Krissa Welshans 1, Feedstuffs Editor

September 18, 2015

6 Min Read
Decline in Texas livestock auction markets examined

DECLINING cow numbers have led to consolidation in Texas livestock auction markets following devastating droughts during the past decade, according to a Texas A&M AgriLife Extension Service study.

"Things change over time, but we were interested in the changes in the beef industry's infrastructure, particularly livestock auction markets," Dr. David Anderson, AgriLife Extension Service livestock marketing economist, said at the recent Texas A&M Beef Cattle Short Course in College Station, Texas. "Obviously, we've experienced changes in cattle cycles, inventory numbers and how we trade. We have the internet, video auctions and direct sales. All of that has played a part in how we trade and market cattle."

Anderson and co-authors Dr. Andy Herring, associate professor in the Texas A&M department of animal science, graduate student Trent Hester and assistant professor Ariun Ishdorj collected data using sources such as the Texas Animal Health Commission, Texas Agricultural Statistics Service and other U.S. Department of Agriculture data.

Anderson noted that during the mid-1970s, Texas beef cow numbers peaked at about 7 million head. Today, only approximately 4.2 million cows reside in the state. He said before starting the study, there was an expectation that fewer auction markets exist now than when data first began being compiled in 1969.

The study proved their hypothesis correct, Anderson said. Texas had 167 auction markets in 1969, and only 92 auction markets were left in the state by 2013. The study indicated that the decline could be attributed to a number of factors, he noted, such as producers using other means to market their cattle "or overall there being fewer cattle to market in the state, (thus) requiring fewer markets to sell fewer cattle."

"That's exactly what we saw," Anderson said. "Then, we wanted to know if these fewer auction markets are handling more volume."

Overall, Anderson said the markets haven't declined as fast as the number of animals.

"Drought will do that as producers sell cattle at an incredibly fast rate. Over time, the auction markets adjust to that at a much slower pace," he said.

Anderson pointed out that the implied animal revenue keeps increasing as drought occurs.

"The more animals are sold, the higher that revenue is," he said. However, "that doesn't account for inflation. Overall, we found there are fewer markets and declining real implied value when you factor inflation into the equation."

Anderson noted that the study did not account for video or internet auctions or other marketing services. Also, sheep, goats and hogs were not part of the study.


Salvaging pumpkins

Cattle producers are always looking for ways to reduce feed costs. One possibility is to use commodities — like pumpkins — that are available at salvage value, according to Dr. Karla Jenkins, University of Nebraska-Lincoln cow/calf and range management specialist.

"Purchasing commodities at salvage value can be a win/win situation for both the cattle producer and the owner of the commodity that is no longer worth its original value," Jenkins said.

Pumpkins have a limited window of optimal value. Jenkins said many pumpkins may be left in the fields if not chosen for fall decorative purposes. Additionally, pumpkins harvested from the fields to be hauled to local markets may get broken or have some sort of blemish that makes the pumpkin less desirable for decorative purposes or human consumption.

These pumpkins may be available for grazing or for inclusion in beef cattle rations, she said.

"Cattle find pumpkins palatable and do not seem to have much trouble consuming pumpkins left in the fields once the pumpkins have undergone some freezing and thawing," Jenkins explained. "Pumpkins can also be lightly disked to facilitate consumption if they are still too firm for breaking up."

She pointed out that pumpkins are high in moisture content (83-88%) and, therefore, do not provide a lot of dry matter per acre for cattle to consume.

"Grazing pumpkins in conjunction with a corn stalk residue field or a grass pasture or with supplemental hay may be necessary to ensure enough feed is available for the cattle. However, pumpkins make a good supplemental protein and energy source," she added.

According to Jenkins, the crude protein content of pumpkins tends to be 14-17% on a dry matter basis, and the in vitro digestibility (similar to total digestible nutrients) is 60-70%. Pumpkins can also make a good supplemental feed for dry pregnant cows in the fall or can be included as a component of a growing ration for calves, she said.

"Regardless of the commodity being considered, producers need to evaluate the cost of the commodity per unit of protein or energy provided and include any transportation and labor costs associated with acquiring and feeding the commodity. Utilizing alternative commodities no longer at peak market value can be a win for the cattle, a win for the cattle producer and a win for the commodity owner," Jenkins concluded.


Sustainability assessment

Cargill recently announced that it has entered phase II of the Cargill Cattle Feeders LLC beef cattle sustainability initiative started last December.

The yearlong effort to identify criteria, establish measurement metrics and define target improvement goals is in collaboration with consulting and accounting firm K*Coe Isom. The joint effort will create a verified beef supply chain sustainability assessment program for Cargill's feedyards as well as for the feedlots operated by Friona Industries that supply Cargill with cattle. Kansas State University's Beef Cattle Institute is also providing technical support to the project.

Cargill said this type of assessment could eventually be expanded to include cattle production in collaboration with stocker operators and ranchers, as well as with Cargill's strategic feedyard partners.

Phase II kicked off in early July, with an interactive informational and training session in Wichita, Kan., with Cargill's feeder cattle buyers. That workshop was followed by refining the cattle producer questionnaire and soliciting feedback from a pilot group of cattle producers to further refine the questionnaire. The next step will be to distribute the questionnaire more broadly and then analyze the results.

The assessment is examining the economic, environmental and community impacts of Cargill's four feedyards in Texas, Kansas and Colorado. From the initial phases, Cargill said benchmarking will be established to support ongoing improvement that will be holistic and verified.

Eventually, Cargill beef customers also may provide their sustainability criteria, resulting in a customized assessment report that provides data to measure and document their organization's supply chain sustainability progress.

"The process we're employing for our sustainability assessment allows us to build out our base of knowledge and information from phase to phase in a logical progression of steps so we ensure the efficacy of this initiative," Cargill Cattle Feeders president Todd Allen said. "It is important to us that this assessment be accurate, complete, credible and meaningful for vested stakeholders. It must also result in actions that are measureable and lead to continuous improvements as we move toward a more sustainable beef model."

Volume:87 Issue:36

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