Local livestock auction markets – Lifeblood of the livestock industry
Auction markets are an important part of the livestock industry, providing an essential service to folks who produce beef and dairy cattle, sheep, hogs and goats.
Lee Pitts, well-known columnist and rancher, has always had a great appreciation for local auction markets around the country. He has stated that small producers are the main customers for the local auctions. The really big groups of calves or stocker cattle are often sold on the video markets, or sometimes the producer retains ownership at a custom feedlot, but even the big outfits sell cull cows and bulls at local sale barns.
Some people think small producers don’t get a fair deal at an auction barn, but this isn’t true; often they top the market, according to Pitts. Sale barns work just as hard for the little guys as they do for the big outfits, because if they don’t have the little guys, they won’t have a business. If they get enough little guys bringing their animals, they have a reliable market, and then some of the bigger outfits start coming, too.
The manager of one South Dakota livestock auction said the small producer gets treated with the same respect and consideration, and quality always sells. Whenever you can get buyers together, bidding competitively on your cattle, you’ll get a better price than if you only show them to one person at your ranch.
The Rocky Mountain Livestock Auction near Salida, Colo., has been in business more than 60 years and even though it is a small operation it is essential to the local ranching community. The big video markets have hurt the small sale barns, but ranchers still need the local auctions, because not everyone can sell through video markets — especially if they only have a few cattle.
“A few big ranches have stuck with us and they bring their cattle here, but the majority of our bigger outfits have gone to selling their calves with Superior,” said Deane LaRue, the Rocky Mountain Livestock Auction manager. “We sell a lot of cattle for people who have anywhere from just 10 or 12 head to someone who runs 60 head. It’s hard to keep the doors open when you’re getting just a handful of calves. We still get a lot of cull cows and bulls, but that’s only because no one can sell butcher cattle through Superior.” People always need a market for cull cattle, and can’t afford to lose the local sale barns. The livestock industry wouldn’t survive without the small auctions.
“People lose sight of how important they are. If this shuts down, where will they haul those two or three cows, or that bull that gets injured in the middle of summer?” With the price of fuel a person can’t afford to haul them very far, especially if you have just one or two animals instead of a trailer load.
Pitts has pointed out that some regions depend almost completely on auction yards. “In the south, where the industry is made up of predominantly small livestock producers, if there were no auction markets, there would be no way for stockmen to sell their cattle. They would not be ranching, period.” Pitts said.
Jerry Vogeler, South Dakota Livestock Auction Markets, said cattle producers need to take full advantage of the local markets. “We sell the highest percentage of feeder calves in this state through auction markets, and our feeder cattle index is higher than surrounding states, because we have one of the most competitive auction market systems in the nation,” Vogeler said.
People haul cattle to an auction because generally the auction works hard to get buyers here, and make the cattle bring what they are worth. In western South Dakota, for instance, the livestock auctions have good incentive to get the best price because they are so competitive against each other. Most sale barns strive to get the most money for these cattle, because if they don’t, the auction down the road might.
“The offer that a cattle buyer out in the country makes for your calves may sound good, but why is that country buyer spending high-priced diesel driving around to try to buy your calves,” Vogeler said. “It’s because he knows feeder calves will bring more at a livestock auction market and he’s trying to buy them cheaper. A producer may think he’s saving a commission, only to find out that he just sold himself short by $50 to $100 a head.”
Ranchers hear about added value and advantages of video markets where you can sell your calves at home. The small producer who doesn’t have a full semi-load of calves can’t do very well on the video sales however, because part loads or mixed loads are discounted. He can get a better price at the local auction.
Every outfit has some extra calves or some that don’t fit a particular load. The local sale barn provides a market for every class of cattle. The auction markets are sometimes looked upon as the last resort when producers can’t do anything else for a market, but it should be the other way around.
Special sales attract buyers and sellers. “Whether it’s for age- and source-verified calves, natural cattle, CAB or preconditioned cattle, buyers know they can go to that sale and get what they need without driving the wheels off their car,” Pitts said. “And sellers are rewarded because of the demand created by special sales. Today there are fewer country buyers because they can see more good cattle at less expense, buying them at the auction,” Pitts said.
“Auction markets don’t just sell livestock, they merchandize them,” Vogeler said. “This isn’t just a matter of holding a sale and hoping someone shows up. There’s a lot of time and money spent advertising, making contacts, getting to know people, representing cattle to people who are interested in buying. There’s a big difference between selling and merchandisig.” There is always good competition for those cattle.
A sale barn is price discovery at its best, according to Pitts. Auctions spend a lot of advertising money trying to bring people in to buy cattle, and all the regional livestock papers list the prices cattle are bringing and readers can compare them. People pay a commission to try to get the most for their cattle, and the sale barn works hard at accomplishing this for their clients.
One reason there is plenty of demand for these cattle is because the auction crew sorts cattle to make the groups as uniform as possible. Buyers want uniformity in the groups they purchase. Pitts said the first time he sold his calves at an auction, years ago, he didn’t even recognize them in the sale ring. “At home they were an up-and-down multi-colored bunch, with wide weight variation, but by the time the crew was done sorting them, they looked so good I almost bought them back as stockers.”
When you sell cattle at a livestock auction market, state and federal law ensures prompt and reliable payment, Vogeler said. “There are strict bonding requirements, to ensure that the seller will get paid. You have protection, under state law. If you sell cattle out in the country or through an out-of-state firm, you need to be careful to make sure the check is good. A phone call to the bank will not always protect you from a bad check.” When you sell at an auction, you get your money the same day, and you don’t have to worry about a bad check.
Pitts said auctions make an effort to buy good hay, have clean water, and make the experience less stressful for the cattle. “For people who are not set up to wean calves, auctions perform an invaluable service in getting a good fill on the cattle, and letting the sellers know when to have them at the sale for best results.”
“It always amazes me that ranchers are willing to give a 3% pencil shrink when selling calves at home, but complain about giving the yards a commission,” Pitts said. “If you doubt the value of an auction market, next time you send calves or yearlings to the auction, get a weight, if you can, at home and another off-car weight at the auction market. If you give those cattle time, I guarantee that the yard will make up the weight and then some, and when you add the feed and commission bills it won’t equal what you would have given up on shrink back at the ranch.”
“And the yard takes all your calves. They don’t sort off the worst ones like the buyer does at the ranch — the ones that you have to send to the auction. I’ve had ranchers tell me their cut-backs brought more at the auction than their best cattle did at home,” Pitts said.
An order buyer at the ranch will always cut some back. The auction people don’t say your calves are too full or your cattle are too sorry-looking. When a country buyer looks at your animals there is always something wrong with them; they are too big or too small or some other excuse to cut some out, but the auction yard takes them all.
Local markets want repeat customers. The customers are their business, and these markets provide true price discovery. It’s always a more equitable and fair market if several buyers are bidding on your cattle. You don’t have to take an offer from just one buyer or feedlot rep or video sale rep.
For small producers, the auction crew can put small groups of cattle together to fill big orders. Without the auction, a country trader can more easily “steal” a small bunch because no one else would be looking at them.
“Most auction markets offer a complete service 52 weeks a year,” Vogeler said. “They sell the small lots, the large lots, the cows, bulls and calves. The market supports their home town, too. In South Dakota we have 300,000 buyers, sellers, truckers and visitors that attend these sales. They spend money on gas, food, motel rooms, pickup parts and many other items.” Auctions have a great multiplier effect throughout the community.
“Not only do they sell the cattle higher than anyone else in the U.S. but the money stays in the community,” Vogeler said. “They generate local income, employing people, supporting local businesses by buying feed and supplies, they pay taxes, support local youth groups, 4-H, etc. Local markets work hard — it’s a tough business — but they do this because they care about their customers. The auction market’s business depends on the cattle producers staying in business. Without the cattle producers, we don’t have a business.” ❖
— Smith Thomas is a cattle rancher, horseman, freelance writer and book author, ranching with her husband near Salmon, Idaho. She can be reached at firstname.lastname@example.org.