producers.
Sens. Max Baucus and Jon Tester of Montana said the investigation should include reports that packers may have violated the Packers and Stockyards Act last year by purchasing feeder lambs that they are slaughtering this year.