71- 17,956
BERG, James Frederick, 1943- THE COMPETITIVE POSITION OF THE OHIO FED CATTLE INDUSTRY.
The Ohio State University, Ph.D., 1970 E conomi cs, agri cultural
University Microfilms, A XEROX Company, Ann Arbor, Michigan
THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED SHE COMPETITIVE POSITION OP THE OHIO
FED CATTLE INDUSTRY
DISSERTATION
Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University
James Frederick Berg, B.S., M.S.
*******
The Ohio State University 1970
Approved by
Adviser Department of Agricultural Economics and Rural Sociology ACKNOWLEDGEMENTS
The author of this dissertation first wishes to thank his wife,
Raye Carol, for her encouragement, understanding and personal sacri fice during the entire graduate program.
Special thanks is expressed to my adviser, Dr. Thomas T. Stout for his suggestions and guidance while preparing and writing this dissertation.
Sincere appreciation is also due to Dr. Prancis E. Walker for valuable assistance in statistical methods. Also to Lira. Elizabeth
Howard and the Department's statistical laboratory clerks who prepared charts and computer materials; to Malinda Brenner and Peggy Lankford for typing the rough draft and to Mrs. Jeanette White for typing the final draft.
ii VITA
August 25 , 1943 • • Bona - Lima, Ohio
1965 ...... B,S., The Ohio State University, Columbus, Ohio
1966-1967 ..... Research Assistant, The Ohio State University, Columbus, Ohio
1966-1967 ...... Manager Assistant, Tom Tarpy's Market, Tremont Center, Columbus, Ohio
1967 ...... * M.S., The Ohio State University, Columbus, Ohio
1967-1970 ..... Research Associate, The Ohio State University, Coltambus, Ohio
FIELDS OF STUDY
Major Field: Agricultural Economics
Specialized in Economic Theory, Quantative Methods, Marketing, and International Trade
iii TABLE) OP CONTENTS
ACKNOWLEDGMENTS
VITA ......
LIST OP TABLES
LIST OP PIGUEES
CHAPTER
I. INTRODUCTION ......
Statement of the Problem Objectives
II. GROWTH AND ADJUSTMENT IN THE CATTLE INDUSTRY . . . .
Concentration in Cattle Feeding State and Regional Adjustment in Cattle Feeding Factors Contributing to Commercial Feedlot Growth Peed grain production Slaughter facilities Feeder cattle supplies Coordination in Feeder Cattle Shipments Operational evidence Cow Numbers - The Base of the Feeding Industry
III. TRANSPORTATION ANALYSIS— THE OPTIMUM SHIPMENT PATTERNS FOR FEEDER CATTLE......
Model for Feeder Cattle Shipments Regional demarcation Delineating of supplies Demand for available calf supplies Transfer costs Program Analysis Initial results The final model CHAPTER Page
XV. ECONOMICS OF FEEDLOT OPERATIONS...... 63
Economies of Scale - Previous Research Results Economics of Smaller Feedlot Operations Discounted labor costs Efficiency measures in feedlots Price considerations
V. RECENT PROCUREMENT PATTERNS AND TRENDS, PROCUREMENT COSTS, MARKETING, AND FEEDER CATTLE FINANCING . . 97
Cattle Procurement - Interregional Adjustments The Eastern Combelt Ohio procurement Procurement Costs Transportation Shrinkage Buying Marketing Fed Cattle Feeder Cattle Financing
VI. RETROSPECT...... 130
Summary Conclusions Implications and Recommendations
APPENDIX A ...... 137 APPENDIX ...... 142 APPENDIX C ...... 146 APPENDIX ...... 151 APPENDIX E ...... 155 APPENDIX ...... 193 APPENDIX G ...... 197 BIBLIOGRAPHY ...... 199
▼ LIST OP TABLES
TABLE Page
1. Changes in U.S. Production of Selected Agricultural Products in Selected Census Years 9
2. Farms and Number of Cattle, Excluding Calves, Sold from Farms Classified by Number Sold per Farm, for the United States, 1954 to 1964 ...... 10
3. Trends in U.S. Feedlots, Numbers by Capacity and Percentage of All Fed Cattle Marketings ...... 12
4. Number of Fed Cattle Marketings in the East North Central Region, State and Region Totals (1,000 head), and Percentage Change Since I960 14
5. Thousands of Fed Cattle Marketings, Percentage Distribution by States, and Percentage Change by Years, i960 and 1969 ...... •••• 15
6. Thousands of Bushels of Grain Sorghum (milo) Production, Leading States, Selected Years, and Percentage Change in Production, Selected Periods, 1956-1969 ...... 20
7. Federally Inspected Slaughter Plants and Commercial Cattle Slaughter, by Census Regions, I960 and 1969 • • 23
8. Beef Cows Two-Years-Old and Older, Percentage Change, and Percentage of U. S. Total for the U. S. and Selected Regions, I960 and 1970 30
9. Dairy Cows Two-Years-Old and Older, Percentage Change, and Percentage of U. S. Total for the U. S. and Selected Regions, i960 and 1970 31
10. Regional Demarcation and Shipping Points ••..... 40
11. Allocation of Calves Sorted by Supply Regions, Number Shipped, Cost per hundredweight, and Total Cost . . . 53
vi TABLE Page
12. States with Non-optimal Cost Coefficients of $.60 or Less per Hundredweight for Shipment of Beef Calves Into Ohio for Feeding and of Other States With Non op timal Cost Coefficients of $.60 or Less per Hundredweight for These Sources ...... 61
13. Labor and Equipment Feeding 600-Pound Steers 120 Days in Various Sizes of Feedlots, California...... 73
14. Average Daily Nonfeed Costs per-Head F e d ...... 75
15. Total Feeding Costs per Pound of Gain by Type of Cost, Size of Feedlot and Degree of Feedlot Utilization, Texas and Oklahoma, 1966-67 .••••••••.••• 79
16. Total Feeding Costs per Pound of Gain, Rates of Gain, Average Days Fed, and Feedlot Utilization by Number of Cattle Fed, Ohio, 1963-64 and 1968-69 ...... 80
17. Fixed, Variable and Total Costs per Pound of Gain, Ohio, Texas and Oklahoma, Various Cost Studies .... 84
18. Daily Rates of Gain and Feed Cost per Pound of Gain by Feeding Periods, 419 Head of Steers, 1968-69 . . . 89
19. Daily Rates of Gain and Feed Cost per Pound of Gain by Weights and Sex of Cattle ...... 90
20. Live Finished Beef Cost Differentials for Different Total Gains on Feeder Animals and Cost of Gain Differentials ...... 92
21. Comparison of January 1 Inventory of Beef Cows and Heifers Two Years Old and Older with Annual Fed Cattle Marketings, Selected States, I960 and 1969 • • 101
22. Origin of Feeder Cattle Shipped Ino Illinois, State Totals, Region Totals and Region Percentages, 1961, 1964 and 1969 ...... 102
23. Origin of Feeder Cattle Shipped Into Ohio, State Total, Region Totals and Percentages, 1961-1969 • • • 104
vii TABLE Page
24* Feeder Cattle Shipped Into Ohio, Percentage of Annual Inshipments by Months, 1961-1969 .••••• H O
25* Transportation Costs for Ohio Inshipments: Bepresentative Transportation Rates and the Transportation Bill for Feeder Cattle Inshipments, 1961, 1965, and 1969 ...... 112
26* Transportation Costs for Texas Inshipments: Bepresentative Transportation Bates and the Transportation Bill for Feeder Cattle Inshipments, 1962, 1965, and 1967 ...... 113
27* Actual Shipment Patterns: Estimated Transportation Cost per Feeder Animal Shipped Into Feedlots, Ohio and Texas, 1969 . . • ...... 115
28. Optimum Shipment Patterns: Estimated Transportation Cost per Feeder Animal Shipped Into Feedlots, Ohio and Texas, 1968 ...... 116
29. Shrinkage of Feeder Cattle: With Actual and Optimum Procurement Patterns, Ohio and Texas Feedlots . . . 118
30. Steer and Heifer Prices: Annual Average Price per 100 Pounds Received by Farmers, Selected Regions, Ohio and Texas, 1961-1969 125
31. Feeder Cattle Financing, Survey Response of Commercial Banks (Sample) and Production Credit Associations ...... 127
32. Number of Feedlots and Number of Fed Cattle Marketings for Two Capacity Groups, by States with Percentages, 22 States, 1969 138
33* Number of Commercial Feedlots and Number of Fed Cattle Marketings by Feedlot Capacity by Regions, 22 States, 1969 ...... 140
viii TABLE Page
34. Federally Inspected Cattle Slaughter by Classifi cation and Percentagef with Breakdown of Com mercial Slaughter Using the Same Percentage, 1968 ...... 145
35. Allocation of Nonfed Cattle for 1968 Optimum Feeder Cattle Shipment Model, Number of Head Allocated and Percentage Allocation for the United States...... 149
36. Inshipments of Cattle from Canada: Allocation of Total Inshipments to Regional Origins and by Intended Use, 1968 ...... 154
37. Transportation Model:Optimum Calf Shipment Patterns for Slaughter and Feeding Purposes, and Non-optimal Shipment Costs, 1968 ...«•.. 156
38. Schedule of Breakeven Prices for 67 Percent Net Gain on Feeder Animals at Selected Feeder Cattle Prices and Feeding Costs per Pound Gain ...••• 194
39. Schedule of Breakeven Prices for 100 Percent Net Gain on Feeder Animals at Selected Feeder Cattle Prices and Feeding Costs per Pound Gain ...... 195
40. Schedule of Breakeven Prices for 150 Percent Net Gain on Feeder Animals at Selected Feeder Cattle Prices and Feeding Costs per Pound Gain ••••.. 196
ix LIST OP FIGURES
Figure Page
1. Trade problem with perfectly inelastic regional supply and demand curves...... 36
2. General alternative use flow chart for calves produced in tbe United States, from birth to slaughter. .... 38
3. General matrix form for the transportation analysis. • 42
4. Optimal shipment patterns for feeder cattle, 1968. . • 51
5. Optimal shipment patterns for slaughter calves, 1968.. 52
6. Pixed, variable, and total nonfeed costs at full capacity by size of feedlot and total nonfeed costs for each size at one-third, two-thirds and full capacity, 700-pound feeder steers fed 120 dyas in a continuous operation, Oklahoma...... 68
7. Relationship between size of feeding ratio and nonfeed costs for feed yards of various sizes...... 71
8. Comparative feeding costs, Texas and Ohio...... 81
9. Comparative feeding costs, Oklahoma and Ohio. .... 82
10. Breakeven fed cattle prices for feeder cattle purchased at different prices per pound, with 67, 100 and 150 per cent net gains as purchased weights and 17 cent and 30 cent total feeding costs per pound gain...... 93
11. Breakeven fed cattle prices for feeder cattle purchased at different prices per pound, with 67, 100 .and 150 per cent net gains on purchased weights and 25 and 27 cent total feeding costs per pound gain. . • 95
12. Surplus and deficit beef calf supplies by states, with nonfeds excluded, 1968...... 100
x c h a p t e r I
INTRODUCTION
How shall goods be produced? That is, by whom and with what resources and in what technological manner are they to be produced? Who hunts, who fishes? Electricity from steam or from waterfall or from atoms?1
This dissertation appraises the specific matter of how beef shall be produced. Yfao feeds beef cattle? Should it be the spe cialized commercial feeder of recent development, or the small diver sified family farm operator familiar to combelt agriculture, or some combination of these types of enterprises? How can the tools of eco nomics be employed in solving these issues?
Rapid growth of commercial cattle feeding concentrated in a few states and in a small number of enoimous feedlots (Table 3) outside the Combelt necessitates a new appraisal of the Combelt cattle pro ducers* stalce in the future of cattle feeding. Ohio producers share these Combelt concerns. According to USDA figures, Ohio beef pro duction totaled 619 million pounds in 1968. In that year, cash re ceipts to Ohio farmers from sales of cattle and calves amounted to
$189.4 million, and ranked second only to dairy products as a source
^Paul A. Samuelson, Economics (New York: McGraw-Hill Book Company, Seventh edition, 1967)> p. 16.
1 of cash receipts in 15 of Ohio’s 88 counties in 1965» ranked second in
34 counties, and third in 20 counties. Cattle and calf sales thus
ranked among the top three sources of income to Ohio farmers in 69 of
the state's 88 comities.
Continued participation of Ohio as a significant participant
(Ohio ranked 15 in fed cattle marketings in 1969) in the growth of
this national industry is not assured. Beef production is character ized by risk and uncertainty resulting from unstable prices and narrow profit margins, by rising investments in equipment and inventory, by the increasing intensity of competition among commercial western feed lots, and between commercial and farm feedlots, as evidenced by in
creased competition for traditional western sources of feeder cattle.
Ohio producers have turned South and Southwest for feeder calves, only
to find increased demand from the Y/est for these sources also.
Statement of the Problem
Ohio's growth in cattle feeding has not kept pace with national growth rates. In the past three years Ohio has shown a 19,000 head
(4 per cent) decrease in fed cattle marketings. What will the future bring? While Ohio feeders continue to compete and plan their com petitive strategies for the future, should not these strategies be based on something more substantial than optimism? Does Ohio have a future in the big-time cattle business? Should Ohioans commit their resources to beef or to other enterprises?
This analysis is intended to provide insights for cattle feeders who are asking these questions as they examine their future in the feeding industry. But the analysis has implications for others also— those not directly engaged in feeding, but nevertheless participants in the industry— markets, packers, processors— the continuum of mer chant and agent middlemen.
Objectives
To achieve the overall objective of determining the future role of Ohio cattle feeding activity as a part of the national industry, several intermediate objectives have been set forth:
1. Review the growth in cattle feeding during the most recent decade for the United States to determine Ohio's relative stake in the national industry.
2. Survey and summarize relevant research bearing upon those aspects of feedlot operations and financing bearing upon the competi tive relationships between Ohio and other areas.
3. Determine the available sources from which feeder calves fed out in Ohio feedlots are purchased, and determine trends and changes in the relative importance of these sources to Ohio feedlot operators.
4. Determine total procurement costs of feeder calves purchased for Ohio feedlots with reference to buying, transportation, and re lated indirect costs incident to procurement such as crippling, mor tality, and health conditions at arrival.
5. Determine the total supply of feeder cattle potentially available, total demand for feeder cattle and the optimum shipment patterns associated with these supplies and demands. 4
Data which specifically relate to objectives outlined above are available from many sources. These include federal reports of the
USDA, state statistical reports, published research bulletins from ag ricultural experiment stations and land grant colleges, private re- 2 search publications, and trade journals. All of these are important information sources utilized by different participants in the live stock industry. Topics examined in the research literature include markets and marketing alternatives for both buyers and sellers, trans portation costs and regulation, shipment patterns, shrinkage, feedlot costs and economies of scale, financing, regional structure and mar keting changes, and related topics ranging from beef herd management to retail sales of fresh beef.
Due to this breadth of treatment, a separate literature review is not offered. Instead, data and research from other studies are introduced when evidence and reference become appropriate to the dis cussion in each of several chapters.
Chapter II describes growth in the national cattle feeding in dustry, changes that have taken place in the industry during the past
2 The most important secondary statistical data utilized includes the January 1 beef cow, dairy cow, and bull inventories, the annual calf crop, cattle death loss, calf death loss, cattle on feed reports, feedlot numbers and marketings by size of feedlots, cattle placed on feed, fed cattle marketings, cattle slaughter, calf slaughter, and feedgrain production, all published by either SIS or SRS of the USDA. Many other research bulletins, circulars, reports, technical papers, and supplementary materials are used throughout this dissertation. In addition to secondary sources, primary data from cooperating Ohio feedlots, cattle buyers, financial institutions, and other sources are also utilized. decade and categories of factors contributing to these changes. iy
this approach the stake of Ohio, the Combelt, and other regions in
the broader U.S. industry is established in perspective to provide a
better understanding of topics treated in chapters that follow. The
chapter also provides background for the national concern among re
searchers and feedlot operators about the number of feeder cattle available in the United States. Regional shifts and changes in cow numbers by type (beef and dairy) are discussed, providing an intro
duction for a more rigorous analysis of feeder calf movements.
In Chapter III, a linear transportation model is used to de
termine optimal feeder cattle shipment patterns in the United States.
Regional beef and dairy calf supplies available for either further feeding or calf slaughter are delineated and the regional demand for
calves is estimated.
Chapter IV compares costs and economies of commercial and farm feedlots. The comparison is based on literature review of commercial feedlot costs and on primary data obtained from cooperating Ohio feed lots. (Although small farm feedlots typify Ohio cattle feeding enter prises, the lots selected for participation represented larger, care
fully managed supplementary enterprises.)
Marketing problems associated with feedlot management are anal yzed in Chapter V. The chapter examines changing sources of feeder
calves, and the implications of an expanding national demand for feeder calves. The problems and costs associated with feeder cattle procurement (alternative market channels, buying costs, transportation costs, shrinkage) are discussed. Feeder cattle financing alternatives are reviewed, encompassing a survey of institutions, costs, and pro cedures used by Ohio feedlot operators in financing feeder cattle.
A final chapter summarizes the research and explores some of its implications. Although primary emphasis is placed on the Ohio cattle industry, valid conclusions cannot be reached if the analysis is con fined to a specific state. The study, therefore, may be appropriately regarded as national in scope. CHAPTER II
GROWTH AND ADJUSTMENT IN THE CATTLE INDUSTRY
4
Growth in specialized scientific livestock production represents an extension of industrialization into agriculture.^ This chapter summarizes some of the changes and developments in the cattle feeding industry that have characterized this industrialization in the 1960's.
What major changes have taken place and what factors have con tributed to the development of the cattle feeding industry? How have these changes affected Ohio and other Combelt cattle feeders? An understanding of these matters provides the background against which issues and alternatives are cast in following chapters. Following a review of broader dimensions of change the latter portion of the chap ter turns more specifically to U.S. capacity to produce feeder cattle.
Feeder calf supplies are an essential input in determining optimal shipment patterns in Chapter III. Identification of optimal procure ment patterns is necessary in making procurement cost comparisons as the industry tends to adjust toward optimal, patterns.
^Harold F. Breimyer, "The Three Economies of Agriculture," Journal of Farm Economics. Vol. X U V (August, 1962), pp. 679-699.
7 Concentration In Cattle Feeding
Cattle feeding in the United States is rapidly acquiring the characteristics of factory production, removed from customary family farm activities. In this respect it is following a pattern now fa miliar in broilers and turkeys and, to a lesser extent, in dairy and citrus production, fable 1 summarizes the course of these tendencies toward growth in firm size in the production of various agricultural products during recent years. In addition to simple growth there has also been a marked increase in percentage of production accounted for by larger firms (fables 1 and 2).
In many respects, the tendencies in cattle feeding are more severe than those recorded in these tables. For example, a recent
Cattle on Feed report records that in 1969, cattle in 22 states were 2 fed in a total of 192,849 feedlots of all sizes. fhis included all reported enclosures such as the customary cowlots and barnyards of
Combelt agriculture, together with the large commercial enterprises that have received so much publicity in recent years. Only 1.1 per cent of all these enclosures had a feeding capacity of 1,000 cattle 3 or more. Yet, these 2,066 feedlots mostly in the western Combelt or
2 Cattle on Feed. January 1, 1970, USDA, Statistical Reporting Service, Crop Reporting Board, Washington, D.C. (January 16, 1970), pp. 18-19. 3 •'Capacity means the optimum number of cattle a given feedlot can handle at any one time. Capacity may be either greater than or less than the total marketings during one year. Large commercial feedlots typically finish feeding any particular lot of steers in six months or less and immediately begin another. Smaller Combelt farm feedlots typically finish one lot of cattle per year in their facilities on an 8 to 11 month feeding period, fherefore, capacity can be utilized more completely two ways, (a) feeding several lots a short period of time, and (b) feeding one lot for a long feeding period; i.e., 12 months. 9
Sable 1
Changes in U.S. Production of Selected Agricultural Products in Selected Census Years
Products, Producers, and Production 1949 1954 1959 1964
(000 omitted on all figures)
Turkeys a Farms reporting sales 162 n.a.a 88 42 Sales (head) 36,438 n.a. 80,396 104,750
Broilers Farms reporting sales n.a.a 50 42 35 Sales (head) n.a. 796,207 1,419,260 1,915,374
Milk Farms reporting sales 3,682 2,957 1,837 1,134 Sales (pounds) 68,670 n.a.a 97,606 105,996
Velencia Oranges Farms reporting harvests n.a. 29 24 19 Harvested (pounds) n.a. 4,755,844 5,025,358 4,137,414
Grapefruit Farms reporting harvests n.a. 24 20 14 Harvested (pounds) n.a 3,532,878 2,981,876 2,518,425
an.a. - Data not available.
Source: 1964 United States Census of Agriculture, Yol. II, Chapters 2 and 4. 10
TABLE! 2
Farms and Number of Cattle, Excluding Calves, Sold from Farms Classified by Number Sold per Farm, for the United States, 1954 to 1964
Farms with Number Number of Cattle of Cattle Sold Farms Sold, 1964
1954a 1959 1964 Total Total (1,000) (per cent)
Total all Farms 1,858,791 1,529,330 1,359,665 34,606 100.0
1 to 4 1,027,421 740,734 616,665 1,349 3.8
5 to 19 595,120 513,874 478,312 4,445 12.8
20 to 49 156,517 166,447 151,806 4,532 13.1
50 to 99 47,216 60,525 58,582 3,965 11.5
100 to 199 20,241 30,462 31,571 4,234 12.2
200 or more 12,276 17,278 16,749 4,833 14.0
500 or more n.a.13 n.a.13 5,980 11,248 32.5
Alaska and Hawaii not included,
n.a. - not available.
Source: 1964 United States Census of Agriculture, Vol. II, Chapter 2. 11 in the West or Southwest, marketed nearly 52 per cent of all fed cat tle in 1969 (up from 47 per cent in 1968), and less than three dozen of them produced nearly 10 per cent.^ Similar concentration ratios for the period over which these data have been collected by the
Statistical Reporting Service, USM, are summarized in Table 3* A more detailed account of the number of cattle marketed by different feedlot capacities appears in Appendix A (Tables 32 and 33)*
Feedlots with capacities of 1,000 head and over increased by 546
(33 per cent) from 1964 through 1969* Feedlots with capacities less than 1,000 head have decreased by 23,547 (11 per cent). This consti tutes a net decrease of 23,001 feedlots for the 32 major feeding states in the United States since 1964. Within the growth areas, there have also been interesting changes occurring which can be ex pected to continue as the cattle feeding industry continues to de velop. For example, from 1964 to 1969, Arizona, Hew Mexico, and
California had a net decrease of 64 feedlots with capacities over
1,000 head, but the remaining feedlots in this category have increased total cattle marketings by 501,000 head (18 per cent) during the sane period, indicating continued rapid increase in concentration in those already highly concentrated states.
State and Regional Adjustment in Cattle Feeding
The emergence of cattle feeding enterprises separate from and independent of family farms is important to Ohio cattle feeders.
^Ibid. TABLE 3 Trends in U. S. Feedlots, Numbers by Capacity and Percentage of All Fed Cattle Marketings
Lots Over 1,000 Head Capacity Lots Under 1,000 Head Capacity Number Cattle Marketed Per cent of Number Cattle Marketed Per cent of Year States of Lots (1,000 head) All Cattle Fed of Lots (1,000 head) All Cattle Fed
1962 32 1,440 5,456 NA NANANA 1963 32 1,537 5,984 NANANA NA 1964 32 1,635 6,912 40.5 221,747 10,146 59.5 1967 32 2,034 9,822 45.3 209,581 11,874 54.7 1968 32 2,080 10,823 47.0 206,516 12,217 53.0 1969a 22 2,066 12,326 51.8 190,783 11,480 48.2 (2,181) (198,200)
aData available for only 22 states for 1969* Thus, 1969 data does not include 113 feedlots reported in states previously reporting with capacities of 1,000 head and over (North Dakota 19, Florida 13, Wyoming 17, Utah 19, Nevada 14, and other states 26). These feedlots marketed 362,000 head of cattle in 1968. Also excluded are 7,417 feedlots with capacities under 1,000 head in ten states which reported 477,000 head of fed cattle marketings in 1968.
Source: Cattle on Feed. USDA, Crop fleporting Board, compiled from annual January issues. 13
Although Ohio reported 33 feedlots with capacities of over 1,000 head
in 1969, these lots accounted for only 8 per cent of all fed cattle
in the state. Also, Ohio fed cattle marketings appear to have de
clined somewhat in recent years, reflecting a mild trend noticeable
throughout the East North Central region (Table 4). Since 1966, fed marketings have declined 3 per cent in this region and 4 per cent in
Ohio. Illinois, the dominant feeding state in the region, has ex perienced a similar decline (Table 4). Remaining states in the region
display growth rates that are nominal compared to West North Central,
West South Central, and selected Mountain states (Table 3).
Regionally, there has been a geographic shift in the production
of fed cattle. Although most cattle feeding regions increased annual fed cattle marketing during the past decade, the greatest growth has
taken place in specific states. During the decade of the 1960's,
United States fed cattle marketings increased about 85 per cent, from
12.9 to 23.8 million head. The East North Central Region increased fed cattle marketings about 440,000 head (20 per cent) during the ten- year period. But the East North Central Region marketed only 10.9 per cent of total U.S. fed cattle in 1969, compared to 16.9 per cent in I960 (Table 5).
Iowa (in the West North Central Region) remains the nation's leading producer of fed cattle. Fed cattle marketings in Iowa in
creased by 80 per cent in 1960-69 period, near the 85 per cent growth
rate for the United States. During the most recent four-year period,
1966-69, Iowa increased fed cattle marketings 29 per cent, while the t a b e s 4
Number of Fed Cattle Marketings in the East North Central Region, State and Region Totals (1,000 head), and Percentage Change Since I960
Ohio Indiana Michigan Wisconsin Illinois Total ENC Region Per Per Per Per Per Per cent cent cent cent cent cent Year Number Change Number Change Number Change Number Change Number Change Number Change (000 omitted on all figures)
I960 287 — 293 — 180 — 164 — 1255 — 2179 —
1962 289 0.7 291 -0.7 198 10.0 168 2.4 1181 -5.9 2127 2.4
1964 293 2.1 364 24.2 198 10.0 175 6.7 1240 -1.2 2220 1.9
1966 453 57.8 480 63.8 230 27.8 190 15.9 1333 6.2 2686 23.3
1967 442 54.0 496 29.3 240 33.3 206 25.6 1281 2.1 2665 22.3
1968 453 57.8 482 64.5 243 35.0 202 23.2 1278 1.8 2658 22.0
1969 434 51.2 511 74.4 244 35.6 212 29.3 1216 -3.1 2617 20.1
Source: livestock and Meat Statistics. USDA, Statistical Reporting Service, compiled from annual supplements to Statistical Bulletin No. 333* IABIE 5
Thousands of Ped Cattle Marketings, Percentage Distribution by States, and Percentage Change by Years, I960 and 1969
I960 1969 Ped Cattle Per cent Ped Cattle Per cent Per cent Change 1969 Marketings of U. S. Marketings of U. S. 1960-69 Hank
East Pennsylvania 146 1.1 131 .6 -10.3 22
N. Central Ohio 287 2.2 434 1 .8 51.2 15 Indiana 293 2.3 511 2.1 74.4 12 Illinois 1,255 9.7 1,216 5.1 -3 .1 7 Michigan 180 1 .4 244 1.0 35.6 18 Wisconsin 164 1.3 212 .9 29.3 19
N. Central Iov/a 2,565 19.9 4,618 19.4 80.0 1 Minnesota 600 4.7 803 3.4 33.8 9 Missouri 440 3.4 731_cl 3.1 66.1 10 North Dakota 178 1.4 —— South Dakota 362 2.8 551 2.3 52.2 11 Nebraska 1,434 11.1 3,322 14.0 131.7 2 Kansas 511 4.0 1,674 7.0 227.6 6 TABLE 5 (cont*d.)
1960 1969 Ped Cattle Per cent Ped Cattle Per cent Per cent Change 1969 Marketings of U. S. Marketings of U. S. 1960-69 Hank V/. S, Central Oklahoma 143 1.1 496 2.1 246.9 13 Texas 477 3.7 2,706 11.4 467.3 3
Mountain Montana 115 .9 177 .7 53.9 20 Idaho 1.8 1.8 231 438ac* 93.9 14 Wyoming 82 .6 —— Colorado 738 5.7 1,757 7.4 138.1 5 New Mexico 113 .9 360 1.5 218.6 16 Arizona 466 3.6 8 847.a 3.5 81.7 Utah 117 —— .9 ao Nevada 45 .3 — —
Pacific Washington 220 1.7 348 1.5 58.2 17 Oregon 117 .9 173 .7 47.9 2 California 1,595 12.4 2,057 8.6 29.0 4
U.S. (26 states) 12,874 100.0 23,806 100.0
^ISSS fed cattle marketings axe not available for these states. In 1968, the latest year data are available, marketings were as follows: North Dakota, 118,000; Wyoming, 69,000; Utah, 100,000; and Nevada, 60,000, Six states (Georgia, Florida, Kentucky, Tennessee, Alabama, and Mississippi) re ported a total of 492,000 fed cattle marketed in 1968, 1969 data are not available. Source: livestock and Meat Statistics, USDA, Statistical Beporting Service, respective annual supplements to Statistical bulletin No. 353. 17 East North Central Region experienced a 3 per cent decline in fed cat tle marketings. Moreover, Iowa is the eastern most state and the only
Combelt state that increased cattle feeding at the national growth rate during the 1960*e. Given the large I960 base from which this
Iowa percentage increase is measured, this is spectacular growth.
Par larger percentage changes are recorded in Western states, but they began with small bases in I960.
Sable 3 summarizes absolute, relative, and percentage changes 5 that have occurred during 1960-1969 • The West South Central Region
(Texas and Oklahoma) has had the greatest regional rate of growth in the fed cattle industry. The East North Central and Pacific Regions are marketing a declining relative percentage of total U.S. market ings. California and Oregon (in the Pacific Region) also have had an absolute decrease in the number of fed marketings since 1966, their year of greatest production. Thus, their recent performance trend is similar to that of the East North Central Region.
Nebraska, Kansas, Oklahoma, and Colorado are other states ex periencing rapid growth rates in cattle feeding. New Mexico has grown at a rate far above the national average but from a much smaller base.
Percentage changes alone can be deceiving. Por example, Texas* increase in fed marketings from 2.7 per cent of total U.S. in I960 to U . 4 per cent in 1969 is more instructive than in the 467 per cent state increase during the period. 18
Factors Contributing to Commercial Feedlot Growth**
Many factors have contributed to the rapid growth and expansion of cattle feeding in the United States. Changes in the supply of feed grains, the location of feed grain production, and economies of scale associated with large-scale "factory-type" commercial cattle feeding are widely acknowledged contributing factors. These, coupled with relatively abundant nearby supplies of feeder cattle and favorable environmental conditions, which in turn affect the cost of feedlot operations, have stimulated growth to an even greater extent in the
Southern Plains and some other Western areas. Although expansion of cattle feeding has not been limited to any specific region or state, the relative regional change in supplies of feed grains is very closely associated with the growth of the feeding industry. Hence, most of the growth in feeding activity coincides with areas experi encing most of the increase in feed grain production.
The slaughter industry also has responded to the westward shift in fed cattle production. Hew technology in slaughtering, refrigera- tion, transportation, as well as anticipated savings associated with decentralization and direct marketing are important factors in en- 7 couraging the packing industry in these adjustments.
**A commercial feedlot is defined as lots with capacities of 1,000 head or more.
^Hot only established firms such as Swift and Wilson, but major new entrants, Missouri Beef Packing, Inc. and Iowa Beef, Inc. have found the new fed cattle supply conditions ideal for growth and ex pansion in the West. 19
Peed grain production Q A 1967 Kansas study outlined the follov/ing major reasons for
increased cattle feeding activity in that state:
1* Large supplies of feed grains and feeder cattle,
2. Recent introduction of hybrid grain sorghum,
3« Substitution of grain sorghum for v/heat due to restricted wheat acreage, and
4. Increased irrigation, with increase in feed grain production.
Similarly, the chief factor contributing to a general increase in cattle feeding in Nebraska was reported to be a substantial in- q crease in the feed grain base. These same factors, varying in de gree of importance provide the basis for cattle feeding expansion in
other regions. Texas, Oklahoma, New Mexico and, to a lesser extent,
Colorado and Nebraska have substantially increased grain sorghum pro
duction since the latter 1950's. This growth in the production of grain sorghum in major producing states is recorded in Table 6.
In a 1962 study Williams noted that, for the Southern Plains
Region feed grain production in some areas of the region appeared to
Q John H. McCoy and Calvin C. Hansman, Economies of Scale in Commercial Cattle Peedlots of Kansas - Analysis of Konfeed Costs, Technical Bulletin frl51, Agricultural Experiment Station, Kansas State University (April, 1967). q Robert II, Pinley and Ralph D. Johnson, Changes in the Cattle Peeding Industry in Nebraska, S.B. No. 476, Nebraska Agricultural Experiment Station (1963). 20
table: 6 Thousands of Bushels of Grain Sorghum (milo) Production, Leading States, Selected Years, and Percentage Change in Production, Selected Periods, 1956-1969
Per cent Per cent Per cent Change Change Change State 1956 1961 1956-61 1969 1961-69 1956-69
Texas 124,202 229,635 84.9 309,800 34.9 149.4 Oklahoma 6,164 16,866 173.6 25,474 51.0 313.3 New Mexico 3,488 9,310 166.9 16,856 81.1 383.3 Arizona 4,320 4,475 73.0 15,522 107.7 259.3 Colorado 2,562 8,384 266.2 10,980 31.0 328.6 Kansas 24,390 111,680 357.9 182,896 63.7 649.9 Nebraska 12,446 59,842 380.8 114,608 91.5 820.8 Iowa 3,240 1,044 -67.8 2,952 182.8 -8.9 South Dekota 1,768 4,828 173.1 9,108 88.6 415.2 Indiana 106 649 305.6 715 10.2 574.5 Illinois 204 434 80.8 402 -3.2 -97.1 California 9,990 13,800 38.1 29,049 110.5 190.8 Missouri 5,984 9,776 63.4 9,108 -6.8 -52.2 Othera 7,251 6,028 -16.9 15,636 159.4 115.6
U.S. TOTAL 206,205 479,751 132.7 743,124 54.9 260.4
alncludes South Dakota, Virginia, North Carolina, South Carolina, Georgia, Kentucky, Tennessee, Alabama, Mississippi, Arkansas, and Louisiana.
Source: Crop Production. Annual Summary for selected years, Statistical Reporting Service, Crop Reporting Board, USDA. vary inversely with wheat and cotton production.10 Prom 1961 to
1969, cotton acreage in Texas and Oklahoma decreased by 2.1 million acres and grain sorghum acreage increased by 1.1 million acres. Grain sorghum production increased 32 per cent from 246.5 million bushels in
1961 to 335.3 million bushels in 1969. Initial growth of sorghum grain production was even more phenomenal. Prom 1956 to 1961 Texas and Oklahoma grain sorghum production increased 89 per cent.
Expansion of grain sorghum supplies is labeled as the major con tributing factor to the rapid growth of the cattle feeding industry in the Southwest. Texas, Oklahoma, Nebraska, and Kansas account for 85 per cent of the U.S. crop. Production of surplus sorghum in the Cen tral and Southern Plains provides Colorado, New Mexico, Arizona, and
California with another grain source to go along with their barley crops and wheat feeding.11 Hopkin and Kramer reported that grain sor ghum was second only to barley as a feed grain in 81 California feed- lots representing 48 per cent of reported California capacity and 70 12 per cent of California cattle fed in 1963. Most of the sorghum was shipped in from the Southwest.
Dillard P. Williams, Marketing Potentials for Peedlot Cattle in Oklahoma and Texas, Department of Agricultural Economics, Oklahoma State University, Processed Series P-426 (September, 1962).
^Peed Situation, Economic Research Service, USDA, Washington, D.C. (May, 1970), p. 28.
12 John A. Hopkin and Robert C. Kramer, Cattle Feeding in California. Bank of America N. T. & S. A., San Francisco (1965). 22
Evidence of continued surplus grain sorghum production and po tential expanded cattle feeding still exists for the Southwest. In a study of 41 counties in Texas, New Mexico, Oklahoma, and Kansas con centrated in and around the Texas panhandle region, Southwest Public
Service Company identified enough feed to produce about 2.8 million 13 more fed cattle than were produced in 1968 for the region. This is equivalent to a 16 per cent increase from the 1968 total U.S. fed cattle marketings of 23.0 million head.
Slaughter facilities
Packing plants also have made substantial adjustments which have helped to accommodate marketing problems associated with expanding supplies of fed beef in West North Central, West South Central, and other Western states. Increased numbers of federally inspected pack ing plants are closely related to increasing numbers of cattle being slaughtered in these states (Table 7, also see footnote 7)«
Thus, statistical evidence supports familiar generalities ex pressed as reasons for rapid growth in Western feedlot s. Many re lated and complementary changes have contributed to industry de velopment, characterized by large specialized feedlots. The economics of feedlot operations, investigated in the next chapter explores cost conditions and economic alternatives for both Western and Combelt cattle feeders.
■^•'1969 Ped Cattle Resources Survey," Southwestern Public Ser vice Company, Agricultural Development Department, Amarillo, Texas. 23
TABLE 7
Federally Inspected Slaughter Plants and Commercial Cattle Slaughter, by Census Regions, I960 and 1969
Plants Under Federal Commercial Cattle Slaughter Inspection 1960 1969 I960 1969 Region Per Per Number cent Number cent
(000 head) (000 head)
North Atlantic 87 85 1,933.9 7.7 1,663.3 4.7 East North Central 107 111 4,977.0 19.7 5,097.0 14.5 West North Central 108 147 8,765.7 34.9 14,275.9 40.4 South Atlantic 41 56 1,273.2 5.0 1,347.6 3.8 South Central 35 46 1,422.0 5.6 1,781.1 5.1 West South Central 33 80 1,825.9 7.2 3,724.5 10.6 West 119 179 5,026.6 19.9- 7,347.5 20.9 U.S. (48 states) 530 704 25,224.3 100.0 35,236.9 100.0
Source: Derived from the following publications: Willis E. Anthony, Structural Changes in the Federally Inspected Livestock Industry, 1950-62, Agricultural Economic Report llo, 83, USDA, Eco nomic Research Service, February, 1966, livestock Slaughter, USDA, Statistical Reporting Service, Crop Reporting Board, April, 1969, and Livestock and Meat Statistics, USDA, Statistical Reporting Ser vice, Statistical Bulletin llo. 333, Annual Supplements. 24
Feeder cattle supplies
Coupled with increased feed grain production and related feeding in the West is a decline in the proportion of Western feeder cattle available for shipment to Combelt states (see Figure 12 in Chapter V).
Ohio and most other Combelt states are deficit feeder cattle pro ducers which depend on calves imported from ether states to support their feeding activities.
While fed cattle marketings have increased 85 per cent
(1 0 ,932,000 head) between I960 and 1969, other important adjustments have occurred during the decade, Beef cow numbers have increased 41,7 per cent (10,995,000 head),1^ Dairy cow numbers have decreased 31*2 per cent (6,274,000 head).1'’ Annual calf slaughter has decreased from 16 8,225,000 head in I960 to 4,862,800 head in 1969 (40,9 per cent).
Ehese changes have stimulated new interest in future feeder cat tle supplies. USDA analysts suggest that opportunities for expanding fed cattle numbers at the expense of nonfed and dairy animals will be 17 largely utilized by the mid 1970's. Anticipated annual per capita
^Livestock and Poultry Inventory,, USDA, Statistical Deporting Service, January 1, Inventory Deports.
15Ibid.
^Livestock and Meat Statistics, USDA, Economic Desearch Ser vice, Bulletin Ho. 333» Annual Supplements.
17 Robert T. Eizek and John T. Iarsen, "Our Beef Producing Potential," livestock and Meat Situation, USDA, Economic Research Service (October, 1969). 25
beef consumption of 130 pounds by 1980 coupled with population growth 18 will necessitate continued expansion of fed beef production,
therefore, beyond the mid 1970*s, increased fed beef output will de
pend largely upon increased beef cow numbers to produce a larger
feeder calf crop.
A 1969 study of Texas-Oklahoma cattle feeding operations ex pressed similar concern with available feeder cattle supplies for the maintenance of feedlot capacity levels.
Contractual arrangements with feeder cattle pro ducers may become necessary to insure adequate quan tities and desired types of feeder cattle on a con tinuous basis as feed facilities expand. Numbers of feeder cattle annually produced in Texas and Oklahoma greatly exceed the local feedlot requirements, but sub stantial numbers of feeder cattle are shipped into the Southern Plains from other states primarily to offset the seasonal nature of feeder cattle production in Texas and Oklahoma. 19
In addition, C o m Belt cattle feeders have remained very competitive 20 in purchasing the higher quality feeders produced in the Southwest.
The total impact of growth, adjustment and potentially limited
18 Donald Seaborg, "Beef Cattle: The Next Ten Years," livestock and Meat Situation. USDA, Economic Research Service (May, 1970).
TO ^Raymond A. Dietrich, Costs and Economies of Size in Texas-Okla- horna Cattle Feeding Operations, B-1083, Texas Agricultural Ex- perinent Station (IJay, 1969) • oc\ Y/illard P. Williams and Thomas T. Stout, Economics of the Livestock Lleat Industry (New York: The Macmillan Company),1 p. 294. 26 feeder cattle supplies has prompted Dietrich to make the following appraisal*^
To insure orderly growth and expansion within the cattle feeding industry* and also to expedite decision making* it may become necessary to project supplies of future feeder cattle* on a regional basis* given rea^- listic assumptions relative to existing resource bases available for producing feeder cattle*
Potential increases in efficiency and coordination in the livestock- meat industry probably would result from such planning* Further ad justment in procurement patterns would reduce feeder cattle transfer costs* Cattle feeders in different geographic regions could more ac curately appraise their relative stake in the industry. Livestock packing plants would also benefit in knowing types and quantities of animals available for slaughter by geographic location.
In Chapter III realistic assumptions are made relative to existing cow numbers for producing feeder calf supplies. Using these supplies, optimum shipment patterns are determined using a linear pro gramming transportation model.
Coordination in Feeder Cattle Shipments
Actual feeder cattle inshipment and outshipment data are gathered and reported in many states. Host data is compiled from health cer
tificates issued by state veterinarians which are a legal requirement for a n interstate livestock shipments. However, the accuracy of such
data is limited by the lack of knowledge of exact destinations and
21 cit., footnote 19. exact origins, less than perfect enforcement of the law, and direct purchases of feeders by buyers without health certificates in neigh- 22 boring states.
Data collection procedures largely depend upon the resources available to each state statistical reporting service and upon the importance of the cattle industry in each state and its ability to
compete for the services that limited funds can provide. Therefore, major cattle feeding and cattle breeding states have generally led in the development of data relating to cattle movement patterns and cat tle feeding activity. The type and extent of data collected depends upon the net feeder cattle supply in individual states. For example,
Iowa, a feeder cattle deficit area, would direct greater efforts toward collecting inshipment data while Montana, a surplus producer of feeder cattle, would concentrate statistical efforts on the col lection of outshipment data, j$r this reasonable use of funds, Iowa
cattle feeders might more effectively evaluate their purchasing pat terns relative to state trends, and Montana producers could consider market alternatives for their surplus feeder cattle production.
However, in many South Atlantic and South Central states (all
surplus producers of feeder cattle) knowledge of available feeder
S'or example, feeder cattle produced in one state (Kansas) may be shipped several hundred miles to a public stockyards in a neighbor ing state (Omaha, Nebraska), where the cattle will be inspected and a health certificate issued. The second state (Nebraska) would then be recorded as the state of origin if tabulated in the receiving state; i.e., Ohio. 28 cattle supplies, the destination of out shipments and the number moving to different states is very limited. Florida and Mississippi are ex ceptions. They are the only states in these two Southern regions that can supply data on recorded inshipments and out shipments by states of 23 origin and destination respectively. Demand for cattle shipment data has apparently not been great enough to warrant the statistical effort in other South Atlantic and South Central states.
State by state shipment data indicates trends in feeder cattle procurement. However, this information is not always available and does not lend to national coordination in .procurement adjustments.
Operational evidence
During the past decade much of the approximate 4 per cent annual increase in beef production came from an increasing tendency to feed out cattle on high concentrate rations along with increased numbers of dairy type animals being fed for slaughter. These trends have re sulted in fewer "non-fed" or "grass-fed" animals being slaughtered and 24 a substantial decline in veal slaughter and veal consumption. The tremendous growth in the fed cattle industry has resulted in a
23 The Crop Reporting Service in each state was contacted by mail, requesting inshipment and outshipment data. In addition, con tacts with livestock extension specialists in several states reveal that such data does not exist. Some specialists were able to esti mate approximate percentages of shipments to various states.
24 Op. cit., footnotes 17 and 18. cleaning up of yearlings and two-year-olds once available for feed- 25 ing. Cattle are moving into feedlots at younger ages and some lots are now operating their own "backgrounding" lots to maintain supplies 26 for their feeding operations. Continued decline in numbers of yearlings and two-year-olds has forced feedlot operators back closer to the ultimate source of calves— the cow.
Cow Numbers - The Base of the Feeding Industry
Increased cattle feeding at rates much greater than expansion in feeder cattle production brings renewed interest in feeder cattle availability throughout the United States. The bulk of feeder cattle supplies are produced from the domestic inventory of beef and dairy cows in the United States. A small number of cattle move into the
United States from Canada and Mexico (1,024,000 head In 1968, about
80 per cent for feeding and 20 per cent for immediate slaughter).
These sources are equivalent to about 3.5 per cent of the total U.S. fed cattle marketings in 1968.
Breakdown of the domestic cow herd into beef and dairy reveals some of the changes which have occurred during the past decade. In all regions beef cow numbers have continued to increase, while dairy cow numbers have decreased substantially (Tables 8 and 9). The South
25 This issue has been discussed with an Ohio feeder cattle or der buyer who also expressed the increasing difficulty in finding yearling feeder cattle.
26 Irrigation Age— Beef and Irrigation Special. "The Questions Farmers Are Asking About Beef and Irrigation," February, 1970, p. 7. TABLE 8 Beef Cows Two-Years-Old and Older, Percentage Change, and Percentage of U.S. Total for the U.S. and Selected Regions, I960 and 1970
Absolute Per cent Per cent of Number Change Change U.S. Total I960 1970 1960-1970 1960-1970 Region I960 1970 (000) (000) (000) ..... * ... . * . .* North Atlantic 156 195 39 25.0 .6 .5
East North Central 1,507 1,905 398 26.4 5.7 5.1
West North Central 7,055 10,327 3,272 46.4 26.8 27.7
South Atlantic 2,205 3,145 940 42.6 8.4 8.4
South Central 3,842 6,085 2,243 58.4 14.6 16.3
South Western 5,596 7,911 2,315 41.4 21.2 21.2
Pacific 5,983 7,771 1,888 31.6 22.7 20.8
U.S. Total (48 states) 26,344 37,339 10,995 41.7 100.0 100.0
Sources livestock and Poultry Inventory. USDA. Statistical Reporting Service, respective issues. (CABLE 9
Dairy Cows Two-Years-Old and Older, Percentage Change, and Percentage of U.S. Total for the U.S. and Selected Regions, I960 and 1970
Absolute Per cent Per cent of Number Change Change U.S. Total I960 1970 1960-1970 1960-1970 I960 1970 Region (000) (ooo) (000) % % %
North Atlantic 3,184 2,518 -666 -20.9 15.8 18.2
East North Central 5,128 3,693 -1,435 -28.0 25.5 26.6
West North Central 4,561 2,855 -1,706 -37.4 22.7 20.6
South Atlantic 1,717 1,144 -573 -33.4 8.5 8.3
South Central 2,445 1,410 -1,035 -42.3 12.1 10.2
South Western 1,016 524 -492 —48.4 5.0 3.9
Pacific 2,081 1,696 -385 -18.5 10.3 12.2
U.S. Total (48 states) 20,132 13,858 -6,274 -31.2 100.0 100.0
Source: livestock and Poultry Inventory. USDA Statistical Reporting Service, respective issues. 32
Central and the West North Central Regions have increased beef cow numbers at rates greater than the U.S. average during the past ten years. The East North Central and North Atlantic Regions have had the slowest rate of expansion in beef cow numbers* Regionally, beef cow numbers have increased more uniformly than during the previous de cades* In 1946, the South Atlantic and South Central Regions ac counted for only 6.26 and 9*89 per cent of total U.S* beef cows re spectively.
Dairy cows have always represented an important portion of total cattle slaughter. Dairy calves have more recently become an important source of feeder calves. Scientific selection and breeding practices have raised average milk production per cow to record levels, per- 27 mitting a substantial reduction in the number of dairy cows. Dairy cow numbers have been reduced in all regions of the United States with the West North Central Region experiencing the greatest absolute de crease and the South Western Region having the largest percentage de cline.
Civen the growth and adjustment in the cattle feeding industry, with its attendant demands for interregional shifts in feeder calf movements, a determination of optimal shipment patterns can provide a basis for anticipating future adjustment. Such a formulation is pre sented in the following chapter.
^Dairy Situation. USDA, Economic Research Service. This source indicates milk production per cow increased from 7,029 pounds in I960 to 9,158 pounds in 1969. CHAPTER III
TRANSPORTATION ANALYSIS— TECS OPTIMUM SHIPMENT PATTERNS POR PEEPER CATTLE
This chapter sets forth assumptions governing available supplies of all dairy and beef feeder and slaughter calves, and employs USDA and agricultural census data in constructing a transportation model to determine optimum shipment patterns among 40 regions in the United
States. Effective construction of such a model depends upon the ef fectiveness of estimating techniques used in meeting data requirements specified by the model. Difficulties that must be overcome are found in the complexity of calf movements, due largely to multiple transfers of ownership between origins and final feedlot destinations, and in associated limits to published data which inadequately record these complexities. Estimating techniques are outlined in this chapter and in accompanying appendices.
Transportation models are a special form of the linear program ming model. It was first formulated by Hitchcock in 1941 to obtain the optimum allocation of a homogeneous product from several sources to numerous localities.'1' The model determines optimal shipment patterns
1P. L. Hitchcock, "The Distribution of a Product Prom Several Sources to Numerous Localities,” Journal of Mathematics and Physics. 2(1941), 224-230.
• 33 34 for transfer of products or inputs (for this analysis feeder cattle) from, surplus regions to deficit regions in a market, minimizing total transfer cost. Bata requirements for the transportation model are the quantities available for shipment from surplus regions, the quantities required by deficit regions, and the transportation costs between re gions.
Expressed mathematically, the transportation model is as fol- 2 lows:
Minimize
(1) Is E £ C X i=j j=i 13 13
subject to the conditions,
m (2 ) S X. . i D . j =1, 2, 3,**««, n. i=j X3 3
n (3) £ X..* S i =1,2, ...... m j=i 13
m n (4) E S . £ B i=l 1 j=l 1
The value T, in the equation (l) to be minimized is the total transportation cost (unit cost times quantity) involved with the move ment of cattle between regions. The in equation (2) represents a
Francis E. Walker. Transportation and Spatial Equilibrium Models for Interregional Analysis. Paper Presented at the Southern P a m Man agement Research Committee Workshop (New Orleans, March 23-24, 1964). shipment from origin i to destination j. is the number of cattle
required to be shipped into region j. The in equation (3 ) states
the number of cattle to be shipped from region i. Equation (4 ) states
that the total supply at origins must equal the total demand at des
tinations.
Presented in tableau form, the transportation problem is as
follows:
Origins Destinations 123. > » . n Total
1
2
3
. •
m
r m n Total J>2 .... !D S^= 2? D. i = j jesi Each row corresponds to one of the m equations in equation (2) and
each column represents one of the n equations in equation (3). A
specific (transfer cost) is associated with each possible ship ment. The transportation model forms a system of m + n linear equa
tions in mn unknowns but the optimal solution is obtained by at most m + n - 1 positive shipments and total cost is at a minimum. 36
She transportation model assumes the following:
1* Product homogenity.
2. Pure competition.
3. Transfer costs are independent of volume shipped.
4. Each region is represented by a basing point.
Since the transportation model can not be used to determine equilibrium prices and quantities between regions, the supply and de mand curves are perfectly inelastic in the infinitesimal short-run.
With the assumption of predetermined quantities for supplies and de mands, prices do not change in response to a change in quantity. The model obtains an equality of quantity flows by minimizing the trans fer costs between surplus and deficit regions.
Region A Region B Price
Pig, 1.— Trade problem with perfectly inelastic regional supply and demand curves. 37
Figure 1 represents a simple tv/o region example where supply and demand in both regions are perfectly inelastic* Y/ith trade between the two regions, the surplus supply q1 q2 in region A, will be trans ferred to the deficit supply q£ q£ in region B. Total supply must equal total demand for the transportation model.
Model for Feeder Cattle Shipments
Transportation analysis involves demarcation of regions, de lineation of supplies, delineation of demands, and knowledge of trans fer costs between each region. From the analysis, optimal shipment patterns are determined and expected adjustments resulting from rate changes and/or price imperfections can be identified.
A major effort was made to accurately identify and quantify calf supplies and demands by regions. In order to achieve this objective, total supplies include dairy calves, beef calves, and inshipments of feeder cattle from Canada and Mexico. Previous studies of interre gional feeder cattle movements have been limited to potential beef calf supplies available for feeding. The general flow chart for calves produced in the United States and their alternative vise from birth to slaughter is charted in Figure 2.
**Max F. Bowser and John Y7. Goodwin, Optimum Distribution Pat terns for Feeder Cattle. Technical Bulletin T-123» Oklahoma State University, June, 1968, and H. E. Buchholz and G. G. Judge, An Inter regional Analysis of the Feed-livestock Economy, Department of Agri cultural Economics, Agricultural Experiment Station, University of Illinois, 1965. 38 Beef cows two years old Dairy cows two years old and older - times calving and older - times calving percentage percentage
Beef calf supply Dairy calf supply s beef calf crop *s dairy calf crop - death loss - death loss
Commercial calf
Replacements of Beef Dairy Replacements of beef cows and feeder feeder dairy cows and L __ ___l beef bull3 cattle cattle dairy bulls
Commercial and farm Non-fed cattle feedlots
r m — 1 i Cattle deaths
Commercial cattle slaughter ” heifers^ = cattle marketings and nonfeds : g j ? n , t y . l ° marketings
Pig. 2.— Ceneral alternative use flow chart for calves produced in the United States, from birth to slaughter.
* 39
Regional demarcation
With four exceptions, individual states were accepted as regions
of supply and demand for the calf supply in the United States. Re- , gions encompassing two or more states are (l) the six New England
states, (2) Delaware and Maryland, (3 ) Wisconsin and Minnesota, and
(4 ) Utah and Nevada. Pive additional points, three in Canada and two in Mexico were selected as basing points for feeder cattle shipments 4 from neighboring foreign countries. A total of 46 regions are de fined for cattle shipments, with the five foreign points limited to
supplies (origins) and one dummy variable.^
In order to separate beef calf and dairy calf supplies for the transportation analysis, each region in the United States was as signed two numbers,one for dairy and one for beef. Table 10 indicates the regional demarcation and shipping points. Pigure 3 presents the general matrix form used in the transportation analysis.
Delineation of supplies
As denoted in Pigure 1, a new-born calf (either beef or dairy) has three alternative uses: (l) be sold and slaughtered as a calf,
(2) be held for a cow or bull replacement, or (3 ) sold as a feeder
calf. Calf supplies for both beef and dairy were developed on a
4 See Appendix D for allocation of foreign supplies.
**A cell was maintained for a dummy variable in the matrix, but not used in the model presented. 40
TABLE 10
Regional Demarcation and Shipping Points
Region Dairy Beef State or States Shipping Point
la 1 dummy variable 2 42 Maine, New Hampshire, Vermont Concord Massachusetts, Rhode Island, Connecticut 3 43 New York Syracuse 4 44 New Jersey Trenton 5 45 Pennsylvania Harrisburg 6 46 Ohio Columbus 7 47 Indiana Indianapolis 8 48 Illinois Springfield 9 49 Michigan Tanai rig 10 50 Wisconsin, Minnesota St* Paul 11 51 Iowa Des Moines 12 52 Missouri Jefferson City 13 53 North Dakota Bismarck 14 54 South Dakota Pierre 15 55 Nebraska Grand Island 16 56 Kansas Wichita 17 57 Delaware, Maryland Baltimore 18 58 Virginia Roanoke 19 59 West Virginia Charleston 20 60 North Carolina Raleigh 21 61 South Carolina Columbia 22 62 Georgia Atlanta 23 63 Florida Tampa 24 64 Kentucky Lexington 25 65 Tennessee Nashville 26 66 Alabama Birmingham TABLE 10 (con^d.)
Region Dairy Beef State or States Shipping Point
27 67 Mississippi Jackson 28 68 Arkansas little Rock 29 69 Louisiana Alexandria 30 70 Qlrl ftVinrna. Oklahoma City 31 71 Texas Abilene 32 72 Montana Billings 33 73 Idaho Boise 34 74 Wyoming Cheyenne 35 75 Colorado Denver 36 76 New Mexico Roswell 37 77 Arizona Phoenix 38 78 Utah, Nevada Ogden 39 77 Washington Spokane 40 80 Oregon B u m 41 81 California Bakersfield 82 Canada (east) Montreal 83 Canada (central) Port Huron 84 Canada (west) Calgary 85 Mexico (west) Hermosilio 86 Mexico (east) Chihuahua
aThis cell was maintained, but not used in this model. Origins (supplies) i* General form matrix for transportationthe analysis. — Fig* 81,1 42,1 Commercialcalf slaughter 41,1 •Prohibited Destinations (demands) •1,41 42,41 41,41 81,41 14 41,81 41,42 42,42 1,42 82,42. Cattle placed on feed plus cattlenonfed •81,81 •86,81 86,42- 42,81
1,81 42 43 8tate-by-state basis. She following statistical data are the basic sources used to analytically derive available calf supplies:®
1. Cows and heifers two years old and older kept for milk.
2. Heifers 1-2 years old kept for milk.
3. Beef cows 2 years old and older.
4. Bulls 1 year old and older.
5. Total calves bom.
6. Total calf deaths.
7. Total cattle deaths.
Since total oalves bom, bulls 1 year old and older, and calf deaths are not reported as dairy and beef separately, for each state these categories are divided between dairy and beef according to the per centage of cows two years old and older (a) kept for milk and (b) beef. The implied assumption is that calving percentages, bulls per cow, and death loss percentages are the same for both beef and dairy in a given state. This procedure was deemed acceptable for lack of a more suitable alternative.
From initial supplies of total dairy calves b o m and total beef calves bom, adjustments were made for bull replacements, calf death loss, and cow replacements. Bull replacement rates were assumed to be
20 per cent annually for both beef and dairy. The dairy cow replace ment rate is assumed to be the number of heifers one to two years old
®These data are reported in livestock and Meat Statistics. Sup plement to Statistical Bulletin No. 333, livestock and Poultry In ventory. and Calf Crop, all reports of the USDA., Economic Research Service. 44 kept for milk in each state. Since beef heifers one to two years old
would include feeder heifers as well as replacement heifers, an in
dependent procedure was used to delineate the beef cow replacement
rate. This procedure and the allocation of the total reported cattle
deaths as reported by the US DA are shown in Appendix B. The 1968 beef
cow replacement rate was calculated as 13.72 per cent. An Ohio beef
herd management study found typical replacement rates averaged 12-14 7 per cent. Hence, state-by-state net calf supplies available for
either further feeding or calf slaughter are determined using the fol
lowing general formulas:
1. Net dairy calves available for feeding or slaughter =
Total dairy calves b o m - Dairy calf death loss -
Dairy bull replacements - Dairy cow replacements.
2. Net beef calves available for feeding or slaughter =
Total beef calves b o m - Beef calf death loss -
Beef bull replacements - Beef cow replacements + or - Q One half of the change in the beef cow inventory.
7 D. I. Armstrong and E. T. Shaudys, Profitability of Practices Affecting the Calf Crop of Beef Herds, Ohio Agricultural Experiment Station, Research Circular 103 (May,~ 1961) •
Q Since the January 1 inventory of beef cows and heifers two years old and older either increases or decreases annually, an adjustment was made to account for this factor. Thus, it was assumed that one half of the increase in cow numbers would be accounted for by saving ad ditional heifer calves and the other half would be accounted for by reduced culling such as holding cows for an extra calf or two. Cor respondingly, a decrease would be accounted for by increasing the cow culling rate to the extent that it would account for one half of the reduced inventory and reducing the number of heifers held for replace ments to account for the other half of reduced inventory. 45
Using the data sources previously listed, all the statistical
manipulative operations were done using basic statistical commands on q the IBJ 360 computer.
Demand for available calf supplies
Two distinct demands exist for the available calf supply. First
and most important is the demand for feeder calves for finishing as
fed cattle in commercial and farm feedlots. The second demand con
sists of commercial calf slaughter, an important but declining demand
for calves.
Another aspect of demand is the number of "nonfed" cattle mar
keted in each region. The "nonfed" portion of commercial cattle
slaughter includes all cattle not classified as fed cattle or replace
ment (cow and bull) marketings. These cattle are especially important when determining optimum shipment patterns for feeder cattle. For
example, if part of the slaughter cattle marketings in any region are
Unonfed," these cattle effect the net (supply or demand) position of
feeder cattle in the region. The analysis in this chapter includes
"nonfed" cattle as a part of demand in addition to the number of cat
tle placed on feed. The number of %onfeds" marketed in each state is
determined in Appendix C. Identification and allocation of "nonfeds"
^R. L. Chamberlain and D. Jowett, The OKUITAB Programming Sys tem. A Guide for Users, Statistical laboratory, Iowa State Univer sity, University Bookstore, Ames, Iowa. 46 by regions allows for the equating of supply and demand in the model
(satisfying equation 4). Thus, a dummy variable was not necessary in the final model presented.
The total demand for feeder cattle in each region is determined as the number of cattle placed on feed plus "nonfeds". The number of cattle placed on feed is reported for the 32 major feeding states10 and adjustments were made to include 39 cattle feeding states.11
State by state commercial calf slaughter is used to determine regional 12 demand for calves for slaughter.
Transfer costs
In the transportation model, the flow of feeder cattle between regions is connected by a set of transportation costs. A number of transportation rates were determined from interviews with trucking
10Id.vestock and Meat Statistics. Supplement to Statistical Bul letin No. 333, USDA, Economic Research Service.
“ jor the seven additional states, only the total number of cat tle on feed January 1 are reported. The total number placed on feed annually is estimated by multiplying the number of cattle on feed January 1 by the ratio of the number of cattle on feed January 1 to the total number of cattle placed on feed during the year for a near by state. The ratio used is of a state believed to have similar feed ing characteristics.
12 Op. cit.. footnote 10. 47 13 firms, and rate schedules provided in research publications. Trans portation cost per head is primarily a function of distance traveled and the weight of cattle being hauled. lypical interstate rates cur rently being charged for the shipment of feeder cattle into Ohio range from 60 to 80 cents per loaded mile. These rates are generally as sociated with 32,600 pound load capacity straight semi-trailers and
42,600 pound load capacity drop-center semi-trailers. For example, relationships for truck transportation rates and load capacities are as follows:
$•60000/loaded mile = S.001846/cwt./mile for 32,500 lb. load.
$•78455/loaded mile = $.001846/cwt./mile for 42,500 lb. load.
Transportation costs were charted for varying distances using different rates and transportation cost functions. The chart indi cated that the rates shown above were representative for shipments greater than 200 miles. All interstate shipments less than 200 miles and all intrastate shipments were assumed to be 20 per cent more ex pensive (3.002215/cwt./mile).
William U. Capener, William P. Stevens, James S. St. Clair and Harold Abel, Transportation of Cattle in the West. Agricultural Experiment Station, University of Wyoming, Hesearch Journal 25 (Jan uary, 1969) and Gene A. Futrell, Francis E. Walker, and Thomas T. Stout, Econometric Generalizations of the Ohio Beef and Pork In dustries in Interregional Competition. Ohio Agricultural Research and Development Center, Research Bulletin 974 (November, 1965)* Another list entitled Truckload Bates on livestock Interstate Move ment was received from Vernon M. Sheppard, Jr., Extension Specialist, Livestock Marketing, correspondence dated August 9, 1968. 48
Mileage between points for interstate shipments were determined
from the Band McNally Road Atlas of the United States. Distances for
intrastate shipments were estimated by the author based upon the char
acteristics of the cattle industry in the state. For example, South
eastern Ohio to northwest Ohio and the Gulf area of Texas to the Pan handle.
Program Analysis
With transfer costs estimated between each pair of regions, and the supply and the demand for cattle in each region determined, op timal shipment patterns were obtained by using the computer program 14 transportation model developed by Dermis. The computer produced optimal shipment patterns between regions, the transportation cost for each shipment, the per unit cost for each shipment, the total trans portation cost for all shipments, and the dual of the transportation problem. The dual shows the relative values of the product in dif ferent regions resulting from the location of surplus-deficit regions.
Initial results
Initial transportation analysis, restricting calf slaughter to dairy calf supplies, then using the unallocated portion of dairy
calves (dairy calf supply is greater than calf slaughter nationally)
14. J. B. Dennis, "A High-Speed Computer Technique for the Trans portation Problem,” Journal of the Association for Computing Machinery. Vol. 5, No. 2 (April, 1958). 49 as a supplementary supply to beef calves in a feeder cattle transpor tation model proved unacceptable. Independently, these separate models had several undesirable characteristics. For example, in sev eral regions calf slaughter is greater than the number of dairy calves available in the region while these same regions produce more beef calves than are fed vdthin the region. Since some regions deficit in dairy calves were shown to optimally procure slaughter (dairy) calves from substantial distances, while their surplus beef calves were shown to be moving out of the region for feeding, several adjustments were made to find a more suitable transportation model for feeder cattle.
Output from the initial models suggested that beyond certain distances it would probably be cheaper for regions with substantial deficit supplies of dairy calves available for slaughter to resort to locally produced beef calves for slaughter rather than transport dairy calves from more distant origins. Hence, a new transportation model was hypothesized allowing both dairy and beef calves to be slaughtered as calves and also allowing both dairy and beef calves to be shipped for feeding in commercial and farm feedlots as shown in Figure 3*
Since most cattle feeders generally regard beef calves as being more desirable for feeding purposes, the transfer cost for ship ment of beef calves for slaughter purposes was adjusted by 1.2 times
C... The figure 1.2 was determined by analysis of differences in minimi average price paid per hundredweight for various grades (Choice, Good and Standard) of feeder cattle as reported by the USDA.^ Since
dairy calves generally grade at least one grade lower as feeder cat
tle than beef calves, price differences between different adjoining
grades were compared. For example, the annual mean price for choice
grade feeder cattle is divided by the annual mean price for good grade
feeder cattle with the resulting factor approximating 1.2 when all
combinations of choice and good and good and standard grades are ex
amined for each market. Therefore, the cost for transporting beef
calves for slaughter is adjusted upward by 20 per cent as indicated in Figure 3* The model in effect makes it less expensive to slaughter
dairy calves.
The final model
The shipment patterns for feeder cattle, and calves for slaughter are presented in Figures 4 and 5 respectively. Table 11 is a detailed account of optimal shipments sorted by supply regions. A complete table of non-optimal shipment costs and optimal shipments is shown in Table 37 in Appendix E. The total feeder cattle procurement picture is dominated by movements into Iowa, the largest net deficit region in the United States.
15 livestock. Meat and Wool. USDA, livestock Division, Consumer and Marketing Service, Market News, Weekly Summary and Statistics. Data analyzed were for the year 1969* The following categories were summarized: steer prices at Kansas City, Oklahoma City, Georgia auctions and Kentucky auctions. Intrastate dairy (__) ^ Interstate beef ■» Interstate dairy - - -
P i g . 4 .— Optimal shipment patterns for feeder cattlet 1968 (000 head). Intrastate dairy C~~^
pig. 5 .— Optimal shipment patterns for slaughter calves, 1968 (000 head)* 53
table: 11
Allocation of Calves Sorted by Supply Regions, Number Shipped, Cost per hundredweight, and Total Cost
el Supplyb Remand Number Cost per Transportation Cost Region Region Shipped Hundred Slaughter Reeding (dollars)
2 2 249,000 .28 160,356 3 31,000 .42 29,946 42 7,000 .28 9,800
3 3 612,000 .20 281,520
4 4 51,000 .11 12,903
5 3 3,000 .38 2,622 4 271,000 .29 180,757 5 158,000 .18 65,412
6 3 1,000 .83 1,909 6 84,000 .25 48,300 46 17,000 .25 21,250 49 180,000 .47 423,000
7 7 51,000 .17 19,941 8 52,000 .38 45,448 47 60,000 .17 51,000
8 51 226,000 .54 610,200
9 9 179,000 .25 102,925 49 89,000 .25 111,250
10 10 695,000 .30 479,550 50 1,168,000 .30 1,752,000
11 11 47,000 .27 29,187 51 343,000 .27 463,050
12 11 265,000 .50 304,750
13 53 50,000 .31 77,500 54 73,000 .38 138,700 54
TABLE 11 (cont'd.)
Supply^ Demand Number Cost per Transportation Cost Region Region Shipped Hundred Slaughter Feeding C dollars)
14 15 8,000 .56 10,304 55 155,000 .56 434,000
15 55 158,000 .20 158,000
16 51 162,000 .74 599,400
17 5 121,000 .18 50,094
18 5 147,000 .51 172,431
19 18 54,000 .38 47,196
20 4 78,000 .80 143,520 17 30,000 .56 38,640
21 18 14,000 .59 18,998 20 8,000 .38 6,992 21 27,000 .18 11,178
22 22 39,000 .27 24,219 26 42,000 .28 27,048
23 21 60,000 .88 121,440 23 46,000 .36 38,088
24 24 8,000 .25 4,600 47 256,000 .38 486,400
25 8 150,000 .66 227,700 48 78,000 .66 257,400
26 25 87,000 .38 76,038
27 27 109,000 .30 75,210 28 19,000 .47 20,539
28 12 51,000 .65 76,245 51 16,000 1.06 84,800
29 29 113,000 .19 49,381 55
lABEE 11 (cont'd.)
Supply^ Demand Number Cost per Transportation Costa Region Region Shipped Hundred Slaughter deeding (dollars)
30 16 4,000 .36 3,312 30 23,000 .25 13,225 56 77,000 .36 138,600
31 31 242,000 .63 350,658
32 32 1,000 .61 1,403 38 7,000 .90 14,490 78 26,000 .90 117,000
33 33 1,000 .18 414 40 17,000 .35 13,685 73 78,000 .18 70,200
34 75 14,000 .24 16,800
35 35 2,000 .31 1,426 75 63,000 .31 97,650
36 36 1,000 .38 874 37 4,000 .93 8,556 76 17,000 .38 32,300
37 41 30,000 .90 62,100
38 41 53,000 1.22 148,718
39 39 17,000 .20 7,820 79 90,000 .20 90,000 80 16,000 •66 52,800
40 41 69,000 1.44 228,528
41 41 103,000 .48 113,712 81 368,000 .48 883,200
42 42 15,000 .28 21,000
43 3 32,000 .24 17,664
44 4 4,000 .13 1,196 56
TABES 11 (cont'd.)
Supply Demand Number Cost per Transportation Costa Region Region Shipped Hundred Slaughter Reeding (dollars)
45 5 62,000 .22 31,372
46 46 217,000 .25 271,250
47 48 294,000 .38 558,600
48 51 561,000 .54 1,514,700
49 49 74,000 .25 92,500
50 50 94,000 .30 141,000 51 379,000 .47 890,650
51 51 966,000 .27 1,304,100
52 51 1,284,000 .50 3 ,210,000
53 54 691,000 .38 1,312,900
54 55 1 ,223,000 .56 3,424,400
55 55 1,393,000 .20 1,393,000
56 51 148,000 .74 547,600 55 809,000 .56 2 ,265,200 56 271,000 .22 298,100
57 5 38,000 .22 19,228
58 18 120,000 .24 66,240 45 156,000 .51 397,800 58 22,000 .20 22,000
59 19 5,000 .16 1,840 46 15,000 .38 28,500 58 40,000 .38 76,000 59 62,000 .13 40,300
60 44 17,000 •80 68,000 57 64,000 .56 179,200 58 111,000 .38 210,900 57
SABLE 11 (cont*d.)
Supply^ Demand Number Cost per Transportation Cost Region Region Shipped Hundred Slaughter Feeding (dollars)
61 21 55,000 .22 27,830 60 91,000 .38 172,900
62 22 1,000 .32 736 62 187,000 .27 252,450 64 278,000 .63 875,700 66 21,000 .28 29,400
63 23 177,000 .43 175,053 61 53,000 .88 233,200 63 245,000 .36 441,000
64 46 321,000 .38 609,900 47 336,000 .38 638,400
65 48 569,000 .66 1,877,700
66 25 54,000 .46 57,132 48 235,000 1.00 1 ,175,000 65 167,000 .38 317,300 66 90,000 .27 121,500
67 27 4,000 .36 3,312 48 237,000 1.10 1,303,500 52 360,000 1.03 1 ,854,000 67 57,000 .30 85,500 68 105,000 .47 246,750
68 51 470,000 1.06 2,491,000 52 67,000 .65 217,750
69 29 120,000 .23 63,480 52 400,000 .98 1 ,960,000 69 36,000 .19 34,200
70 56 1,415,000 .36 2,547,000
71 31 104,000 .76 181,792 51 237,000 1.30 1,540,500 70 543,000 .59 1,601,850 71 2 ,432,000 .63 7,660,800 77 13,000 1.55 100,750 81 234,000 2.29 2,679,300 IABIE 11 (cont'd.)
a Supply. Demand Number Cost per Transportation Cost Region Region Shipped Hundred Slaughter Reeding - (dollars)
72 53 104,000 .80 416,000 72 271,000 .61 826,550 73 114,000 1.00 570,000 74 125,000 .88 550,000 75 320,000 1.07 1 ,712,000 78 179,000 .90 805,500
73 73 326,000 .18 293,400 80 65,000 .35 113,750
74 75 501,000 .24 601,200
75 75 734,000 .31 1,137,700
76 76 379,000 .38 720,100 77 87,000 .93 404,550
77 81 224,000 .90 1,008,000
78 81 413,000 1.22 2,519,300
79 79 269,000 .20 269,000
80 80 146,000 .32 233,600 81 345,000 1.44 2,484,000
81 81 689,000 .48 1 ,653,600
82 42 12,000 .39 23,400 43 33,000 .47 77,550
83 49 33,000 .31 51,150
84 79 29,000 .85 123,250
85 77 174,000 .65 565,500
86 77 528,000 1.17 3,088,800 59
TABLE 11 (cont*d.)
Supplyb Demand Number Cost per Transportation Cost Region Region Shipped Hundred Slaughter Reeding , (dollars)
Subtotal dairy calves (4,572,000 si. and 3 ,698,000 feeding) 4,460,708 6,689,900
Subtotal beef calves (738,000 si. and 24,294,000 feeding) 646,875 69,582,950
TOTAL 5,107,583 76,272,850
Assume slaughter calves average weight equals 230 pounds and feeder cattle average weight equals 500 pounds*
^Supply regions 2 through 41 are dairy calves, regions 42 through 81 are beef calves, and 82 through 86 represent foreign origins.
Source: Calculated from computer output. Table 11 also shows total transportation cost for shipment of calves for slaughter and calves for feeding purposes* These costs are calculated on the basis of 230 pound calves being shipped for slaughter and 300 pound calves being shipped for feeding.
Ohio cattle feeders optimally procure 217,000 beef calves and
17,000 dairy calves which are produced within the state. Optimal in shipments are from Kentucky (321,000 head) and West Virginia (15,000 head). Table 12 shows regions for which Ohio's non-optimal shipment cost is $.60 per hundredweight or less and other states with non- optimal cost coefficients of $.60 or less per hundredweight for these sources. Other Eastern Combelt states appear as the major competi tors for beef calf supplies in regions where Ohio non-optimal ship ment costs are $.60 per hundredweight or less. Non-optimal shipment costs for shipments of Texas and Oklahoma beef calves into Ohio are
$1.49 and $1.36 per hundredweight respectively.
It can be shorn that allocation on a cost per hundredweight basis will give the same allocation when calculated on a cost per head basis with two different weight classifications (i.e. 230 pounds for all calves slaughtered and 500 pounds for all calves for feeding). Average weight of all calves slaughtered was 230 pounds according to TJSDA statistics and feeder cattle weights are assumed to be 500 pounds. 61
TABLE 12
States With Non-optimal Cost Coefficients of $.60 or Less per Hundredweight for Shipment of Beef Calves Into Ohio for Feeding and of Other States With Non-optimal Cost Coefficients of $.60 or Less per Hundredweight for These Sourcesa
Non-optimal Cost Coefficient Non-optimal Shipment Cost for Shipments Into Ohio of Other States for Origin by States*1 These Sources*5
46 .00 Ohio (217,000) .12 Pennsylvania, .13 Indiana, .21 Illinois, .00 Michigan, .48 Iowa
47 *21 Indiana .52 Pennsylvania, .00 Il linois (244,000), .07 Mich igan, .17 Iowa, .37 Missouri
49 .44 Michigan • 43 Indiana, .47 Illinois, .00 Michigan (74,000), .43 Iowa
58 .39 Virginia .00 Pennsylvania (156,000)
59 .00 West Virginia (15,000) .05 Pennsylvania, .18 Indiana, .33 Illinois, .18 Michigan, .52 Iowa, .00 Virginia (40,000), .00 West Virginia (62,000)
60 .54 North Carolina .00 New Yoifc (17,000), .02 Pennsylvania. .00 Del-Mary- land (64*000), .00 Virginia (111,000)
61 .44 South Carolina .19 Pennsylvania, .42 Indiana. .00 North Carolina (91,000) 62
TABIE 12 (cont'd.)
Non-optimal Cost Coefficient Non-optimal Shipment Cost for Shipment Into Ohio of Other States for Origin by States*5 These Sources*5
62 .21 Georgia .22 Pennsylvania, .14 Indiana, •12 Illinois, .42 Michigan, .30 Iowa, .29 Missouri, .00 Georgia (187.000), .00 Kentucky (278.000), .00 Alabama (21,000)
63 .50 Florida .28 Pennsylvania, .48 Indiana, •44 Illinois, .59 Missouri, .00 South Carolina (53*000), .00 Florida (245,000)
64 .00 Kentucky (321,000) •36 Pennsylvania, .00 Indiana (336,000), .05 Illinois, .16 Michigan, *25 Iowa, .35 Mis souri
65 •28 Tennessee .09 Indiana, .00 Illinois (569,000), .30 Michigan, .18 Iowa, «19 Missouri
66 .28 Alabama •40 Pennsylvania, .10 Indiana, .00 Illinois (235,000), .31 Michigan, .15 Iowa, .12 Mis souri
67 •55 Mississippi •27 Indiana, .00 Illinois (237,000), .51 Michigan, .09 Iowa, .00 Missouri (360.000), •00 Mississippi (57,000), .00 Arkansas (105,000), .34 Oklahoma, .29 Texas
aThis table summarizes non-optimal cost coefficients presented in Table 37 of Appendix E which are of direct interest to Ohio procurement.
^Parenthesized figures indicate number of cattle shipped ac cording to optimal patterns determined by the model. c h a p t e r IV
ECONOMICS OP FEEDLOT OPERATIONS
Before an investment is made an entrepreneur is in a long-run situation. He may select any one of a wide variety of different investments. After the investment decision is made and funds congealed in fixed capital equipment, the entrepreneur operates under short-run con ditions. Thus perhaps the best distinction is to say that an economic agent operates in the short-run and plans in the long-run.**-
In this chapter, the economics of feedlot operations are investi gated to examine the implications for Ohio of present competitive con ditions in the feeding industry. What types of cost structure are en countered by feedlot operators under various conditions and what can be expected to evolve from this structure? A review of relevant re search bearing upon aspects of feedlot operations provides the basis for generalizing comparative relationships. Published feedlot cost data and performance information is supplemented by actual feedlot performance results from several participating Ohio feedlot s.
Economies of Scale - Previous Research Results
In addition to changes in regional feed grain supplies, an ftfflo-rg-j ng awareness of great economies of scale in commercial cattle
1C. E. Ferguson, Microeconomic Theory (rev. ed; Homewood, Il linois: Richard D. Irwin, Inc., 1969), p . 198.
63 64 feeding has contributed to growth of large feedlots. Ferguson de scribes economies of scale as follows:
As the size of plant and the scale of operation be come larger, considering expansion from the smallest pos sible plant, certain economies of scale are usually rear- lized. That is, after adjusting all inputs optimally, the unit cost of production can be reduced by increasing the size of plant.2
Physical, technological, and financial forces contribute to economies of scale. Significant examples of these forces can be found in the cattle feeding industry. An excellent explanation of the
"theoretical considerations" surrounding these forces was offered by
Hopkin in a 1966 California study.
Economies of size in the cattle feeding industry of the Southwest include both economies of intensive vise of plant and economies of scale as described by Viner, J. M., Clark, Bouldi.ng et al. Important labor economies occur when the feed yard becomes sufficiently large that labor specialization is possible— when one man can spend all his time mixing rations for instance, while another man spends full time "working" the cat tle. When numbers of cattle fed are increased suffi ciently, new skills, such as those of a veterinarian, an animal nutritionist, or a marketing specialist, can be made available on a full-time basis, as is done in a few cases in the state. In recent years, cattle feeding in California has become an industry with high fixed costs which generate a heavy per-unit cost burden when not spread over large numbers of cattle.
Still another important economy of scale...arised from the increased bargaining power of the firm as the number of cattle fed is increased. This increased bargaining power might occur in buying feeds and live stock, or it might appear in selling the fat cattle at an advantage by attracting frequent visits from a large number of cattle buyers.•• A reputation for
2Ibid. 65
being skillful in buying and selling cattle might be equally as important in attracting customers with cattle to be fed as a reputation for being able to obtain economical weight gains. While bigness is not essential to thevacquisition of such skills, the larger firms appear to have an advantage in estab lishing this kind of reputation. 3
As feedlots grew in size and the existence of scale economies became apparent, research studies began to investigate the magnitude of these scale advantages. Since feed costs and cattle costs are gen erally very similar for all lots in a locality the analyses tend to be confined to nonfeed costs.
In 1956 Hopkin concluded that 40-50,000 head did not constitute 4 an upper limit to size for California feedlots. His findings, based on the records of 77 operators, showed substantial variation in non feed costs per pound of gain for finishing cattle in the sampled feed yards. Differences in daily nonfeed costs, when grouped by kind of operation (faim feeder, owner feeder, commercial feeder, or combined owner and commercial feeder),^ were not significant when firms of
3 John A. Hopkin | "Economies of Size in the Cattle-Peeding In dustry of California," Bank of America N.I. & S.A., Journal of Parm Economics, Vol. XL (May, 1958), p. 418.
4Ibid. c Commercial feedlots in this dissertation are defined as lots with capacities of 1,000 head or more, as noted in Chapter II. How ever, the research being cited at this point identifies commercial feedlots as those purchasing essentially all the feed and labor in puts and owning only part or none of the cattle being fed. fhe im portance of this reference is that significant differences in nonfeed costs were found to exist by size of feedlot, regardless of ownership arrangements or type of operation. 66
similar size were compared. Statistically significant differences in
nonfeed costs were found with differences in size of feedlots as
measured by feedlot capacity and with differences in the ratio of numbers fed per year (capacity utilization) to feed yard capacity.
The latter differences are short-run economies, defined as economies
resulting from shifts in the feeding ratio, the physical plant re maining fixed.
Hunter and Madden reported that "large operations require that
the feedlot be essentially full throughout the year, and that the feed w m be an appropriate size. Excess capacity raises average costs
sharply."** This 1961-62 survey of Colorado feeders indicated that
feedlots with average capacity of 143 head fed only 113 cattle, an
average of seven months during the year, or approximately 46 per cent 7 of the cattle they could have fed. large feedlots, with an average
capacity of 12,000 head, fed approximately 25,000 head an average of
5.5 months during the year, operating at 98 per cent of capacity.
These results are consistent with statistically significant differ- Q ences reported earlier by Hopkjn.
Elmer C. Hunter and J. Patrick Madden, Economies of Size for Specialized Beef Peedlots in Colorado, U.S. Department of Agriculture, Economic Research Service and Colorado Experiment Station, Agricul tural Economics Report 91» May, 1966.
7Ibid. O Op. cit., footnote 3* 67
She existence of economies of scale have been shown consistently in nearly every study since Hopkln's California study. Both King
(1962)^ and Williams and McDowell ( 1 9 6 5 used cost synthesis in es
timating input-output relationships and then applying costs to these inputs to derive total costs for each size lot. Figure 8 illustrates average short-run nonfeed cost curves for different size lots, varying levels of capacity utilization, and the corresponding long-run nonfeed
cost curve as synthesized by Williams and McDowell. Principal sources of scale economies were attributed to (l) changing technology and or ganization of the feedlot with changes in size, and to (2) management of labor inputs, with some substitution of capital for labor as scale increases.^
Short-run average cost curves reflect differences in the degree of feedlot utilization. Evidence suggests that feedlot operators tend to expand facilities, and to move to larger capacity before they en
counter the region of increasing short-run average cost generally dis
cussed as the U-shaped cost curve in economic theory. For example, referring to Figure 6, if a 5,000 head feedlot is operating at full
^Gordon A. King, Economies of Scale in Large Commercial Feed lots. Grannini Research Report No. 251, University of California, 1962.
10Willard P. Williams and J. J. McDowell, Costs and Efficiency in Commercial Dry-Lot Cattle Feeding. Processed Series P-509, Oklahoma State University, 1965.
n ibid. 10 .(300)
(600) 9
8 1(1,0 0 0 ) +»01 11(2,0 0 0 ) 7 (5,000) Total Nonfeed Cost (10,000) 6 3/3 Capacity C5 (15.000) • d 2/3 Capacity 0 Full Capacity P4 U 1 , 0 0 1 01 10,000 P. 2,000 5,000 ■P Long-run Nonfeed Variable Cost 01 3 oo 300 2 Long-run Fixed Cost 1,000 1 000 10,000 15,000 000
0 1 2 3 5 6 7 8 9 10 11 12 13 Million Pounds Gain (liveweight)
Fig. 6.— Fixed, variable, and total nonfeed costs at full capacity by size of feedlot and total nonfeed costs for each size at one-third, two-thirds and full capacity, 700-pound feeder steers fed 120 days in a continuous operation, Oklahoma. CT\ 09 69 capacity (minimum cost in the short-run), rather than tiy to handle additional cattle by "crowding" the existing facility at the expense of optimum performance (which would increase nonfeed cost per pound gain) feedlot operators tend to increase size. Feedlot studies do not show evidence that feedlot operators encounter increasing short-run average nonfeed costs with given size lots. Instead, decision al ternatives are (l) operation of the existing feeding facilities at optimum full capacity levels or (2) new investment (a long-run eco nomic commitment) in additional fixed facilities, moving to a new short-run average cost curve, i.e. the 10,000 to 15,000 head capacity lots in Figure 6. 12 Two Kansas studies, one in farm feedlots, the other on com- 13 mercial feedlots present similar evidence. In fact, the empirical investigation of cattle feedlots in both studies showed that average nonfeed costs did not increase when use of a feedlot was extended to
125 per cent of normal capacity. The authors suggested misinterpre tation of the term "capacity” by Kansas feedlot operators, or that feedlot operators perhaps considered a certain amount of excess ca pacity to be normal. The researcher concluded that Kansas feedlot facilities usually expanded before existing feeding facilities are fully utilized.
12 J. H. McCoy and H. D. Wakefield, Economies of Scale in Farm Cattle Feedlots of Kansas - An Analysis of Nonfeed Costs. Technical Bulletin No. 145, Kansas Agricultural Experiment Station, 1965.
13 SE* oit** footnote 8, Chapter II. «
70 14 As shown in Figure 7, Hopkin found that his synthesized short-
run cost curves provided a good representation of the scatter of ob
served costs of feedlots within each size group (see explanatory foot-
note, Figure 2). In general, the precision of the fit improved ma- '
terially as the average size of the firm increased, owing to greater
homogeneity among firms and to more reliable data supplied by larger
firms.^
The long-run average cost curve derived by Williams and McDowell
is quite similar to the earlier analysis of King.^ King's study of nonfeed costs for five different sizes of commercial feedlots in the
Imperial Valley showed decreasing costs as feedlot size increased T7 (Table 13). Many additional studies offer further evidence of econ- 18 omies of scale in cattle feeding. They consistently report the ap
pearance of economies as larger feedlots are built and utilized to
14 Op. cit., footnote 3.
^0p. cit., footnote 9.
^Although King's costs per head are lower than those reported by Williams end McDowell, the King analysis excluded land, marketing, and interest costs. These exclusions account for much of the dif ference. Other differences are due to differing feedlot specifica tions, equipment requirements, utilization assumptions and spatial costs. Spatial cost differences are discussed in another section of this dissertation.
IQ See for example, Ralph D. Johnson and Alfred R. Eckert, Cattle Feeding Costs in Nebraska by System of Feeding and Size of Operation, S. B. 496, Nebraska Agricultural Experiment Station, 1968. Rex 'J. Cox and Fred R. Taylor, Feasibility of Cooperatively O w ne d Feedlots, Agricultural Economics Report No. 36, North Dakota State University, Nonfeed Cost3 per Animal. Day (Dollars) of sizes.avarious VO I—I CM VO o Dig*7. Relationship between sizeof feeding ratio and nonfeed costs — for feed yards CM vo Deeding Eatios for Six Size-Groups (Logof Deed Yards Scale) CM CM • H VO CM m VO nin co in CO CO Ov o m CM cm 00 (M fn vo VO CO CVI.r l CM CM
72
Die method of least squares, employing the quadratic foxmula Y = a + bX + cX1 was used to compute the short-run cost curves. The several equations, their respective standard errors of estimate a nd' correlation coefficients are listed below*
Size Group Equation p Sy. r 1 Y = 21.53 - 8.93X + 1.70X. .765 .922* 2 Y = 22.82 - 11.62X + 2.29X2 .772 .943* 3 Y = 21.91 - 10.23X + 1.85XJ .378 .975* 4 Y = 17.80 - 7.08X + 1.13X2 .986 .852* 5 Y = 19.24 - 8.97X + 1.63X2 .487 .660** 6 Y = 18.58 - 8.24X + 1.40X .552 .956*
*Significant at 99 per cent level of confidence. ^Significant at 97 per cent level of confidence. capacity. Major variations in conclusions are centered on mini mm
size requirements necessary for feedlots to achieve most of the
economies associated with increased size.
TABLE 13
labor and Equipment Feeding 600-Pound Steers 120 Days in Various Sizes of Feedlots, California
Feedlot Annual Fixed Annual Variable Cost per Capacity Costs Costs Total Costs Head per Lay (dollars) (cents)
3,760 29,922 67,437 97,359 7.19
7,520 49,296 118,041 167,337 6.18
11,280 71,553 169,053 240,606 5.92
15,040 91,628 219,871 311,499 5.75
22,560 131,126 321,484 452,610 5.57
Source: Gordon A. King, Economies of Scale in Large Commercial Feedlots, University of California, 1962.
Perhaps of greater significance is the evidence supporting maxi mum capacity utilization (high feeding ratios) to maintain mSm'mm average total nonfeed costs per pound of gain in a given feedlot size
1964. Jack A. Richards and Gerald E. Korzan, Beef Cattle Feedlots in Oregon— A Feasibility Study, Special Report 170, Oregon State University, 1964. Several other studies are cited in Economies of Scale in Cattle Feeding, Supplement No. 3 to Technical Study Ho. 1, Organization and Competition in the Livestock and Meat Industry, National Commission on Food Marketing, June, 1966. category. The Hopkin and Kramer work is the only study of commercial 19 feedlots showing diseconomy with increased size. In their study, feedlots feeding more than 26,000 head annually encountered disecon omies in nonfeed costs per head. These were associated with salaries and wages, depreciation, repairs, legal and accounting costs, trucking and freight, promotion and other costs (Table 14). The authors ex- 20 plained:
As feedlots increase in physical size, longer dis tances must be traveled to inspect and service cattle. This includes weighing, vaccination, and other medical services; maintaining the vigil necessary for keeping cattle on feed and gaining weight; and hauling feed to pens. The possibility of wasting feed also increases with the size of the operation.
However, in a more recent study, Dietrich found continuing economies for both annual fixed cost per pound of gain (nonfeed costs) and variable costs per pound of gain as feedlot size in- 21 creased. Feedlots were grouped into five class intervals for feed lot capacity ranging from less than 1,000 to over 10,000 head. 22 Dietrich cautiously summarized as follows:
Since this study indicates the existence of econ omies of scale beyond the range of the available data,
10 Op. cit., footnote 12, Chapter II.
*®Ibid.. see page 32.
^Raymond A. Dietrich, Costs and Economies of Size in Texas- Oklahoma cattle Feedlot Operations. 3-1083, Texas Agricultural Experi ment Station, May, 1969. This study of feeding costs represents 70 per cent of the cattle on feed in Texas and 60 per cent of the cattle on feed in Oklahoma from July, 1966 to June, 1967. 75
TABLE 14 Average Daily Nonfeed Costs per-Head Ped
Numbers fed Under 4,000- 10,000- Over State Cost items 4,000 10,000 26,000 26,000 Average cents Salaries and wages8, . 4.68 3.52 2.97 3.29 3.27 Taxes, interest, insurance 2.32 1.42 0.93 0.89 1.00 Utilities 0.59 0.51 0.41 0.40 0.42 Gasoline, oil, grease 0.53 0.29 0.26 0.26 0.27 Depreciation 2.59 1.23 0.88 0.93 1.00 Repairs 1.11 0.62 0.73 0.87 0.82 Vet fees, medical 0.85 0.41 0.64 0.41 0.49 Nutrition services 0.01 0.05 0.15 0.07 0.09 Legal and accounting 0.05 0.15 0.07 0.16 0.13 Trucking and freight 0.15 0.28 0.02 0.08 0.08 Promotion 0.01 0.04 0.03 0.06 0.05 Other costs . 0.28 0.29 0.19 0.26 0.24 Total gross costs 13.17 8.81 7.28 7.66 7.86 Manure credit -0.43 -0.13 -0.27 -0.54 -0.41 TOTAL NET COST 12.74 8.68 7.01 7.14 7.45
aAll salaries and wages and payroll taxes.
^Property taxes, interest on investment (computed at 6 per cent of book value of total investment in feed lot, mill, storage, office, trucks, etc.) and insurance costs. Taxes and insurance costs as re ported or computed at 1 per cent of book value.
cOther costs included market reports, odor control, rental fees, and livestock commissions.
^Death losses are not included. If death losses average 1 per cent and the loss occurs half way through the feeding period and the Aw-imai lost weighs 800 pounds, is worth 22.5 cents per pound and the feeding period is 150 days, the daily cost per head fed for death loss is 1.2 cents. Death loss is a cost that should not be omitted. Since California cattle feeders use lot accounting and charge deaths to the entire lot costs and since the loss is higher for calves than for yearlings, an average death loss was not included in the analysis. Source: Hopkin and Kramer. See footnote 12, Chapter II. additional research may be desirable for determining optimum sizes of feedlots relative to given levels of technology for such discrete or indivisible items as milling equipment.
Although existence of economies of scale we re again confirmed by the study, substantial emphasis was centered on levels of feedlot 23 utilizations
One of the major contributors of lower annual fixed costs per pound of gain in the larger feedlots was the level of feedlot utilization. Feedlots with 10,000-head-and-over capacity generally exhibited utilization rates above 75 per cent compared to uti lization rates of 50 per cent and lower for feedlots with less than 1,000 head capacity.
The competitive advantage due to size declined when feedlot utilization rates were held constant at consecutively higher levels. For example, when feed lot utilization rates were held constant at the 25 per cent level, total annual fixed costs were approximately 2 cents per pound of gain higher for feedlots with 35,000 head capacity. However, differences in fixed cost between these two size groups declined to 1.2 cents per pound of gain when utilization rates were held constant at 75 per cent level.
Thus, isolated cases of efficiency at smaller size intervals have now and then appeared, but these operations appear to be the ex- 24 ception rather than the rule. Hopkin and Kramer commented on iso lated examples in their study.
Some of the cattle feeders who fed the smallest numbers had nonfeed costs equal to and even below average. Cost consciousness and efficient operations apparently enable some of the smaller operators to
23Ibid.
24 Op. cit., footnote 19• 77 keep costs as low as those of larger operations. The task apparently is very difficult for the snailer operators, however, because their average nonfeed costs were significantly higher.
Economics of Snaller Feedlot Operations
In view of the consistency with which research reports the ex
istence of economies of scale in cattle feeding, how do the smaller
feedlots, typified in the Cornbelt, manage to survive? Farm feedlots still account for well over 90 per cent of the locations in which cat
tle are fed in the United States. Obviously the large, commercial feedlot operations of the West exert great competitive pressure upon these small enterprises. Yet farm feeding enterprises remain popular and in some areas are expanding. What differences occur between farm feedlots and larger commercial feedlots to account for the co-exis tence of the two? Perhaps answers can be provided through comparative analysis of Ohio feedlot cost data with similar feedlot data from com mercial feedlots in the Southwest.
Comparisons made in this section are based upon recently pub lished studies supplemented by cost records on 7,400 head of cattle 25 obtained by the author during the 1968-69 feeding period. Addi tional factors important to the location of feedlots and their
25 Raymond A. Dietrich, Costs and Economies of Size in Texas-Okla- homa Cattle Peedlot Operations, Texas Agricultural Experiment Station. College” Station Texas, !b -103;5, Kay, 1969j Ralph D. Johnson and Alfred R. Eckert, Cattle Feeding Costs in Nebraska by System of Feeding and Size of Operation, Nebraska Agricultural Experiment Station, SB 496, January, 1968; and R. II. Blosser, Costs of Feeding Cattle in Ohio, Ohio Agricultural Research and Development Center, Research Circular 165, April, 1969. The data compiled by this author was solicited from several feedlots selected to represent larger (over 500 head) and better managed feedlots in Ohio . 78 competitive position axe found in feeder calf procurement. These costs, such as buying, transportation and shrinkage are considered in Chapter V.
Feedlot costs are generally categorized as being fixed and vari able. Fixed costs are associated with depreciation, interest and taxes on investment in buildings, pens, land, feed storage and han dling equipment, scales, water system, and office equipment. Variable costs include feed (the most important cost besides the purchase of feeder cattle), labor, interest, veterinarian, medication, electric ity, insurance, property tax, and telephone expenditures.
Earlier parts of this chapter summarized economies of scale in large Y/estem cattle feeding operations. Are similar economies en countered by smaller Combelt cattle feeders feeding smaller numbers of cattle? Table 15 shows Texas and Oklahoma fixed and variable costs per pound of gain by feedlot size. Table 16 shows Ohio fixed and variable costs per pound of gain by size of feedlot and the 1968-69 case study results. These same data are charted in Figures 8 and 9 for direct comparative analysis.
Ohio feedlot cost data demonstrates that larger feedlots within the state do tend to have lower fixed and variable costs per pound of gain. These feedlots were similar to the Texas and Oklahoma lots in showing higher degrees of feedlot utilization in larger size cate gories. TABEE 15 Total Feeding Costs per Pound of Gain by Type of Cost, Size of Feedlot and Degree of Feedlot Utilization, Texas and Oklahoma, 1966-67
State, Type of Cost Less Than 1,000 to 2,000 to 5,000 to 10,000 Head and 1,000 Head 1,999 Head 4,999 Head 9,999 Head and Over Total Degree of Utilization Capacity Capacity Capacity Capacity Capacity Dollars Texas Fixed .0269 .0198 .0194 .0136 .0098 .0118 Variable Feed .1689 .1755 .1791 .1818 .1764 .1755 Nonfeed .0472 .0435 .0452 .0400 .0373 .0409 Total .2450 .2586 .2437 .2354 .2235 .2282 Total nonfeed .0741 .0651 .0646 .0536 .0471 .0527 Degree of utilization 41.4 51.8 66.5 68.2 77.6 73.0
Oklahoma Fixed .0547 .0251 .0204 .0141 .0128 .0147 Variable Feed .1974 .1999 .1922 .1880 .1851 .1873 Nonfeed .0447 .0583 .0563 .0397 .0444 .0455 Total .2768 .2843 .2689 .2418 .2423 .2475 Total nonfeed .0794 .0834 .0767 .0738 .0572 .0602 Degree of feedlot 36.2 61.1 78.6 utilization 24.5 64.3 69.1
Source: Raymond A. Dietrich, Costs and Economies of Size in Texas-Oklahoma Cattle Feedlot Operations. Texas Agricultural Experiment Station, B-1083, May, 1969* TABLE 16 Total Feeding Costs per Pound of Gain, Bates of Gain, Average Bays Fed, and Feedlot Utilization by Number of Cattle Fed, Ohio, 1963-64 and 1968-69
Average Number of Cattle Fed per Unit All Sample Lots 1963-64 Feedlots 1968-69 53 123 238 640 1963-64 7,400 Head Dollars Type of cost Fixed .0351 .0291 .0243 .0218 .0278 .0288 Variable Feed 1 .1950 .1800 .1722 .1678 .1785 •i963a Nonfeed .0649 .0445 .0370 .0352 .0449 .0432 Total .2950 .2536 .2335 .2248 .2512 .2683 Total nonfeed .1000 .0736 .0613 .0570 .0727 .0720
Other data Number farms 30 72 32 34 168 Gain in weight/ hd* lbs. 369 452 469 460 442 433 Average number of days fed 225 259 261 258 253 248 Average gain per head per lb. 1.63 1.72 1.82 1.83 1.75 1.75 Degree of feedlot utilization 61.6 71.0 71.8 70.7 69.3 67.9
^Tonfeed costs could not be broken into fixed and variable categories in all cases* Thus the figures presented represent percentage breakdown, according to those records which could be categorized* Source: Bobert H. Blosser, Costs of Feeding Cattle in Ohio, Ohio Agricultural Besearch and Development Center, Besearch Circular xb5, April, iyoy, and original data. Texas Ohio
30 .. Average Total Cost (1968-6 9) 26.83 Average Total Cost 22.82 Total Cost tl^3-CTr~g. 12
Best Feedlot Total Cost (1968-6 9) 22.62 Average Feed 17.55 20 -- Average Feed (1963-64) 17*85
10 - * Average Nonfeed 5.27 Average Nonfeed (1968-6 9) 7»27
Average Fixed Cost (1963-6 4) 2.88 Average Fixed Cost 1.1 8
10,000 5. 000- 2,000- 1,000- Under 0 100 200 300 & over 9,999 **,999 1,999 1,000 Lot Capacity in Head Number of Head Ped Annually
Pig* 8• -—Comparative feeding costs, Texas and Ohio. $/CWT.
OhioOklahoma
Average Total Cost 24.73 30 -- Average Total Cost (1968-6 9) 26.83
Total Cost (1963-64) 25.12
Average Feed 18.73 Best Feedlot Total Cost (1968-6 9) 22.62 20 -- Average Feed (1963-64) 17.85
Average Nonfeed 6.02 10 - - Average Nonfeed (1968-6 9) 7.27
Average Fixed Cost 1.47 Average Fixed Cost (1963-64) 2.88
10,000 5,000- 1,000- Under 100 200 300 & over 9,999 1,999 1,000 Lot Capacity in Head Number of Head Fed Annually
Fig* 9.— Comparative feeding costs, Oklahoma and Ohio 83
Degree of feedlot utilization =
(Turnover ratio) (Average Days on Peed) 365 where Number of cattle fed annually Turnover ratio = ----- Feedlot-— -rr-Z— capacity ''"-T------
These measurements take into account different feeding programs among various sizes and types of feedlot operations, thus providing a uni- 26 form measure of feedlot utilization. Ohio feedlots typically feed 27 one lot of cattle per year on average of 253 days. This amounts to
a 442 pound average gain per head or 1.75 pounds gain per head per
day. Data from 1968-69 participating case study feedlots showed re
sults consistent with this earlier summary of Ohio feedlot perform ance records.
Major differences in feedlot costs per pound of gain when com paring Ohio with Southwestern states of Texas and Oklahoma are in total nonfeed costs (Table 17)• Ohio nonfeed costs are nearly 32.00 per hundredweight greater than average nonfeed costs in Texas and about
$1.20 per hundredweight greater than Oklahoma (cents per pound is con verted to dollars per hundredweight by multiplying by 100, simply move
decimal two places to the right). Breaking these nonfeed costs into fixed and variable, the best Ohio feedlots show only slightly lower nonfeed variable costs, but these feedlots also show nonfeed fixed
26I M d . . Dietrich.
cit., Blosser, footnote 25* costs of about $1*00 per hundredweight greater than the two South western states.
TABLE 17
Fixed, Variable and Total Costs per Pound of Gain, Ohio, Texas and Oklahoma, Various Cost Studies3,
Average Costs per Pound Gain (Pol.) ' Variable State or Study Peed Nonfeed Fixed Total
Ohio 1968-69 case results .1963 .0432 .0288 .2683 Best 1968-69 results .1641 .0370 .0251 .2262
1963-64 168 Ohio farms .1785 .0449 .0278 .2512 1963-64 best 56 farms .1423 .0348 .0216 .1987
Texas .1755 ,0409 .0118 ,2282
Oklahoma .1873 .0455 .0147 .2475
Source: Dietrich, Blosser, and original data (see footnote 25).
On feed costs alone, the largest of the variable costs, the dif ferences are less apparent. The best Ohio feedlots maintain lower feed costs per pound of gain than average feed costs among the Western competitors. However, on the average, Ohio feed costs tend to be slightly higher than in Texas and Oklahoma.
Total feeding costs (fixed and variable) in Ohio are higher than in Texas and Oklahoma on an average basis. Only the best Ohio feed lots showed lower costs than those recorded in the two Southwestern states. Only these well-managed feedlots in Ohio can maintain total 85
production costs equal to or below total costs reports! in the South
west.
less efficient Ohio feedlots apparently operate on borrowed
tine. The basis for this borrowed time requires explanation: In this
comparative analysis, fixed costs based on appraised depreciated re
placement value are levied against Ohio feedlots. Yet, unlike the
Western investment, these typically time worn facilities used for
supplementary Combelt enterprises, are probably being treated as 28 salvage by their users. As such they have little or no value. Thus
a critical difference between investments in large, new commercial
feedlots in the West and investments in supplementary farm feeding en
terprises in the Combelt is that new investments in the West must meet all fixed and variable costs. Okie Combelt farmer is not paying
all the costs that must be met in the new commercial operations. What
emerges is a competitive situation between total-cost enterprises with
great economies of scale in the West, and small less technically
2 8 Buildings may even discount the value of a farm. When a C o m belt farmer buys a farm, the market for farm real estate may require a payment for land, but not necessarily for buildings. According to Dr. S. T. Shaudys, Professor of ?arm Management, The Ohio State University, the Midwest farm real estate market reflects the strong demand of present landowners for more land to expand the size of their operations. Additional houses and outbuildings are not needed for this purpose and frequently serve only to increase the tax burden on the acquired farm above the rate that would prevail for bare farmland without buildings. Such facilities are frequently t o m down, rented, or sold to free the farmer of the unwanted tax burden they represent. To the extent that these largely unwanted buildings can serve some useful purpose, such as providing shelter and enclosure for a cattle feeding enterprise which supplements the basic cropping activity, they represent a mini mal fixed cost investment compared to their Western commercial counterparts. 86 efficient feedlots in the Combelt which pay only variable costs.
Shis is especially significant inasmuch as Texas and Oklahoma com mercial feedlots have an advantage over Ohio in average fixed cost per hundred pound gain amounting to $1.31 to $1.60 (Figures 8 and 9).
She unique financial structure of the less technically efficient supplementary Combelt cattle feeder only allows for survival as long 29 as decaying and redundant facilities remain. Unlike Western oper ations, these financial circumstances allow no room for replacement, growth, and expansion by most cattle feeders.
A reciprocal observation can be made with respect to Western feedlots. If, in order to meet competition of Combelt feedlots that do not allocate the fixed cost burden to the feeding enterprise, the commercial Western lot cannot obtain a satisfactory return on invest ment or, confronted with potential losses, must neglect some fixed costs, then, the future for some commercial Western feedlots is also jeopardized. If this should be the case, then some Western feedlots may be expected to fail, and upon sale, be purchased at discounted prices. These prices would similarly represent salvage value on the
29 Such facilities can be maintained at very low cost for a rela tively large period of time. Low cost, more efficient feeders may even find expansion profitable if costs are low enough or if already committed investment in feedmill facilities can be m o m fully utilized by adjusting pen facilities. Commercial banks responding to ques tionnaires mailed by the author concerning interest in cattle feeding by Ohio farmers generally states that interest in cattle feeding was increasingly coming from fewer, but larger feeders. 87 original investment, and would permit satisfactory returns on lower investment by new owners. One can thus conjecture that the long-term future for large commercial feedlots appears assured, no matter how unwisely they may initially have been located and financed.
Discounted labor costs
Another difference between Western commercial and Combelt sup plementary feeding enterprises is found in the seasonality of the
Combelt labor requirements. Labor costs averaged $1.79 per hundred weight of gain for Ohio feedlot operators during 1963-64 (SI.18 per hundredweight for the best of the 1968-69 case feedlots). Several
Ohio faimers feeding from 500 to 900 head of cattle conceded that they discounted labor costs substantially, but offered a plausible defense:
Their feedlot operations are supplementary, only a part of their total enterprise. Labor is a significant cost element in the total enter prise, and there is little difference in cost between competent and incompetent labor. Competent labor is hard to find, and due to the seasonal nature of a cropping program, it is very hard to keep. A winter feeding program keeps labor employed on the farm during slack winter months. Thus, as one farmer with 1,000 cattle on feed ex plained: ’’This may mean that profit maximization for my whole opera tion means 1 run a loss minimization program on my cattle. If the cattle will return out-of-pocket costs I may be better off than with 30 no cattle."^ Opportunity cost for variable labor is often considered to be zero by Combelt cattle feeders and therefore discounted (if necessary), with long-run savings and reliable more fully employed labor the result.
Efficiency measures in feedlots
Utilization of capacity, rate of turnover, and feed use effi- 31 ciency are typical feedlot performance measures. For Ohio feedlot operators who are obliged to meet only variable costs and generally feeding only one lot of cattle per year, feed use efficiency and uti lization of capacity are the most important measures of performance.
Finishing lighter weight feeder cattle enables feedlot operators to utilize capacity a longer period of time. It also enables feedlot operators to enjoy lower cost gains associated with the earlier por tions of the feeding period (Table 18). Although daily rates of gain are less during the early portion of the feeding period, feed cost per pound gain increased substantially during the latter portion of the feeding period.
Cattle in different weight and sex categories also effect the total cost of producing beef. Table 19 provides an illustration in
30. .Vinner of an Outstanding Young Parmer in America Award in 1967. Another professional farm manager consulted reported disconcem toward already committed facility investment in stating that they feed heif ers, in order to assure marketable finished weights before early spring, making labor available for crop activities. Any returns over other out-of-pocket expenses went toward labor.
^Gerald E. Llarousek, The Western Cattle Feeding Industry; Structural and Marketing Changes, 1952-1962, Idaho Agricultural Ex periment Station Bulletin 481, July, 1967. 89
TABLE 18
Daily Rates of Gain and Reed Cost per Pound of Gain by Peeding Periods, 419 Head of Steers, 1968-69*
Average Peed Average Daily Cost per Rate of Gain Pound Gain (cents) lot #1 212 head (440*5 lbs. ave. starting wt. and 975*7 lbs. ave. finished wt.)
Start to 105 days 1.783 12.95
105 days to finish 1*857 16.57
Total feeding period (292 days) 1.829 15.26 lot #2 207 head (477*3 lbs. ave. starting wt. and 981*4 ave. finished wt*)
Start to 129 days 1.663 12.46
129 days to finish 1.710 19.70
Total feeding period (297 days) 1.690 16.59
heights are net paid feeder and net paid slaughter*
Source: Original data* 90
which steer calves seem to be most efficient in terms of feed cost per
pound gain. Nebraska research showed feed costs for feedlots feeding
only calves averaged 2.43 cents less per pound gain than feedlots 32 feeding yearlings. Again, since Ohio feedlot operators tend to fill
pens only once each year, feeding lighter cattle provides a longer
feeding period for averaging annual fixed cost. Annual fixed cost is
$12.47 per unit of capacity for typical Ohio feedlots. Therefore,
greater utilization through a longer feeding period (greater total
gain per unit) is more desirable for operators with an annual turnover
ratio of one.
TABLE 19
Daily Hates of Gain and Peed Cost per Pound of Gain by Weights and Sex of Cattle
Average Average Average Average Peed Cost Purchase Sale Daily Hate per Pound Number and Class Weight Weight of Gain of Gain (cents)
1,144 yearling steers 786.0 1080.2 1.917 21.04
1,897 heifer calves 498.1 816.1 1.555 21.54
4,059 steer calves 418.3 942.9 1.777 18.81 7,400 Total 1.747 19.63
Source: Original data.
32 ' Op. cit., footnote 25, Johnson and Eckert. 91
Price considerations
Differences in production costs can not be directly translated into cost differentials for live finished beef in producing areas*
Any feeding cost differential is partially absorbed by the cost of feeder cattle. The extent of absorption depends upon the pounds of gain put on the feeder animal* Thus, cost differences in producing pounds of beef are less impressive on a finished animal basis (Table
20).
Cost of production in conjunction with breakeven analysis has some interesting implications* Breakeven analysis identifies the necessary fed cattle price in order to cover all input costs for various feeder cattle purchase prices per hundredweight, weights of feeder animals, amounts of gain, and costs of feeding*
(Purchase) (Weight of) (Net pounds) (Feeding cost) Breakeven price feeder animal of gain per pound gain price = Net sale weight
Figure 10 shows the finished beef breakeven price for varying feeder cattle prices with 17 cent and 30 cent total feeding costs per pound gain. This figure is developed from Tables 38, 39» and 40 in
Appendix F showing gains of 67 per cent, 100 per cent, and 150 per cent on the purchased weight of feeder cattle.
Figure 10 can be interpreted from two different points of view:
First, if feeder calf price per pound exceeds feeding cost per pound gain, the more gain put on feeder calves, the lower the fed cattle breakeven price* For example, with 30 cent feeding costs per pound gain, and 37 cent feeder cattle per pound, the breakeven price would 92
IABIE 20
live Finished Beef Cost Differentials for Different Total Gains on Feeder Animals and Cost of Gain Differentials
Pounds of Gain Weight of ...... ____ _ Feeder Animal 67 Per cent 100 Per cent 150 Per cent Gain Gain Gain
400 268 400 600
450 302 450 675
500 335 500 750
550 369 550 ••
600 402 600 ■a
650 436
Cost of gain differential live beef cost differential $/cwt.
$l/ctrt, .40 .50 .60
$2/&rt» .80 1.00 1.20
Source: Calculated. 93
+>w
&
&
A8 d> O P4 <0
"S O TJ d £a)
l— i— i— i— I— i— i— i— i— i— i— i— i— i— i— i— i— i— i— i— i— i— r 20 22 24 26 28 30 32 34 36 38 40 42 44 Peeder Cattle Price per Pound (cents)
Pig. 10.— Breakeven fed cattle prices for feeder cattle pur chased at different prices per pound, with 67,100 and 150 per cent net gains as purchased weights and 17 cent and 30 cent total feeding costs per pound gain. 94
be 34.2, 33.5, and 32.8 cents per pound for 67, 100, and 150 per cent
gains respectively. Second, if feeder calf price per pound is less
than feeding cost per pound gain, the more gain put on the calves,
the higher the fed cattle breakeven price. For example, with 30 cent
feeding cost per pound gain and 23 cent feeder cattle per pound, the
breakeven price would be 25.8 , 26.5, and 27*2 cents per pound for 67,
100 and 150 per cent gains respectively.
Hhe analysis above does not mean it is advantageous to have higher feeding costs. lowest feeding cost per pound of gain are al ways preferable. An important difference to Ohio and Uidwest cattle
feeders lies in the different finished weights of fed cattle in the
Combelt compared with the Southwest. Combelt cattle feeders tend
to market heavier, more highly finished beef than do the feedlots in the Southwest. Figure 11 illustrates the point. For example, when a
two cent cost per pound of gain advantage is conceded to the South west, with feeder cattle at 37 cents per pound, if the Western pro
ducer puts a 100 per cent gain on the feeder animal (i.e. 400 pound feeder to 800 pounds), while the Combelt feeder puts a 150 per cent gain on the feeder animal (i.e. 400 pound feeder to 1,000 pounds), the
breakeven price for both producers is 31 cents per pound. A general
conclusion can be made that high cost producers are at the least com parative disadvantage, the higher feeder cattle prices are above feeding cost per pound gain, and high cost producers are at the greatest disadvantage when feeder cattle prices are below their
feeding cost per pound gain. . But low cost producers always have an absolute advantage. 95
/
Peeder Cattle Price per Pound (cents)
Pig. 11.— Breakeven fed cattle prices for feeder cattle pur chased at different prices per pound, with 67, 100 and 150 per cent net gains on purchased weights and 25 and 27 cent total feeding costs per pound gain. Based on comparative feedlot costs, average total feeding costs are higher in Ohio. Only well managed low cost Ohio feedlots can com pete on a total cost hasis. Expansion of feeding facilities is not advisable for most Ohio feedlot operators who are not prepared.
However, the future of cattle feeding during the more immediate future is assured even for less efficient producers. Kuch of Ohio's disadvantage lies in higher fixed cost per pound gain. Since build ings and equipment used in cattle feeding have little or no salvage value, the opportunity cost is generally zero. Neglecting fixed costs makes less efficient variable cost operations compare more favorably with total cost Western commercial feedlot operations. (This only pro vides for continued cattle feeding in Ohio during the short-run. To have an economically profitable and competitive feeding industry in the long-run Ohio cattle feeders must meet total costs. c h a p t e r V
RECENT PROCUREMENT PATTERNS AND TRENDS, PROCUREMENT COSTS, MARKETING, AND FEEDER CATTLE FINANCING
This chapter treats several Issues important to the competitive
position of the Ohio cattle feeding industry* The object of a summary of feeder calf movements is to identify shifts that are occurring in
the relative importance of feeder cattle sources and changes in inter
state shipment patterns that accompany them.’*' Such information pro vides background that should be useful to Ohio cattle feeders in un
derstanding interregional competitive relationships that exist today.
Closely related to shipment patterns are procurement costs consisting of buying, transportation, shrinkage, and other costs incident to feeder cattle purchases. This examination of actual feeder cattle movements is compared with optimum interregional flow patterns for feeder calves determined by the linear programming transportation model presented in Chapter III. To the extent tliat present flow pat terns described in Chapter V differ from optimum patterns set forth in
Chapter III, Ohio cattle feeders may form expectations about further
A state-by-state inquiry to Crop Reporting Boards and to de partments of Agricultural Economics at Land Grant Universities was conducted by the author to obtain available data on cattle inship ments and outshipments by states of origin and destination, respec tively.
97 98 developments as present procurement channels and buying procedures continue to change.
The first part of this chapter provides a basis for comparing
Ohio procurement costs with Texas procurement costs to determine their relative locational advantages. Marketing costs and feeder cattle fi nancing sections complete this chapter.
Cattle Procurement - Interregional Adjustments
The movement of feeder cattle into the Combelt from Western range areas is a long established pattern. To many Combelt cattle feeders the major impact of growth in Western commercial cattle feed ing has been felt in the evaporation of traditionally abundant feeder calf supplies in the West. Eastern Combelt cattle feeders have turned increasingly to Southern sources. However, continued growth in commercial feeding in the West has not only absorbed many Western calves, but also increased competition for Southern calves as well.
Eastern cattle feeders should recognize that interregional ship ment patterns still are not stabilized and that adjustments will con tinue to occur. Increased competition for feeder calves is reflected in both (l) the increased level of feeding activity or increased total demand for calves, and (2) in relative changes in regional demands reflecting the different growth rates in cattle feeding described in
Chapter II. Feeders in the East North Central Hegion feel both the direct influence of increased feeder demand and the indirect or secondary effect of different regional growth rates and shifting ship ment patterns. 99
For example, Texas and Oklahoma marketed over 2.5 million ad ditional fed cattle by the end of the decade than they did in i960.
In this same period, Nebraska, Kansas,and Colorado increased fed mar ketings by 1.9, 1.1, and 1.0 million head respectively (Table 5,
Chapter II). Traditionally abundant calf supplies in these states have steadily been absorbed by Western feedlots, forcing Combelt feeders to alternate sources. Colorado and Nebraska provide illus trations. Once major feeder exporting states, each is now a net im- porter of calves to supply their own feedlot requirements (Table 21).
Hence, their position has become similar to that of most states in the
East North Central Region. Annual fed cattle sales in Colorado and
Nebraska now exceed January 1 inventories of beef cows and heifers two years old and older in each of these states (Table 21). Therefore
(even with the most severe assumptions of 100 per cent calf crop, no cow or bull replacements, and no feeder cattle outshipments) these states must now inship feeder cattle to maintain present levels of feeding activity. Kansas has also increased annual fed cattle mar ketings substantially and is no longer a large surplus producer of feeder cattle. Texas and Oklahoma are still net surplus producers of feeder cattle even though their growth in feeding has been phenomenal.
Thus, on a national basis, the distribution of surplus and deficit feeder calf states has been substantially altered. The 1968 status of 2 this distribution is summarized in Figure 12.
p Six New England states are combined as are Maryland and Dela^- ware. 9^0,159 581,197
Pig. 12.— Surplus and deficit beef calf supplies by states, with nonfeds 100 excluded, 1968. 101
TABLE 21
Comparison of January l Inventory of Beef Cows and Heifers Two Years Old and Older with Annual Ped Cattle Marketings, Selected States, 1960 and 1969
1960 1969 Beef Cows and Beef Cows and Heifers 2 Years Ped Cattle Heifers 2 Years Ped Cattle State Old and Older Marketings Old and Older Marketings
Colorado 761,000 738,000 995,000 1,757,000
Nebraska 1,499,000 1,434,000 1,899,000 3,322,000
Kansas 1,195,000 511,000 1,754,000 1,674,000
Texas 4,206,000 477,000 5,570,000 2,706,000
Oklahoma 1,390,000 143,000 2,070,000 496,000
Iowa 993,000 2,565,000 1,392,000 4,618,000
Ohio 260,000 287,000 325,000 434,000
Sources Compiled from selected issues of Livestock and Poultry Inventory and Cattle on Peed, Statistical Beporting Service, USDA.
The Eastern Combelt
The effect of expanded cattle feeding in Western states is of major importance to cattle feeders in Ohio and other East North
Central States* Tables 22 and 23 illustrates the significance of shifts in feeder cattle procurement that have been recorded by the
Illinois Department of Agriculture and the Ohio Crop Reporting Service respectively. Inshipment data from each state verifies the increasing tendency of both states to purchase Southern feeder calves* 102
TABLE 22
Origin of Feeder Cattle Shipped Into Illinois, State Totals, Region Totals and Region Percentages, 1961, 1964, and 1968
Year Region or State 1961 1964 1968
Southern Alabama 4.8 8.5 4.0 Arkansas 4.8 9.0 7.3 Florida 2.9 2.2 1.4 Georgia 1.2 1.0 .9 Kentucky 34.2 93.7 80.7 Louisiana 2.6 3.1 .9 Mississippi 31.3 32.1 33.7 Tennessee 36.3 55.7 69.8 Virginia .6 6.9 4.3 West Virginia .2 5.1 5.1 Region Total 118.9 217.3 208.1 Percentage 10.6 17.3 20.9
Western Arizona .5 .8 — California .6 1.2 1.4 Colorado 54.0 51.0 43.1 Idaho 5.8 5.2 3.2 Kansas 77.9 107.0 47.2 Montana 94.5 104.1 79.0 ITebraska 75.4 84.6 75.6 Nevada .1 2.2 • 6 New Mexico 18.8 37.8 18.0 North Dakota 22.2 12.3 13.4 Oklahoma 51.6 99.0 70.1 Oregon 6.0 9.1 4.5 South Dakota 17.7 14.4 6.6 Texas 141.8 134.9 68.7 Utah .5 .4 .2 Washington .6 .2 .2 Wyoming 23.2 32,8 17.2 Region Total 591.2 697.0 448.9 Percentage 52.6 55.6 45.0 103
TABES 22 (cont'd.)
Year Region or State 1961 1964 1968
Other Horth Central States Indiana 31.4 15.9 20.1 Iowa 26.2 31.4 28.2 Illinois 131.1 107.6 75.9 Michigan — .1 — Minnesota 9.0 5.1 5.9 Missouri 183.1 159.4 193.3 Ohio 3.9 2.7 1.5 Wisconsin 7.7 9.3 10.9 Region Total 392.4 331.5 335.7 Percentage 34.9 26.4 33.7
Other States 20.4 10.6 4.8
TOTAL 1,222.9 1,256.4 997.5
Prom public stockyards.
Source: Division of livestock Industry, Illinois Department of Agriculture. Compiled from imports to Illinois from public stockyards and direct from states reported in Illinois Agricultural Marketing Statistics. Bulletins 61-2 and 68-1. TABLE 23
Origin of Feeder Cattle Shipped Into Ohio, State Total, Region Totals and Percentages, 1961-1969
Year Region or State 1961 1962 1963 1964 1965 1966 1967 1968 1969 (1,000 head)
Southern Kentucky 60.8 61.8 61.8 98.8 96.8 95.0 107.2 115.5 114.4 Tennessee 26.4 32.2 27.0 29.1 28.7 35.9 36.7 46.6 44.8 Virginia 40.4 41.0 36.5 31.6 40.9 33.5 34.3 45.6 52.4 West Virginia 12.2 11.7 13.7 9.7 13.2 16.6 23.3 16.0 17.5 Alabama 5.4 9.5 19.3 22.1 30.0 27.3 20.6 16.0 9.1 Mississippi —— .2 6.8 11.7 19.3 15.7 12.1 2.8 Florida 2.0 1.2 9.3 3.1 2.3 4.0 8.2 3.1 — North Carolina 1.6 5.7 5.3 4.9 6.0 14.7 13.4 13.1 18.6 South Carolina — — — — 1.7 2.2 — — —
Region Total 143.8 160.1 173.1 206.1 231.3 248.5 259.4 268.0 259.6 Per cent 61.5 56.8 62.0 64.8 75.6 73.3 80.0 80.7 80.6
Western Texas 10.4 25.6 23.5 28.3 13.3 17.9 15.6 12.5 7.8 Oklahoma 16.2 21.3 14.6 26.0 10.3 14.1 9.1 6.2 3.7 Kansas 6.9 9.7 5.4 10.5 6.4 8.8 5.2 6.7' 7.0 Colorado 2.0 3.9 7.4 9.1 4.6 8.7 2.3 7.6 10.9 North Dakota 6.1 3.6 3.2 5.1 4.4 2.1 — — — Montana 2.6 1.1 1.9 — — — 2.4 — Region Total 44.2 65.2 56.0 79.0 39.0 51.6 32.2 35.4 29.4 Per cent 18.3 23.1 20.1 24.8 12.8 15.2 9.9 10.7 9.1 TABLE 23 (contfd.)
Year Region or State 1961 1962 1963 1964 1965 1966 1967 1968 1969 (1,000 head)
Other Origins Indiana 20.8 27.2 26.0 9.0 14.2 15.4 15.1 10.7 8.8 Illinois 3.3 1.6 3.4 3.2 2.9 4.7 2.7 2.4 2.0 Minnesota — —- 1.3 1.0 2.8 1.7 2.6 2.7 2.8 Wisconsin — — —— — — 1.8 2.0 2.8 Missouri 2.1 3.5 3.2 5.8 5.3 2.0 1.8 2.9 4.5 Pennsylvania 3.9 1.7 3.2 — — — — — —
Other States 18.9 22.7 12.8 13.9 10.5 15.1 10.4 8.0 12.1
Total Inshipments 242.0 282.0 279.0 318.0 306.0 339.0 326.0 332.0 322.0
Includes some feeder cattle v/hich state of origin is not knovai and a number of states supplying less than 2,000 feeder cattle to Ohio.
Source: Compiled from Ohio Crop Reporting Service issues of "Shipments of Peeder Cattle Into Ohio Prom Other States." 106
Feeder cattle from Southern origins accounted for 20.9 per cent
(208,111 head) of all Illinois inshipments in 1968, compared to 10.6 per cent (118,886 head) in 1961. Kentucky and Tennessee were the two most important states, supplying about three-fourths of all the
Southern calves shipped into Illinois in 1968 (Table 22). These two states also accounted for about half of all feeder inshipments re ceived in Ohio in 1969> with Kentucky the principal out-of-state source for Ohio buyers, and Tennessee ranking third (Table 23).
The expansion of Western feeding has not only absorbed Western calves but led to increased competition by Westerners for calves in 3 the South. Respite these trends some Combelt feedlots cling to traditional procurement patterns and continue to feed Western calves, perhaps with some justification. Texas, Oklahoma, and some other
Southern and Southwestern states produce large numbers of heavier and higher quality feeder cattle which are predominantly in demand in the 4. Combelt. Williams and Stout have observed that:
Many individual producer-feeders throughout the southwest do not feed the feeder cattle they produce. Instead, they realize a greater return by selling their Good - and Choice-Grade feeders to buyers for northern farmer-feeders and buying Common or Medium feeder cattle for finishing in their feedlots.^
May, 1970 interview with a major order buyer for Ohio cattle feeders reveals that Western buyers are actively purchasing feeder cattle in the Carolinas and Georgia for shipment to Oklahoma and Kansas.
^Willard F. Williams and Thomas T. Stout, Economics of the livestock Meat Industry (New York: The Macmillan Company), p. 294•
5Ibid. 107 A recent study confirms this observation. Colorado feedlots import a substantial number of feeders for their own feedlots, while g many Colorado-produced feeder cattle are exported to other states.
Such shipment patterns appear to be redundant. That Western and
Southern calves are not considered by Combelt feeders to be entirely homogeneous may provide some explanation. It has been suggested that farm feeders in the Midwest have been willing to pay higher prices- for
"typy" beef breeds of cattle in order to maintain an attractive uni- 7 formity in their small feedlots.
Declining yearly supplies, greater competition for Western calves, more favorable price spreads associated with feeding lower 0 grade feeder cattle through "upgrading," and experience in feeding the previously less desirable lower grade feeder cattle have all con tributed to Combelt adjustment toward Southern feeder cattle sources.
Such changes have caused some reluctance on the part of Combelt cat tle feeders to continue to pay a premium for uniformity in size,
Albert G. Madsen, Kenneth Hummels, and William N. Capener, Colorado’s Cattle Feeding Industry. Agricultural Experiment Station, Colorado State University, April, 1967.
7Ibid.
^William H. Newland, Matching Nutrition Programs to Kinds of Cattle in Ohio. Memeo, Department of Animal Science, The Ohio State University, PAC-AS-672, March, 1967. This paper summarizes aspects of feedlot performance, carcass measurement and financial values from research work done at Ohio, Michigan, Wisconsin and Iowa Ex periment Stations. 108
conformation, and general appearance of feeder cattle. Southern
states have also made changes to accommodate adjustment trends through
improved marketing systems and efforts to improve feeder cattle qual ity.9
Ohio procurement
The Ohio Crop Reporting Service has maintained an annual record of feeder calf inshipments into Ohio feedlots since 1961.^ The data records that, in 1969, the Southern states provided 80 per cent
(259,600 head) of the feeder cattle reported shipped into Ohio, com pared to 62 per cent (148,800 head) in 1961 (Table 23). Kentucky ranked first in importance in 1969, providing 36 per cent of the total inshipments. Virginia ranked second, supplying about 16 per cent
(52,400 head), and Tennessee ranked third with 14 per cent (44,800
Zack E. Soufley (ed.), Kentucky Feeder Sales, 1967. Department of Agricultural Economics, University of Kentucky (prepared by Kenr- tucky Feeder Calf Association, Inc.). This report records that num ber of sales increased from eight sales with 3*621 head in 1955 to 30 sales with 32,164 head in 1967* Hilliard Jackson, Evaluation of live Cattle Marketing in Arkansas. Agricultural Experiment Station, Uni versity of Arkansas, Bulletin 744, June, 1969, and J. R. Smith and M. J. Darmer, Movements of Cattle and Calves Through Alabama Auction Markets. Agricultural Experiment Station, Auburn University, Bulletin 360, September, 1965, also report efforts to improve feeder cattle marketing in their respective states. A letter dated August 27, 1968, from Irving Dulov, Professor, Department of Agricultural Eco nomics, University of Tennessee, reports the initiation of a produc tion testing program in Tennessee. Similar programs are being con ducted in other states.
^Data-gathering procedures for this survey were discussed in interviews by the author with Dan Tucker, Statistician in Charge, and Eldon Houton, Statistician, Ohio Crop Reporting Service, September 10, 109
head). The actual number as well as percentage of inshipments from
Western states has declined since 1961. Only 29,400 head of Western
feeder cattle were reported shipped into Ohio in 1969 (10 per cent),
compared to 44,200 head in 1961 (19 per cent).
Over 50 per cent of Ohio feeder cattle inshipments typically ar
rive in September, October and November (Table 24). Another 20 per
cent are received during July, August and December. The remaining 30 per cent arrive during the first six months of the year. The annual
distribution of inshipments by months remained fairly uniform during
the 1961-1969 period. Due to the seasonality of range and pasture
conditions, and thus the seasonal nature of feeder calf production,
this seasonal pattern of inshipments into Ohio and other feeding
states probably will remain a characteristic of the industry."^
Procurement Costs
Costs encountered in livestock procurement are largely two- 12 fold. First is transportation cost for the physical movement of
1968. Data for Ohio inshipment reports is obtained from semi-annual surveys of Ohio cattle buyers. Survey lists are obtained through State Veterinarian reports and supplemented with names of buyers re ported by county agents and vocational agricultural teachers through out the State.
■^See footnote 9. Also see Dalphus R. Lav/son and Jack R. Davidson, Direct Marketing of Feeder Cattle in Hontana, Montana Ag ricultural Experiment Station, Montana State University, Bulletin 598, August, 1965, p. 4 and Florida Agricultural Statistics, Annual livestock Summarys, Florida Department of Agriculture, Tallahassee, Florida, livestock outshipments - stocker cattle. 12 Ohio sources knowledgeable about 200,000 head of inshipments annually reported feeder cattle in-transit death loss to be very rare. Truckers carry insurance for such losses. It was reported that such losses are deducted from the transportation bill. TABLE 24
Feeder Cattle Shipped Into Ohio, Percentage of Annual Inshipments By Months, 1961-1969
Year Month 1961 1962 1963 1964 1965 1966 1967 1968 1969
January 6.53 5.32 3.76 3.93 5.07 6.20 5.83 4.82 4.50 February 3.18 3.01 2.15 3.62 3.27 5.16 3.53 3.92 3.73 March 4.09 7.27 3.77 4.87 6.05 5.46 5.06 4.37 6.52 April 4.17 6.21 6.09 4.56 6.05 5.16 4.45 4.97 6.68 May 3.88 4.26 4.66 4.72 5.07 4.43 3.38 4.22 6.06 June 4.59 3.01 4.30 4.40 4.25 4.28 3.63 4.22 5.43
January-June 26.44 29.08 24.73 26.10 29.74 30.68 26.38 26.51 32.92
July 4.56 4.61 5.73 7.23 4.58 6.64 4.75 6.17 4.35 August 7.60 12.06 9.68 11.48 7.84 7.08 8.28 7.83 7.76 September 13.22 15.60 15.05 16.98 19.28 15.34 18.56 17.77 15.38 October 26.94 24.83 25.46 23.43 23.04 22.27 23.47 26.51 25.00 November 14.75 10.28 15.05 9.91 10.62 12.98 13.50 10.69 10.71 December 6.49 3.55 4.30 4.86 4.90 5.02 5.06 4.52 3.88
July-December 73.56 70.93 75.27 73.90 70.26 69.32 73.62 63.49 67.08
Year 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source: Compiled from Ohio Crop Reporting Service issues of "Shipments of Feeder Cattle Into Ohio From Other States." Ill
livestock from origin to destination. Second is shrinkage, an easily
overlooked indirect cost.
Transportation
Changes in procurement patterns by Ohio feedlot operators has
resulted in an apparent reduction in total per hundredweight trans
portation costs. This reduction is largely attributable to a gradual
shift toward less distant feeder cattle sources. The transportation
savings may be as much as 59 cents per head, judging from shifts re
corded by the Crop Reporting Service and based on representative
transportation rates. As Western feeder cattle sources continue to
decline in importance, the average transportation cost per animal re
ceived in Ohio can be expected to decline further. Based on 1961
transportation charges, the 1969 savings approximated 190,000 dollars
(Table 25).
Texans have realized similar transportation cost reduction on
inshipments (Table 26). The large number of outshipments to the C o m
belt, California, and other feeding states made it necessary for
Texas to inship about 892,000 head of cattle in 1967* Although the number of inshipments have increased, cattle are coming from less
distant origins, reflected by the decreased transportation cost per
fljrinifli inshipped. For example, in 1962 Texas received 74,700 head of
cattle from Florida, but in 1967 the number had dropped to 24,800 head. Transportation cost per animal for these interstate shipments averaged $1.55 per head greater than interstate inshipments for Ohio
(comparing Tables 25 and 26). TABLE 25 Transportation Costs for Ohio Inshipnents: Representative Transportation Bates and the Transportation 3 i U for Feeder Cattle Inshipnents, 1961, 1965, and 1969
(000 dollars)a State of Origin S/cvvt. 0/head 1961 1965 1969 Kentucky *38 1.90 115.5 183.9 217.4 Tennessee .73 3.65 96.4 104.8 163.5 Virginia .59 2.95 119.2 120.7 154.6 West Virginia .38 1.90 23.2 25.1 33.3 Alabama 1.07 5.35 28.9 160.5 48.7 Mississippi 1.42 7.10 — 83.1 19.9 Florida 1.82 9.10 18.2 20.9 — North Carolina .92 4.60 7.4 27.6 85.6 South Carolina 1.03 5.15 — 8.8 — Texas 2.24 11.20 116.5 149.0 87.4 Oklahoma 1.69 8.45 136.9 87.0 31.3 Kansas 1.57 7.85 54.2 50.2 55.0 Colorado 2.28 11.40 22.8 52.4 124.3 North Dakota 2.68 13.40 81.7 59.0 — Montana 3.06 15.30 39.8 — — Indiana .38 1.90 39.5 27.0 16.7 Illinois .67 3.35 11.1 9.7 6.7 Minnesota 1.70 8.50 — 23.8 23.8 Missouri 1.70 8.50 —— 23.8 Pennsylvania .99 4.95 10.4 26.2 22.3 Wisconsin * .68 3.40 13.3 — —
TOTAL 935.0 1,219.7 1,114.3
Total reported inshipments (000 head) 242.0 306.0 322.0 Unidentified inshipments (000 head) 18.9 10.5 12.1
Identified inshipments (000 head) 223.1 295.5 309.9 Transportation cost per head 34.19 34.13 33.60
All costs based on 500 pound animals*
Sources Based on "Shipments of Feeder Cattle Into Ohio Prom Other States," Ohio Crop Reporting Service, and on transportation rates used in optimum shipment patterns, Chapter III* 113 TABLE 26 Transportation Costs for Texas Inshipnents: Representative Transportation Rates and the Transportation Bill for Feeder Cattle Inshipnents, 1962, 1965, and 1967
(000 dollars) a State of Origin S/cwt. S/head 1962 1965 1969
Alabama 1.51 7.55 244.7 417.0 333.7 Arizona 1.55 7.75 6.1 49.3 12.3 Arkansas .90 4.50 79.1 80.5 111.8 California 2.29 11.45 1.8 13.6 8.2 Colorado 1.18 5.90 67.1 55.6 66.8 Florida 2.29 11.45 855.4 356.6 321.3 Georgia 1.79 8.95 11.6 46.9 49.8 Illinois 1.64 8.20 13.3 8.9 10.1 Iowa 1.30 6.50 20.9 38.8 47.4 Kansas .81 4.05 25.8 35.4 36.4 Louisiana .85 4.25 379.9 468.9 229.9 Mississippi 1.06 5.30 255.5 409.7 652.6 Missouri 1.27 6.35 32.7 22.5 47.1 Montana 2.50 12.50 65.3 9.0 4.0 Nebraska 1.25 6.25 7.8 11.0 6.1 New Mexico 1.04 5.20 1,021.9 1,435.4 2,060.9 Oklahoma .59 2.95 153.0 264.7 483.4 South Dakota 1.79 8.95 4.1 23.0 6.6 Wisconsin 2.01 10.05 24.4 38.3 84.5 'Wyoming 1.37 6.85 7.1 7.7 17.6
TOTAL 3,277.5 3,792.8 4,590.5 Total reported inshipments (000 head) 557.8 717.4 910.3 Unidentified inshipments (000 head) 6.7 8.2 18.6
Identified inshipments (000 head) 551.1 709.2 891.7
Transportation cost per head $5.95 $5.35 05.15
aAll costs based on 500 pound feeder animals.
Source: Based on inshipment data from the Texas -Animal Health Commission, tabulated from health certificates, and on transportation rates used in optimum shipment patterns, Chapter III. More Important considerations in determining the relative ad vantage or disadvantage in procurement for each state (Ohio and Texas) is the average cost of transportation when intrastate as well as in terstate shipments are accounted. Although it is commonly thought that Ohio has great advantages in procurement, such advantages are less than are frequently assumed. Table 27 indicates that when actual shipment patterns for 1969 are compared, Ohio transportation costs are less by 19 cents per hundredweight (75 cents per head). Average dis tance of feeder cattle shipments were 82.4 miles less for Ohio than
Texas. This difference amounts to a 76 cent per head advantage to
Ohio cattle feeders in transportation cost for feeder cattle weighing
900 pounds.
Transportation costs with actual shipment patterns (Table 27) can be compared with estimated transportation costs per animal with optimum shipment patterns (Table 28). Table 28 presents transporta tion costs associated with optimal shipment patterns identified using the transportation model presented in Chapter III. With optimum pro- . curement patterns, Ohio feeders would enjoy an advantage in transpor tation costs amounting to more than 90 cents per hundredweight (31.50 per head). Average distance for shipments would be 164.7 miles less for Ohio than for Texas. It is apparent that continued adjustments toward optimum procurement patterns may work more to the advantage of
Ohio feedlot operators than their counterparts in the Southern Plains. 115
TABLE 27
Actual Shipment Patterns: Estimated Transportation Cost per Feeder Animal Shipped Into Feedlots, Ohio and Texas, 1969a
Cost per Cost Hundred per Head Total Cost Origin Humber ( dollars) (dollars) (dollars)
Ohio
Interstate 322,000 .72 3*60 1,189,200.00 Intrastate 112,000 .25 1.25 140,000.00
Total or Y/eighted 434,000 .612 3*06 1 ,329,200.00 average Average mileage = 531*5
Texas
Interstate 910,000b 1.03 5.15 4,686,500.00 Intrastate 1,796,000 .63 3.15 5,657,400.00 Total or Y/eighted 2,706,000 .764 3.82 10,343,900.00 average Average mileage = 413*9
^oes not include allowance for nonfed cattle in either state. Based on 500 pound cattle.
bBased on inshipments and costs for 1967, Texas inshipment data from Texas Animal Health. Commission, tabulated from health certificates.
Source: Calculated from original data. 116
TABLE 28
Optimum Shipment Patterns* Estimated Transportation Cost per Peeder Animal Shipped Into Feedlots, Ohio and Texas, 1968a
Cost per Cost Hundred per Head Total Cost Origin Humber (dollars) (dollars) (dollars)
Ohio
Ohio dairy calves 17,000 .25 1.25 21,250.00 Ohio beef calves 217,000 .25 1.25 271,250.00 West Virginia 15,000 .38 1.90 28,500.00 beef calves Kentucky beef calves 321,000 .38 1.90 609,900.00
Total or weighted 570,000 .326 930,900.00 average 1.63 Average mileage = 176.6
Texas
Texas beef calves 2,432,000 .630 3.15 7,660,800.00
Average mileage = 341.3
aIndudes allowance for nonfeed cattle in each state. Based on 500 pound cattle.
Sources Transportation analysis, Chapter III. 117 Shrinkage
Shrinkage is an important indirect cost related to transporta tion of cattle from origin to destination* Research on feeder cattle shrinkage shows weight losses ranging from 1.85 per cent on shipments of one hour to 12.44 per cent on shipments with durations of 84 hours 13 and over. An examination of shrinkage on several loads of feeder cattle shipped into participating Ohio feedlots conformed with the re sults of these earlier studies.
Alert buyers are constantly aware of shrinkage and weighing con- 14 ditions in purchasing feeder cattle. In direct buying, shrinkage is usually specifically negotiated in the terms of sale.
Table 29 outlines shrinkage figures associated with both actual and optimum shipment patterns for both Ohio and Texas. Ohio feedlot operators should have an advantage in the form of less shrinkage and less stress on feeder cattle than in Texas. We may assume, therefore, that in order to produce a 1,000 pound fed animal, feedlot operators
13 Neff Tippets, Ira LI. Stevens, C. B. Brotherton and Harold Abel, In-Transit Shrinkage of Cattle. University of Wyoming, Circular No. 78, February, 1957. George F. Henning and Paul H. Thomas, Some of the Factors Influencing the Shrinkage of Livestock From the Farm to the First Market. Ohio Agricultural Experiment Station, Research Bulletin 925, October, 1962.
14 Correspondence from Dr. Lindsey Horn, Beef livestock Feeding Division, Swift and Company, concerning Western feedlot operations, reports as follows: "Llost all of the good operations calculate their gains and costs on the basis of purchase weight of cattle vs. selling weight. Everyone is very conscious of the weighing conditions and I can assure you these gains and costs are on the basis as outlined." 118
TABLE 29
Shrinkage of Feeder Cattle: With Actual and Optimum Procurement Patterns, Ohio and Texas Feedlots
Ohio Texas
• Actual Shipments Average weight of feeder 500 500 Average mileage hauled 331.5 413.9 Hours in transit 8.3 10.3 Per cent shrinkage 5.98 8.20 Estimated shrink (pounds) 29.90 41.00
Optimum Shipments Average weight of feeder 500 500 Average mileage hauled 176.6 341.3 Hours in transit 4.4 8.5 Per cent shrinkage 3.77 5.98 Estimated shrink (pounds) 18.85 29.90
Source: Based on average hauling speeds of 40 miles per hour and shrinkage percentages from lleff Tippets at al., In-Transit Shrinkage of cattle. University of Wyoming, Circular Ho. 78, February, 1957. 119 who purchase calves with less shrink need to put less pounds of gain on their calves to realize finished weights. However, the direct translation of reduced shrink (due to shorter hauls) into savings through shorter feeding periods and less feed is conjectural. Little or no evidence exists for comparison of compensatory gain on feeder cattle hauled various distances and experiencing varying amounts of shrinkage.
Handling of feeder cattle and conditions of sale are important factors when the amount of stress and shrinkage is being determined.
Comparisons between regions must be made assuming similar procurement methods and marketing channels. Differences in methods and channels can lead to differences in shrinkage that are not associated with distance hauled. For example, cattle sold in "graded" feeder calf sales are weighed into the stockyards from trucks of the producer, then sorted into pens of similar weight, grade and sex,for sale the following day. Thus, the cattle are exposed to disease from many farms and subject to more than 24 hours of stress from sorting, buying 15 inspection, and sale activity. Other auction sales have similar characteristics but pay weight is determined at the moment of sales rather than at time of arrival. For these sales, the seller rather than the buyer would absorb some of the shrinkage loss.^ Direct
15 £it_., see footnote 13 • This study reports shrinkage from overnight stands to be between 3 and 4 per cent.
"^Auctions basing pay weight on time of sale, and known to be offering "shrunk out" calves would normally expect to realize a higher per hundredweight price than sale barns that used arrival weight as the pay weight. purchase bypasses some of the exposure to stress conditions associated with indirect markets. The advantages and disadvantages in using dif ferent market channels in procurement of feeder cattle and the sale of slaughter cattle by feedlot operators, and in the sale of feeder cat- 17 tie by ranchers was extensively investigated in a 1961 Idaho study.
The differences must be accounted for in terns of feeder cattle price when comparing market channels. In order to minimize shrinkage, prob ably a good rule to follow would be to minimize the total time between the calf's departure from familiar home surroundings and his arrival at final destination. It is reasonable to suppose that the stress of strange environment is more conducive to shrinkage than is distance, or temperature or time, which normally are cited as associated factors in shrinkage studies. Such measurable factors merely indirectly 18 represent, as proxies, the probable underlying cause.
Buying
Transportation and shrinkage are costs incurred in the purchase of all feeder cattle. Buying fees are an additional direct cost en countered when order buyers and dealers are used in procurement.
Order buyers and dealers typically charge buying fees ranging from
^Martin H. Fabricius and Karl H. Findeborg, Market Channels Selected by Idaho Cattlemen. Idaho Agricultural Experiment Station, Bulletin Mo. 415, October, 1963*
18 Op. cit.t footnote 4» pp. 652-53* 121 19 3.25 per hundredweight to two dollars per head. Similar fees are 20 charged for buying services in other states.
Typical costs incurred by Ohio feedlot operators purchasing 21 feeder cattle are illustrated in four examples shown below.
Example 1
82 steers 43,210# less 3 per cent pencil shrink 1.296# net paid weight 41,914# 0 30.25/cwt. 312,678.98 Yardage S.10 per head 8.20 Truck freight from Texas Sl.80/cwt. 752.40 Commission for buying 32.00 per head 164.00 Total delivered cost to buyer 313,603.58 Delivered cost per hundred on paid weight 332.46 Cost per hundred on into-lot (shrunk) weight 335«28a
aThis lot of cattle was weighed into the lot upon delivery. Total shrinkage was 4,654 pounds (43,210 - 38,556 = 4,654 or 10.77 per cent. That is 7.77 per cent shrink on the paid weight.)
Example 2
202 heifers 89,688# 0 28.10/cwt. 325,202.33 Truck transportation from Virginia 3.75/cwt. 672.00 Commission and delivery 31.75/head 355.00 Total delivered cost to buyer 326,229.33 Delivered cost per hundred on paid weight 329.24 Cost per hundred on into-lot (shrunk) weight 33l.lOa
aThis cost is based on a 5.98 per cent shrink, found to be typical in-transit shrinkage for feeder cattle traveling a comparable distance. (89,688 - 84,325 = 5,363 or 5.98 per cent)
19 Buying fees were surveyed from local livestock organizations and order buyers.
50 Op. cit., footnote 17. 21 These examples are representative of records for shipments of feeder cattle in Ohio feedlots. Cost variations largely depend upon origin of purchase which effects the transportation cost per head of livestock. 122
Example 3
98 steers 41,750# less 2 per cent pencil shrink 835# net paid weight 40,915# 0 31.50/cwt. $12,888.23 Health certificate 3.00 Truck freight from Mississippi $1.15/cwt. 479.40 Commission for buying $2.00 per head 196.00 Total delivered cost to buyer $13,566.63
Delivered cost per hundred on paid weight $33.13
Cost per hundred on into-lot (shrunk) weight $35.01a
^his cost is based on a 7.18 per cent shrink, found to be typical in-transit shrinkage for feeder cattle traveling a compar able distance. (41,750 - 38,752 = 2,998 or 7.18 per cent)
Example 4
97 steers 42,138# © $33»13/cwt» 960*32
Truck transportation (144 mile Ohio intrastate shipment) $1.00 per loaded mile =$.357/cwt. 144.00 Delivered cost to buyer $14,104.32
Delivered cost per hundred on paid weight $33.47 fit Cost per hundred on into-lot (shrunk) weight $36.30
aThis cost is based on a 7.77 shrink (4.00 percent for over night stand and 3*77 for in-transit). (42,138 - 3,274 = 38,854 or 7.77 per cent) These cattle were purchased at a graded feeder cattle sale. Cattle were weighed into the yards after being hauled 40 to 60 miles from local farms the morning preceeding the sale date. Hay and water were available while in the yards.
The first three examples illustrate purchases throughan order buyer, while example 4 illustrates an owner purchase. No attempt was made to compare prices paid for cattle by feedlot operators buying through different market channels. Feedlot operators purchasing their own cattle avoid direct buy ing fees. Many operators purchase their own feeder cattle because they can inspect and select the type, grade, sex, and quality they prefer to feed. Based on total costs, purchases by individual feed lot operators can be a disadvantage as well as an advantage. Some feedlot operators lack buying alternatives. Some farmer feeders who buy feeder cattle less frequently tend to be less skilled in buying, unaware of latest market developments and conditions, and less skilled in recognizing quality of feeder cattle and translating quality, weight, grade and sex of cattle into market value. In addition, these feeders must arrange transportation, often a difficult task due to lack of contacts, infrequency of purchase, and small inefficient 22 loads.
From a procurement standpoint, the major advantage for Ohio feedlot operators is in close feeder cattle supplies. A definite cost advantage is attainable in lower transportation cost per animal. Com paring Ohio with Texas, under optimum procurement patterns the trans portation cost advantage would be twice ($1.52 per head compared to
$.76 per head) as great as the actual differences calculated according to actual procurement patterns existing in 1969.
22 Some feeders attempt to avoid transportation problems by ar ranging a hauler before the sale. This can be unwise. It can cause the feeder to feel compelled to buy or pay for unused trucking ser vice. Fewer numbers available for sale, poor quality, and higher prices than expected are factors contributing to such non-optimal purchasing decisions. 124
Shrinkage differences associated with shipments from different sources are less conclusive due to lack of evidence concerning rela tive feedlot performance of calves arriving at feedlots after ex periencing varying stress situations and displaying varying degrees of shrinkage.
Marketing Fed Cattle
Slaughter facilities have also adjusted with the changing cat tle feeding industry (Table 7, Chapter II). Annual commercial cattle slaughter has more than doubled in the West South Central Region (Texas and Oklahoma) from I960 to 1969* Therefore, problems of inadequate marketing and slaughter facilities have been substantially reduced, if not eliminated in the Southwest. large numbers of cattle do not have to be transported long distances for slaughter as is often believed.
Annual average prices received by farmers show that Ohio and other East North Central States no longer hold a price advantage over the West South Central Region in the sale of steers and heifers (Table
30). Selling price advantages of one dollar per hundredweight or more for Ohio in the early 1960fs have steadily declined and the relation ship may have reversed. The price relationship indicates that Ohio and Texas serve different markets, Ohio being tied closely to Atlantic coastal markets, and Texas to a Pacific market. 125
TABLE 30
Steer and Heifer Prices: Annual Average Price per 100 Pounds Received by Farmers, Selected Regions, Ohio and Texas, 1961-1969
East North West South Year Central Region Ohio Central Region Texas
I960 23*30 22.70 21.00 21.10
1961 22.40 21.50 21.60 21.80
1962 24.00 22.70 22.80 22.80
1963 21*90 21.40 21.60 21.30
1964 20.40 20.30 18.40 18.10
1965 22.40 22.40 21.00 21.00
1966 23.80 23.60 23.90 24.00
1967 23.80 23.80 23.60 23.70
1968 24.90 25.10 24.70 24.90
1969 27.90 28.00 28.40 28.60
Region Includes Arkansas, Louisiana, Oklahoma and Texas*
Source: Agricultural Prices, USDA, Crop Reporting Board, compiled from annual summaries*
Feeder Cattle Financing
Ohio and Combelt cattle feeders generally own the fixed Inputs 22 of buildings and equipment or they are included in the farm mortgage*
However, feeder cattle are usually financed on short-term basis. A
22See Chapter IV. 126 survey of commercial banks and production credit associations, fi nancial institutions generally used by feedlot operators was con- 23 ducted. All reports indicated satisfactory experience with pro grams for financing feeder cattle. Bepayment records have been ex cellent and several reported repayment excelling general agricultural loans.
Based on 1969 Ohio fed cattle marketings of 434)000 head and summarization of Production Credit Association loans, it is estimated that about 23 per cent of all Ohio fed cattle are PCA financed. Al though the total number of cattle financed is unaccounted, commercial banks probably account for the majority of the remainder. A Colorado study reported that 89 per cent of their cattle feeders borrowed from commercial banks and the remaining 11 per cent from production credit 24 associations, private individuals and other sources.
Table 31 summarizes some of the Ohio survey results. It was evident from the survey that banks tended to finance established
23 Primary data from the Federal Intermediate Credit Bank of Louisville, Louisville, Kentucky, summarized the feeder cattle fi nancing activity of production credit associations in Ohio. Lata on commercial bank financing activity was obtained through sample survey of ten Ohio banks (seven responding). Banks solicited were suggested by Mr. 0. E. Anderson, Executive Manager, Ohio Bankers As sociation as being active and knowledgeable in feeder cattle fi nancing. The seven banks responding reported financing 77,000 head of feeder cattle on an annual basis. A copy of the Guideline Ques tions sent to institutions appears in Appendix G.
24 Albert G. Madsen, Kenneth Hummels, and William Capener, Colorado^ Cattle Feeding Industry. Agricultural Experiment Station, Colorado State University, Bulletin 528S, April, 1967. 127
TABLE 31
Feeder Cattle Financing, SurveyResponse of Commercial Banks (Sample) and Production Credit Associations3,
Number Reported Sizes of Lots Number of Financed of Cattle Loan Activity Number Loans FinancedI Number Volume Largest Smallest Average
1 92 18,000 D I 1,400 75 200
2 62 2,565 D I 200 10 35
3 90 6,000 II 800 50 65
4 13 300 I I 100 15 25
5 300 40,000 I I 1,200 100 150
6 60 8,000 I I 400 40 150
7 30 2,400 U I 600 60 100
All 77,265 Banks 647 PCA*s 1,000 100,000 (both increased 5,000 100 slightly) 25
aSee footnote 23*
D - decrease, X - increasing, and U - unchanged.
Source: Original data. 128
cattle feeders with better equity positions. If equity position would
permit, both banks and PCA's would finance the feed for feeding op- 25 erations. Banks will usually finance up to 100 per cent of the
price of feeder cattle. Loans are based primarily on the previous
feeding record of individual farmers. Hone of the responding banks
required hedging of cattle on the futures market, but insurance was
required by three responding banks, the amount depending upon the net
worth of the farmer.
Five banks reported interest rates on feeder cattle loans at the
going rate on commercial loans or at the "prime rate" referred to in money markets. Two banks reporting fewer cattle loans charged inter
est at 1/2 per cent less than the "prime rate." Bates on PCA loans
tended to be slightly higher.
The general response on farmer attitude toward cattle feeding
showed no real indication of growth. Several banks noted that inter
est in cattle feeding came from fewer, but larger farm operations.
The PCA summary indicated "increased interest but to a small degree."
25 The Federal Intermediate Credit Bank of Louisville reports PCA attitude "The margin requirements for financing feeder cattle are de termined to some extent by the farmer's financial position, as well as the specific collateral taken to secure the loan. The collateral formula usually followed would be: 80 per cent of cattle and feed, plus sufficient additional specific collateral to adequately secure the amount of loan and to provide for price declines and other contingencies." Banks reports varied from "If farmer has sufficient equities" to "not as a general practice." See footnote 23 concerning source of data. A real desire and attitude for expanded cattle feeding in Ohio does not appear to exist* Interest lies primarily with, established cattle feeders adjusting present operations. CHAPTER VI
RETROSPECT
The study investigates relative strengths and weaknesses of the
Ohio cattle feeding industry in three critical areas* feeder cattle procurement, feedlot costs, and marketing of finished cattle. Expec tations concerning further developments in cattle feeding and the role of Ohio cattlemen as participants in these developments can be drawn from the analysis.
Summary
Many interrelated changes and adjustments have taken place in the cattle feeding industry. Production of fed cattle continues to grow and to become increasingly concentrated in fewer states and in fewer and larger feedlots. Growth in cattle feeding in the West has been stimulated by substantially increased production of feed grains and already-abundant nearby feeder cattle supplies. Development of hybrid grain sorghum, increased irrigation, and shifts from cotton production to grain sorghum production are major factors stimulating increased feed grain production in the Southwest. Economies of scale in large, scientifically managed feedlots provide additional bases for continued growth of large feedlots. The slaughter industry has responded to Western growth in cattle feeding. Hew and expanded
130 131 slaughter capacity has developed in the Southwest and other Y/estem regions. These changes and adjustments bring into focus questions concerning the ability of Ohio feedlots to compete effectively in a growing national cattle feeding industry.
Although records show 33 feedlots with capacities over 1,000 head in Ohio, and total fed cattle marketings of 434)000 head in 1969, the 1960-69 growth in Ohio fed cattle marketings (51.2 per cent) wa3 less than the national average (84.9 per cent). During 1966-1969, fed marketings declined 3 per cent in the East North Central Region and 4 per cent in Ohio, compared with a 16.9 per cent (20.4 to 23*8 million head) national increase during the same period. Factors contributing to these trends constituted some principal conclusions of the study.
Conclusions
In terms of total transportation charges, procurement patterns for feeder calves in 1968 were not optimal, either for Ohio or for other feeding states, when compared to an optimal linear programming solution. In 1968 Ohio feedlots tended to purchase calves from less distant sources than did Western feedlots. Direct comparisons were drawn between Ohio and Texas. Comparison revealed advantages in terms of transportation and shrinkage costs that were enjoyed by Ohio feed lots, both under actual and optimal conditions.
Under optimal procurement patterns, transportation and shrinkage advantages to Ohio feedlot operators would be more than under actual procurement patterns. Similar benefits could be realized by all states moving toward optimal procurement patterns. In view of the 132
competitive tendency of the industry to adjust toward optimal pat
terns, procurement advantages for Ohio relative to Western compet
itors may increase over time. Unique advantages could he realized by
states that move more promptly toward an optimum pattern than ordinary
competitive pressures would require.
Only the best Ohio feedlots have total feeding costs as low as
in the Southwest. Average total costs for all Ohio feedlots studied were about four cents per pound (of gain) higher than average Texas
feedlot costs, and two cents per pound (of gain) higher than average
Oklahoma feedlot costs. Only the best Ohio feedlots showed feed
costs per pound gain that were lower than costs recorded in either
Texas or Oklahoma. Fixed costs (overhead) of facilities were two to
three times higher per pound of gain in Ohio feedlots. Even the most
efficient Ohio feedlots displayed this same general relationship to
Texas and Oklahoma feedlots. Variable non-feed costs were not greatly
different among states.
Some Ohio operators continue to compete on the basis of variable
costs and discounted inputs. Overhead costs are frequently ignored.
Facilities used by much of the Ohio cattle feeding industry are de preciated, paid for, or neglected by many Ohio cattle feeders. Other producers use supplementary feeding programs to occupy hired labor
between seasonal labor peaks in the principal cropping enterprise.
Labor costs are levied against the crop program rather than the feed lot. Such measures are useful in maintaining a feeding enterprise in
the short-run, but they do not provide a viable basis for long-term growth. There is a popular belief that Ohio enjoys price advantages over the Southern Plains in fed cattle markets* USUA records of steer and heifer prices received by fanners do not support this belief. Neither is there direct evidence that Ohio enjoys singular advantages over competitors in terms of commissions or other costs incident to buying or selling. Nor is there evidence of unusual or advantageous access to financing of cattle or feedlot operations* The only evident mar ket advantages enjoyed by Ohio feedlots are the locational advantages that can be translated into lower transportation and shrinkage costs associated with the purchase of feeder calves.
Implications and Recommendations
Implications of the study bear directly upon Ohio feedlot oper ators, and indirectly upon feeder cattle producers, cattle markets, and processing plants, since the future of any part affects the future of other parts in the Ohio livestock industry. Therefore, im plications and recommendations addressed primarily to Ohio feedlot operators should be of some interest to others in Ohio whose future is related to the competitive position of Ohio cattle feedlots.
Procurement costs for feeder calves should continue to decline at the national level as all areas of the U.S. move toward a rede fined optimum procurement pattern. Savings (reduced cost) will be realized through less transportation and less shrinkage associated with shipments of feeder cattle over shorter distances. More cattle are fed in Ohio than are produced within the state, as evidenced by annual inshipments averaging about 300,000 head during the 1960's. 134
Although feeder shipments are adjusting toward an optimal pattern, the
benefits have not been fully realized. Kentucky, West Virginia, and
(native) Ohio feeder cattle would dominate Ohio feedlots under optimum
conditions.
As long as Ohio feedlot capacity exceeds the productive capacity of Ohio feeder calf producers, those calf producers who can provide
the kind of calves required by Ohio feedlots will enjoy a locational advantage. A profitable and continuing market for feeder calves
should remain available to Ohio calf producers who can minimize their own production costs and participate in an effective calf marketing program that is attractive to buyers.
Producer and marketing groups can help to improve the competi tive position of Ohio feedlots, and strengthen their own positions in turn, by innovative improvements in marketing to minimize the amount of time between the departure of calves from their home farms and their arrival in Ohio feedlots. locational advantages associated with small distances between cow herds and feedlots can be dissipated by lengthy exposure of calves to strange and stressful conditions in ducing excessive shrinkage. If buyers are obliged to pay for these excesses, there is little locational advantage by which to encourage them to switch from out-of-state sources to which they have become ac customed.
Although total feedlot costs average higher in Ohio than in the
Southern Plains, there is evidence that the most efficient Ohio feed lots can compete on a total cost basis. large cost differences be tween the average and the best Ohio feedlots indicate substantial room 135 for improvement by most Ohio feedlot operations. Complete records must be maintained. Only feedlot operators who know their actual costs can plan sufficiently to compete effectively in the long-run.
Break-even costs on inputs and finished cattle prices must be based on total costs that can be identified only by complete records.
If Ohio cattle feeders elect not to undertake the complete man agement task, as it is emerging in the West, the Ohio fed cattle in dustry probably will decline in relative national importance. There has been a 4 per cent decline in Ohio fed cattle marketings since
1966. A long-term continuation of this trend would be intolerable to other elements of the Ohio livestock industry* Ohio packers, already in a deficit producing area would encounter a continued decline in fed cattle availability. Replacement cattle would make up a rising percentage of cattle marketed and slaughtered in Ohio. Fewer Ohio feedlot operators, feeding fewer cattle, would constitute a shrinking market for calf producers.
Maybe a reasonable and workable perspective about change in the cattle industry is to recognize that the major innovation introduced into the business by Western feedlots was alert and enterprising management. More than hybrid grain sorghums, more than deep-well ir rigation, and more than an arid climate, the impact of management has affected the cattle business.
It might be that management astuteness realized that C o m Belt feed costs would long be lower than in the Southern Plains. It might have realized that great economies of scale, reducing overhead, would therefore be the only effective way to compete with an entrenched
Midwest. It might have acknowledged that large scale operations re quired careful management, and it might have realized that careful management could capture from a complacent Midwest the growth that was to come, and that the last 15 years have seen.
All this seems to have happened. While the Midwest slept at the switch, the action went West and a relocated slaughter industry and a host of innovations followed and confirmed it. Now the Midwest wor ries about survival, and maybe it need not really worry.
But it should, by now, have learned some lessons about effective management. APPENDIX A 138
TABLE 32
Number of feedlots and Number of fed Cattle Marketings for Two Capacity Groups, by States with Percentages, 22 States, 1969
feedlot Capacity feedlot Capacity Under 1,000 Under 1,000 Region or State 1,000 or more 1,000 or more
feedlot Numbers Per cent of Total Number Pennsylvania 5,997 3 100.0 0.0 Ohio 9,972 28 99.7 0.3 Indiana 14,474, 26 99.8 0.2 Illinois 24,964 36 99.9 0.1 Michigan 1,679 21 98.8 1.2 Wisconsin 7,793 7 99.9 0.1 Minnesota 19,868 32 99.8 0.2 Iowa 43,839 163 99.6 0.4 Missouri 17,968 32 99.8 0.2 South Dakota 9,347 53 99.4 0.6 Nebraska 20,719 489 97.7 2.3 Kansas 8,874 126 98.6 1.4
Oklahoma 900 49 94.8 5.2 Texas 1,300 300 81.2 18.8 Montana 415 55 88.3 11.7 Idaho 660 85 88.6 11.4 Colorado 1,226 120 91.1 8.9 New Mexico 27 41 39.7 60.3 Arizona 6 54 12.9 87.1 Washington 284 30 90.4 9.6 Oregon 296 35 89.4 10.6 California 173 281 38.1 61.9
U.S. total (22 states) 190,783 2,066 98.9 1.1 139
TABLE 32 (cont'd.)
Feedlot Capacity Feedlot Capacity Under 1,000 Under 1,000 Region or State 1,000 or more 1,000 or more
Marketings Per cent of (000 head) Marketings
Pennsylvania 122 9 93.1 6.9 Ohio .401 33 92.4 7.6 Indiana '467 44 91.4 8.6 Illinois 1,132 84 93.1 6.9 Michigan 218 26 89.3 10.7 Wisconsin 201 11 94.8 5.2 Minnesota 755 48 94.0 6.0 Iowa 4,194 424 90.8 9.2 Missouri 662 69 90.6 9.4 South Dakota 465 86 84.4 15.6 Nebraska 1,552 1,770 46.7 53.3 Kansas 550 1,124 32.9 67.1
Oklahoma 63 433 12.7 87.3 Texas 111 2,595 4.1 95.9 Montana 70 107 39.5 60.5 Idaho 74 364 16.9 83.1 Colorado 311 1,446 17.7 82.3 New Mexico 7 353 1.9 98.1 Arizona 3 844 0.4 99.6 Washington 61 287 17.5 82.5 Oregon 44 129 25.4 74.6 California 17 2,040 0.8 99.2
U.S. total (22 states) 11,480 12,326 48.2 51.8
Source: Cattle on Feed, Statistical Reporting Service, U.S. Department of Agriculture, January, 1970. TABLE 33
Number of Commercial Feedlots and Number of Fed Cattle Marketings by Feedlot Capacity by Regions, 22 States, 1969 (feedlots with capacity of 1,000 head or more)
Feedlot Capacity Region, or 1,000- 2,000- 4,000- 8,000- 16,GOO- 32,000- State 1,999 3,999 7,999 15,999 31, 999 over Total Number of Peedlots
Pennsylvania 3a 3
Ohio 28a A 28 Indiana 18 8 26 Illinois 24 5 4 3 36 Michigan 13 8 21
Y/isconsin 7a o 7 Minnesota 29 3 32 Iowa 106 38a 15 4 163
Missouri 19 13 A 32 South Dakota 37 12 4 53 Nebraska 285 120 60 16 5 3 489 Kansas 31 30 24 21 17 3 126
Oklahoma 19 14 7 4 5a 49 Texas 108 67 53a 32 29 11 300 Montana 31 14 10 U.S. Total (22 states) 931 497 318 187 99 34 2,066 % of Total Peedlots .48 .26 .16 .10 .05 .02 1.07 141 TABLE 33 (cont'd.) Feedlot Capacity Region or 1,000- 2,000- 4,000- 8,000- 16,000- 32,000- State 1,999 3,999 7,999 15,999 31,999 over Total Feedlot Marketings (1,000 head) Pennsylvania 9a 9 Ohio 33 A 33 Indiana 20 24 44 Illinois 28 17 23 16 84 Michigan U a 12 26 Wisconsin 11 A 11 Minnesota 38 10 48 Iowa 179 105. 85 55 424 Missouri 21 48 a 69 South Dakota 36 24 26 86 Nebraska 420 380 410 270 140 150 1,770 Kansas 62 110 186 279 395 92 1,124 Oklahoma 39 56 51 81 206a 433 Texas 78 133 303a 514 768 799 2,595 Montana 27 22 59 107 Idaho 39 42 83 87 H 3 1 364 Colorado 78 121 213 250 784“ 1,446 Nev; Mexico 8 24 53 123 145 353 Arizona 8 27 93 167 336 213 844 Washington 8 49 51 179 287 Oregon 15 18 13 83 129 California 20 96 234 570 550 570 2,040 U.S. Total (22 states) 1,180 1,300 ]L,869 2,703 2,997 2,277 12,326 fo of all fed cattle 4.96 5.46 7.85 11.35 12.59 9.56 51.78 ^ t s and marketings from larger size groups are included to avoid disclosing individual operations. Source: Cattle on Feed, Statistical Reporting Service, U.S. Department of Agriculture, January, 1970. APPENDIX B 143 .Delineating Procedure for the Beef Cow Replacement Rate and Allocation of Cattle Deaths, United States, 1968 Total cattle death loss is reported at 1,521,000 head.^ This total was allocated as follows: 348,773 - from fed cattle marketings (1,5% of 23,251,000).2 850,000 - beef cows (2.4$ of 35,314,000 beef cow inventory). 322.227 - dairy cows (2.2$ of 14,626,000 dairy cow inventory). 1,521,000 - total death loss. 3 From total U.S. commercial cow slaughter of 6,830,148 head and the allocation of cattle deaths, the beef replacement rate is derived. Commercial cow slaughter 6,830,148 Dairy cow replacement 3,575,000 less: dairy cow deaths 322,227 Net dairy cows slaughtered 3,252.773 Net beef cows slaughtered 3,577,375 plus: beef cow deaths 850,000 : §• change in beef cow inventory 418,500 Total adjustments 1,268,500 Total beef cows replaced 4,845,875 Beef cow replacement rate = Total beef cows replaced January 1 beef cows 2 years old and older = 4.845.875 35,314,000 = 13.72 per cent ^vestock and Meat Statistics, USDA, Statistical Reporting Service, Supplement for 1968 to Bulletin No. 333» p. 30. 2 Adjusted to include 39 states. -*See Table 34 showing how commercial cow slaughter was de termined from federally inspected cow slaughter. Allocation of Total Commercial Cattle Slaughter Commercial cattle slaughter is not categorized as is federally inspected slaughter. Hence, the percentage breakdown of federally inspected slaughter was used to divide the total commercial slaughter into classifications as shown in Table 34. The implied assumption of this procedure is that non-federally inspected plants slaughter equal percentages of the various classes of livestock as do federally in spected plants. This assumption is subject to error to the extent that non-federally inspected plants do not slaughter similar peiv centages of the various classes of cattle. Since federally inspected slaughter accounts for about 85 per cent of all commercial cattle slaughter and neither a more suitable procedure, or research evidence showing otherwise is available, this method was deemed acceptable. As nonfed cattle continue to decrease in importance, problems in iden tification and classification of total commercial cattle slaughter will steadily decrease. 145 TABUS 34 Federally Inspected Cattle Slaughter by Classification and Percentage, with Breakdown of Commercial Slaughter Using the Same Percentages, 1968 Federally Commercial Inspected Percentage Slaughter^ Slaughter Breakdown Equivalent Steers 15,361,000 51.9 18,178,702 Heifers 7,986,000 27.0 9,457,128 Cows 5,785,000 19.5 6,830,148 Bulls and stags 459,000 1.6 560,422 TOTAL 29,591,000 100.0 35,026,400 o As reported in Livestock and Meat Statistics, USDA, Bulletin 333. Allocation of the total reported commercial slaughter* APPENDIX C 147 Allocation of Nonfed Cattle An acceptable method to identify nonfed cattle must be selected, in order to equate surplus and deficit regions for the transportation analysis* An "educated guess" at identifying nonfed cattle marketed for slaughter might be acceptable in some cases, but is certainly less reliable than identification of these cattle through a set of as sumptions applied to the best data available. One could reasonably suggest that tendencies to slaughter nonfed cattle would probably be greatest in areas deficit in fed cattle replacement bulls, and re placement cows available for slaughter. These methods were deemed unacceptable since data sources indicating potential insights to the problem were found. The 1964 Census of Agriculture reports cattle sold under two categories, all cattle sold, and cattle fed grain and concentrates and sold for slaughter. Thus, the following procedure was used to allocate nonfed cattle to individual states: All cattle sold (excluding calves)^-cattle fattened on grain and concentrate and 1 2 sold for slaughter -replacement cows and bulls sold for slaughter = residual of cattle marketings for other purposes. Prom this posi tive residual, the final allocation of nonfeds are delineated. This residual in effect is the maximum number of nonfeds that can be al located to a given state. ■*"1964 U.S. agricultural census data. 2 Calculated. Since the total residual for all states is greater than the number of nonfeds, the allocation was distributed on a subjective basis. For some states the entire residual is assumed to be nonfeds and allocated accordingly as indicated in Table 35. In 1968 these states accounted for 1,534,787 head. The remaining portion of non feds are allocated on the basis of a percentage of the residual. Thus a final percentage allocation is derived for all states in the United States. 149 TABLE 35 Allocation of Nonfed Cattle for 1968 Optimum Feeder Cattle Shipment Model, Number of Head Allocated and Percentage Allocation for the United States Residual of Cattle Marketings Allocation Per cent for Other of of State Purposes Per cent Nonfeds Nonfeds States with the en tire residual as sumed to be nonfeds Maine 3,944 3,944 .11 New Hampshire 2,270 2,270 .06 Vermont 9,620 9,620 .27 Massachusetts 11,211 11,211 .31 Rhode Island 2,160 2,160 .06 Connecticut 5,234 5,234 .15 New York 18,165 18,165 .51 New Jersey 17,132 17,132 .48 Pennsylvania 18,297 18,297 .51 Ohio 134,080 134,080 3.74 Indiana 156,609 156,609 4.37 Michigan 120,131 120,131 3.35 V/isconsin 87,988 87,988 2.46 Delaware 3,137 3,137 .09 Maryland 23,732 23,732 .66 Virginia 134,101 134,101 3.74 Y/est Virginia 62,127 62,127 1.73 North Carolina 38,943 38,943 1.09 South Carolina 27,504 27,504 .77 Georgia 68,055 68,055 1.90 Florida 125,082 125,082 3.49 Kentucky 187,660 187,660 5.25 Tennessee 117,115 117,115 3.27 Alabama 47,341 47,341 1.32 Mississippi 14,989 14,989 .42 Arkansas 79,014 79,014 2.21 Louisiana 19,146 19,146 .53 Sub Total 1,534,787 1,534,787 42.85 150 TABLE! 35 (cont'd.) Residual of Cattle Marketings Allocation Per cent for Other of of State Purposes Per cent Nonfeds Nonfeds States with a pei> centage of the residual allocated as nonfeds Illinois 252,641 3.42 70,010 1.95 Minnesota 308,069 4.17 85,364 2.38 Iowa 552,873 7.49 153,327 4.28 Missouri 343,938 4.66 95,394 2.66 North Dakota 157,436 2.13 43,603 1.22 South Dakota 408,887 5.54 113,409 3.17 Nebraska 725,395 9.83 201,229 5.62 Kansas 992,826 13.45 275,334 7.69 Oklahoma 359,777 4.88 99,898 2.79 Texas 711,185 9.64 197,339 5.51 Montana 352,516 4.78 97,851 2.73 Idaho 206,734 2.80 57,319 1.60 Wyoming 238,454 3.23 66,121 1.85 Colorado 425,063 5.76 117,912 3.29 New Mexico 200,765 2.72 55,681 1.55 Arizona 149,948 2.03 41,556 1.16 Utah 57,560 .78 15,967 .45 Nevada 93,033 1.26 25,793 .72 Washington 175,823 2.38 48,721 1.36 Oregon 166,760 2.26 46,264 1.29 California 500,036 6.78 138,793 3.88 Sub Total 7,379,719 2,046,885 57.15 TOTAL 8,914,506 3,581,672 100.00 APPENDIX D 152 Foreign Inshipments In 1968 the U.S. inshipped 322,000 head of cattle from Canada and 702,000 head of cattle from Mexico.^” Cattle shipped in from Mexico are primarily for feeding purposes, but cattle shipped from Canada are for both feeding and immediate slaughter. First, two points of origin were selected in Mexico with a sub jective allocation of all cattle inshipments from this country of 174,000 head from Hermosillo, the Western origin and 528,000 head from Chihuahua, the Eastern origin. The allocation was based on the knowledge that Mexico's greatest concentration of cattle tends to be toward the Gulf of Mexico area. The importance of this allocation proved less significant in the final transportation model allocation since all the cattle were optimally shipped into Arizona. Inshipments from Canada must be more carefully analyzed and al located since cattle are inshipped for both feeding and slaughter pur poses. Another important factor is the length of the National bound ary between Canada and the U.S. Since the common National boundary is of substantial length three origins were selected for Canadian inshipments. The breakdown of total inshipments to origins and type of cattle (feeder and immediate slaughter) was determined from an ^J.S. Foreign Agricultural Trade by Countries, Calendar Year 1968. A supplement to the monthly Foreign Agricultural Trade of the United States, Economic Research Service, USDA, February, 1970. 153 2 analysis of 1969 sample data from 13 ports of entry* Table 36 shows the breakdown for all inshipments based on the sample data* The 13 ports accounted for 95*4 per cent of all inshipments and 93.0 per cent of all inshipments for slaughter during the four sample months* Breakdown of 1968 U*S* inshipments from Canada by weight clas sification is as follows: Less than 200 pounds 134,000 head 200 to 700 pounds 113,000 head Over 700 pounds 73,000 head Total 322,000 head Since about 70 per cent of all inshipments are from the Eastern portion of Canada and since New York slaughters substantially more calves than are available within the state, all of the 134,000 head of calves weighing less than 200 pounds are assumed to go for meeting calf slaughter demand in New York* /) The data presented was compiled from unpublished records on cattle inshipments from Foreign Agricultural Service, USDA, Wash ington, D.C. Sample months include January, April, July and October, 1969* TABES 36 Inshipments of Cattle from Canda: Allocation of Total Inshipments to Regional Origins and by Intended Use, 1968 Sample Total Allocation 1968 Region and sample Number for Total Percent Number for Number for Total ports of entry Slaughter Number Slaughter Slaughter feeding Inshipments Montreal (East) 46,280 57,851 80.00 178,491 44,623 223,114 Champlain, N.Y. 20,220 22,130 Ogdensburg, N.Y. 18,500 18,576 Alexandria Bay, N.Y. 1,865 6,330 Buffalo, N.Y. 1,495 5,325 Richford, Vermont 1,900 1,910 Highgate Springs, Vt 2,390 2,640 Horton, Maine 310 940 Port Huron (Central) 2,165 10,615 20.40 8,349 32,577 40,926 Port Huron, Mich. 370 3,795 Pembena, N. Dak. 1,795 6,820 Calgary (West) 7,415 15,025 49.35 28,603 29,357 57,960 Sweet Gross, Mont. 2,030 3,320 Port Idaho, Idaho 4,160 5,375 Blaine, Wash. 1,085 2,090 Orville, Wash. 140 4,240 Total 55,860 83,491 66.91 215,443 106,557 322,000 Source: Sample data, foreign Agricultural Service, and calculations. appendix e TABLE 37 Transportation Model: Optimum Calf Shipment Patterns for Slaughter and Feeding Purposes, and Non-Optimal Shipment Costs, 1968jj/ ‘-•‘a . . h y i? ... Supply Regions • for Demand Regions for Calves^ Calves— 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 2 249 31 -14 -56 -156 -185 -196 -148 -231 -199 -238 -343 -322 -264 3 -36 612 -30 -38 -121 -152 -167 -116 -196 -166 -213 -260 -288 -230 4 -41 -21 51 -29 -128 -160 -174 -134 -217 -183 -214 -329 -309 -248 5 -54 3 271 158 -88 -120 -151 -98 -179 -147 -173 -293 -270 -212 6 -71 1 -16 -5 84 -13 -21 -0 -79 -48 -60 -193 -170 -97 7 -108 -39 -56 -45 -21 51 52 -7 -55 -17 -37 -169 -147 -75 8 -158 -93 -109 -115 -68 -39 -7 -50 -51 -0 -25 -164 -132 -61 9 -107 -39 -66 -59 -44 -43 -47 179 -74 -43 -90 -188 -166 -108 10 -217 -146 -176 -167 -150 -118 -75 -101 695 -0 -88 -82 -69 -47 11 -222 -153 -179 -172 -156 -117 -61 -107 -37 47 -64 -147 -106 -38 12 -197 -136 -146 -134 -104 -73 -22 -90 -61 265 -21 -172 -129 -54 13 -262 -193 -221 -214 -197 -165 -121 -148 -15 -43 -132 -0 -0 -32 14 -255 -185 -215 -205 -188 -157 -103 -140 -16 -16 -103 -14 -1 8 15 -258 -188 -215 -208 -176 -146 -93 -143 -55 -9 -89 -107 -61 -0 a/ See footnote explanations on last page of this table. vn o\ TABLE 37— Continued Supply Regions for Demand Regions for Calves^ Calves-' 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 -307 -73 -132 -160 -171 -229 -269 -368 -208 -261 -290 -342 -324 -383 -345 3 -281 -65 -117 -165 -163 -220 -256 -355 -170 -227 -272 -316 -291 -352 -311 4 -282 -43 -102 -159 -135 -193 -233 -332 -175 -228 -254 -306 -296 -344 -306 5 -263 -13 -67 -116 -108 -166 -201 -300 -138 -194 -217 -269 -258 -307 -265 6 -129 -25 -30 -35 -84 -115 -124 -246 -26 -81 -129 -170 -145 -208 -152 I 7 -106 -65 -62 -61 -117 -131 -125 -252 -34 o -119 -152 -123 -190 -128 8 -92 -134 -115 -115 -170 -182 -162 -287 -78 -100 -148 -164 -121 -200 -121 9 -158 -65 -98 -97 -161 -183 -189 -317 -86 -127 -176 -212 -187 -248 -188 10 -126 -186 -203 -192 -248 -265 -260 -387 -167 -200 -252 -257 -196 -267 -166 11 -99 -192 -197 -195 -251 -261 -241 -366 -159 -179 -224 -234 -170 -246 -139 12 -66 -152 -149 -149 -196 -203 -176 -299 -105 -116 -157 -161 -106 -164 -92 13 -117 -232 -241 -239 -295 -312 -307 -434 -211 -247 -299 -300 -229 -291 -159 14 -86 -224 -232 -230 -286 -304 -284 -408 -203 -222 -267 -266 -202 -260 -126 15 -70 -228 -325 -224 -279 -294 -273 -394 -191 -211 -253 -251 -187 -248 -108 TABLE 37 — Continued Supply Regions for Demand Regions for Calves^ Calves^ 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 1 2 -382 -441 -488 -357 -345 -393 -420 -441 -522 -498 -413 7 -6 -21 -57 3 -342 -413 -453 -324 -314 -359 -394 -408 -490 -464 -388 -36 -6 -37 -45 4 -350 -427 -475 -342 -324 -367 -395 -425 -508 -489 -389 -41 -27 -7 -36 5 -311 -395 -435 -306 -296 -342 -375 -389 -472 -445 -370 -54 -6 -7 -7 6 -198 -295 -319 -191 -171 -210 -242 -274 -372 -330 -235 -71 -6 -23 -12 7 -175 -272 -297 -168 -147 -187 -219 -252 -348 -308 -213 -108 -45 -63 -52 8 -164 -251 -282 -153 -129 -173 -264 -237 -332 -293 -199 -158 -99 -116 -122 9 -235 -291 -330 -201 -191 -237 -271 -285 -368 -341 -265 -107 -45 -73 -66 10 -208 -185 -246 -142 -131 -218 -229 -222 -262 -256 -212 -217 -152 -183 -174 11 -157 -224 -260 -132 -121 -190 -212 -215 -306 -271 -223 -222 -159 -186 -179 12 -131 -246 -267 -138 -111 -149 -178 -222 -328 -277 -173 -197 -142 -153 -141 13 -190 -68 -138 -69 -68 -162 -171 -136 -149 -149 -124 -262 -199 -228 -221 14 -159 -92 -152 -49 -46 -131 -149 -123 -173 -163 -115 -255 -191 -222 -212 15 -141 -172 -202 -74 -63 -148 -162 -157 -254 -213 -170 -258 -194 -222 -215 158 TABLE 37 — Continued Supply Regions for „/ Demand Regions for Calve9^^ Calves- 4$ 47 48 49 50 51 52 53 54 55 56 57 58 59 60 1 2 -156 -185 -196 -148 -231 -199 -238 -343 -322 -264 -307 -80 -136 -163 -175 3 -121 -152 -167 -116 -196 -166 -213 -260 -288 -230 -281 -72 -121 -168 -167 4 -128 -160 -174 -134 -217 -183 -214 -329 -309 -248 -282 -50 -106 -162 -139 5 -88 -120 -151 -98 -179 -147 -173 -293 -270 -212 -263 -20 -71 -119 -112 6 17 -13 -21 180 -79 -48 -60 -193 -170 -97 -129 -32 -34 -38 -88 7 -21 60 -0 -7 -55 -17 -37 -169 -147 -75 -106 -72 -66 -64 -121 8 -68 -39 -7 -50 -51 226 -25 -164 -132 -61 -92 -141 -119 -118 -174 9 -44 -43 -47 -0 -74 -43 -90 -188 -166 -108 -158 -72 -102 -100 -165 10 -150 -118 -75 -101 1168 -0 -88 -82 -69 -47 -126 -193 -207 -195 -252 11 -156 -117 -51 -107 -37 343 -64 -147 -106 -38 -99 -199 -201 -198 -255 12 -104 -73 -22 -90 -61 -0 -21 -172 -129 -54 -66 -159 -153 -152 -200 13 -197 -165 -121 -148 -15 -43 -132 50 73 -32 -117 -239 -245 -242 -299 14 -188 -157 -103 -140 -16 -16 -103 -14 -1 155 -86 -231 -236 -233 -290 15 -176 -146 -93 -143 -55 -9 -89 -107 -61 158 -70 -235 -229 -227 -283 159 TABLE 37 — Continued Supply Regions • for „/ Demand Regions for Calves^ Calves- 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 1 2 -236 -274 -375 -212 -269 -295 -348 -330 -387 -353 -395 -441 -488 -357 -345 3 -227 -261 -362 -174 -235 -277 -322 -297 -356 -319 -355 -413 -453 -324 -314 4 -200 -238 -339 -179 -236 -259 -312 -302 -348 -314 -363 -427 -475 -342 -324 5 -173 -206 -307 -142 -202 -222 -275 -264 -311 -273 -324 -395 -435 -306 -296 6 -122 -129 -253 -30 -89 -134 -176 -151 -212 -160 -211 -295 -319 -191 -171 7 -138 -130 -259 -38 -78 -124 -158 -129 -194 -136 -188 -272 -297 -168 -147 8 -189 -167 -294 -82 -108 -153 -170 -127 -294 -129 -177 -251 -282 -153 -129 9 -190 -194 -324 -90 -135 -181 -218 -193 -252 -196 -248 -291 -330 -201 -191 10 -272 -265 -394 -171 -208 -257 -263 -202 -271 -174 -331 -185 -246 -142 -131 11 -268 -246 -373 -163 -187 -229 -240 -176 -250 -147 -170 -224 -260 -132 -121 12 -210 -181 -306 -109 -124 -162 -167 -112 -168 -100 -144 -246 -267 -138 -111 13 -319 -312 -441 -215 -255 -304 -306 -235 -295 -167 -203 -68 -138 -69 -68 14 -311 -289 -415 -207 -230 -272 -272 -208 -264 -134 -172 -92 -152 -49 -46 15 -301 -278 -401 -195 -219 -258 -257 -193 -252 -116 -154 -172 -202 -74 -63 M 8 TABLE 37 — Continued Supply Regions for ______Demand Regions for Calves^'______Total Calves^'76 77 78 79 80 81 U1 Shipments^ 1 2 -393 -420 -441 -522 -498 -413 16 287 3 -359 -394 -408 -490 -464 -388 38 612 4 -367 -395 -425 -508 -489 -389 38 51 5 -342 -375 -389 -472 -445 -370 20 432 6 -210 -242 -274 -372 -330 -235 -25 282 7 -187 -219 -252 -348 -308 -213 -17 163 8 -173 -204 -237 -332 -293 -199 1 226 9 -237 -271 -285 -368 -341 -265 -3 268 10 -218 -229 -222 -262 -256 -212 8 1863 11 -190 -212 -215 -306 -271 -223 28 390 12 -149 -178 -222 -328 -277 -173 5 265 13 -162 -171 -136 -149 -149 -124 -26 123 14 -131 -149 -123 -173 -163 -115 -19 163 15 -148 -162 -157 -254 -213 -170 17 158 161 TABLE 37 — Continued Supply Regions for _, Demand Regions for Calves^ Calves- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 -231 -169 -179 -189 -138 -107 -54 -123 -64 -0 -31 -122 -77 -0 17 -58 -14 -1 121 -95 -127 -157 -91 -185 -154 -178 -298 -276 -219 18 -63 -12 -6 147 -46 -70 -84 -70 -148 -105 -121 -253 -230 -162 19 -44 -13 -16 -2 -4 -22 -37 -22 -90 -56 -74 -204 -181 -114 20 -63 -19 78 -2 -61 -86 -100 -94 -154 -120 -129 -268 -245 -177 21 -77 -32 -14 -16 -48 -46 -68 -72 -127 -86 -92 -241 -219 -148 22 -86 -37 -23 -20 -26 -19 -17 -47 -91 -35 -34 -205 -168 -96 23 -94 -45 -31 -28 -57 -55 -51 -84 -127 -69 -66 -241 -201 -126 24 -97 -23 -37 -29 -0 -0 -5 -16 -70 -25 -35 -181 -159 -86 25 -123 -53 -63 -58 -28 -9 150 -30 -76 -18 -19 -190 -151 -79 26 -112 -58 -49 -41 -36 -18 -8 -39 -88 -23 -20 -202 -156 -81 27 -146 -84 -83 -75 -59 -33 -6 -57 -75 -15 -6 -185 -137 -61 28 -177 -108 -122 -113 -83 -53 -12 -81 -63 -0 51 -163 -122 -46 29 -182 -115 -116 -108 -92 -66 -37 -88 -80 -22 -4 -171 -126 -53 30 -244 -174 -178 -166 -136 -104 -58 -128 -79 -15 -32 -139 -92 -13 162 TABLE 37 — Continued Supply Regions for „/ Demand Regions for Calves^ Calves" 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 16 -0 -195 -186 -184 -226 -221 -194 -311 -139 -143 -171 -169 -104 -160 -25 17 -256 -7 -63 -114 -93 -151 -191 -290 -132 -187 -212 -264 -256 -301 -272 18 -193 -9 -3 -47 -42 -83 -117 -223 -67 -92 -116 -181 -162 -217 -203 19 -144 -13 54 -1 -44 -72 -106 -215 -16 -75 -119 -164 -140 -203 -166 20 -194 30 -3 -52 -8 -44 -90 -184 -34 -102 -117 -169 -169 -206 -212 21 -145 -14 14 -36 8 27 -33 -122 -37 -62 -60 -112 -114 -150 -149 22 -87 -23 -3 -39 -15 -2 39 -100 -1 -5 42 -52 -54 -90 -89 23 -113 -31 -18 -57 -18 60 -9 46 -38 -40 -22 -52 -79 -86 -113 24 -104 -36 -25 -21 -31 -78 -73 -201 8 -30 -81 -119 -96 -153 -125 25 -81 -64 -23 -53 -72 -76 -50 -176 -3 -17 -40 -77 -58 -115 -99 26 -69 -49 -7 -57 -47 -34 -5 -118 -14 87 -3 -28 -36 -85 -71 27 -49 -83 -54 -84 -81 -68 -39 -130 -34 -19 -10 100 19 -16 -32 28 -33 -124 -84 -109 -130 -119 -90 -206 -60 -49 -67 -49 -16 -63 -21 29 -35 -115 -85 -118 -113 -101 -72 -159 -63 -52 -62 -11 -9 113 -26 30 4 -186 -171 -181 -219 -200 -171 -286 -135 -136 -148 -127 -67 -126 23 H TABLE 37 — Continued Supply Regions for „/ Demand Regions for Calve s^ Calves- 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 16 -61 -192 -205 -77 -43 -66 -92 -152 -274 -216 -86 -231 -175 -186 -196 17 -319 -401 -441 -313 -302 -332 -369 -396 -478 -452 -363 -58 -20 -8 -7 18 -215 -362 -388 -259 -238 -259 -298 -342 -438 -398 -285 -63 -18 -13 -7 19 -194 -307 -347 -207 -186 -219 -257 -290 -384 -357 -252 -44 -19 -23 -9 20 -220 -370 -399 -271 -245 -270 -296 -354 -447 -410 -292 -63 -25 -7 -9 21 -163 -344 -367 -236 -209 -204 -239 -319 -421 -377 -237 -77 -38 -21 -23 22 -96 -286 -309 -181 -152 -146 -179 -261 -384 -320 -177 -86 -43 -30 -27 23 -103 -318 -339 -210 -178 -139 -179 -287 -400 -350 -179 -94 -51 -38 -35 24 -157 -284 -406 -176 -149 -163 -216 -261 -361 -318 -206 -97 -29 -44 -36 25 -111 -269 -292 -75 -137 -149 -193 -248 -369 -303 -181 -123 -59 -70 -65 26 -79 -273 -295 -166 -134 -119 -154 -243 -355 -305 -155 -112 -64 -56 -48 27 -22 -253 -264 -141 -105 -67 -98 -206 -335 -274 -97 -146 -90 -90 -82 28 -38 -237 -256 -128 -94 -69 -115 -203 -320 -267 -109 -177 -114 -129 -120 29 -4 -256 -249 -126 -90 -52 -83 -199 -330 -260 -82 -182 -121 -123 -115 30 -25 -206 -211 -84 -49 -40 -69 -160 -287 -222 -64 -244 -180 -185 -173 TABLE 37 — Continued Supply Regions for c/ Demand Regions for Calves-V Calves'" 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 16 -138 -107 -54 -123 -64 162 -31 -122 -77 -0 -0 -202 -190 -187 -230 17 -95 -127 -157 -91 -185 -154 -178 -298 -276 -219 -256 -14 -67 -117 -97 18 -46 -70 -84 -70 -148 -105 -121 -253 -230 -162 -193 -16 -7 -50 -46 19 -4 -22 -37 -22 -90 -56 -74 -204 -181 -114 -144 -20 -4 -4 -48 20 -61 -86 -100 -94 -154 -120 -129 -268 -245 -177 -194 -7 -7 -55 -12 21 -48 -46 -68 -72 -127 -86 -92 -241 -219 -148 -145 -21 -4 -39 -4 22 -26 -19 -17 -47 -91 -35 -34 -205 -168 -96 -87 -30 -7 -42 -19 23 -57 -55 -51 -84 -127 -69 -66 -241 -201 -126 -113 -38 -22 -60 -22 24 -0 256 -5 -16 -70 -25 -35 -181 -159 -86 -104 -43 -29 -24 -35 25 -28 -9 78 -30 -76 -18 -19 -190 -151 -79 -81 -71 -27 -56 -76 26 -36 -18 -8 -39 -88 -23 -20 -202 -156 -81 -69 -56 -11 -60 -51 27 -59 -33 -6 -57 -75 -15 -6 -185 -137 -61 -49 -90 -58 -87 -85 28 -83 -53 -12 -81 -63 16 -0 -163 -122 -46 -33 -131 -88 -112 -134 29 -92 -66 -37 -88 -80 -22 -4 -171 -126 -53 -35 -122 -89 -121 -117 30 -136 -104 -58 -128 -79 -15 -32 -139 -92 -13 77 -193 -175 -184 -223 H TABLE 37 — Continued Supply Regions for _/ Demand Regions for Calves^ Calves— 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 16 -228 -199 -318 -143 -151 -176 -175 -110 -164 -33 -74 -192 -205 -77 -43 17 -158 -196 -297 -136 -195 -217 -270 -262 -305 -280 -332 -401 -441 -313 -302 18 -90 -122 -230 -71 -100 -121 -187 -168 -221 -211 -228 -362 -388 -259 -238 19 -79 -111 -222 -20 -83 -124 -170 -146 -207 -174 -207 -307 -347 -207 -186 20 -51 -95 -191 -38 -110 -122 -175 -175 -210 -220 -233 -370 -399 -271 -245 21 -7 -38 -129 -31 -70 -65 -118 -120 -154 -157 -176 -344 -367 -236 -209 22 -9 -5 -107 -5 -13 -5 -58 -60 -94 -97 -116 -286 -309 -181 -152 23 -7 -14 -7 -42 -48 -27 -58 -85 -90 -121 -116 -318 -339 -210 -178 24 -85 -78 -208 -4 -38 -86 -125 -102 -157 -133 -170 -284 -406 -176 -149 25 -83 -55 -183 -7 -25 -45 -83 -64 -119 -107 -124 -269 -292 -75 -137 26 -41 -10 -125 -18 -8 -8 -34 -42 -89 -79 -92 -273 -295 -166 -134 27 -75 -44 -137 -38 -27 -15 -6 -6 -20 -40 -35 -253 -264 -141 -105 28 -126 -95 -213 -64 -57 -72 -55 -22 -67 -29 -51 -237 -256 -128 -94 29 -108 -77 -166 -67 -60 -67 -17 -15 -4 -34 -17 -256 -249 -126 -90 30 -207 -176 -293 -139 -144 -153 -133 -73 -130 -8 -38 -206 -211 -84 -49 166 TABLE 37 — Continued Supply Regions b/ for . Demand Regions for Calves— Total d/ Calves- 76 77 78 79 80 81 Ui Shipment: 16 -66 -92 -152 -274 -216 -86 -19 162 17 -332 -369 -396 -478 -452 -363 20 121 18 -259 -298 -342 -438 -398 -285 -13 147 19 -219 -257 -290 -384 -357 -252 -34 54 20 -270 -296 -354 -447 -410 -292 -31 108 21 -204 -239 -319 -421 -377 -237 -55 49 22 -146 -179 -261 -384 -320 -177 -75 81 23 -139 -179 -287 -400 -350 -179 -125 106 24 -163 -216 -261 -361 -318 -206 -38 264 25 -149 -193 -248 -369 -303 -181 -45 228 26 -119 -154 -243 -355 -305 -155 -71 87 27 -67 -98 -206 -335 -274 -97 -83 128 28 -69 -115 -203 -320 -267 -109 -51 67 29 -52 -83 -199 -330 -260 -82 -80 113 30 -40 -69 -160 -287 -222 -64 -33 104 H o\ -a TABLE 37 — Continued Supply Regions for Demand Regions for Calves^ Calves— 1 2 3 4 5 6 7 8 9 10 11 12 13 14 . 15 31 -261 -185 -202 -192 -162 -131 -81 -155 -101 -13 -51 -150 -105 -26 32 -292 -228 -251 -248 -231 -200 -140 -183 -50 -52 -138 -0 -10 -29 33 -460 -389 -420 -409 -376 -346 -292 -342 -232 -209 -280 -191 -191 -180 34 -318 -249 -276 -269 -237 -206 -152 -203 -117 -70 -140 -111 -77 -41 35 -318 -251 -270 -271 -229 -197 -140 -205 -118 -71 -125 -122 -86 -42 36 -345 -275 -292 -296 -247 -216 -163 -230 -184 -119 -142 -195 -150 -106 37 -504 -442 -452 -461 -411 -380 -326 -396 -327 -273 -303 -236 -300 -252 38 -428 -359 -385 -378 -346 -316 -262 -313 -223 -179 -250 -204 -177 -150 39 -434 -366 -393 -386 -369 -337 -282 -321 -188 -195 -281 -142 -152 -172 40 -490 -420 -454 -439 -407 -377 -323 -374 -262 -420 -310 -222 -222 -211 41 -613 -552 -562 -572 -520 -490 -437 -506 -426 -400 -414 -405 -382 -376 42 -6 -8 -23 -72 -184 -219 -236 -179 -282 -247 -285 -409 -386 -321 43 -40 32 -34 -42 -134 -171 -193 -132 -231 -199 -247 -361 -336 -272 44 -48 -27 4 -33 -144 -182 -203 -156 -258 -221 -250 -386 -364 -295 45 -66 -4 -2 62 -98 -136 -177 -114 -214 -179 -202 -345 -318 -254 168 TABLE 37 — Continued Supply Region for _ / Demand Regions for Calves^ Calves- 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 -16 -213 -163 -189 -207 -194 -165 -256 -147 -128 -136 -97 -64 -84 -5 32 -119 -267 -282 -274 -329 -347 -320 -443 -246 -258 -302 -300 -235 -308 -158 33 -253 -428 -429 -435 -479 -491 -464 -585 -389 -402 -445 -432 -375 -422 -284 34 -114 -289 -289 -284 -340 -349 -325 -445 -248 -174 -305 -298 -236 -288 -146 35 -92 -290 -280 -275 -326 -334 -308 -425 -233 -248 -285 -274 -214 -264 -123 36 -94 -299 -280 -287 -330 -308 -281 -365 -226 -239 -249 -215 -168 -205 -93 37 -252 -468 -451 -457 -488 -475 -446 -537 -411 -415 -416 -378 -346 -368 -254 38 -215 -398 -398 -393 -449 -458 -431 -548 -359 -373 -408 -389 -337 -387 -248 39 -262 -405 -419 -412 -467 -485 -479 -586 -384 -419 -445 -443 -379 -443 -300 40 -284 -459 -459 -465 -510 -521 -495 -616 -421 -433 -475 -462 -406 -453 -315 41 -362 -578 -554 -568 -600 -589 -560 -653 -517 -519 -533 -493 -456 -483 -365 42 -366 -89 -156 -184 -199 -264 -310 -421 -244 -303 -335 -397 -378 -444 -409 43 -326 -71 -130 -182 -181 -245 -286 -397 -190 -254 -305 -357 -330 -399 -360 44 -329 -47 -114 -177 -149 -215 -260 -371 -198 -257 -286 -347 -338 -391 -356 45 -308 -13 -73 -127 -118 -184 -224 -334 -155 -218 -243 -304 -294 -348 -308 o\H vo TABLE 37 "" Continued Supply Regions for „, _ Demand Regions for Calves^ Calves- 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 31 242 -202 -181 -62 -24 -17 -13 -128 -262 -192 -13 -261 -191 -209 -199 32 -174 1 -0 -0 -0 -93 -61 7 -29 -11 -2 -292 -234 -258 -255 33 -274 -121 1 -135 -130 -185 -108 -54 -83 17 -17 -460 -395 -427 -416 34 -144 -110 -124 -15 -0 -93 -97 -72 -201 -134 -61 -318 -255 -283 -276 35 -118 -122 -131 -12 2 -67 -72 -86 -210 -142 -56 -318 -257 -277 -278 36 -90 -194 -165 -84 -46 1 4 -113 -266 -176 -16 -345 -281 -299 -303 37 -218 -294 -220 -220 -183 -132 -27 -175 -321 -228 30 -504 -448 -459 -468 38 -236 -136 -69 -98 -100 -148 -78 -54 -166 -85 53 -428 -365 -392 -385 39 -295 -90 -23 -152 -149 -226 -149 -91 17 -0 -32 -434 -372 -400 -393 40 -305 -152 -20 -165 -161 -216 -136 -90 -80 -0 69 -490 -426 -461 -446 41 -334 -351 -245 -300 -283 -264 -116 -213 -320 -208 103 -613 -558 -569 -579 42 -455 -523 -587 -428 -417 -473 -517 -529 -622 -603 -523 15 -6 -21 -63 43 -399 -481 -537 -380 -372 -424 -477 -481 -576 -554 -485 -32 -2 -33 -41 44 -411 -500 -565 -403 -386 -436 -480 -503 -599 -586 -488 -39 -25 -5 -34 45 -365 -463 -519 -362 -354 -407 -458 -462 -558 -534 -467 -50 -2 -3 -3 TABLE 37 — Continued Supply Regions for Demand Regions for Calves^ Calves— 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 31 -162 -131 -81 -155 -101 -13 -51 -150 -105 -26 -16 -220 -167 -192 -211 32 -231 -200 -140 -183 -50 -52 -138 -0 -10 -29 -119 -274 -286 -277 -333 33 -376 -346 -292 -343 -232 -209 -280 -191 -191 -180 -253 -435 -433 -438 -483 34 -237 -206 -152 -203 -117 -70 -140 -111 -77 -41 -114 -296 -293 -287 -344 35 -229 -197 -140 -205 -118 -71 -125 -122 -86 -42 -92 -297 -284 -278 -330 36 -247 -216 -163 -230 -184 -119 -142 -195 -150 -106 -94 -306 -284 -290 -334 37 -411 -380 -326 -396 -327 -273 -303 -336 -300 -252 -252 -475 -455 -460 -492 38 -346 -316 -262 -313 -223 -179 -250 -204 -177 -150 -215 -405 -402 -396 -453 39 -369 -337 -282 -321 -188 -195 -281 -142 -152 -172 -262 -412 -423 -415 -471 40 -407 -377 -323 -374 -262 -240 -310 -222 -222 -211 -284 -466 -463 -468 -514 41 -520 -490 -437 -506 -426 -229 -414 -405 -382 -376 -362 -585 -558 -571 -604 42 -156 -185 -196 -148 -231 -199 -238 -343 -322 -264 -307 -80 -136 -163 -175 43 -117 -148 -163 -112 -192 -162 -209 -256 -284 -226 -277 -68 -117 -164 -163 44 -126 -158 -172 -132 -215 -181 -212 -327 -307 -246 -280 -48 -104 -160 -137 45 -84 -116 -147 -94 -175 -143 -169 -289 -266 -208 -259 -16 -67 -115 -108 171 TABLE 37 — Continued Supply Regions b/ for , Demand Regions for Calves- Calves^ 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 31 -201 -170 -263 -151 -136 -141 -103 -70 -88 -13 -13 -202 -181 -62 -24 32 -354 -325 -450 -250 -266 -307 -306 -241 -312 -166 -187 -0 -0 -0 -0 33 -498 -469 -592 -393 -410 -450 -438 -381 -426 -292 -287 -121 78 -135 -130 34 -356 -330 -452 -252 -182 -310 -304 -242 -292 -154 -157 -110 -124 -15 14 35 -341 -313 -432 -237 -256 -290 -280 -220 -268 -131 -131 -122 -131 -12 63 36 -315 -286 -372 -230 -247 -254 -221 -174 -209 -101 -103 -194 -165 -84 -46 37 -482 -451 -544 -415 -423 -421 -384 -352 -372 -262 -231 -294 -220 -220 -183 38 -465 -436 -555 -363 -381 -413 -395 -343 -391 -256 -249 -136 -69 -98 -100 39 -492 -484 -593 -388 -427 -450 -449 -385 -447 -308 -308 -90 -23 -152 -149 40 -528 -500 -623 -425 -441 -480 -468 -412 -457 -323 -318 -152 -20 -165 -161 41 -596 -565 -660 -521 -527 -538 -499 -462 -487 -373 -347 -351 -245 -300 -283 42 -236 -274 -375 -212 -269 -295 -348 -330 -387 -353 -395 -441 -488 -357 -345 43 -223 -257 -358 -170 -231 -273 -318 -293 -352 -315 -351 -409 -449 -320 -310 44 -198 -236 -337 -177 -234 -257 -310 -300 -346 -312 -361 -425 -473 -340 -322 45 -169 -202 -303 -138 -198 -218 -271 -260 -307 -269 -320 -391 -431 -302 -292 ■pr -ro j TABLE 37 — Continued Supply Regions for /______Demand Regions for_Calves—______Total ,. Calves-- 76 77 78 79 80____ 81 U1 Shipments— 31 -17 -13 -128 -262 -192 -13 -62 242 32 -93 -61 26 -29 -11 -2 -75 34 33 -185 -108 -54 -83 -0 -17 7 96 34 -93 -97 -72 -201 -134 -61 8 14 35 -67 -72 -86 -210 -142 -56 1 65 36 17 -0 -113 -266 -176 -16 -13 22 37 -132 -27 -175 -321 -228 -0 64 30 38 -148 -78 -54 -166 -85 -0 32 53 39 -226 -149 -91 90 16 -32 -24 123 40 -216 -136 -90 -80 -0 -0 10 69 41 -264 -116 -213 -320 -208 368 106 471 42 -393 -420 -441 -522 -498 -413 16 15 43 -355 -390 -404 -486 -460 -384 34 32 44 -365 -393 -423 -506 -487 -387 36 4 45 -338 -371 -385 -468 -441 -366 16 62 H TABLE 37 Continued Supply Regions for / Demand Regions for Calves^ Calves* 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 46 -99 -17 -34 -19 -5 -21 -34 -9 -107 -74 -80 -238 -211 -129 47 -142 -62 -80 -65 -29 -3 -8 -16 -77 -35 -51 -207 -182 -101 48 -198 -123 -140 -145 -81 -47 -12 -64 -69 -11 -33 -198 -161 -80 49 -138 -59 -90 -79 -53 -52 -61 -5 -97 -63 -111 -227 -202 -138 50 -268 -185 -219 -206 -178 -140 -93 -124 -6 -9 -107 -98 -84 -62 51 -270 -190 -219 -208 -182 -135 -72 -127 -46 -5 -74 -172 -124 -47 52 -244 -174 -184 -167 -124 -87 -30 -111 -80 -10 -27 -206 -156 -71 53 -328 -248 -280 -270 -242 -203 -155 -187 -31 -68 -166 -6 -8 -51 54 -319 -237 -272 -257 -229 -192 -132 -176 -31 -34 -130 -22 -7 -11 55 -315 -234 -264 -254 -208 -172 -112 -173 -70 -18 -106 -126 -72 -4 56 -290 -218 -228 -238 -169 -132 -73 -156 -88 -15 -44 -151 -99 -11 57 -70 -20 -3 38 -106 -144 -185 -106 -222 -188 -208 -351 -326 -262 58 -80 -22 -13 -3 -51 -80 -101 -84 -181 -133 -144 -300 -274 -197 59 -64 -30 -32 -13 -8 -29 -51 -34 -118 -81 -94 -249 -222 -147 60 -84 -34 -9 -9 -72 -102 -123 -116 -191 -i54 -157 -322 -296 -219 H -a TABLE 37'— Continued Supply Regi ons for . Demand Regions: for Calve9^^ Calves^ 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 46 -160 -40 -42 -43 -102 -136 -144 -282 -34 -96 -150 -198 -172 -242 -186 47 -131 -86 -79 -72 -140 -153 -144 -288 -42 -81 -137 -175 -144 -219 -155 48 -111 -166 -139 -133 -200 -211 -185 -326 -91 -113 -168 -186 -138 -228 -143 49 -191 -84 -119 -113 -190 -213 -218 -363 -101 -146 -202 -244 -218 -286 -225 50 -150 -227 -243 -224 -292 -309 -301 -445 -196 -232 -291 -296 -226 -307 -196 51 -114 -230 -232 -224 -292 -300 -274 -416 -183 -203 -254 -265 -191 -277 -160 52 -79 -186 -179 -173 -231 -235 -201 -340 -122 -132 -178 -182 -119 -184 -108 53 -146 -289 -295 -288 -356 -372 -364 -508 -256 -295 -355 -355 -273 -342 -194 54 -108 -278 -283 -275 -344 -361 -335 -476 -245 -264 -315 -312 -239 -304 -153 55 -81 -275 -267 -261 -328 -342 -315 -452 -223 -243 -291 -287 -214 -282 -125 56 -4 -243 -228 -220 -272 -262 -227 -359 -168 -169 -200 -196 -121 -184 -32 57 -300 -5 -68 -124 -100 -166 -212 -322 -148 -210 -237 -298 -292 -341 -317 58 -228 -U 120 -48 -43 -88 -126 -245 -73 -99 -125 -202 -183 -244 -238 59 -176 -23 -4 5 -52 -82 -120 -243 -19 -86 -136 -189 -164 -234 -200 60 -233 -4 -4 -57 -5 -45 -98 -202 -37 -115 -130 -191 -195 -234 -252 H TABLE 37 — Continued Supply Regions for , Demand Regions for Calves^ Calves- 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 -243 -356 -393 -237 -217 -262 -311 -337 -451 -409 -318 -71 -6 -23 -12 47 -214 -327 -365 -208 -186 -233 -282 -309 -420 -381 -290 -108 -45 -63 -52 48 -197 -298 -343 -186 -161 -212 -261 -287 -397 -360 -269 -158 -99 -116 -122 49 -283 -347 -402 -244 -236 -290 -342 -346 -441 -418 -349 -107 -45 -73 -66 50 -248 -218 -299 -171 -162 -265 -289 -268 -312 -314 -284 -217 -152 -183 -174 51 -183 -260 -311 -155 -146 -227 -265 -255 -361 -328 -293 -222 -159 -186 -179 52 -156 -291 -324 -167 -139 -183 -229 -268 -392 -340 -237 -197 -142 -153 -141 53 -233 -84 -176 -91 -93 -205 -226 -171 -183 -192 -185 -262 -199 -228 -221 54 -195 -111 -191 -65 -65 -166 -199 -154 -211 -208 -173 -255 -191 -222 -212 55 -166 -200 -244 -88 -79 -179 -207 -188 -301 -261 -231 -258 -194 -222 -215 56 -77 -231 -255 -99 -62 -88 -130 -189 -332 -271 -138 -231 -175 -186 -196 57 -375 -470 -526 -370 -361 -395 -451 -470 -565 -543 -458 -54 -16 -4 -3 58 -254 -427 -466 -309 -288 -311 -369 -409 -520 -482 -368 -56 -11 -6 156 59 -236 -368 -424 -254 -232 -271 -327 -354 -463 -440 -336 -40 -15 -19 -5 60 -263 -440 -483 -327 -300 -328 -370 -427 -535 -500 -380 -56 -18 17 -2 -4H cn TABLE 3 7 — Continued Supply Regions for Demand Regions for Calves^ Calves- 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 46 217 -13 -21 -0 -79 -48 -60 -193 -170 -97 -129 -32 -34 -38 -88 47 -21 -0 294 -7 -55 -17 -37 -169 -147 -75 -106 -72 -66 -64 -121 48 -68 -39 -7 -50 -51 561 -25 -164 -132 -61 -92 -141 -119 -118 -174 49 -44 -43 -47 74 -74 -43 -90 -188 -166 -108 -158 -72 -102 -100 -165 50 -150 -118 -75 -101 94 379 -88 -82 -69 -47 -126 -193 -207 -195 -252 51 -156 -117 -61 -107 -37 966 -64 -147 -106 -38 -99 -199 -201 -198 -255 52 -104 -73 -22 -90 -61 1284 -21 -172 -129 -54 -66 -159 -153 -152 -200 53 -197 -165 -121 -148 -15 -43 -132 -0 691 -32 -117 -239 -245 -242 -299 54 -188 -157 -103 -140 -16 -16 -103 -14 -1 1223 -86 -231 -236 -233 -290 55 -176 -146 -93 -143 -55 -9 -89 -107 -61 1393 -70 -235 -229 -227 -283 56 -138 -107 -54 -123 -64 148 -31 -122 -77 809 271 -202 -190 -187 -230 57 -91 -123 -153 -87 -181 -150 -174 -294 -272 -215 -252 -10 -63 -113 -93 58 -39 -63 -77 -63 -141 -98 -114 -246 -223 -155 -186 -9 22 -43 -39 59 _15 -18 -33 -18 -86 -52 -70 -200 -177 -110 -140 -16 40 62 -44 60 -54 -79 -93 -87 -147 -113 -122 -261 -238 -170 -187 64 111 -48 -5 H TABLE 37 — Continued Supply Regions . . for / Demand Regions for Calves— Calves- 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 46 -122 -129 -253 -30 -89 -134 -176 -151 -212 -160 -211 -295 -319 -191 -171 H CM 47 -138 -130 -259 -38 -78 1 -158 -129 -194 -136 -188 -272 -297 -168 -147 48 -189 -167 -294 -82 -108 -153 -170 -127 -204 -129 -177 -251 -282 -153 -129 49 -190 -194 -324 -90 -135 -181 -218 -193 -252 -196 -248 -291 -330 -201 -191 50 -272 -265 -394 -171 -208 -257 -263 -202 -271 -174 -221 -185 -246 -142 -131 51 -268 -246 -373 -163 -187 -229 -240 -176 -250 -147 -170 -224 -260 -132 -121 52 -210 -181 -306 -109 -124 -162 -167 -112 -168 -100 -144 -246 -267 -138 -111 53 -319 -312 -441 -215 -255 -304 -306 -235 -295 -167 -203 -68 -138 -69 -69 54 -311 -289 -415 -207 -230 -272 -272 -208 -264 -134 -172 -92 -152 -49 -46 55 -301 -278 -401 -195 -219 -258 -257 -193 -252 -116 -154 -172 -202 -74 -63 56 -228 -199 -318 -143 -151 -176 -175 -110 -164 -33 -74 -192 -205 -77 -43 57 -154 -192 -293 -132 -191 -213 -266 -258 -301 -276 -328 -397 -437 -309 -298 58 -83 -115 -223 -64 -93 -114 -180 -161 -214 -204 -221 -355 -381 -252 -231 59 -75 -107 -218 -16 -79 -120 -166 -142 -203 -170 -203 -303 -343 -203 -182 60 -44 -88 -184 -31 -103 -115 -168 -168 -203 -213 -226 -363 -392 -264 -238 CL78 TABLE 37 — Continued Supply Regions b/ for , Demand Regions for Calves- ______Total ,. Calves-/-•_ 1 ____ C < ■?£76 1177 78 IQ 79 -ia 80 on Q81 1 TUi M O Shipments— L J ______- 46 -210 -242 -274 -372 -330 -235 -25 217 47 -187 -219 -252 -348 -308 -213 -17 294 48 -173 -204 -237 -332 -293-199 1 561 49 -237 -271 -285 -368 -341 -265 -3 74 50 -218 -229 -222 -262 -256 -212 8 473 51 -190 -212 -215 -306 -271 -223 28 966 52 -149 -178 -222 -328 -277 -173 5 1284 53 -162 -171 -136 -149 -149 -124 -26 691 54 -131 -149 -123 -173 -163 -115 -19 1223 55 -148 -162 -157 -254 -213 -170 17 1393 56 -66 -92 -152 -274 -216 -86 -19 1228 57 -328 -365 -392 -474 -448 -359 16 38 58 -252 -291 -335 -431 -391 -278 -20 298 59 -215 -253 -286 -380 -353 -248 -38 122 60 -263 -289 -347 -440 -403 -285 -38 192 H -4 VO TABLE 37 — Continued Supply Regions • for , Demand Regions for Calves^ Calves-' 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 61 -108 -57 -34 -34 -65 -74 -93 -98 -167 -121 -120 -297 -272 -192 62 -122 -66 -47 -42 -41 -33 -35 -71 -127 -63 -54 -257 -214 -133 63 -140 -84 -65 -59 -86 -84 -83 -123 -178 -112 -100 -308 -262 -177 64 -133 -47 -62 -50 -8 -8 -18 -31 -99 -49 -52 -226 -201 -118 65 -165 -84 -94 -86 -43 -20 -13 -49 -108 -42 -35 -238 -193 -111 66 -149 -87 -75 -63 -49 -28 -20 -57 -119 -45 -33 -250 -196 -111 67 -195 -123 -120 -108 -81 -50 -22 -83 -108 -40 -21 -234 -177 -91 68 -231 -151 -166 -153 -110 -74 -29 -112 -93 -21 -13 -207 -159 -73 69 -239 -162 -161 -149 -122 -91 -61 -122 -116 -49 -20 -218 -166 -83 70 -308 -227 -230 -213 -170 -131 -80 -165 -109 -36 -48 -174 -119 -30 71 -321 -233 -252 -237 -194 -157 -101 -190 -128 -26 -63 -180 -128 -38 72 -374 -300 -326 -320 -292 -255 -187 -239 -83 -88 -183 -16 -29 -57 73 -559 -477 -512 -497 -450 -414 -353 -415 -285 -260 -337 -229 -230 -220 74 -389 -309 -339 -329 -283 -246 -185 -246 -146 -93 -169 -133 -93 -55 75 -390 -313 -334 -333 -275 -236 -172 -250 -149 -96 -153 -147 -105 -58 § TABLE 37 — Continued Supply Regions b / for _, Demand Regions for Calves" Calves- 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 61 -182 -29 -8 -46 -4 55 -37 -136 -49 -75 -70 -131 -137 -175 -184 62 -115 -43 -14 -52 -25 -5 1 -112 -9 -9 -1 -62 -68 -106 -115 63 -154 -60 -40 -82 -36 -11 -19 177 -61 -59 -35 -70 -106 -109 -152 64 -133 -56 -38 -28 -41 -94 -86 -231 -5 -37 -97 -140 -116 -179 -156 65 -107 -91 -37 -68 -92 -93 -59 -202 -10 -23 -48 -91 -71 -135 -126 66 -90 -70 -15 -70 -59 -40 -3 -130 -22 54 -0 -29 -42 -96 -90 67 -70 -115 -76 -107 -104 -85 -48 -149 -49 -27 -13 4 -3 -18 -47 68 -50 -164 -112 -137 -163 -146 -109 -240 -80 -62 -81 -58 -22 -74 -34 69 -55 -155 -115 -149 -144 -126 -89 -185 -85 -68 -77 -15 -16 120 -42 70 -7 -235 -213 -219 -266 -239 -202 -332 -166 -163 -175 -148 -80 -146 -5 71 -19 -260 -196 -222 -244 -225 -188 -289 -173 -146 -153 -105 -69 -88 -4 72 -158 -340 -354 -339 -406 -424 -389 -529 -308 -318 -368 -364 -290 -372 -203 73 -303 -517 -514 -516 -570 -580 -546 -683 -463 -474 -523 -506 -441 -493 -338 74 -136 -350 -346 -335 -403 -410 -429 -515 -293 -201 -355 -345 -274 -332 -172 75 -111 -353 -337 -325 -388 -393 -360 -492 -277 -291 -332 -318 -249 -304 -146 181 TABLE 37 — Continued Supply Regions for Demand Regionsi for Calves—^ Calves— 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 61 -203 -417 -452 -293 -264 -257 -310 -393 -511 -468 -322 -73 -34 -17 -19 62 -134 -350 -386 -280 -199 -190 -241 -326 -470 -402 -253 -81 -38 -25 -22 63 -142 -397 -430 -273 -238 -190 -249 -365 -497 -446 -264 -87 -44 -31 -28 64 -196 -346 -380 -221 -193 -208 -283 -324 -440 -398 -286 -97 -29 -44 -36 65 -142 -329 -364 -102 -180 -193 -257 -310 -451 -381 -257 -123 -59 -70 -65 66 -101 -331 -365 -208 -173 -154 -207 -301 -431 -381 -223 -104 -56 -48 -40 67 -37 -311 -332 -182 -143 -96 -144 -261 -412 -348 -158 -140 -84 -84 -76 68 -56 -292 -322 -166 -129 -98 -164 -257 -393 -339 -172 -177 -114 -129 -120 69 -17 -316 -316 -166 -126 -79 -128 -254 -407 -332 -141 -178 -117 -119 -111 70 -37 -251 -265 -110 -72 -60 -105 -202 -350 -281 -114 -244 -180 -185 -173 71 104 -239 -222 -76 -35 -25 -31 -156 -313 -238 -46 -248 -178 -196 -186 72 -224 -12 -20 -18 -21 -132 -104 -18 -49 -37 -48 -292 -234 -258 -255 73 -328 -141 -4 -163 -161 -226 -144 -66 -97 -7 -50 -460 -395 -427 -416 74 -171 -128 -152 -19 -5 -115 -131 -88 -239 -168 -102 -318 -255 -283 -276 75 -142 -143 -162 -17 -6 -85 -102 -106 -251 -179 -98 -318 -257 -277 -278 SOT TABLE 37 — Continued Supply Regions b/ for Demand Regionsi for Calve sr- Calves- 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 -44 -42 -64 -68 -123 -82 -88 -237 -215 -144 -141 -17 -0 -35 91 62 -21 -14 -12 -42 -86 -30 -29 -200 -163 -91 -82 -25 -2 -37 -14 63 -50 -48 -44 -77 -120 -62 -59 -234 -194 -119 -106 -31 -15 -53 -15 64 321 336 -5 -16 -70 -25 -35 -181 -159 -86 -104 -43 -29 -24 -35 65 -28 -9 569 -30 -76 -18 -19 -190 -151 -79 -81 -71 -27 -56 -76 66 -28 -10 235 -31 -80 -15 -12 -194 -148 -73 -61 -48 -3 -52 -43 67 -53 -27 237 -51 -69 -9 360 -179 -131 -55 -43 -84 -52 -81 -79 68 -83 -53 -12 -81 -63 470 67 -163 -122 -46 -33 -131 -88 -112 -134 69 -88 -62 -33 -84 -76 -18 400 -167 -122 -49 -31 -118 -85 -117 -113 70 -136 -104 -58 -128 -79 -15 -32 -139 -92 -13 1415 -193 -175 -184 -223 71 -149 -118 -68 -142 -88 237 -38 -137 -92 -13 -3 -207 -154 -179 -198 72 -231 -200 -140 -183 -50 -52 -138 104 -10 -29 -119 -274 -286 -277 -333 73 -376 -346 -292 -343 -232 -209 -280 -191 -191 -180 -253 -435 -433 -438 -483 74 -237 -206 -152 -203 -117 -70 -140 -111 -77 -41 -114 -296 -293 -287 -344 75 -229 -197 -140 -205 -118 -71 -125 -122 -86 -42 -92 -297 -284 -278 -330 TABLE 37 — Continued Supply Regions b/ for . , Demand Regions for Calves- Calves-1 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 61 -3 -34 -125 -37 -66 -61 -114 -116 -150 -153 -172 -340 -363 -232 -205 62 -4 187 -102 278 -8 21 -53 -55 -89 -92 -111 -281 -304 -176 -147 63 53 -7 245 -35 -41 -20 -51 -78 -83 -114 -109 -311 -332 -203 -171 64 -85 -78 -208 -4 -38 -86 -125 -102 -157 -133 -170 -284 -406 -176 -149 65 -83 -55 -183 -7 -25 -45 -83 -64 -119 -107 -124 -269 -292 -75 -137 66 -33 -2 -117 -10 167 90 -26 -34 -81 -71 -84 -265 -287 -158 -126 67 -69 -38 -131 -32 -21 -9 57 105 -14 -34 -29 -247 -258 -135 -99 68 -126 -95 -213 -64 -57 -72 -55 -22 -67 -29 -51 -237 -256 -128 -94 69 -104 -73 -162 -63 -56 -63 -13 -11 36 -30 -13 -252 -245 -122 -86 70 -207 -176 -293 -139 -144 -153 -133 -73 -130 -8 -38 -206 -211 -84 -49 71 -188 -157 -250 -138 -123 -128 -90 -57 -75 543 2432 -189 -168 -49 -11 72 -354 -325 -450 -250 -266 -307 -306 -241 -312 -166 -187 271 114 125 320 73 -498 -469 -592 -393 -410 -450 -438 -381 -426 -292 -287 -121 326 -135 -130 74 -356 -330 -452 -252 -182 -310 -304 -242 -292 -154 -157 -110 -124 -15 501 75 -341 -313 -432 -237 -256 -290 -280 -220 -268 -131 -131 -122 -131 -12 734 TABLE 37 Continued Supply Regions b. for Qj______Demand Regions for Calve9— ______Total Calvesr- 76 77 78 79 80 81 Ui Shipments 61 -200 -235 -315 -417 -373 -233 -59 146 t 00 62 -141 -174 -256 -379 -315 -172 o 487 63 -132 -172 -280 -393 -343 -172 -132 475 64 -163 -216 -261 -361 -318 -206 -38 657 65 -149 -193 -248 -369 -303 -181 -45 569 66 -111 -146 -235 -347 -297 -147 -79 546 67 -61 -92 -200 -329 -268 -91 -89 763 68 -69 -115 -203 -320 -267 -109 51 537 69 -48 -79 -195 -326 -256 -78 -84 556 70 -40 -69 -160 -287 -222 -64 -33 1415 71 -4 13 -115 -249 -179 234 -75 3563 72 -93 -61 179 -29 -11 -2 -75 1113 73 -185 -108 -54 -83 65 -17 7 391 74 -93 -97 -72 -201 -134 -61 8 501 75 -67 -72 -86 -201 -142 -56 1 734 TABLE 37 — Continued Supply Regions for . Demand Regions for Calves^/ Calves^' 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 76 -425 -344 -363 -365 -299 -262 -202 -283 -231 -156 -176 -238 -185 -137 77 -601 -529 -539 -548 -480 -443 -383 -467 -387 -326 -354 -391 -350 -297 78 -516 -436 -465 -455 -409 -373 -312 -374 -269 -219 -296 -239 -208 -181 79 -534 -456 -486 -476 -448 -409 -347 -394 -238 -250 -345 -176 -190 -219 80 -595 -514 -553 -532 -486 -450 -390 -451 -320 -297 -373 -265 -267 -259 81 -723 -653 -663 -673 -603 -567 -507 -590 -498 -470 -478 -466 -440 -437 82 83 84 Prohibited 85 86 Vj 44 58 49 38 0 0 21 22 38 55 14 5 12 37 Total Destination . Requirement— 249 679 404 526 84 51 202 179 695 312 51 0 0 8 TABLE 37 — Continued Supply Regions b/ for , Demand Regions for Calves- Calves- 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 76 -116 -366 -339 -343 -395 -365 -330 -423 -271 -283 -292 -250 -197 -236 -113 77 -290 -554 -529 -531 -569 -550 -513 -614 -478 -479 -477 -430 -395 -417 -290 78 -252 -476 -472 -461 -529 -536 -501 -633 -422 -435 -474 -450 -391 -446 -290 79 -320 -496 -508 -495 -562 -579 -570 -690 -463 -501 -529 -526 -452 -524 -363 80 -339 -554 -550 -552 -607 -616 -582 -719 -501 -511 -559 -542 -478 -529 -374 81 -414 -677 -644 -656 -695 -678 -641 -745 -597 -595 -609 -560 -519 -546 -415 82 83 84 Prohibited 85 86 Vj 3 25 4 -22 -17 -37 -48 -89 -13 -33 -47 -53 -36 -61 -8 Total 4 30 188 5 8 142 40 223 8 141 42 113 19 233 23 Destination Requirements^/ B TABLE 37 — Continued Supply Regions _ . b/ for , Demand Regions for Calves— Calves— 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 76 -111 -233 -206 -•106 -64 -8 -19 -141 -321 -222 -53 -345 -281 -299 -303 77 -249 -337 -256 -254 -213 -151 -36 -200 -372 -269 -18 -504 -448 -459 -468 78 -277 -154 -81 -■114 -120 -176 -103 -61 -192 -104 -24 -428 -365 -392 -385 79 -359 -110 -37 -•190 -190 -281 -200 -117 -4 -13 -74 -434 -372 -400 -393 80 -364 -178 -27 -■199 -198 -262 -177 -109 -93 -6 -29 -490 -426 -461 -446 81 -380 -397 -278 -341 -325 -301 -134 -237 -362 -237 -10 -613 -558 -569 -579 82 12 33 -41 -58 83 -85 -23 -51 -44 84 Prohibited -381 -321 -347 -344 85 -501 -436 -455 -459 86 -402 -337 -355 -360 Vj 1 -14 25 13 32 25 80 15 -4 42 154 44 52 42 31 Total 346 1 1 0 2 1 4 7 17 17 255 34 33 17 156 Destination Requirements^/ TABLE 37 — Continued Supply Regions • for Demand Regions for Calves^ Calves£'46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 76 -247 -216 -163 -230 -184 -119 -142 -195 -150 -106 -94 -306 -284 -290 -334 77 -411 -380 -326 -396 -327 -273 -303 -336 -300 -252 -252 -475 -455 -460 -492 78 -346 -316 -262 -313 -223 -179 -250 -204 -177 -150 -215 -405 -402 -396 -453 79 -369 -337 -282 -321 -188 -195 -281 -142 -152 -172 -262 -412 -423 -415 -471 80 -407 -377 -232 -374 -262 -240 -310 -222 -222 -211 -284 -466 -463 -468 -514 81 -520 -490 -437 -506 -426 -434 -414 -405 -382 -376 -362 -585 -558 -571 -604 82 -135 -167 -182 -130 -179 -180 -228 -325 - -302 -245 -296 -86 -135 -182 -181 83 -38 -55 -64 33 -93 -62 -108 -207 -183 -116 -167 -80 -98 -95 -151 84 -320 -289 -229 -272 -96 -141 -227 -64 -96 -127 -212 -385 -340 -337 -394 85 -403 -372 -319 -386 -339 -275 -298 -351 -306 -262 -249 -262 -440 -446 -488 86 -303 -373 -220 -286 -240 -175 -198 -248 -209 -159 -150 -371 -318 -346 -362 Vj 0 0 21 22 38 55 14 5 12 37 3 18 0 25 21 Total 570 652 1413 376 1262 4792 827 154 764 3738 1763 64 173 62 91 Destination Requirements^ U5£ TABLE 37 — Continued Supply Regions for ./ Demand Regions for Calve s^ Calves- 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 -315 -286 -372 -230 -247 -254 -221 -174 -209 -101 -103 -194 -165 -84 -46 77 -482 -451 -544 -415 -423 -421 -384 -352 -372 -262 -231 -294 -220 -220 -183 78 -465 -436 -555 -363 -381 -413 -395 -343 -391 -256 -249 -136 -69 -98 -100 79 -492 -484 -593 -388 -427 -450 -449 -385 -447 -308 -308 -90 -23 -152 -149 80 -528 -500 -623 -425 -441 -480 -468 -412 -457 -323 -318 -152 -20 -165 -161 81 -596 -565 -660 -521 -527 -538 -499 -462 -487 -373 -347 -351 -245 -300 -283 82 -270 -277 -318 -189 -249 -291 -336 -311 -371 -333 -370 -427 -267 -339 -310 83 -185 -190 -320 -85 -147 -192 -233 -211 -249 -213 -252 -304 -343 -215 -204 84 -230 -407 -536 -311 -350 -399 -401 -331 -391 -263 -258 -23 -43 -84 -84 85 -286 -442 -583 -386 -403 -410 -376 -329 -364 -257 -222 -349 -236 -239 -201 86 -222 -320 -414 -286 -287 -292 -253 -230 -239 -158 -101 -248 -236 -133 -95 Vj -44 -53 -96 -17 -41 -52 -59 -42 -65 -16 -12 -14 25 13 32 Total 53 187 245 278 167 111 57 105 36 543 2432 271 518 125 1632 Destination Requirements^' «I> O TABLE 37 — Continued Supply Regions for .______Demand Regions for Calves— Total Calves-'76 77 78 79 80 81 Ui Shipments- 76 379 87 -113 -266 -176 -16 -13 466 77 -132 -27 -175 -321-228 224 64 224 78 -148 -78 -54 -166 -85 413 32 413 79 -226 -149 -91 269 -0 -32 -24 269 80 -216 -136 -90 -80 146 345 10 491 81 -264 -116 -213 -320 -208 689 106 689 82 -373 -408 -422 -504 -478 -403 5 45 83 -250 -284 -298 -381 -354 -278 -9 33 84 -187 -113 -53 29 -21 -53 -89 29 85 -118 174 -191 -337 -244 -16 15 174 86 -18 528 -91 -337 -244 -16 -37 528 Vj 25 80 15 -4 42 154 Total 396 802 205 388 227 2273 33302 Destination Requirements—' H b/ Demand regions 2 through 41 represent calf slaughter, 42 through 81 all calves not slaughtered as calves. Cell number one was maintained for a dummy variable but not used. c/ Supply regions 2 through 41 represent dairy calf supplies, 42 through 81 beef calf supplies, and 82 through 86 foreign inshipments. Cell number one was maintained for a dummy variable but not used. d / Thousands o.f head. e/ Cents per hundredweight. Source: Original data. H vo IN) APPENDIX P TABLE 38 Schedule of Breakeven Prices for 67 Percent Net Gain on Feeder Animals (i.e. 600 Pound Feeder With a 400 Pound Gain) at Selected Feeder Cattle Prices and Feeding Costs Per Pound Gaiqf/ Total feeder Total feeding cost per pound gain (cents) cattle costk/ 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Breakeven sales price (dollars/cwt.) 20 18.80 19.20 19.60 20.00 20.40 20.80 21.20 21.60 22.00 22.40 22.80 23.20 23.60 24.00 21 19.40 19.80 20.20 20.60 21.00 21.40 21.80 22.20 22.60 23.00 23.40 23.80 24.20 24.60 22 20.00 20.40 20.80 21.20 21.60 22.00 22.40 22.80 23.20 23.60 24.00 24.40 24.80 25.20 23 20.60 21.00 21.40 21.80 22.20 22.60 23.00 23.40 23.80 24.20 24.60 25.00 25.40 25.80 24 21.20 21.60 22.00 22.40 22.80 23.20 23.60 24.00 24.40 24.80 25.20 25.60 26.00 26.40 25 21.80 22.20 22.60 23.00 23.40 23.80 24.20 24.60 25.00 25.40 25.80 26.20 26.60 27.00 26 22.40 22.80 23.20 23.60 24.00 24.40 24.80 25.20 25.60 26.00 26.40 26.80 27.20 27.60 27 23.00 23.40 23.80 24.20 24.60 25.00 25.40 25.80 26.20 26.60 27.00 27.40 27.80 28.20 28 23.60 24.00 24.40 24.80 25.20 25.60 26.00 26.40 26.80 27.20 27.60 28.00 28.40 28.80 29 24.20 24.60 25.00 25.40 25.80 26.20 26.60 27.00 27.40 27.80 28.20 28.60 29.00 29.40 30 24.80 25.20 25.60 26.00 26.40 26.80 27.20 27.60 28.00 28.40 28.80 29.20 29.60 30.00 31 25.40 25.80 26.20 26.60 27.00 27.40 27.80 28.20 28.60 29.00 29.40 29.80 30.20 30.60 32 26.00 26.40 26.80 27.20 27.60 28.00 28.40 28.80 29.20 29.60 30.00 30.40 30.80 31.20 33 26.60 27.00 27.40 27.80 28.20 28.60 29.00 29.40 29.80 30.20 30.60 31.00 31.40 31.80 34 27.20 27.60 28.00 28.40 28.80 29.20 29.60 30.00 30.40 30.80 31.20 31.60 32.00 32.40 35 27.80 28.20 28.60 29.00 29.40 29.80 30.20 30.60 31.00 31.40 31.80 32.20 32.60 33.00 36 28.40 28.80 29.20 29.60 30.00 30.40 30.80 31.20 31.60 32.00 32.40 32.80 33.20 33.60 37 29.00 29.40 29.80 30.20 30.60 31.00 31.40 31.80 32.20 32.60 33.00 33.40 33.80 34.20 38 29.60 30.00 30.40 30.80 31.20 31.60 32.00 32.40 32.80 33.20 33.60 34.00 34.40 34.80 39 30.20 30.60 31.00 31.40 31.80 32.20 32.60 33.00 33.40 33.80 34.20 34.60 35.00 35.40 40 30.80 31.20 31.60 32.00 32.40 32.80 33.20 33.60 34.00 34.40 34.80 35.20 35.60 36.00 41 31.40 31.80 32.20 32.60 33.00 33.40 33.80 34.20 34.60 35.00 35.40 35.80 36.20 36.60 42 32.00 32.40 32.80 33.20 33.60 34.00 34.40 34.80 35.20 35.60 36.00 36.40 36.80 37.20 43 32.60 33.00 33.40 33.80 34.20 34.60 35.00 35.40 35.80 36.20 36.60 37.00 37.40 37.80 44 33.20 33.60 34.00 34.40 34.80 35.20 35.60 36.00 36.40 36.80 37.20 37.60 38.00 38.40 a 7 A s s u m e s net gain sold. b f Delivered cost (must Include total procurement cost-buying fees, transportation, etc.). H VO TABLE 39 Schedule of Breakeven Prices for 100 Percent Net Gain on Feeder Animals (i.e. 500 Pound Feeder ______With a 500 Pound Gain at Selected Feeder Cattle Prices and Feeding Costs Per Pound Galn£/____ Total feeder Total feeding cost per pound gain (cents) cattl h/ costs£' 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Breakeven sales price (dollars/cwt.) 20 18.50 19.00 19.50 20.00 20.50 21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 21 19.00 19.50 20.00 20.50 21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 22 19.50 20.00 20.50 21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 23 20.00 20.50 21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 24 20.50 21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 25 21.00 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 26 21.50 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 28.00 27 22.00 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 28.00 28.50 28 22.50 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29 23.00 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 .28.00 28.50 29.00 29.50 30 23.50 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 31 24.00 24.50 25.00 25.50 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 32 24.50 25.00 25.50 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 33 25.00 25.50 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 34 25.50 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 35 26.00 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 36 26.50 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 37 27.00 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 38 27.50 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 39 28.00 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 34*50 40 28.50 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 34.50 35.00 41 29.00 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 34.50 35.00 35.50 42 29.50 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 34.50 35.00 35.50 36.00 43 30.00 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 34.50 35.00 35.50 36.00 36.50 44 30.50 31.00 31.50 32.00 32.50 33.00 33.50 34.00 34.50 35.00 35.50 36.00 36.50 37.00 aj Assumes net gain sold. b/ Delivered cost (must include total procurement cost-buying fees, transportation, etc.). H vo TABLE 40 Schedule of Breakeven Prices for 150 Percent Net Gain on Feeder Animals (i.e. 400 Pound Feeder ______With a 600 Pound Gain) at Selected Feeder Cattle Prices and Feeding Costs Per Pound Gain£^ Total feeder Total feeding cost per pound gain (cents) cattle COSt£/ 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Breakeven sales price (dollars/cwt.) 20 18.20 18.80 19.40 20.00 20.60 21.20 21.80 22.40 23.00 23.60 24.20 24.80 25.40 26.00 21 18.60 19.20 19.80 20.40 21.00 21.60 22.20 22.80 23.40 24.00 24.60 25.20 25.80 26.40 22 19.00 19.60 20.20 20.80 21.40 22.00 22.60 23.20 23.80 24.40 25.00 25.60 26.20 26.80 23 19.40 20.00 20.60 21.20 21.80 22.40 23.00 23.60 24.20 24.80 25.40 26.00 26.60 27.20 24 19.80 20.40 21.00 21.60 22.20 22.80 23.40 24.00 24.60 25.20 25.80 26.40 27.00 27.60 25 20.20 20.80 21.40 22.00 22.60 23.20 23.80 24.40 25.00 25.60 26.20 26.80 27.40 28.00 26 20.60 21.20 21.80 22.40 23.00 23.60 24.20 24.80 25.40 26.00 26.60 27.20 27.80 28.40 27 21.00 21.60 22.20 22.80 23.40 24.00 24.60 25.20 25.80 26.40 27.00 27.60 28.20 28.60 28 21.40 22.00 22.60 23.20 23.80 24.40 25.00 25.60 26.20 26.80 27.40 28.00 28.60 29.20 29 21.80 22.40 23.00 23.60 24.20 24.80 25.40 26.00 26.60 27.20 27.80 28.40 29.00 29.60 30 22.20 22.80 23.40 24.00 24.60 25.20 25.80 26.40 27.00 27.60 28.20 28.80 29.40 30.00 31 22.60 23.20. 23.80 24.40 25.00 25.60 26.20 26.80 27.40 28.00 28.60 29.20 29.80 30.40 32 23.00 23.60 24.20 24.80 25.40 26.00 26.60 27.20 27.80 28.40 29.00 29.60 30.20 30.80 33 23.40 24.00 24.60 25.20 25.80 26.40 27.00 27.60 28.20 28.80 29.40 30.00 30.60 31.20 34 23.80 24.40 25.00 25.60 26.20 26.80 27.40 28.00 28.60 29.20 29.80 30.40 31.00 31.60 35 24.20 24.80 25.40 26.00 26.60 27.20 27,80 28.40 29.00 29.60 30.20 30.80 31.40 32.00 36 24.60 25.20 25.80 26.40 27.00 27.60 28.20 28.80 29.40 30.00 30.60 31.20 31.80 32.40 37 25.00 25.60 26.20 26.80 27.40 28.00 28.60 29.20 29.80 30.40 31.00 31.60 32.20 32.80 38 25.40 26.00 26.60 27.20 27.80 28.40 29.00 29.60 30.20 30.80 31.40 32.00 32.60 33.20 39 25.80 26.40 27.00 27.60 28.20 28.80 29.40 30.00 30.60 31.20 31.80 32.40 33.00 33.60 40 26.20 26.80 27.40 28.00 28.60 29.20 29.80 30.40 31.00 31.60 32.20 32.80 33.40 34.00 41 26.60 27.20 27.80 28.40 29.00 29.60 30.20 20.80 31.40 32.00 32.60 33.20 33.80 34.40 42 27.00 27.60 28.20 28.80 29.40 30.00 30.60 31.20 31.80 32.40 33.00 33.60 34.20 34.80 43 27.40 28.00 28.60 29.20 29.80 30.40 31.00 31.60 32.20 32.80 33.40 34.00 34.60 35.20 44 27.80 28.40 29.00 29.60 30.20 30.80 31.40 32.00 32.60 33.20 33.80 34.40 35.00 35.60 7 7 Assumes net gain sold. b/ Delivered cost (must include total procurement cost-buying fees, transportation, etc.). h — - vo cr. APPENDIX G 198 Guideline Questions Does your bank finance feeder cattle? Does your bank finance feeding facilities (silos, equipment, etc*)? About how many feeder cattle loans were made during the past year? About how many feeder cattle (# of head) did you finance during the past year? Are the number of feeder cattle loans being made annually increasing or decreasing for your bank? Is the dollar volume of feeder cattle loans increasing or decreasing annually? What is the size of feedlot operation (# of head fed annually) your bank finances? Hange of sizes? Average size? What has been your bank’s attitude toward financing feeder cattle compared with other types of loans? Has repayment been good? ’What interest rates do you generally charge for feeder cattle loans? — perhaps relative to prime rate. What types of guidelines do you use in making feeder cattle loans? -percentage of feeder cattle purchase price? -previous feeding records of individual farmer? -absolute restriction of size of loans for feeder cattle purposes? -do you require insurance? -do you require hedging of cattle? Do you finance the feed for feeding operations? Would you say faimers in your areas are showing more or less interest in cattle feeding as a business activity? BIBLIOGRAPHY Bo oka Ferguson, C. E. Microeconomic Theory. Homewood, Illinois: Richard D. Irvin, Inc., 1969, Revised edition. Samuelson, Paul A. Economics. New York: McGraw-Hill Book Company, Seventh edition, 1967. Williams, Willard F. and Stout, Thomas T. Economics of the Livestock Meat Industry. New York: The Macmillan Company, 1964. Periodicals Cattle on Feed. January 1, 1970, U.S. Department of Agriculture, Statistical Reporting Service, Washington, D.C., January, 1970. Crop Production. Annual Summary, U.S. Department of Agriculture, Statistical Reporting Service, I960 through 1969. Dairy Situation. U.S. Department of Agriculture, Economic Research Service, September, 1969* Feed Situation, U.S. Department of Agriculture, Economic Research Service, Washington, D.C., May, 1970. Florida Agricultural Statistics, Annual livestock Summary, Florida Department of Agriculture, Tallahassee, Florida, 1966-1968. Illinois Agricultural Marketing Statistics. Division of Livestock Industry* Illinois Department of Agriculture, Bulletins 61-2 and 68-1. 1961-1968. Livestock and Meat Statistics. Supplement to Statistical Bulletin No. 333, U.S. Department of Agriculture, Economic Research Service, I960 through 1970. Livestock and Poultry Inventory. U.S. Department of Agriculture, Statistical Reporting Service, January 1, Inventory Report, 1960 through 1970. 199 Livestock Slaughter, U.S. Department of Agriculture, Statistical Reporting Service, Crop Reporting Board, April, 1969# Shipments of Feeder Cattle Into Ohio From Other States, Ohio Crop Reporting Service. Annuaj. release, I960 through 1970. 1964 United States Census of Agriculture, Vol. II, Chapters 2 and 4 Reports Anthony, Willis E. Structural Changes in the Federally Inspected Livestock Industry. 1960-62. Agricultural Economic Report No. 83, U.S. Department of Agriculture, Economic Research Service, February, 1966. Armstrong, D. L. and Shaudys, E. T. Profitability of Practices Af fecting the Calf Crop of Beef Herds. Ohio Agricultural Experi ment Station, Research Circular 103, May, 1961. ELosser, R. H. Costs of Feeding Cattle in Ohio, Ohio Agricultural Research and Development Center, Research Circular 163, April, 1969. Bowser, Max F. and Goodwin, John W. Optimum Distribution Patterns for Feeder Cattle, Technical Bulletin T-123, Oklahoma State University, June, 1968. Breimyer, Harold F. "The Three Economies of Agriculture," Journal of Farm Economics, Vol. XLIV, August, 1962* Buchholz, H. E. and Judge, G. G. An Interregional Analysis of the Feed-Livestock Economy. Department of Agricultural Economics, Agricultural Experiment Station, University of Illinois, 1965 Capener, William N., Stevens, William, P., St. Clair, James S., and Abel, Harold. Transportation of Cattle in the West. Agricultural Experiment Station, University of Wyoming, Research Journal 25, January, 1969. Chamberlain, R. L. and Jowett, D. The OIJNITAB Programming System, A Guide for Usere, Statistical Laboratory, Iowa State Uni versity, University Bookstore, Ames, Iowa. Cox, Rex W. and Taylor, Fred R. Feasibility of Cooperatively Owned Feedlots, Agricultural Economics Report No. 36, North Dakota State University, 1964. 201 Dawson, Dalphus R. and Davidson, Jack R. Direct Marketing of Feeder Cattle in Montana, Montana Agricultural Experiment Station, Montana State University, Bulletin 598, August, 1965* Dennis, J. B. "A High Speed Computer Technique for the Transporta tion Problem," Journal of the Association for Computing Machinery, Vol. 5, No.2, April, 1958. Dietrich, Raymond A. Costs and Economies of Size in Texas— Oklahoma Cattle Feedlot Operations, B-1033, Texas Agricultural Experi ment Station, May, 1969. Economies of Scale in Cattle Feeding. Supplement No. 3 to Technical Study No. 1, Organization and Competition in the livestock and Meat Industry. National Commission on Pood Marketing, June, 1966. Fabricius, Martin H. and Findeborg, Karl H. Market Channels Se lected by Idaho Cattlemen, Idaho Agricultural Experiment Station, Bulletin No. 415, October, 1963. Finley, Robert M. and Johnson, Ralph D. Changes in the Cattle Feeding Industry in Nebraska, S.B. No. 476, Nebraska Agricultural Ex periment Station, 1963* Futrell, Gene A., Walker, Francis F., and Stout, Thomas T. Econometric Generalizations of the Ohio Beef and Pork Industries in Inter regional Competition, Ohio Agricultural Research and Development Center, Research Bulletin 974, November, 1965. Henning, George F. and Thomas, Paul R. Some of the Factors Influencing the Shrinkage of Livestock From the Farm to the First Market, Ohio Agricultural Experiment Station, Research Bulletin 925, October, 1962. Hitchcock, F. I. "The Distribution of a Product From Several Sources to Numerous localities," Journal of Mathematics and Physics, 2(1941). Hopkin, John A. '•Economies of Size in the Cattle-Feeding Industry of California," Bank of America N.T. & S.A., Journal of Farm Economics, Vol. XL, May, 1958. Hopkin, John A. and Kramer, Robert C. Cattle Feeding in California, Bank of America N.T. and S.A., San Francisco, 1965. 202 Hunter, Elmer C. and Madden, J. Patrick. Economics of Size for Specialized Beef Feedlots in Colorado. U.S. Department of Ag riculture, Economic Research Service and Colorado Experiment Station, Agricultural Economics Report 91, May, 1966. Jackson, Hilliard. Evaluation of Live Cattle Marketing in Arkansas. Agricultural Experiment Station, University of Arkansas, Bul letin 744,June, 1969* Johnson, Ralph D. and Eckert, Alfred R. Cattle Feeding Costs in Nebraska by System of Feeding and Size of Operation. S.B. 4-96, Nebraska Agricultural Experiment Station, 1968. King, Gordon A. Economies of Scale in Large Commercial Peedlots. Grannini Research Report No. 251, University of California, 1962. Madsen, Albert G., Hummels, Kenneth, and Capener, William. Colo rado* s Cattle Feeding Industry, Agricultural Experiment Station, Colorado State University, Bulletin 528S, April, 1967. Harousek, Gerald E. The Western Cattle Feeding Industry: Structural and Marketing Changes. 1952-1962,Idaho Agricultural Experi ment Station, Bulletin 481, July, 1967. McCoy, John H. and Hansman, Calvin C. Economies of Scale in Com mercial Cattle Peedlots of Kansas— Analysis of Nonfeed Costs. Technical- Bulletin #151, Agricultural Experiment Station, Kansas State University, April, 1967. McCoy, J. H. and Wakefield, H. D. Economies of Scale in Farm Cattle Peedlots of Kansas— An Analysis of Nonfeed Costs. Technical Bulletin No. 145, Kansas Agricultural Experiment Station, 1965. Newland, William H. Matching Nutrition Programs to Kinds of Cattle in Ohio. Memeo, Department of Animal Science, The Ohio State University, EAC-AS-672, March, 1967. Richards, Jack A. and Korzan, Gerald E. Beef Cattle Peedlots in Oregon— A Feasibility Study, Special Report 170, Oregon State U^eTsit77T964-: Rizek, Robert T. and Larsen, John T. "Our Beef Producing Potential," Livestock and Meat Situation, U.S. Department of Agriculture, Economic Research Service, October, 1969* 203 Seaborg, Donald. "Beef Cattle: The Next Ten Years," Livestock and Heat Situation. U.S. Department of Agriculture, Economic Re search Service, Hay, 1970. Smith, J. R. and Danner, lu. J. Movements of Cattle and Calves Through Alabama Auction Marketst Agricultural Experiment Station, Auburn University, Bulletin 360, September, 1965* Soufley, Zack E., editor. Kentucky Feeder Sales. 1967. Report of Agricultural Economics, University of Kentucky (prepared by Kentucky Feeder Calf Association, Inc.) Tippets, Neff, Stevens, Ira M., Brotherton, C.B., and Abel, Harold. In-Transit Shrinkage of Cattle. University of Wyoming, Circular No. 78, February, 1957. Walker, Francis E. "Transportation and Spatial Equilibrium Models for Interregional Analysis," Paper Presented at the Southern Farm Management Research Committee Workshop, New Orleans, March 23-24, 1964. Williams, Willard F. Marketing Potentials for Feedlot Cattle in Oklahoma and Texas. Department of Agricultural Economics, Oklahoma State University, Processed Series P-426, September, 1962. Williams, Willard F. and McDowell, J. J. Costs and Efficiency in Commercial Dry-Lot Cattle Feeding. Processed Series P-509, Oklahoma State University, 1965. Other Sources "1969 Red Cattle Resources Survey," Southwestern Public Service Company, Agricultural Development Department, Amarillo, Texas. Irrigation Age— Beef and Irrigation Special. "The Questions Farmers Are Asking About Beef and Irrigation," February, 1970# Rand McNally Road Atlas. United States, Canada and Mexico, Rand McNally and Company, New York, 1968.