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Roy's Bullpen

Why would anyone want to buy them full?

By August 9, 2005May 22nd, 2009No Comments

Why would anyone want to buy them full?

After reading an article on page 34 of the October 1997 issue of the Canadian Cattleman magazine, my colleagues conscripted me to try to dispel some of the myths and misinformation concerning shrink on cattle.

It seems that the people who have trouble comprehending the concept are those who only raise and sell their own cattle.

If they buy cattle they catch on real quick. Especially if they have their own scale at their feedlot or farm to reweigh the incoming cattle. Most feedlots that buy do.

I have a lot of questions of my own. Why is it always some auctioneer or market operator who has to tell ” the rest of the story.”? Why not a feedlot operator or cattle feeder association?

Too smart to get involved, I guess.

I am going to create a scenario that should be familiar to many. Please don’t get ahead of me and throw this down in disgust and say “Everybody knows that.” They should know it, but they don’t. I explain this hundreds of times every year.

Here is the scenario.

A backgrounder wants to sell a load of 550 pound steers. He wants to weigh them at home and sell them as a group at his feedlot. I know we can agree on a price. But most arguments are over weighing conditions.

Since I have my order buying hat on today, I have to outsmart the other bidders so I offer him $1.20 per pound, with no pencil shrink, and no over night stand dry.

We will weigh them full. He is so mesmerized by this that he won’t even mention that they are bringing $1.30 in the sale ring. If he does, I will just have to convince him that the shrink and trucking and excessive selling charges will eat up those fifty five dollars per head. Besides, someone might start bidding against me there.

If any other buyers look at the cattle they won’t agree on the weighing conditions. They don’t have anyone to send them to full, but I do.

I get them bought. We load 63000 pounds of them on the tri-axle, and ship them four hundred miles to a buyer.

He unloads them and reweighs them. They weigh 59850 pounds now. 5% is left in the truck. Do you think he keeps smiling like he is in his picture in the Cattleman? Or does he get a puke burp look on his face, as he strides over to the phone?

He calls me up and politely says “Who is going to pay for the $3780.00 worth of shrink that this trucker is slopping out in my yard?”

I will calmly ask “Do you like the cattle mister?” “Yes, I do. But the weight isn’t there,” he will reply. I will have to smooth it over. I have this article he wrote in The Cattleman right in front of me. “I got the impression that you wanted them weighed full. I am an auctioneer, not really an order buyer. I didn’t know any better. I still want the total payment of $ 75600.00, plus my $630.00 buying commission, though. And please will you pay the trucker separate. Thanks for your business.”

I suspect that by then, he is going to tell me where to go.

I will have to get a hold of the trucker on his cell phone. Tell him to pick up the cattle. Take them into the nearest auction market and they will sell them by auction. Empty. They will send me a cheque for $1.30 per pound.

Now I am wondering what kind of a guy he really is. He wants to sell them full, but now he wants to buy them empty.

I have another load lined up; I think I’ll give him a call. Do you get the picture?

The fact is no one is going to pay feeder or beef price for manure. Why would anyone expect them to?

We run lots of presorted calf sales over here in Saskatchewan. The calves come in the day before the sale and are weighed and graded into uniform truck load lots. In the spring all the calves are supposed to be weighed with a 3% pencil shrink if weighed right off of the truck. Or penned overnight without feed or water and weighed with a 0% pencil shrink in the morning. Then put on feed and water until sale time. 3% is the industry standard. It is not an artificial shrink. It is needed to derive at an empty weight on the calves.

Either way we do it, it works out about the same. We have checked lots of times. However, almost every consignor wants his cattle pencil shrunk off truck, rather than the overnight stand. Why, if it is artificial? Maybe they understand this shrink thing better than we think.

Either way we do it there is a lot of suspicion by some consignors. People who do not understand the concept think that I personally have something to gain. The buyers are not here when the cattle are weighed. They can’t see how full or empty the cattle are. It becomes my responsibility to keep it fair for both buyer and seller. The buyers over the years have come to trust me, and depend on me to have the weights as accurate as possible.

Some of the people who never buy cattle think shrink is a rip off. They accusingly ask “How much shrink do you charge?” How would anyone charge shrink? As a market operator I do not get any monetary value from the pencil shrink. I would like to charge for hauling it out, though.

A pencil shrink is deducted by the computer as the calves are weighed and penned. But the computer does not accumulate those deducted figures and create a new calf every 550 pounds or so.

An empty weight has to be found in order to know what we are selling. If we are gambling on the weight, the price will have to be adjusted down to cover the shortfalls, or shrink, if you like.

Going without feed or water for twelve or thirteen hours on an overnight stand is not as cruel as some want it made out to be. I go from Seven P.M. to Seven A.M. regularly with out eating or drinking. Look at me. Am I suffering?

When an order buyer buys a load, or several loads, of calves at one of these sales, he may spend three to five cents over his order if he really likes the calves. They do work on commission you know. If they buy nothing, they get no commission. Sometimes they have to bear down and get the cattle bought and use some salesmanship after.

He talks to the feedlot he is sending them to, and tells them how good the calves are and how much he paid. When the cattle arrive they will reweigh them. The weight has got to be there or there will be problems. The quality and the price won’t change.

I am saying that it is easier for the order buyer to justify paying too much to his customer, if he can depend on the weight being there when the incoming calves are reweighed. If the weight is not there the order buyer gets a phone call. Then we get a phone call from him. I have been there and done that. How many sellers have? Who is going to pay for the difference? We can not go back and deduct any thing from the consignor’s cheque. Those are long gone.

We see consignors trying to beat the system all the time. They over fill the calves. Manure is running out of them as they walk. Some cattle road bloat on the way to town. The cattle are filthy coming off of the truck. We have no choice. We can not put those cattle in top cut pens, even though they may have gone there if they were not so full.

Slaughter cattle are another story. Let’s take an empty 1200 pound cow, for example. Let’s suppose that she will yield 50% empty and cows are fetching $1.00 a pound on the rail. She should bring 50 cents per pound, live.

What a lot of sellers forget is that the buyer is buying that cow on the hoof, but getting paid for the carcass only, from the plant he sends them to. The fill is not there anymore. The guts are gone.

For those who are unfamiliar with yield percentage, the shortest way I can describe it is as follows. It is the percent that you come up with when you divide the carcass weight on the rail by the live weight that you bought the animal at.

The better you can estimate the yield, as a buyer of live slaughter cattle, the more money you make for your employer or yourself. It means the difference between success and failure as packer buyer. Any packer buyer will tell you that the yield is more accurately estimated on empty cattle.

Now 8% fill is not unusual in a big bovine, if planned properly and delivered quickly and quietly to the auction. The aforementioned cow would weigh 1296 pounds, 8% full. But the yield is now only 46%. Try selling her that way, and no one is going to bid over 45 cents maximum. The buyers are not really sure how much fill there is, so they have to guess in their favor in order to avoid losing money. If there is a chance of losing money on her, any self respecting cow buyer will let someone else own her.

So instead of getting $600 for that empty 1200 pound cow you will get $ 583.20 for that 1296 pound full cow. The seller loses or the buyer goes broke. Figure the odds. How many go broke? That $16.80 you left on the table, amounts to the same as the auction fees, the check off, and brand inspection fees combined.

As far as the idea of that cow being worth $600 full or empty goes, she should be, if you can figure the yield quickly and accurately enough on a full cow.

As far as calves being worth $600.00 full or empty, I guess they are, if you sell them by the dollar. But if an experienced buyer comes to your place and bids on your cattle by the dollar, 99% of the ranchers start second guessing themselves. Probably, with good reason too. He does this every day. You do it once a year. Who do you think will win most often?

If an experienced buyer guesses the weight, estimates the fill, multiplies that by the price per pound and makes you an offer by the head instead of the pound, 99% of the ranchers will have no idea if that is a good offer or not. They will say “I will have to get back to you.”

“Are the cattle for sale or not? Say yes or no,” the buyer will ask. Most sellers will say no, because they are afraid they will make a mistake. If sold full by the pound or the dollar, that buyer still has to guess how much fill is really in those calves. If it is cattle on the grass that he is looking at, he can guess the fill at the time very accurately. Cattle on feed can be more of a challenge. He will most likely guess in his favor, then. Better to show them to him empty.

I find most knowledgeable people who buy their grassers or backgrounders in the sale ring like to sell them empty when they sell. They like good condition when they buy. They know that other buyers pay more if the cattle are empty and the guesswork is eliminated. They know that they, themselves, pay more when the guesswork is eliminated, too.

If a buyer buys cattle at your ranch, at top dollar, and sends them to a lot that reweighs them, the weight had better be there, or he will be told not to buy your calves anymore. If he buys them for ten cents less than they are worth, the weight is not so important. But will you let them go at that?

The fairest way for all concerned is an overnight stand. There is no guess work on empty cattle. Why would anyone want to sell them full?

I believe that it is in some people’s best interest to keep this shrink business controversial. That is why there are so many myths about it. Come and walk a mile in my shoes. Can anyone answer my questions? What percentage of the cattle producers have little or no idea what happens in the beef industry after their cattle leave their farm gate? How many care? How can we inform them? Who is going accept that challenge? When is this task going to get started? Do they even want to know? Would they change anything if they did know? Will anything I say make a difference? Who knows?

Roy Rutledge