Economic analysis of cattle shrinkage
by Glen R Purnell
A THESIS Submitted to the Graduate Faculty in partial fulfillment of the requirements for the degree
of Master of Science in Agricultural Economics
Montana State University
© Copyright by Glen R Purnell (1953)
Abstract:
no abstract found in this volume ECONOMIC ANALYSTS OF CATTLE
SHRINKAGE
by
v
GLEN R» PURNELL
A THESIS
S ubm itted to th e G rad u ate F a c u lty
in
■)
p a r t i a l f u l f i l l m e n t o f th e re q u ire m e n ts
f o r th e d e g re e o f
Mas t e r ro f.(.Scie h c e ' 'in i(A g ric u l t u r a l lEc Onomics
at
Montana S ta te C ollege
, Chairm an, Exam ining Committee
.n, GJhduAte M v id -Io n
Bozeman, Montana
A ugust, 1953
I'-.' 7
2
CONTENTS
T itle
Page
L is t o f Tables
h
L i s t o f F ig u re s
6
Acknowledgments
7
A b s tr a c t . . . . . .
8
PART I i
INTRODUCTION............................................................................................
9
A.
S e le c tio n o f th e F ie ld o f I n v e s tig a t io n .................................
9
B.
The P r o b le m ..............................................................................................
11
C.
H y p o th eses................................. .................................................................
18
D.
O b je c tiv e s o f th e I n v e s tig a t io n ...................................................
19
E.
B oundaries and L im ita tio n s ..............................................................
19
F.
Review o f L i t e r a t u r e ......... .................................................................
20
EMPIRICAL ANALYSIS .............................................................................
27
PART I I I
A.
M ethodology ................................... .................................. ................... ..
27
B.
E x te n t o f S hrin k ag e ......................................................................
29
1.
C alves ..............................................................................................
29
2.
Cows ........................................................................................ ..
33
3.
S te e r s and H e ife rs ....................................................................
36
C.
F a c to rs C ausing S hrinkag e ................................................................
W
D.
F u n c tio n a l R e la tio n s h ip Between F a c to rs C ausing S hrinkage
and E x te n t o f S h rin k ag e ................................... ................................
47
ECONOMIC IMPLICATIONS OF SHRINKAGE OCCURRING DURING THE
MARKETING PROCESS .............................................................................
53
PART I I I i
A.
T h e o r e tic a l Framework f o r A p p ra is a l o f Economic S i g n i f i ­
cance ........... ............................................. ..................................................
53
108571
3
T itle
Page
Be
Ie
T h e o r e tic a l A ssum ptions .......................................... ............
53
2o
Economic A n a ly sis o f E m p iric a l Evidence e e e e e e e .e e
59
E a tio n a l M ark etin g B ehavior ...................................................
I.
PART IVi
.
76
B udget A n a l y s i s ........................................................................
76
SUMMARY AND CONCLUSIONS ....................................... ..................... ..
85
A.
Summary o f th e I n v e s t i g a t i o n .................................................. ..
85
Be
E x te n t to S ii c h H ypotheses were S u b s ta n tia te d ........... ..
87
Ce
Recommendations Based and F in d in g s o f t h i s S tu d y . . . . . .
89
De
S u g g e stio n s f o r F u r th e r R esearch ............................................
90
APPENDIX............... ................. ........................................................ ..
Appendix A - Q u e stio n n a ire ...................... .............................................
92
93
Appendix B - S upplem entary Tables ...........................................
BIBLIOGRAPHY......... ................. ...................................................... ............................
97
. 100
it
LIST OF TABLES
Number
'I
II
T itle
Page
Cash and Gross Farm Income O btained from M eat Animals '
i n th e U nited S t a t e s , 1950 and 1 9 5 1 .................................. . . . .
11
C ost o f T r a n s p o rta tio n f o r Y e a rlin g S t e e r s , K i l g o r e ,"
N ebraska, to M o n te c e llo , Iow a. B a s is Loading "H eights,
.................................... ................................................. .......................
16
III
S hrin k ag e o f F eed er C alves Shipped from Montana to O hio.
31
IV
S hrin k ag e o f Montana C a lv e s, D eterm ined by th e D i f f e r ­
ence i n Loading and O ff-C ar W eig h ts, and T ran sp o rte d by
R a il to M arket ................................................................^ r . r T
0
31
S hrin k ag e o f Montana C a lv e s, D eterm ined by the D i f f e r ­
ence Between Loading and S a le s W eight. T ran sp o rte d by
R a il and b y Truck ......................................... '__ r ___^ ^ „
32
S hrin k ag e o f Dry Cows i n M ontana, b ased on th e D i f f e r ­
ence Between Loading and S a le s W eight ......................................
35
S hrinkage o f Montana F eed er H e ife rs and S te e r s , Based '
on th e D iffe re n c e Between Loading and S a le s W eights . . . .
38
S hrin k ag e o f Montana S la u g h te r H e ife rs and S la u g h te r
S te e r s — Based on th e D iffe re n c e Between Loading and
O ff-C ar W eights ...................................................... ..................... ..
ko
S hrinkage o f Montana F eeder S t e e r s , as a P e rc e n t o f
Loading W eight---- Based on th e D iffe re n c e Between Load­
in g and O ff-C ar W eights
............................. „
14 .
S hrinkage o f V arious C la sse s o f C a t tle i n M ontana,
G ross O ff-C ar S h rin k Compared w ith N et S a le s S h rin k . . . .
h3
P e rc e n t S h rin k f o r 60 F a t C a ttle Between Each Check
W eighing D uring a 200 M ile Truck Haul ................................. Tr
1*5
XII
S hrin k ag e and R e f i l l o f F eed er C a ttle i n Montana ..............
72 ■
X III
S a le s C osts f o r S e llin g C alves th ro u g h V arious A uctions
i n M ontana, 1953 ............................................................................
98
C ost o f F r e ig h t on F eeder S to ck Shipped from V arious
P o in ts i n Montana to S t . P a u l, M in n eso ta, 1953 ..................
99
V
VI
HI
H II
IX
X
XI
XIV
2
Number
XV
T itle
P r ic e s R eq u ired from" D if f e r e n t S a le s C hannels5 to
Net E qual R etu rn s ............... ................................ ..
?
Page
8I4.
6
IIS T OF FIGURES:
Number
T itle
Page
S c a t t e r Diagram Showing th e P e rc e n t S h rin k o f Dry Cows
i n R e la tio n to th e Number o f Hours Between A r r iv a l and
S a le s , M ontana, 19^3 ........... ................... *......................................
3It.
A Firm F acing a P u r e ly C o m p etitiv e Demand C urve, P la c e s
Two Q u a n titie s on th e M arket ...........................
54
A Firm F acing a P e r f e c t l y E l a s t i c Demand Curve Seeks an
Optimum . . . . . . . . . . . . . . . . . ...................... ................................
56
4
A Firm F a c in g M o n o p o listic M arket C o n d itio n s
57
5
A ty p ic a l Demand and C o st F u n c tio n i n A g r i c u l t u r e ............
58
6
E q u ilib riu m P o s itio n s o f a Firm A c tin g R a tio n a lly and
I r r a t i o n a l l y w ith R espect to 'W elfare M axim ization . . . . . .
60
A B eef P ro d u cin g Firm F acin g a P e r f e c t l y E l a s t i c Demand
f o r B ee f, P la c e s Two Q u a n titie s on the M arket a t a P r ic e
o f 200 p e r Pound ...................................................................................
6I1
P r i c e - —Supply R e la tio n s h ip fo r an I n d iv id u a l Firm
P la c in g Animals on th e M arket Under Three S h rin k Condi­
t io n s ................................................................................................
65
Pounds o f B eef L o st i n one Time P e rio d and R egained i n
Anoth e r
69
An Optimum P o s itio n i s Sought b y a Firm Where M arg in al
C ost E quals M arg in al Revenue .......................................................
73
Pounds o f B eef L o s t Through S h rinkage i n S e v e ra l Time
P e r i o d s .................................................. ...........................................
75
1
2
3
7
8
9
10
11
12
..............
Pounds o f Beef R egained a s Compared to th e C ost o f
R egain ............................... ............................................. ..
7=
ACKNOWLEDGMENTS
The a u th o r w ishes to e x p re ss s in c e r e a p p r e c ia tio n f o r th e a id and
encouragem ent ex ten d ed by a l l th o s e c o n ta c te d th ro u g h o u t th e c o u rse o f
h is p o s t-g ra d u a te worko
There has in d eed b een an u p l i f t i n g and en co u rag in g environm ent s u r ­
ro u n d in g th e g ra d u a te t r a i n i n g program i n th e D epartm ent o f A g r ic u ltu r a l
Econom icsi
The p r o f e s s o r s , s e c r e t a r i e s and g ra d u a te c o lle a g u e s have b een
v e ry h e lp f u l and t o l e r a n t .
S p e c ia l g r a t i t u d e i s due to D octor C. R. H arsto n f o r h is guidance
and a s s is ta n c e th ro u g h o u t th e co u rse o f t h i s study*
Acknowledgment i s g iv e n t o C0 B. B ro th e rto n and N. A. Jaco b sen f o r
t h e i r tim e ly c r i t i c i s m s and s u g g e s tio n s w h ile s e rv in g on th e t h e s i s com­
m itte e .
Members o f th e Branch Experim ent S ta tio n s a t Havre and M iles C ity ,
and a ls o farm ers and d e a le r s c o n ta c te d i n r e l a t i o n to t h i s s tu d y , a s s i s t e d
i n g iv in g o f t h e i r tim e and in fo rm a tio n f o r re s e a rc h p u rp o ses 6
9
PART I 0
INTRODUCTION
Ao
S e le c tio n o f th e F ie ld o f I n v e s tig a t io n
Eie im portance o f liv e s to c k m a rk e tin g to consumers and a g r i c u l t u r a l
p ro d u c e rs i s re v e a le d b y s t a t i s t i c s in d ic a tin g t h a t o n e -fo u rth o f th e
consumers food e x p e n d itu re s go f o r m eat; and t h a t a p p ro x im a te ly o n e - th ir d
0-f f a r m e r 's t o t a l cash farm income i n th e U nited S ta te s i s o b ta in e d from
th e s a le o f li v e s t o c k , I /
Of th e co n su m er's m eat d o l l a r a b o u t 60 to 6k
c e n ts goes back to th e p ro d u c e r d u rin g p e rio d s o f h ig h p r ic e s and th e r e ­
m aining 35 to kO c e n ts goes to p ro c e s s o rs and m ark etin g a g e n c ie s , 2/
Of th e I ; 903j OOO5OOO a c r e s o f th e c o n tin e n ta l U n ited S t a t e s 5 a p p ro x i­
m a te ly l ; 0lt2; 000;000 a c re s were c l a s s i f i e d a s p a s tu r e and g ra z in g la n d s
i n 1930o 3 /
I n a d d itio n ; a c o n s id e ra b le p a r t o f th e 359,000,000. a c re s o f
h a rv e s te d cro p la n d was devoted t o th e p ro d u c tio n o f g r a i n , h a y , and o th e r
'I
fe e d s f o r li v e s t o c k . There were e stim a te d 93,676,000 c a t t l e and c a lv e s ,
31 ,6 1 1 ,0 0 0 sheep and lam bs, and 5 ^,6 3 2 ,0 0 0 hogs on farm s i n t h e U nited
S ta te s on Jan u ary I , 1953«
The t o t a l farm v a lu e o f t h i s liv e s to c k as o f
t h a t d a te was e s tim a te d to be # 1 3 ,9 1 6 ,5 9 5 ,0 0 0 , o f which c a t t l e and c a lv e s
acco u n ted f o r $ 1 1 ,9 9 7 ,1 7 3 ,OOO,1: h o g s, $1,[(.16,365,000, and sheep and lam bs,
I / U n ited S ta te s Departm ent, o f A g r ic u ltu r e , Bureau o f A g r ic u ltu r a l Econo­
m ic s, A g r ic u ltu r a l S t a t i s t i c s , 1952,
2 / U n ited S ta te s D epartm ent o f A g r ic u ltu r e , Bureau o f A g r ic u ltu r a l Econo­
m ic s, The L iv esto c k and M eat S i t u a t i o n , J a n u a ry , 1S>50, p , 1 3 ,
3 / N a tio n a l R esources B oard, R eport o f the Land P la n n in g Committee,
W ashington, D, C ,, December, 193U, P a r t I I , p . 109,
;--------------
10
$ # 3 ,0 5 7 ,0 0 0 . I /
The g ro ss farm income o b ta in e d from th e m eat a n im a ls---- c a t t l e , h o g s,
and sh eep — i n th e U nited S ta te s amounted t o $11,818,01*5,000. i n 1951, as
shown i n Table 1«
The g ro ss farm income in c lu d e s th e cash income o b ta in e d
from th e s a le o f m eat anim als and m eat and th e e stim a te d v alu e o f th e m eat
consumed on th e farm*
The g ro ss farm income o b ta in e d from c a t t l e and
c a lv e s was g r e a t e r th a n t h a t o b ta in e d from ho g s; th e income o b ta in e d from
sheep and lambs was much le s s im p o rtan t* From th e above in fo rm a tio n th e
"
im portance o f th e liv e s to c k i n d u s tr y can r e a d ily be o b se rv e d , and c a t t l e
•
occupy th e o u ts ta n d in g p o s itio n i n t h i s f ie ld *
The im portance o f th e liv e s to c k in d u s tr y i n Montana i s i l l u s t r a t e d
b y th e f a c t t h a t a p p ro x im a te ly %2% o f farm cash r e c e ip ts a re d e riv e d from
liv e s to c k i n t h i s s t a t e .
The s t a t e ' s p ro d u c tio n i n 1952 i n l i v e w eight
was 62l* m illi o n pounds o f c a t t l e and c a lv e s , 81* m illi o n pounds o f sheep
and lam bs, and a l i t t l e o v e r 63 m illi o n pounds o f h o g s. 2/
Comsumers a re i n t e r e s t e d i n o b ta in in g m eat a t d e c re a se d c o s ts and
im proved q u a l i t y i f p o s s ib le i n o rd e r t h a t t h e i r food d o l l a r w i l l go
f a r t h e r and th e y can re c e iv e g r e a t e r b e n e f i t s through in c re a s e d q u a lity *
P ro d u cers a re e v e r a n x io u s t o tr im th e m a rk e tin g sh are o f th e consumers
food d o l l a r to a minimum i n o rd e r t h a t th e p ro d u c e rs can g e t a maximum
p o r tio n o f t h i s income f o r t h e i r own b e n e f i t s .
I / U nited
m ic s, Crop
Jan u a ry I ,
2 / U nited
m ic s, Farm
S ta te s D epartm ent o f A g r ic u ltu r e , B ureau o f A g r ic u ltu r a l Econo­
R e p o rtin g B oard, L iv e sto c k and P o u ltr y on Farms and R anches,
1953*
' '
: "—“- ■
S ta te s D epartm ent o f A g r ic u ltu r e , Bureau o f A g r ic u ltu r a l' Econo­
P ro d u c tio n , D is p o s itio n and Income, W ashington, D .C ., A p r il, 1953*
11
Table I .
Cash and G ross Farm Income O btained from Meat Animals i n th e
U nited S t a t e s , 1950 and 1951 ( i n thousands o f d o l l a r s ) .
CASH
INCOME
CLASS
D a ttle &
C alves
logs
Jheep &
Lambs
Dotal
HOME
CONSUMPTION
GROSS
INCOME
1950
1951
*5,677,3W i
$6,937,11*5
$95,225
$117,870
3 , 1 8 k ,070
3,903,718
355,382
386,81*1*
3,539,1*52
I*, 290,562
386,207
1*67,355
1 ,5 9 8
5,113
390,805
1*72,1*68
9,21*7,621
11,308,218
1*55,205
509,827
1950
1951
1950
1951
$ 5,772,569 $7,055,015
9 ,7 0 2 ,8 2 6 11,818,01*5
S o u r c e : U n i t e d S ta te s D epartm ent o f A g r ic u ltu r e , A g r ic u ltu r a l S t a t i s t i c s /
1952.
The im portance o f th e liv e s to c k in d u s tr y to th e p ro d u c e r and consum er,
as w e ll as th e p a r t i c u l a r im portan ce o f th e c a t t l e i n d u s tr y i n Montana has
le d to th e u n d e rta k in g o f th e i n v e s t ig a ti o n as i t i s e x p la in e d i n th e f o l ­
low ing s e c tio n s .
V
B. The Problem
There i s a la r g e m a rk e tin g c o s t in th e liv e s to c k in d u s tr y , which i s
p a r t i a l l y due to th e d is ta n c e ly in g betw een th e m ajor p ro d u c tio n a re a s and
th e m ajor consum ption a r e a s .
Over f o r t y p e rc e n t o f a l l b e e f c a t t l e i n the
U nited S ta te s a re lo c a te d w est o f th e 10 0 th m e rid ia n .
T h irty y e a rs ago
tw o -th ird s o f th e c a t t l e sh ip p ed from th e W estern g ra z in g a re a s each y e ar
were s o ld f o r im m ediate s la u g h t e r , and th e rem aining o n e - th ir d were sh ip p ed
12
i n t o th e c o rn b e l t and o th e r s t a t e s to be f a tte n e d . I /
A t th e p r e s e n t
tim e p ro b a b ly a l a r g e r p ro p o r tio n o f th e w e ste rn anim als a re p la c e d i n fe e d
l o t s f o r in c re a s e d f i n i s h .
I n c o n t r a s t to th e lo c a t io n o f th e p ro d u c tio n a re a s we f in d th e con­
sum ption a re a s i n th e e a s te r n p a r t o f th e n a tio n .
About 80% o f th e p o p u la­
t i o n r e s id e s e a s t o f th e M is s is s ip p i , w h ile a b o u t $0 p e r c e n t l i v e i n th e
s ix te e n s t a t e s e a s t o f th e M is s is s ip p i and n o rth o f th e Ohio and Potomac
E iv e rs and s l i g h t l y l e s s th a n t h i r t y p e r c e n t i n the f i f t e e n s t a t e s from
M innesota so u th th ro u g h L o u isia n a and s o u th o f the Ohio and Potomac E lv e rs .
Due t o th e lo c a t io n o f th e consum ers, and th e r e l a t i v e c o s t o f s h ip ­
p in g l i v e anim als v e rsu s r e f r i g e r a t e d m eat i n th e p a s t , m ost o f th e
s la u g h te r houses and p a ck in g p la n ts have b een e s ta b lis h e d i n th e E a s t, or
i n la r g e m id -w e stern c i t i e s a lo n g m ain w a te r w ays.
P r in c i p le item s o f m a rk e tin g c o s ts in c lu d e s
( I ) tr a n s p o r t a t i o n , (2)
y a rd a g e , (.3) fe e d , (U) d e a th s , (5) c r i p p l i n g , (6 ) s e l l i n g a n d /o r b u y in g ,
(7) in s u ra n c e and (8) s h rin k a g e .
S h rin k ag e o f c a t t l e w i l l be th e c e n te r o f i n v e s t i g a t i o n i n th e f o l ­
low ing a n a l y s i s .
This has been chosen b e ca u se th e in fo rm a tio n a v a ila b le
to th e p u b lic i s n o t a d e q u a te , and th e r e has been v ery l i t t l e p re v io u s
work done w ith th e sh rin k a g e prob lem .
Shrinkage i n t h i s s tu d y has r e fe re n c e to th e lo s s i n w eig h t which
o c cu rs betw een th e p o in t o f o r ig in (lo a d in g p o in t) and th e d e s t i n a t i o n o f
-
__________________________________________________________________________ \
___________
'
____
I / W ilcox, E .H ., 'Je n n in g s, R .D .,. C o l l i e r , G.¥ » , B lack , W .H ., McComas, E.W .,
C o sts and Methods o f F a tte n in g B eef C a t tle i n th e Corn B e lt, 1919-1923,
U.S.D .A . T e c h n ic a l B u l l e t i n 235 December, 1927, p . 2.
13
th e a n im a ls, o r th e d if f e r e n c e i n w eig h ts betw een two tim e p e rio d s
w h eth er s h ip p in g ta k e s p la c e o r n o t.
This lo s s i n w eig h t may be due to
e x c r e to r y s h rin k a g e o r t i s s u e shrinkage®
“E x c re to ry sh rin k a g e i s d e fin e d a s' th e lo s s i n w eight r e s u l t ­
in g from th e e lim in a tio n o f e x c r e ta , which i s u s u a lly r e f e r r e d to
a s th e e lin im a tio n o f “f i l l " *
The d e c re a se i n th e d re s s e d body
.weight o f th e anim al i s th e r e s u l t o f t i s s u e shrinkage® An am'mal
t h a t h a s-b e e n fe d and w atered s h o r t l y b e fo re i t i s s o ld i s r e f e r r e d
to i n th e tr a d e as h av in g b een “f i l l e d " , th e d eg ree o f " f i l l " b ein g
dependent upon th e amount o f fe e d and w a te r t h a t t h e an im al r e t a i n s
when weighed® Hheh m ost o f th e i n t e s t i n a l and b la d d e r c o n te n ts
have been e x c r e te d , th e a n im a l i s r e f e r r e d t o as h av in g had th e
f i l l " e lim in a te d " , o r th e anim al i s !'shrunk out"®
D re ssin g y i e l d , a s d eterm in ed by th e p a c k e rs , r e p r e s e n ts th e
p e rc e n ta g e t h a t th e w e ig h t o f th e d re s s e d c a r c a s s o f th e sla u g h ­
t e r e d a n im al i s o f t h e l i v e w e ig h t a t th e tim e th e an im al i s p u r­
chased® F or exam ple, i f a s t e e r w eighing 1 ,000 pounds a l i v e p ro ­
duces a c a r c a s s w eighing 550 p ounds, th e d r e s s in g p e rc e n ta g e o r
y ie ld i s f i f t y - f i v e percent®
The e x t e n t , th e r e f o r e , t o which an anim al i s f i l l e d when i t
i s p u rch ased a f f e c t s i t s d r e s s in g yield® An an im al w ith heavy
f i l l y ie ld s a s m a lle r p e rc e n ta g e o f c a r c a s s th a n one p u rch ased
w ith o u t f ill®
The amount o f f i l l w i l l a f f e c t th e I iv d w eight o f
th e a n im a l, b u t i t w i l l n o t a f f e c t th e c a rc a s s w e ig h t, and i t "is
th e c a rc a s s w e ig h t t h a t th e p a c k e r e s tim a te s when he buys l i v e ­
s to c k , Loss i n w eight r e s u l t i n g from t i s s u e s h rin k a g e , on th e
o th e r hand, c o n s t i t u t e s an a c tu a l r e d u c tio n i n th e c a r c a s s weight®" I /
A lthough b o th o f th e s e ty p e s o f sh rin k a g e c o n s itu te a lo s s i n w e ig h t,
th e e x c r e to r y sh rin k a g e can be re p la c e d r a t h e r soon w hereas th e tis s u e
s h rin k a g e ta k e s a lo n g e r p e rio d o f tim e t o r e p la c e , b ecau se th e fe e d m ust
be c o n v e rte d i n t o an im al tissu e ®
These two ty p e s o f sh rin k a g e p ro b a b ly do n o t o ccu r as two d i s t i n c t
I / D ow ell, A.A® and B jo rk a , K®, L iv e sto c k M ark etin g , McGraw-Hill Book
Company In c .,, London and New York, 19L1, p p , 2U0-U1®
Iii
p h a se s i n th e sh rin k a g e p r o c e s s .
The s h rin k a g e due t o lo s s o f stomach
f i l l s t i l l may be ta k in g p la c e when th e s h rin k a g e due to l o s s o f tis s u e
w eig h t i s b e g in n in g .
T h e re fo re , a t one s ta g e i n th e p r o c e s s , th e r e may be
a r a th e r heavy amount o f t o t a l sh rin k a g e s in c e b o th ty p e s a re p o s s ib ly
o c c u rrin g a t o n c e.
The two ty p e s shade i n t o one a n o th e r, b u t on each ex ­
trem e o n ly one ty p e o f s h rin k a g e o c c u r s .
m ent o n ly e x c r e to r y sh rin k a g e o c c u rs .
I n th e e a r l y p a r t o f th e s h ip ­
A t a c e r t a i n u n d e fin e d s ta g e i n
t h e shipm ent b o th e x c r e to r y and t i s s u e sh rin k a g e o c c u rs .
D uring the l a t ­
t e r p a r t o f th e shipm ent o n ly t i s s u e s h rin k a g e o ccu rs a f t e r a l l o f the
s to m a c h .f i ll i s l o s t .
In fo rm a tio n on th e amount o f sh rin k a g e expense as r e l a t e d t o th e
t o t a l c o s t o f m a rk e tin g l iv e s to c k i s in a d e q u a te , b u t th e r e a re some d a ta
a v a il a b le on sh rin k a g e as a p r o p o r tio n o f t o t a l sh ip p in g c o s t s .
N erv ick ,
i n h is s tu d y o f m a rk e tin g South Dakota c a t t l e , found t h a t sh rin k a g e i s
v e ry im p o rta n t r e l a t i v e to o th e r m a rk e tin g c o s t s .
I t was found i n h is
case s tu d y t h a t sh rin k a g e was re s p o n s ib le f o r th e g r e a te s t p a r t o f ex­
penses in c u r r e d when sh ip p in g y e a r lin g s t e e r s .
S hrink age on th e s e c a s e s v a rie d from 6 .8 p e rc e n t f o r a shipm ent o f
c a lv e s which covered a d is ta n c e o f
m ile s to 12.2 p e rc e n t f o r a s h ip ­
ment o f y e a r lin g s t e e r s which co v ered ab o u t 750 m ile s .
These f ig u r e s
a re somewhat m is le a d in g b ecau se th e s to c k i n a l l c ase s had b een o f f fe e d
and w a te r b e fo re w eighing a t o r i g i n .
Thus a c o n s id e ra b le s h rin k a g e had
a lr e a d y o c c u rre d b e fo re th e f i r s t w eig h ts were ta k e n .
Assuming a g iv en
p r ic e l e v e l , s h rin k a g e s t i l l rem ains th e m ost im p o rta n t elem ent i n t o t a l
s h ip p in g c o s t s .
I n th e s e cases- i t v a rie d from 69 to 80 p e r c e n t o f th e
'
t o t a l tr a n s p o r t a t i o n c o s ts *
I t is ,, th e r e f o r e , o f g r e a t im p o rtan ce to
l iv e s to c k s h ip p e rs t h a t s e r io u s e f f o r t s a re made to red u ce such l o s s e s .
(See Table I I ) .
P eople (p ro d u ce rs o f liv e s to c k and consumers o f m eat) do n o t r e a l i z e
th e im portance o f s h rin k a g e , n e ith e r do th ey know what f a c t o r s a re r e s ­
p o n s ib le f o r s h rin k a g e , n o r what f a c t o r s can , and s h o u ld , b e c o n tr o lle d
t o reduce s h rin k a g e .
. S hrinkage i s one o f th e m ajo r f a c t o r s t h a t th e liv e s to c k d e a le r s and
b u y e rs c o n s id e r when p u rc h a sin g a n im a ls.
The r e tu r n s t o the p ro d u c e r p e r
an im al a re d e term in e d by th e p r ic e o f th e anim al p e r pound tim e s th e
w eight i n pounds o f th e a n im a l.
b o th p r i c e and s iz e o f a n im a l.
S h rin k ag e i s a p a r t i a l d e te rm in a n t o f
I f th e an im al has b e en "shrunk o u t" th e re
may be a h ig h e r p r i c e p e r pound o f f e r e d . • I f th e a n im al has n o t been
shrunk o u t th e r e w i l l be more pounds o f b e e f t o o f f e r f o r s a l e .
The b u y er
w i l l t r y t o e s tim a te each c ase in to an e q u a l i t y o f f i n a l t o t a l paym ent.
This a b i l i t y o f th e b u y e r t o make c o r r e c t e s tim a te s d e term in e s i n p a r t
w h e th er o r n o t he w i l l make any n e t r e t u r n on h is b u s in e s s . , This v a r ia ­
t i o n i n s h rin k a g e th e n , i s r e a liz e d b y th e d e a le r s t o be one o f th e m ost
im p o rta n t f a c t o r s t o be c o n s id e re d .
T h e re fo re , s h rin k a g e becomes a b a r ­
g a in in g p o in t a lo n g w ith p r ic e f o r d e te rm in in g what is t o be p a id f o r th e
a n im a ls .
S ince i t i s th e b u y e rs p r o f e s s io n to d e a l i n liv e s to c k he w i l l
te n d to become v e ry p r a c t i c a l a t f ig u r in g sh rin k a g e p e rc e n ta g e s , and i t
may be t o th e p r o d u c e r 's d e trim e n t i f he does not r e a l i z e th e im portance
o f s h rin k a g e .
I n a d d itio n th e b u y e r may la c k c o m p e titio n i n c e r t a i n
m a rk e ts, o r i f c o m p e titio n f o r p u rc h a se s i s h ig h i t may be b ia s e d tow ards
16
Table I I .
C o st o f T ra n s p o rta tio n f o r Y e a rlin g S t e e r s , K ilg o re , N ebraska,
to M ontece l l o , Iow a. B asis Loading W eights, 19^9.
Average F r e ig h t
Feed
p r ic e
ra te
c o s ts
p e r cw t. p e r cw t. p e r cw t.
$21.63
$ .381
$.026
P e rc e n t
Shrinkage
C o st o f
sh rin k a g e
p e r cw t.
8 .7
$1,883
T o ta l s h ip ­ Shrinkage
p in g c o s ts as % o f
p e r cw t.
t o t a l s h ip ­
p in g c o s ts
$2.1+9
73.6
S o u r c e : M a r k e t i n g South Dakota F eed er C a t t l e , A g r ic u ltu r a l Experim ent
S t a tio n , B ro o k in g s, South D akota, B u l le tin U09, May, 191?I , p . 13.
th e norm al s h r in k , r a t h e r th a n tow ards an e q u a li ty o f payment th ro u g h o u t
th e s h rin k ra n g e .
These f a c t o r s a l l se rv e a s b a rg a in in g p o in ts f o r p u r­
chase o f the a n im a ls .
There a re numerous f a c to r s which have been assumed i n th e p a s t to be
re s p o n s ib le f o r s h rin k a g e .
Some o f th o se which have been assumed to i n ­
flu e n c e th e w eig h ts o f th e anim als a r e :
le n g th o f jo u rn e y , d eg ree o f
com fort en r o u te , sea so n o f th e y e a r (te m p e ra tu re ), type o f tr a n s p o r ta ­
t i o n , number o f anim als i n c a r , age o f a n im al, c la s s o f a n im a l, b reed o f
a n im a l, s e x , s i z e , pro g en y , fe e d b e f o r e —d u rin g —and a f t e r shipm ent,
w a ter a v a i l a b i l i t y and f r e s h n e s s , number o f fe e d and r e s t s to p s , number
o f hours a t fe e d and r e s t s to p s , and h a n d lin g b e f o r e —d u rin g — and a f t e r
sh ip m en t.
From t h i s l i s t i t may be seen t h a t r e l a t i v e l y l i t t l e is
a c t u a l l y known a b o u t which a re th e more im p o rtan t f a c to r s i n d e te rm in in g
s h rin k a g e .
The s iz e o f th e l i s t i l l u s t r a t e s t h a t sh rin k a g e may be due to
a la r g e v a r i e t y o f f a c t o r s .
P r io r to c o n tr o llin g a t random any one o r
even a few o f th e s e f a c t o r s , i t would be w ise t o d eterm in e th e r e l a t i v e
17
im portance o f each and th e n em phasize th e c o n t i o l ’o f th e m ost im p o rtan t*
Under p r e s e n t c o n d itio n s i t i s e n t i r e l y p o s s ib le t h a t w e ste rn s e l l e r s
a re fo rc e d t o a c c e p t an u n n e c e s s a r ily h ig h p r ic e d is c o u n t b y b uyers to
c o v er a n t i c i p a t e d h eav y s h rin k a g e and o th e r lo s s e s when p o s s ib ly such d i s ­
co u n ts a re u n w arran ted e
I t i s a ls o b e lie v e d t h a t c e r t a i n segments o f th e
tr a d e (n o t in c lu d in g liv e s to c k p ro d u c e rs) have a v a ila b le c e r t a i n f a c t u a l
in fo rm a tio n on sh rin k ag e, which i s n o t a t th e d is p o s a l o f grow ers g e n e r a lly .
Banchers and farm ers a re a t a c o m p e titiv e d is a d v a n ta g e Tdien th e y buy
and s e l l s to c k , becau se th e y la c k a d eq u a te in fo rm a tio n on s h rin k a g e .
More
in fo rm a tio n i s a v a ila b le t o th e o th e r segm ents o f th e liv e s to c k tr a d e .
I f th e p e o p le o th e r th a n th e p ro d u c e r have knowledge ab o u t amounts o f
s h rin k a g e , v a r i a t i o n s i n sh rin k a g e and e f f e c t s o f sh rin k a g e on p r o f i t s ,
th e n th e y w i l l have th e advantag e o v e r th e p ro d u c e r who does not have
t h i s s p e c if ic knowledge o f s h rin k a g e .
The p ro d u c e r th e r e f o r e w i l l b ase
h is m arket p o s i t i o n ( p r ic e asked) bn l e s s d e f i n i t e grounds th a n does th e
c o m p e titio n .
The dynamic n a tu r e o f th e w e ste rn l i v e s to c k and m eat in d u s tr y in c lu d ­
in g th e p ro d u c tio n and m a rk e tin g , as w e ll as th e demand f o r th e s e p ro ­
d u c ts , p r e s e n t some r e a l problem s i n th e a re a o f e f f i c i e n t use and econo­
mic a l l o c a t i o n o f w e ste rn r e s o u r c e s .
B ecause o f th e r a p id changes which
have o c c u rre d i t i s e n t i r e l y p o s s ib le t h a t th e movements and methods o f
h a n d lin g l i v e an im als a re n o t i n acco rd w ith th e m ost e f f i c i e n t p a tte r n s
l iv e s to c k s a le s d i s t r i b u t i o n .
I t i s a ls o l i k e l y t h a t th ro u g h custom ,
e s ta b lis h e d in d u s tr y p r a c tic e s ' o r because o f o th e r r i g i d i t i e s i n th e
t r a d e , p r e s e n t methods o f h a n d lin g and moving liv e s to c k to m arket a re n o t
18
i n acco rd -with th e b e s t o r th e m ost e f f i c i e n t m a rk e tin g p ro c e d u re s e
Co
H ypotheses
The fo llo w in g s ta te m e n ts a re p o s s ib le s o lu tio n s t o th e sh rin k a g e
problem which m ust be p u t to th e t e s t o f ex p erien ce*
They go beyond th e
g iv e n arrangem ent to a p o s s ib le i n t e r p r e t a t i o n of t h e p a tte r n in g o f
r e l e v a n t f a c ts *
These p o s s i b i l i t i e s a re p r o je c te d p r o v is io n a lly , w ith a
d e f in ite - view t o u ltim a te c o n firm a tio n or r e j e c t i o n a f t e r te s tin g *
These
p o s s i b i l i t i e s w i l l be t e s t e d b y th e u se o f e m p iric a l ev id en ce and th e o r e ­
t i c a l to o ls *
H y p o th e tic a l S ta te m e n ts I*
There i s a lo s s t o s o c ie ty as a whole due to ti s s u e shrinkage*
E x c re to ry sh rin k a g e may r e s u l t i n no s o c i a l lo s s b u t a t r a n s f e r
o f income from one in d iv id u a l to a n o th e r depending upon th e
knowledge and b a rg a in in g a b i l i t y o f th e p a r t i e s co n n ected w ith
th e tr a d i n g o f anim als*
2«
Many f a c to r s a re re s p o n s ib le f o r sh rin k ag e*
3*
Som ething can be done t o red u ce s h rin k a g e , and to keep a l l
p a r t i e s inform ed r e l a t i v e to th e e x te n t o f sh rin k a g e t h a t does
occur*
• ho
There i s an e x c e s siv e sh rin k a g e o f c a t t l e i n t r a n s i t and a
re d u c tio n i n t h i s sh rin k a g e can be econom ical*
R etu rn s o b ta in e d
from a d d itio n a l w eig h t w i l l be g r e a t e r th an th e c o s ts in c u rre d
i n o b ta in in g t h i s a d d itio n a l w eight*
19
Do
O b je c tiv e s o f th e I n v e s tig a t io n
Io
To d e term in e th e amount and im p o rtan ce o f s h rin k a g e o f v a rio u s
2,
c la s s e s o f c a t t l e ,
.
'
e
To f in d o u t Tdiat f a c t o r s a re re s p o n s ib le f o r sh rin k a g e and to
d e term in e th e r e l a t i v e im p o rtan ce o r s ig n if ic a n c e o f a s e le c te d
few o f th e s e f a c t o r s ,
3«
To s e t f o r t h economic c r i t e r i a which m ight r e v e a l th e e x te n t to
which th e s e f a c t o r s can be c o n tr o lle d i n o rd e r to red u ce s h r in k ­
age,
li.
To s e t f o r t h economic c r i t e r i a b y which th e e x te n t o f s o c ia l lo s s
due t o sh rin k a g e m ight be t e s t e d ,
5*
To e s tim a te th e economic f e a s i b i l i t y o f re d u c in g an im al sh rin k a g e
and s u g g e s t a c ti o n t h a t would b r in g ab o u t economic optimum c o n d i­
tio n s ,
E,
B oundaries and l i m i t a t i o n s
B iis s tu d y w i l l d e a l o n ly w ith th e s h rin k a g e p a r t o f th e m a rk e tin g
c o s ts o f b e e f c a t t l e .
I t w i l l n o t in c lu d e any a n a ly s is o f o th e r m ark etin g
c o s ts a s such b u t i t may u se some o f th e s e c o s ts i n o rd e r t h a t th e e x te n t
•and im portance o f s h rin k a g e c o s ts can be i l l u s t r a t e d .
This s tu d y w i l l not d e a l w ith liv e s to c k o th e r th a n c a t t l e , and i t w i l l
n o t in c lu d e any in fo rm a tio n on s to c k which a r e n o t o f a b e e f b re e d .
The scope o f t h i s s tu d y w i l l in c lu d e o n ly s to c k produced o r handled
i n M ontana,
Due to th e la c k o f h i s t o r i c a l re c o rd s on s h rin k a g e , tim e
l i m i t a t i o n s m ust be re c o g n iz e d .
Most o f th e s t a t i s t i c a l in fo rm a tio n used
20
i s o b ta in e d on th e s a le o f b e e f s t e e r s from th e Branch Experim ent S ta tio n s
a t Havre and M iles C ity , M ontana, b u t a ls o in c lu d e d w i l l be o th e r d a ta to
supplem ent t h i s when i t i s n e c e s s a ry t o i l l u s t r a t e im p o rta n t p ro b lem s0
I n th e e m p iric a l a n a ly s is an i n v e s t i g a t i o n o f a l l o f th e f a c to r s
b e lie v e d to in flu e n c e sh rin k a g e w i l l n o t be made; b u t th e a n a ly s is w i l l
c e n te r upon th o s e f a c t o r s which a re b e lie v e d to in flu e n c e s h rin k a g e th e
m ost o r th o s e f a c t o r s a b o u t which th e l e a s t i s known0
R esearch r e s u l t s w i l l be p re s e n te d i n a manner u n b ia se d to w ard s any
p a r t i c u l a r segment o f th e liv e s to c k i n d u s tr y .
The d e t a i l s o f th e s i t u a ­
t i o n as th e y e x i s t w i l l be p re s e n te d as c o m p le te ly as th e l i m i t s o f th e
r e s e a r c h w i l l p e rm ite
Fe
Review o f L i te r a tu r e
Bie s h rin k a g e problem h as n o t re c e iv e d g r e a t a t t e n t i o n , p ro b a b ly due
to th e d i f f i c u l t y o f o b ta in in g a c c u ra te d a ta from th e s h ip p e rs*
I t is
*1 ;
o f te n im p r a c tic a b le to o b ta in lo a d in g w eig h ts n e c e s sa ry f o r sh rin k a g e c a l -
'
c u l a t i o n s , p a r t i c u l a r l y f o r g ra s s f a t and fe e d e r an im als sh ip p ed from
summer ra n g e s .
O fte n th e r e a re no liv e s to c k s c a le s a v a il a b le a t s h ip p in g
s t a t i o n s i n such a r e a s .
I n a d d itio n , many shipm ents a re t r a i l e d s e v e r a l
m ile s o v er a p e rio d o f a day o r days t o re a c h th e lo a d in g p o in t, and few
ra n c h es have s c a le s a t th e o r i g i n a l s t a r t i n g p o in t.
i
W ithout s c a le s i t i s
im p o ssib le t o d e term in e t h i s f i r s t sh rin k a g e which h a s , i n a few c a s e s ,
been p ro v en g r e a t e r th a n sh rin k a g e s i n subsequent p e r io d s .
I
i
Some s h ip p e rs
a re r e l u c t a n t to expend tim e and e f f o r t n e c e s s a ry t o w eigh and keep r e -
j
co rd s o f shipm ents even i f i t were p o s s ib le , becau se th e y f ig u r e th e lo s s
j;
■
I
21
i s u n a v o id a b le , and t h a t a re c o rd o f sh rin k a g e would be v a lu e l e s s e
A v a ila b le r e p o r ts on sh rin k a g e s tu d ie s a re v e ry lim it e d b u t a b r i e f
re v ie w o f th o s e a v a ila b le w i l l le n d c l a r i t y to th e problem s a s s o c ia te d
w ith a s tu d y o f sh rinkage*
¥• Fe Ward and James E* Downing made one of th e m ost com plete s tu d ie s
o f c a t t l e s h rin k a g e t h a t has been made i n th e l a s t £0 y e ars* I /
s tu d y was d iv id e d i n t o th re e m ain p a r ts ?
T heir
( I ) S o u th w estern S hrinkage "Work
o f 1910-11, (2) N orthw estern S hrin k ag e Work o f 1911-12, ( 3 ) N orthw estern
and S o u th w estern S hrinkage Work o f 1911.
The c a t t l e used i n making t h i s
i n v e s t i g a t i o n were r a is e d i n d i f f e r e n t p a r t s o f th e Tfest*
The ran g e c a t t l e
work was c a r r ie d on i n th e v a rio u s W estern S ta te s from Texas to M ontana,
and th e work w ith th e fe d c a t t l e was c o n fin e d c h ie f ly to th e S ta te s o f
th e M iddle West*
No i n t e n t i o n a l d is c r im in a tio n was made a g a in s t any s e c ­
t i o n b u t th e work was done where th e c o n d itio n s were m ost fa v o ra b le f o r i t *
Bie o b je c tiv e s o f th e work o f Ward and Downing may be b r i e f l y s t a t e d
a s fo llo w s t
( I ) To s e c u re w eig h ts o f enough c a t t l e o f each c la s s i n o rd e r
th a t com parisons c o u ld be made o f th e s h rin k a g e o f one c l a s s o f c a t t l e w ith
a n o th e r f o r a g iv e n p e rio d o f tim e*
(2 ) To d e te rm in e , i f p o s s ib le , a t w hat
p e rio d o f th e jo u rn e y th e g r e a t e s t sh rin k a g e occurred*
( 3 ) To s tu d y what
e f f e c t s th e d i f f e r e n t m ethods o f h a n d lin g th e c a t t l e p re v io u s to lo a d in g
them had upon th e sh rin k a g e i n t r a n s i t .
(U) To n o te th e e f f e c t of th e
w e a th e r a t tim e o f sh ip p in g upon th e sh rin k a g e i n t r a n s i t and th e f i l l
I / Ward, "W.F. and Downing, James E ., U nited S ta te s D epartm ent o f A g ric u l­
t u r e , B ureau o f Animal In d u s tr y , The S h rin k ag e i n W eight o f B eef C a ttle i n
T r a n s i t , (December, 1 9 1 3 ), p . 71«
:-------
22
ta k e n a t m a rk e t.
(5>) To d eterm in e th e r e l a t i v e b e n e f i t 5 i f any, o f a good5
q u ic k run. t o m ark et as compared to a slow , rough t r i p w ith c a r e le s s han­
d lin g o f th e t r a i n .
(6 ) To see w h eth er o r not fe e d in g ard w a te rin g th e
c a t t l e a s h o r t time b e fo re lo a d in g them was b e n e f i c i a l .
( 7 ) To n o te th e
d if f e r e n c e i n s h ip p in g c a t t l e lon g d is ta n c e s i n "feed and w a te r" c a rs w ith ­
o u t u n lo a d in g them , as a g a in s t th e method o f u n lo a d in g i n t r a n s i t to f e e d ,
w a te r, and a llo w th e s to c k t o r e s t .
( 8) To s tu d y th e sh rin k a g e o f c a t t l e
t h a t have been f in i s h e d f o r th e m ark et upon v a rio u s f e e d s t u f f s .
n o te what in flu e n c e th e se a so n w i l l e x e r t upon th e s h rin k a g e .
( 9 ) To
(10) To
o b ta in r e l i a b l e d a ta t h a t may be used a s a b a s is upon which th e c a ttle m a n
can c a lc u la te th e approxim ate s h rin k a g e i n w e ig h t o f h i s c a t t l e i n s h ip p in g .
The w eig h ts o f th e an im als were ta k e n a t th e p o in t o f lo a d in g , oh
a r r i v a l a t t h e i r d e s t i n a t i o n , and a g a in a f t e r h av in g b een g iv e n r e s t , f e e d ,
and w a te r.
s o ld .
The l a s t w eight was th e w eight secu red ,when th e a n im a ls were
C o n d itio n s su rro u n d in g th e c a t t l e p re v io u s to shipm ent, en ro u te ,
and a t d e s t i n a t i o n , were re c o rd e d .
Any o th e r item s o f im portance were
a ls o noted..
The t h r e e y e a r s ' work may be b r i e f l y summarized as f o llo w s t
(I)
upons
The sh rin k a g e o f c a t t l e i n t r a n s i t depends v ery m a te r ia lly
(a) th e c o n d itio n s e x is t in g a t th e -time o f s h ip p in g and upon th e
tr e a tm e n t re c e iv e d d u rin g th e d riv e t o th e lo a d in g p e n s, (b ) th e le n g th
o f tim e th e c a t t l e were h e ld w ith o u t fe e d and w a te r b e fo re b e in g lo a d e d , •
(c ) th e n a tu re o f th e f i l l which th e c a t t l e had b e fo re lo a d in g .
I f i t was
o f s u c c u le n t g r a s s , b e e t p u lp , o r s i l a g e , a g r e a t lo s s i n w e ig h t was
ex p erien c e d , (d ) th e w e a th e r c o n d itio n s a t th e tim e o f lo a d in g and w h ile
23
in tra n s it*
f s ) th e c h a r a c te r o f th e ru n t o m arket*
Slow* rough ru n s
caused a g r e a t s h rin k a g e , ( f ) th e k in d o f tre a tm e n t th e y re c e iv e d a t un­
lo a d in g s ta tio n s * (g) th e tim e o f a r r i v a l a t m arket* i f th e y a r r iv e d j u s t
b e fo re b e in g sold* t h e f i l l was sm all*
C a ttle t h a t were sh ip p ed a lo n g
d is ta n c e and th o s e t h a t a r r iv e d a t m arket d u rin g th e n ig h t b e fo re s a le
u s u a lly d id n o t f i l l w e l l .
I f th e y a r r iv e d th e a fte rn o o n b e fo re or about
d a y lig h t o f th e s a le d a y , th e y g e n e r a lly to o k a good f i l l *
(h) th e c lim atic
c o n d itio n s a t th e m a rk e t.
(2)
An e x c e e d in g ly la r g e f i l l a t m arket i s not d e sire d * a s i t w i l l
d e t r a c t from th e s e l l i n g p r i c e .
(3)
s
The sh rin k a g e on c a lv e s may seem sm all* b u t u n d e r norm al c o n d i­
tio n s i t h o ld s about th e same p r o p o r tio n t o t h e i r w eig h t as i s found w ith
grown c a t t l e .
(U)
The d if f e r e n c e betw een th e sh rin k a g e o f cows and s t e e r s i s n o t
a s g r e a t as many i n th e t r a d e supposed.
S te e rs w i l l u s u a lly s h rin k some­
w hat l e s s th a n cows o f th e same w e ig h t.
(3 )
The s h rin k a g e d u rin g th e f i r s t 2h h o u rs i s g r e a te r p r o p o r tio n ­
a t e l y th a n f o r any su cceed in g p e rio d o f th e same d u r a tio n .
(6)
The number o f pounds l o s t b y sh rin k a g e i n c a t t l e was found to
v a ry i n d i r e c t p ro p o r tio n t o t h e i r l i v e w eight when c o n d itio n s were th e
same and a l l o th e r f a c t o r s were e q u a l.
(7 )
The sh rin k a g e o f range c a t t l e i n t r a n s i t o v er 70 h o u rs d u rin g
a norm al y e a r i s from 3 t o 6 p e rc e n t o f t h e i r l i v e w e ig h t.
I f th e y are.
i n t r a n s i t 36 h o u rs o r le s s * th e sh rin k a g e w i l l range from 3 t o U p e rc e n t
o f t h e i r l i v e w e ig h t.
2k
(8)
Ihe s h rin k a g e o f fe d c a t t l e does n o t . d i f f e r g r e a tly from t h a t
o f ran g e c a t t l e f o r e q u a l p e rio d s o f time®
(9)
C a t tle fe d on s ila g e have a la r g e g ro ss s h rin k a g e b u t u s u a lly
f i l l so w e ll a t m arket t h a t th e n e t sh rin k a g e i s small®
(10) P u lp fe d c a t t l e s h rin k more i n t r a n s i t th a n any o t h e r c la s s of.
c a t t l e , and a ls o in c u r a g r e a t e r n e t shrinkage®
(11) The s h rin k a g e o f c a t t l e i s p r o p o r tio n a te ly s m a lle r f o r each
a d d i t i o n a l tw elve h o u rs th e y a re i n t r a n s i t a f t e r th e f i r s t 2k h o u r p e rio d
is p a s t,
(12) F o r a lo n g jo u rn e y th e common method o f u n lo a d in g f o r fe e d ,
w a te r, and r e s t i s t o be p r e f e r r e d to th e use o f fe e d and w a te r cars®
C a t tle sh o u ld be w eighed b e fo re b e in g lo ad ed w herever p r a c t i c a b l e , t o
o b ta in n e t shrinkage®
Among o th e r a r t i c l e s a v a ila b le on s m a ll su rv ey s which have been made
r e c e n tly i s a r e p o r t by Jacobsen a n d ’W illso n who conducted a p re lim in a ry
s tu d y o f f e e d e r c a lv e s .
T h e ir s tu d y s u p p lie d good ev id en ce i n re g a rd to
th e e x te n t o f s h rin k t h a t o c cu rs and f a c t o r s in f lu e n c in g sh rin k ag e® ' I /
The purp o se o f t h i s s tu d y was to d e term in e th e c o s t o f s h ip p in g , i n ­
c lu d in g th e amount and c o s t o f sh rin k a g e on a shipm ent o f fe e d e r c a lv e s
from Montana to Ohio®
Aln o b s e rv e r accom panied th e sh ip m en t and n o ted con­
d it i o n s o f d e liv e r y to r a i l r o a d s h ip p in g p o i n t , w eig h in g , lo a d in g , r a i l ­
road h a n d lin g , and fe e d in g en r o u te , d e liv e r y and w eig h in g a t f i n a l
I / Jac o b se n , N .A ., and W ills o n , E .A ., M arketing C osts o f F eed er C alves
Montana to Ohio, Montana E xperim ent S ta tio n , J u ly , 1949, U npublished data®
2f?
d e s t i n a t i o n and 's o r tin g f o r grade a f t e r a r r iv a l*
A ll c o n d itio n s were
n o te d which a r e b e lie v e d ;to c o n tr ib u te to th e sh rin k a g e o f liv e s to c k i n
tra n s it.
In t h i s s tu d y i t was found t h a t sh rin k a g e c o s ts acco u n ted f o r ab o u t
69 o2$> o f t o t a l s h ip p in g c o s ts *
The in fo rm a tio n sec u re d i n th is s tu d y
in d ic a te s th e need f o r f u r t h e r in v e s t i g a t i o n o f c o n tr o lle d shipm ents
h a n d led u n d e r v a ry in g c o n d itio n s .
Abbenhaus arid Penny made a s tu d y , th e p u rp o se o f which was to d e t e r ­
mine how much s h rin k a g e o ccurs i n tr a n s p o r tin g f a t c a t t l e to m arket and
d u rin g w hat p a r t o f th e h a u l th e g r e a t e s t amount o f sh rin k a g e ta k e s
p la c e . I /
I n t h i s s tu d y th e r e were 7!? head o f f a t s t e e r s lo ad ed i n tru c k s
and h a u le d 200 m ile s *
These s t e e r s were w eighed when lo a d e d and a ls o
a f t e r 2£, 5>0 , 100, and 200 m ile s o f th e h a u l.
pounds o f s h rin k p e r h e a d .
S ix ty s t e e r s averaged ijiu3
Average p e rc e n t o f w eight sh rin k a g e was 3*9^*
This, s tu d y shows t h a t sh rin k a g e f o r f a t c a t t l e i n t r a n s i t ta k e s p la c e a t.
an e x tre m e ly ra p id r a t e i n th e f i r s t p a r t o f th e h a u l, k6.3% i n th e f i r s t
1 /8 o f th e t r i p , and a f t e r th e f i r s t 2£ m ile s sh rin k a g e o c cu rs a t a
r a p i d l y d e c re a s in g r a te *
K ervik r e p o r te d t h a t sh rin k a g e o f c a t t l e d u rin g m a rk e tin g re p re s e n te d
7£ o6# o f t o t a l m a rk e tin g c o s t s .
His i n v e s t i g a t i o n was d e sig n e d to o b ta in
in fo rm a tio n -a b o u t th e c h an n e ls o f d i s t r i b u t i o n f o r c a t t l e from range to
f e e d ic ts *
I n tr a n s p o r tin g th e c a t t l e from th e p ro d u c e r to th e m a rk e t, th e
I / Abbenhaus, G erald R ., and Penny, R oland G*, S h rin k C h a r a c te r is tic s o f
F a t C a ttle T ra n sp o rte d b y Truck, Chicago Union S tock Yard and T r a n s it
Company, C hicago, I l l i n o i s , 1951.
26
c o s ts o f tr a n s p o r t a t i o n were o b serv ed .
S in ce sh rin k a g e was found to
r e p r e s e n t ab o u t 3/Ui.of th e s h ip p in g c o s t s , i t was ob serv ed t h a t theg r e a te r th e s h rin k a g e r a t e , th e g r e a t e r were th e t o t a l m a rk e tin g c o s t s . I /
W right com piled re s e a rc h m a te r ia l w hich had been r e le a s e d b y o th e r
p e o p le concerned w ith th e f i e l d o f l i v e s to c k s h rin k a g e . 2 /
s h rin k v a rie d a c c o rd in g to th e a c ti o n o f many f a c t o r s .
He found t h a t
These f a c t o r s w ere;
tim e , c o n d itio n s and methods o f w eighing and computing s h rin k a g e , n a tu re
o f fe e d p re v io u s to sh ip m en t, c o n d itio n o f anim al p re v io u s to sh ip m en t,
tim e en ro u te to m a rk e t, and w e ath e r c o n d itio n s d u rin g jo u rn e y .
o f th e f a c t o r s found i n h i s a n a ly s is , W right recommends t h a t ;
I n view
( I ) s h ip p e rs
sh o u ld know how much s h r in k o c c u rs , ( 2 ) anim als sh o u ld be h a n d led c a r e f u l ly ,
(3 ) tim e en r o u te sh o u ld be d e c re a s e d , and (U) r a i l , c a rs and tru c k s sh o u ld
be w e ll sanded and bedded.
I / W ervick, O tt a r . M arketing South D akota F eed er C a t t l e , B u l l e t i n U09,
A g r ic u ltu r a l E xperim ent S t a t i o n , B ro o k in g s, South D akota, 19^1.
£ / W right, J . S te w a rt, Montana- Sheep and C a ttle S h rin k ag e i n T r a n s it,
Montana Experim ent S t a t i o n , .May, 19k2«
27.
PART I I
EMPIRICAL ANALYSIS
A.
M ethodology
Ihe fo llo w in g s e c tio n i s com prised o f s t a t i s t i c a l d a ta d e sig n e d to
t e s t th e p r o je c te d h y p o th eses and a t t a i n th e o b je c tiv e s o f th e s tu d y as
f u l l y a s p o s s ib le .
D ata a re t e s t e d and a n a ly z e d by s t a t i s t i c a l m easures
as an a id i n th e d e te r m in a tio n o f th e e x te n t to which the h y p o th eses can
be s u b s ta n tia te d o r r e j e c t e d .
The e m p iric a l d a ta a re u sed to m easure th e
e x t e n t ' o f sh rin k a g e t h a t ta k e s p la c e i n c a t t l e o f d i f f e r e n t age and sex
c la s s e s .
The in fo rm a tio n i s a ls o used i n th e d e te rm in a tio n o f f a c to r s
re s p o n s ib le f o r liv e s to c k sh rin k a g e , and t h e i r r e l a t i v e im p o rtan c e .
The
r e l a t i v e im portance o f proposed m ajor f a c t o r s a re m easured b y means o f
c o r r e l a t i o n a n a l y s i s , and th e f u n c tio n a l r e l a t i o n s h i p betw een th e f a c to r s
c a u s in g sh rin k a g e and th e e x te n t o f s h rin k a g e i s i l l u s t r a t e d and d e s c rib e d .
The m ajo r p o r tio n o f th e d a ta u sed i n t h i s s e c tio n i s in fo rm a tio n
com piled from th e re c o rd s o f th e Branch E xperim ent S ta tio n s a t Havre and
M iles C ity , M ontana.
The in fo rm a tio n from Havre i s on s te e rs .w h ic h have had un ifo rm t r e a t ­
ment i n th e p ro d u c tio n and fe e d in g p r o c e s s .
a n im al from b i r t h to th e tim e o f s a l e .
A re c o rd i s k e p t o f each
The an im als a re b o rn e a r l y i n th e
s p rin g o f th e y e a r and ru n w ith t h e i r m others on range g ra s s u n t i l th e
fo llo w in g f a l l , a t which tim e th e y a re weaned and p l a c e d 'i n fe e d l o t s .
They rem ain i n th e fe e d l o t s from th e autumn u n t i l e a r l y i n th e n e x t
s p r in g se a so n when th e y a re sh ip p ed b y r a i l to th e South S t . "Paul C e n tra l
28
M arket and s o ld th ro u g h a com m ission firm ,,
The an im als produced' a t the
M iles C ity s t a t i o n a r e handled a p p ro x im a te ly th e same a s th o se from th e
Havre s t a t i o n .
The m ajor d if f e r e n c e betw een th e two b e in g th e f a c t t h a t
th e M iles C ity s t e e r s a re s o ld l a t e r i n th e y e a r , g e n e r a lly i n J u ly 6
O th e rw ise , th e r e i s no s i g n i f i c a n t d if f e r e n c e i n p ro d u c tio n p ro c e d u re s
betw een th e s e two groups o f c a t t l e .
I
A d d itio n a l in fo rm a tio n has b een o b ta in e d 'fro m p r iv a te p ro d u c e rs and
d e a le r s th ro u g h o u t th e s t a t e o f M ontana.
This in fo rm a tio n was o b ta in e d b y
p e rs o n a l in te rv ie w s w ith ra n c h e rs and d e a le r s who had r e c e n t l y h an d led a
liv e s to c k t r a n s a c t i o n and had th e d a ta re q u ire d a v a ila b le f o r u s e . I /
It
was n e c e s s a ry to o b ta in a d d itio n a l m a te r ia l i n o rd e r t h a t th e e x te n t o f
sh rin k a g e c o u ld be o b serv ed i n an im als o th e r th a n s la u g h te r s t e e r s which
were produced b y th e E xperim ent S t a t i o n s .
T his su p p lem en tary d a ta was ob­
ta in e d on an im als o f d i f f e r e n t ages and s e x e s , as w e ll a s on anim als which
v a rie d g r e a t l y i n d eg ree o f f i n i s h from each o th e r and from th e Havre and
M iles C ity a n im a ls.
The d a ta o b ta in e d w i l l o f a n e c e s s ity have lim ite d u ses b ecau se o f
in c o m p le te n e ss r e l a t i v e to many sh rin k a g e a s p e c ts .
The s t a t i s t i c a l a n a ly s is i s u sed as a b a s is f o r d e te rm in in g f a c to r s
which may be c o n tr o lle d a s a means o f re d u c in g s h rin k a g e .
I n a d d itio n ,
f o r th e s e f a c t o r s re s p o n s ib le f o r s h rin k a g e , i t may be u sed t o d eterm in e
th e e x te n t o f c o n tr o l which i s eco n o m ical, and t o d eterm in e th e optimum
range o r p o in t a t which c o n tr o l sh o u ld be m a in ta in e d .
V
See appendix f o r a copy o f th e sc h e d u le s u sed .
A nother use f o r
29
th e se d a ta i s to d e te rm in e , i f p o s s ib le , w h eth er o r n o t th e r e i s a lo s s to
s o c ie ty i n i t i a t e d th ro u g h e x te n s iv e sh rin k a g e o f c a t t l e ,
Be
E x te n t o f S hrinkage
One o f th e q u e s tio n s which has a r i s e n i n th e p a s t and a ls o i n r e l a t i o n
to t h i s s tu d y , i s how much sh rin k a g e o f d i f f e r e n t c la s s e s o f an im als ta k e s
p la c e d u rin g m a rk e tin g ?
How much sh rin k a g e should a p ro d u c e r e x p e c t when
s h ip p in g a n im als under a v a r i e t y o f c o n d itio n s ?
s h rin k s th e m ost?
sh rin k a g e ?
Hhich c la s s o f anim als
H hat i s th e r e la tio n s h ip betw een age and th e e x te n t o f
How much v a r i a t i o n o f sh rin k a g e i s th e r e w ith in c la s s e s o f
a n im als u n d e r s i m i l a r tr e a tm e n t?
An a tte m p t i s made i n th e fo llo w in g
d iv is io n s to answ er th e s e q u e s tio n s w ith r e s p e c t to c a lv e s , cows, and ■
y e a r lin g s t e e r s and h e i f e r s ,
I,
C alves
C alves a re g e n e r a lly ta k e n from t h e i r m others a t an age o f U t o 7
months and s o ld im m e d ia te ly .
C alves a re e x p ec te d to s h rin k a l i t t l e . m o r e
th a n o th e r an im als b e ca u se o f extrem e n erv o u sn ess o cca sio n ed b y s e p a r a tio n
from t h e i r m o th e rs,
When c a lv e s a re ta k e n from t h e i r m others th e y a re ta k e n o f f t h e i r
m ajo r so u rce o f fe e d .
The fe e d t h a t th e y have been accustom ed to i s no
lo n g e r a v a ila b le -, and an a b ru p t change i s ' n e c e s sa ry i n o rd e r t h a t th e y w i l l
n o t s ta rv e .
Of c o u rs e , t h i s means t h a t th e r e w i l l be a c o n s id e ra b le le n g th
o f tim e b e fo re th e c a lv e s w i l l f i l l up enough on h a y and w a te r to slow
down th e ra p id sh rin k a g e ta k in g p la c e .
Even i f th e y do a d ap t th em selv es
t o th e new fe e d , th e y w i l l n o t e a t a d e q u a te ly t o s to p sh rin k a g e because o f
30
w orry and n e rv o u sn ess due to the lo s s o f t h e i r m o th e r’s com panionship0
High sh rin k a g e i s e s p e c i a l l y n o tic e a b le on c a lv e s which a r e sh ip p ed lo n g
d is ta n c e s e
Heavy sh rin k a g e was q u ite n o tic e a b le i n th e s tu d y made by
• Jacobsen and W illso n i n t h e i r o b s e r v a tio n o f fe e d e r c a lv e s sh ip p ed from
Montana to O hio. I /
The f ig u r e s r e le v a n t to th e sh rin k a g e i n t h i s c ase
a r e shown i n Table I I I .
.
These f ig u r e s in d ic a te t h a t th e sh rin k a g e was r e l a t i v e l y h ig h ^ and
I'
a ls o t h a t h e i f e r c a lv e s i n t h i s case sh ru n k j u s t s l i g h t l y l e s s th a n d id
s t e e r c a lv e s ,
.'fe.ble 17 p r e s e n ts f ig u r e s on c a lv e s which were sh ip p ed by r a i l from
ran g e i n Montana to s e v e r a l d i f f e r e n t m a rk e ts.
These s h rin k a g e f ig u r e s
a re b ased on the d if f e r e n c e betw een th e lo a d in g w eig h ts o f th e c a lv e s and
th e o f f - c a r w eights o f th e c a lv e s .
This would mean t h a t th e c a lv e s had no
tim e f o r r e f i l l b e fo re th e f i n a l w eight was ta k e n .
from 5 .7 $ s h rin k to 1 2 ,6 $ s h rin k a g e .
These c a lv e s ranged
The a v erag e sh rin k a g e was 8 . 8$ o f
lo a d in g w e ig h t.
The c o n d itio n s su rro u n d in g th e s e shipm ents were a p p ro x im a te ly th e
same as th o s e o u tlin e d i n Table V below , w ith th e e x c e p tio n o f th e d i f f e r ­
ence i n th e w eighing c o n d itio n s .
Table IV i s b ased on lo a d in g w eig h t and
° ^ " c a r w eight 3 w h ile Table V i s b ased on lo a d in g w eight and s a le s w e ig h t,
o r w e ig h t a f t e r f i l l - b a c k .
The sh rin k a g e f ig u r e s i n Table V were o b ta in e d on th e d if f e r e n c e b e - tween lo a d in g w eig h t o f t h e c a lv e s and s a le s w eight o f th e c a lv e s .
The
I / Jac o b se n , N .A ., and W ills o n , E .A ., M ark etin g C osts o f F e e d er C alves
Montana to Ohio, Montana E xperim ent S ta tio n , J u ly , 19U9o U npublished d a ta .
31
Table I I I .
S hrinkage o f F e e d er C alves Shipped from Montana to Ohio I /
No. o f an im als
T o ta l s h rin k
P e r head s h rin k
82 s te e r s
li,li25 l b s .
5L.0 l b s .
12.6
1±5 h e if e r s
1 ,9 6 5 l b s .
il3 .6 l b s .
11.2
TOTAL: 12? head
6 ,390 l b s .
5 0 .3 l b s Aver age —^ 11.9
Thble IV .
Shrinkage o f Montana C alves D eterm ined b y t h e D iffe re n c e i n
Loading and O ff-c a r W eights, and T ran sp o rted b y R a il to M arket.
Hours
Number Loading P ercen t
En Route o f head Weight S h rin k
O rig in
D e s tin a tio n
"files C ity
Tos to n
Ross Fork
Ross Fork
Idaho F a l l s , Idaho
R in g lin g
Lewis town
W h ite h all
G re e le y , C olo.
G re e le y , C olo.
Sioux C ity , Iowa
G re e le y , C olo.
G a lla t in Gateway, Mont,
A rlin g to n , W is.
G re e le y , C olo.
G re e le y , C olo.
AVERAGES
S ource:
P e rc e n t s h rin k
96
120
72
Ib b
bQ
108
120
120
200
120
3b
70
500
291
100
151
332
U27
U5
bob
123
33b
b3b
397
5 .7
6 .6
8 .0
8 .3
9 .0
9 .9
10.6
1 2.6
108
163
397
8 .8
D ata g a th e re d i n c o s t o f m a rk e tin g stu d y a t MeSeCej 1952-52 .
s h rin k ranges from ,5% t o 13. 3# f o r th e an im als o bserved i n th e s e sh ip m e n ts.
The av erag e s h rin k a g e was 3 .5 # f o r c a lv e s sh ip p ed by r a i l , w h ile th e c a lv e s
sh ip p ed by tr u c k averaged 5 .1 # .
I/
I b id , p . 12.
This le a v e s a d if f e r e n c e o f 1 .6 # .
With
T able 7 .
S hrinkage o f Montana C a lv e s, D eterm ined by th e D iffe re n c e Between Loading and
S a le s W eight. T ra n sp o rte d by R a il and by T ruck.
H rs . in
P e rO rig in D e s ti­ H rs.En No.o f Yards Loading C ent
O rig in D e s ti­ irs.E n No.o f
n a tio n Route Head B efore W eight Shrink
n a tio n lo u te Head
S ale
Twin
120
F a lls
Lewistown Chic age 72
121
#
hhQ
.5
60
120
U65
Lewistown Chicagc
96
220
96
)e ll
11
5U
72
K isso u la
9
150
30
369
.8
i.i
Idaho
F a lls
D illo n D e ll
I
19
~1T
ll65
1 .5
U23
1 .7
D illo n D e ll
T~
*
~T~
IlOti
2 .0
30
U63
2.3
Roscoe B illin g !
2
20
~T~
libo
6.3
3U
UO
U15
U .l
Two Dot B illin g : ~TT~
27
I
m
7 .1
Two Dol B illin g s ~rr
~F~
I
300
13.3
a
9
1|06
5 .1
Idaho
F a lls
lo ss Fork Sioux
C ity
Dell
Idaho
F a lls
D illo n
Denver
Io
U7
3U
395
lu 3
W
132
216
U30
5 .2
B illin g s
UO
130
*
396
5.3
Sioux
160
C ity
Lewistown Chicago OU
91
339
5.3
Denver
Jascade
Average
73
D e ll
H rs .in
Per
Yards Loading Cent
B efore W eight S hrink
S ale
72
120
U20
5 .5
97
95
120
3 .5
Average
~ %•
# No tim e i n y a rd s
S ource; D ata o b ta in e d f o r c o s t o f M arketing S tu d y , M .S.C ., 1952-53
3 .7
VuJ
rv>
33
th e e x c lu s io n o f th e shipm ent which sh ra n k 13«3$$ which were in flu e n c e d
by a bad sn o w sto rn , from th e tr u c k Shipm ents5 th e av erag e becomes 3<,8$
f o r c a lv e s sh ip p ed b y tr u c k .
This le a v e s a d if f e r e n c e o f .3% betw een th e
shipm ents tr a n s p o r te d by r a i l o r tr u c k .
This d if f e r e n c e i s r a t h e r i n s i g ­
n i f i c a n t and th e c o n c lu s io n may be drawn t h a t c a lv e s sh ip p ed b y r a i l o r
t r u c k w i l l a v erag e a p p ro x im a te ly 3 .7 # s h rin k a g e . ) This i s made w ith th e
'
assu m p tio n t h a t o th e r shipm ents w i l l be com parable t o th e s e i n su rro u n d in g
c o n d itio n s .
These c o n d itio n s may be l i s t e d as an av erag e o f 73 hours en
r o u te b y r a i l and 3«7 h o u rs b y t r u c k 5 an av erag e fe e d in g p e rio d betw een
a r r i v a l a t y a rd s and s a le o f anim al o f 95 hours on th o se sh ip p ed by r a i l
’
‘
I
and 9 hours on th o se sh ip p ed by t r u c k | and an im als which av erag ed a p p ro x i­
m a te ly 1*13 pounds lo a d in g w e ig h t.
This g iv e s a d if f e r e n c e o f I*.6# av erag e sh rin k a g e betw een c a lv e s a l ­
lowed to r e f i l l and th o se not allo w ed a r e f i l l .
The d if f e r e n c e seems to
be s i g n i f i c a n t , e s p e c i a l l y s in c e th e c o n d itio n s su rro u n d in g b o th sample
groups were com parable, w ith th e e x c e p tio n o f th e w eig h in g c o n d itio n s as
has been o u tlin e d above.
2.
Cows
Cows a re g e n e r a lly s o ld when th e y a re no lo n g e r m ilk in g and a re t o be
c u lle d from th e b re e d in g h e rd .
Thus5 th e y a r e c a lle d "d ry " cows.
Dry
cows a re s o ld as f e e d e r o r s la u g h te r an im als depending upon t h e i r r e l a t i v e
c o n d itio n .
The e x te n t o f s h rin k a g e i n d ry cows i n r e l a t i o n t o h o u rs i n
y a rd s b e fo re s a le i s o u tlin e d i n Table VI and fig u r e I .
Table VI shows th e e x te n t o f sh rin k a g e i n d ry cows i n Montana as i t
P e rc e n t S h rin k
3h
Hours i n Yards
F ig u re I .
S c a tte r Diagram Showing the P e rc e n t S h rin k o f
Dry Cows i n R e la tio n to Hours i n th e Yards B et­
ween A r r iv a l and S a le s .
i s r e l a t e d to th e ho u rs i n y ard s betw een a r r i v a l and s a l e s .
This i s an
allow ance o f tim e f o r th e anim als t o o b ta in a r e f i l l b e fo re th e s a le ta k e s
p la c e .
The sh rin k a g e ranges from 3*5$ a t 2k ho u rs i n th e y ard s to 9»5% a t Ii
h o u rs i n th e y a r d s .
The av erag e s h rin k i s 5.9%»
The av erag e number o f
T able VI.
S hrinkage o f Dry Cows in M ontana, Based on th e D iffe re n c e Between Loading
and S a le s W eig h ts.
O rig in
D e s tin a ti on
D e ll, M ont.
W hite S ulphur S p rin g s
G a lla t in Gateway
Two Dot
#
Ranch a t Glasgow
D illo n
W hite S u lp h u r S p rin g s
C o le s tr ip , Mont.
H arlow ton
G a lla t in Gateway
F is h T a i l , Mont.
H arlow ton
H arlow ton
F ish T a i l , Mont.
F is h T a i l , Mont.
A bsorakee, Mont.
H am ilton
H am ilton
H am ilton
G a lla t in Gateway
B u tte
B u tte
B u tte
B illin g s
B illin g s
Glasgow
Idaho F a l l s , Idaho
B u tte
Bozeman
B illin g s
B u tte
B illin g s
B illin g s
B illin g s
B illin g s
B illin g s
B illin g s
M issoula
M issoula
Miss a u la
B u tte
Averages
Hours
En ro u te
U
2h
h
h
2
I
7
2k
29
k
k
2
3
3
3
2
2
2
2
2
k
6.3
No. in
Shipment
Loading
W eight
H rs. Between
A r r iv a l and
S a le s
P e rc e n t
S h rin k
11
18
3
2
I
96
13
2
I
10
I
10
3
k
2
7
2
19
9
Ik
I
1136
1375
1186
11+35
1160
111+5
1167
1255
1180
1282
H+20
1325
H 83
1265
1600
1100
1027
1200
1100
1200
11+20
21+
1+5
l+o
1+8
30
21
1+8
1+8
1+5
20
l+o
36
21+
23
15
15
22
0
k
k
1+
5 .5
5 .6
6 .0
6.3
6 .5
6 .9
7»5
7.8
8 .0
8 .0
8 .0
9 .5
10.9
121+5.8
26 .5
6.1+
•* Not o b ta in e d
S o u rce: D ata from C ost o f M arketing Study a t M .S .C ., 1952-53
JI OcT
3 #7
3 .8
3 .9
l+.o
5 I
5.1+
36
h o u rs i n th e y a rd s was 26,5«
S hrinkage d e c re a se s a s th e number o f h o u rs i n th e y a rd s in c r e a s e s ,
( f ig u r e I ) ,
I n o th e r w ords^ th e lo n g e r th e cows a re fe d i n th e yards
p re v io u s to s a l e , th e n th e l e s s w i l l be th e amount o f n e t s h rin k a g e t h a t
ta k e s p la c e , I /
B efore a r r i v a l a t th e y ard s th e cows w ere en ro u te an
av erag e o f 6 ,3 h o u rs , which seems q u ite r e p r e s e n ta tiv e o f th e group,
3«
S te e r s and H e ife rs
These c la s s e s o f an im als a re s o ld e i t h e r com bined, o r s e p a r a te ly .
G e n e ra lly th e y a re s o ld from th e range i n Montana when th e y a re ttIong
y e a rlin g s'* a b o u t 16 to 20 months o f a g e .
This c la s s h a s te n d e d to in c lu d e
th e m a jo r ity o f th e anim als s o ld from th e a r i d re g io n s o f th e s t a t e , s in c e
i n th e s e a re a s l e s s hay and g r a in a re a v a il a b le f o r th e r e q u ire d w in te r
fe e d .
C o n seq u en tly , th e an im als a re s o ld a f t e r o n ly one w i n t e r 's fe e d in g .
The r e c e n t tre n d h as been tow ard s an in c r e a s in g number o f ran ch es going
on t o th e cow and c a l f b a s is where th e c a lv e s a re s o ld b e fo re any w in te r
fe e d in g i s r e q u ir e d .
N e v e rth e le s s , most o f th e c a t t l e s o ld i n Montana
a t th e p r e s e n t tim e a re s o ld a s .lo n g y e a r l i n g s . 2 /
These c a t t l e a re so ld
as f e e d e r s to c k t o th e co rn b e l t . P a c if ic c o a s t, o r o th e r fe e d e r a r e a s ,
o r a s g ra s s f a t s la u g h te r a n im a ls.
I / The r e g r e s s io n e q u a tio n f o r t h i s r e l a tio n s h ip i s Y = 8.018 - .08X and
th e g ro ss c o r r e l a t i o n c o e f f i c i e n t i s r = - ,7 3 w h ile th e g ro ss c o e f f i c i e n t
o f d e te r m in a tio n i s r d = . 5 3 . ' The c o r r e l a t i o n c o e f f i c i e n t i s s i g n i f i c a n t
a t th e
le v e l,
2 j S te v e n s , I r a M ., e t a l , M arketing W estern F eed er C a t t l e , Wyoming A g ri­
c u l t u r a l E xperim ent S ta tio n , B u l le tin No. 317s Laram ie, Wyoming, Ju n e, 1952
PPo 19, 20.
37
TiJhen an im als a re allo w ed tim e f o r a r e f i l l , th e sh rin k a g e may be r e ­
duced c o n sid e ra b ly ,,
A ccording to m a te r ia l t h a t has b een g a th e re d w ith
r e s p e c t to fe e d e r h e i f e r s and s t e e r s , i t has been observ ed t h a t th e y
s h rin k a p p ro x im a te ly 3«5 p e rc e n t and U0It p e r c e n t, r e s p e c t i v e l y , (See Table
V II) ,
The a c t u a l sh rin k a g e seems to be p a r t i a l l y d eterm in ed b y th e number
o f ho u rs en ro u te and th e number o f h o u rs i n th e y ard s p re v io u s to s a l e ,
■The h e i f e r s which i n c r e a s e d " t h e ir w eight 0$% were e n ro u te o n ly 2 h o u rs ,
and i n th e y a rd s 10 h o u rs b e fo re s a l e , w hereas th e h e i f e r s which sh ran k
7.3% were en ro u te 2 h o u rs and i n th e y ard s o n ly I h o u r b e fo re s a le to o k
p la c e ,
(T ab le V II)„
O bviously, th e r e i s some r e l a t i o n s h i p betw een th e s e
two f a c t o r s w ith r e s p e c t to f e e d e r h e i f e r s .
F e e d er s t e e r s av erag e a p p ro x i­
m a te ly l|.oU% sh rin k a g e when allow ed a re a so n a b le le n g th o f tim e f o r r e f i l l .
O vernight s h rin k on a group o f 63 s t e e r s was found t o be 3,8% as i s shown
i n T able V II,
F e e d er h e i f e r s have a l i t t l e ad v an tag e o v e r f e e d e r s t e e r s
s in c e h e i f e r s averaged 3.5% w h ile s t e e r s av erag e h*h%3 a d if f e r e n c e o f
.9%.
These f ig u r e s seem t o be com parable s in c e th e c o n d itio n s o f tim e en
ro u te and h o u rs allow ed f o r a r e f i l l a re v e iy n e a r ly e q u a l.
S la u g h te r s t e e r s s h rin k a l i t t l e more th a n s la u g h t e r h e i f e r s a cc o rd ­
in g to d a ta p re s e n te d i n Table V III,
H e ife rs sh ran k 2,3% l e s s th a n s t e e r s
even though th e y were en ro u te h9 h o u rs i n c o n tr a s t w ith 23 h o u rs f o r th e
s te e rs .
A lthough th e d if f e r e n c e o f 2,3% may be due to o th e r f a c t o r s n o t
l i s t e d , i t would s u g g e s t t h a t th e re i s a d if f e r e n c e i n s h rin k t h a t m ight
be e x p ec te d betw een s la u g h te r s t e e r s and h e i f e r s .
The s ig n if ic a n c e o f
o th e r f a c t o r s i s s u g g e ste d by the f a c t t h a t i n th e s t e e r group w ith a
c o n s ta n t number o f hours en r o u te 9 th e s h rin k v a rie s from Iu 2% t o 10.0%,
T able V II.
S hrinkage of Montana F eed er H e ife rs and S te e r s , Based on th e D iffe re n c e
Between Loading and S a le s W eig h ts.
'
I'e e d e r H e ife rs
Hours
En ro u te
Number in
Shipment
Loading
Weight
F eed er S te e rs
Hours in
Yards B efore
S ale
P ercent Hours
S h rin k Sn ro u te
Number in
Shipment
Loading
W eights
Hours in P e rc e n t
Yards Be­ S h rin k
fo re S ale
2
88
512
10
/.9
100
25
660
72
6 .9
100
9
561
72
/• h
29
I
68 0
U8
7 .it
29
I
600
U8
5 .8
29
27
6 89
it8
.5
ho
6
638
32
2 .7
163
38
727
6
7 .7
h
20
697
hB
6 .0
2
7
733
3
3 .5
h
3
773
ho
3 .It
0*
63
78it
0
3 .8
2
8
803
I
7 .3
it
16
8it0
it8
5 .2
h
908
it. 7
8#
290
856
0
1 .3
72
209
887
72
it .5
2
32
1015
18
2 .5
it
18
105it
18
it.5
38
66
8 ll
30
it.it
29
toep36
17
687
h8
37
3 .5
# T r a ile d
Source* D ata o b ta in e d from th e C ost of M arketing Stucfy, M .S.C ., 1952-53«
V
jJ
CD
39
.-
A lso i n th e h e i f e r group, w ith tim e en ro u te h e ld c o n s ta n t a t 36 h o u rs ,
sh rin k a g e i s se e n to v a ry from 3„8$ t o $ 90%*
S hrin k ag e o f Montana fe e d e r s t e e r s i n t r a n s i t av erag es ab o u t _9o0% as
i s in d ic a te d i n Table IX0; Many .of th e s e an im als were sh ip p ed a r e l a t i v e l y
lo n g d is ta n c e .
The s h r in k ran g es from 1 ,0 $ to 1 7 .3 $ ,
The low sh rin k a g e s
te n d t o be combined w ith s h o r t h a u ls w h ile th e h ig h e r s h rin k s a re p ro b a b ly
due t o c o m p a ra tiv e ly lo n g h a u ls ,
lifhen a n aly z e d s t a t i s t i c a l l y th e r e l a t i o n s h i p betw een sh rin k a g e and
h o u rs e n ro u te i s shown by th e r e g r e s s io n e q u a tio n T = 6 . 3I4. « «026x.
This
means t h a t , when Y d e n o te s s h rin k and X d e n o te s h o u rs i n t r a n s i t , an i n ­
c re a s e o f one h o u r e n ro u te w i l l r e s u l t i n a c o rre sp o n d in g .0 3 $ in c re a s e
i n s h rin k a g e ,
'IShen th e a n im als a re sh ip p ed 100 h o u rs th e s h rin k w i l l i n ­
c re a s e a p p ro x im a te ly 3$.
The d eg ree o f th e r e la tio n s h ip i s shown b y th e
c o r r e l a t i o n c o e f f i c i e n t , r / = * .1;1, I /
The p ro p o r tio n o f th e v a r i a b i l i t y
i n sh rin k a g e which i s e x p la in e d b y h o u rs en ro u te i s i l l u s t r a t e d by th e
c o e f f i c i e n t o f d e te rm in a tio n r 2 which i s e q u a l to .17«
From t h i s fig u r e
i t i s se e n t h a t a b o u t 17$ o f th e v a r i a t i o n i n s h rin k a g e i s e x p la in e d by
v a r ia tio n s i n h o u rs en r o u te .
This le a v e s 83$ o f th e v a r i a t i o n to -b e
e x p la in e d b y f a c t o r s o th e r th a n ho u rs en r o u te .
I f th e anim al s h rin k a g e , computed on th e d if f e r e n c e betw een lo a d in g
and o f f - c a r w e ig h ts, i s compared w ith th e s h rin k a g e fig u r e d on th e d i f f e r ence betw een lo a d in g and s a le s w e ig h t, i t can be seen t h a t th o se anim als
I / These f ig u r e s a re s i g n i f i c a n t a t th e 95$ l e v e l , w hich means t h a t th e
chances a re 5 i n 100 t h a t th e c o r r e la tio n , c o e f f i c i e n t would be t h i s h ig h
due t o chance a lo n e .
T ab le V I I I .
S hrinkage o f Montana S la u g h te r H e ife rs and S la u g h te r S te e rs — Based on th e
D iffe re n c e Between Loading and O ff-C ar W eig h ts.
S la u g h te r H eifei - S
Hours
En ro u te
S la u g h te r S te e rs
Number i n
Shipment
Loading
W eight
P e rc e n t
S h rin k
Hours
En ro u te
Number in
Shipment
Loading
W eight
P e rc e n t
S h rin k
36
31
798
3 .8
36
32
881*
1 0 .0
36
3h
805
l* .o
36
31
987
5 .0
36
31
828
l* .o
36
26
1061*
1*.2
36
32
831*
IuO
2
20
1100
IuO
36
10
838
IuO
2
13
1100
5 .o
36
30
870
lu 5
1*8
336
1136
8 .8
36
30
870
5 .0
3
11
1185
5 .2
IltO
8
911*
8 .5
Ave. 1*9
26
81*5
I*.7
Ave. 23
67
1065
7 .0
S o u rce :
D ata o b ta in e d f o r th e C ost of M arketing Study a t M.S.C.-, 1952-53.
U
Table IX*
Number
in
Shipment
Shrinkage, of Montana Feeder Steers, as a Percent of
Loading Weight--Based on the Difference Between Loading
and Off-Car Weights«
Hours
En ro u te
72
26
100
192
11*0
108
3
11*0
163
113
ii5
20
88
23
133
1*8
557
38
101
11*3
21 1
360
58
31*
188
99
65
111*
Loading Weights
13
155
88
15 0
233
139
11*0
168
503
626
660
676
682
698
703
711*
727
750
772
809
81*1*
851
860
901*
908
979
1062
1091*
1100
1132
1135
111*8
1170
1190
A verage ■
13 6
103
873
108
11*0
108
100
135
106
11*0
11*0
3
11*0
120
2
108
20
322
S o u rc e j
I
Off-Car Weights
Percentage of
Shrink
1*29
577
615
613
615
630
692
629
61*7
680
689
707
71*7
701*
766
836
803
958
990
1001
101*5
1089
1089
1117
1000
1073
H *.5
7 .8
6 .9
9 .3
9 .9
9 .7
1 .6
1 0 .2
1 1 .0
8 .7
1 0 .7
1 2 .6
1 1 .3
1 7 .3
1 0 .9
7 .6
1 1 .6
2 .2
6 .8
8 .5
5 .0
1 2 .6
1*.0
2 .7
1 1 .0
9 .9
800
9 .0
M isc e lla n eo u s d a ta o b t a in e d i n th e C ost o f M arketing Study#
Montana S ta te C o lle g e , 1952-03.
h2
o f th e f i r s t group shrank a good d e a l more th a n d id th o s e i n th e second
g ro u p . (See Table X ).
Ihe c a lv e s , sh ip p ed f o r a p e rio d o f 215 hours
underw ent th e g r e a t e s t amount o f sh rin k a g e (11.9%) on an o f f - c a r d i f f e r ­
e n ce , w h ile fe e d e r s t e e r s averag ed 9.0%, o th e r c a lv e s 8.8%, s la u g h te r
s t e e r s 7.0%, and s la u g h te r h e i f e r s h,7%.
When sh rin k a g e i s computed on th e d if f e r e n c e betw een lo a d in g and
s a le s w e ig h t, cows accum ulated th e h ig h e s t sh rin k a g e w ith an av erag e o f
6.U%, n e x t were f e e d e r s t e e r s lul|% , c a lv e s 1.3%, and f e e d e r h e i f e r s 3.5%.
(See Table X ).
From th e f a c to r s which have b een o bserved i t seems t h a t th e re i s a
s l i g h t te n d en c y f o r p e rc e n t sh rin k a g e to in c r e a s e w ith a d e c re a se i n
lo a d in g w e ig h t, and to d e c re a se w ith an in c re a s e i n lo a d in g w e ig h t. (See
fe e d e r s t e e r s i n Table H i ) .
This ten d en cy was a ls o shown i n th e s tu d y
made by Abbenhaus and Penny in ch eck in g sh rin k a g e o f d i f f e r e n t w eight
c la s s e s . I /
A tendency f o r th e sh rin k a g e to d e c re a se w ith an in c re a s e d le n g th o f
tim e in th e y a rd s p re v io u s t o s a le i s a ls o n o tic e a b le .
(See c o r r e l a t i o n
e s tim a te s on page 36). There i s a p o s itiv e r e la tio n s h ip betw een p e rc e n t
and h o u rs en r o u t e .
This i s i l l u s t r a t e d by th e r e g r e s s io n e q u a tio n
and th e c o r r e l a t i o n c o e f f i c i e n t s on page 39 of t h i s s tu d y .
Any and a ll of these shrinkage
figures in Table X may vary consider­
ably with variations in any of the factors liste d , such as:
class of
I / A bbenhaus, G erald R«, and Penny, Roland C ., S h rin k C h a r a c te r is tic s o f
F a t C a t tle T ran sp o rte d by Truck, Chicago Union Stock Yard and T r a n s it C o.,
C hicago, I l l i n o i s , 1951, p p. 5 -7 .
T able I.
Shrinkage o f V arious C la ss e s o f C a t tle in M ontana.
W ith Net S ales S h rin k . *
Gross O ff-C ar S h rin k Compared
PERCENTAGE
Averages
Averages
Off-C3ar W eight
3l a s s o f No, o f P e rc e n t
Loading Hours
C lass o f
3a t t i e
Head
S hrinkage Weight En ro u te C a ttle
S a le s W eight
No. o f P e rc e n t
Loading Hours
Hours in
Head
Shrinkage W eight
En ro u te Yard B efore
( in l b s . )
S ale
3alv es
lli66
8 .8
Uoo
108
C alves
969
U .3
U13
38
52
feed er
S te e rs
35U3
9 .0
838
102
Feeder
H e ife rs
139
3 .5
68 7
36
37
Slaughter
ie i f e r s
206
Iu 7
877
U9
F eed er
S te e rs
726
U.U
811
38
30
S laughter
S te e rs
U69
7 .0
1065
23
Coirs
229
6 .U
12U6
63
27
3alves #
127
1 1 .9
U13
215
* En ro u te an e x tr a long le n g th o f tim e .
S ource;
D ata o b ta in e d f o r c o s t of M arketing Study a t M .S.C ., 1952-53
ItU
c a t t l e , lo a d in g w e ig h ts, h o u rs en ro u te to m a rk e t, and h o u rs i n th e y ard s
a f t e r a r r i v a l and p re v io u s to sale *
I n a d d itio n , v a r ia tio n s i n th e s h rin k ­
age e s tim a te s may o ccu r when numerous f a c t o r s , Thich have, n o t b e e n recorded,
change i n d e g re e o r p r o p o r tio n s .
Ge
F a c to rs C ausing S hrinkage
From o b s e rv a tio n s o f p ro d u c e rs and d e a le r s i t i s b e lie v e d th a t many,
many f a c t o r s a re re s p o n s ib le f o r th e amount o f sh rin k a g e and f o r th e v a r i ­
a tio n s i n s h rin k a g e .
F a c to rs w hich have been commonly th o u g h t to in flu e n c e sh rin k a g e - a re
l i s t e d below :
I.
Length o f jo u rn e y o r th e number o f h o u rs t h a t th e an im als a re en
ro u te has lo n g b een th o u g h t to in flu e n c e th e amount o f s h rin k a g e , " i t . i s
b e lie v e d t h a t th e lo n g e r th e anim als a re en r o u te , th e g r e a t e r w i l l b e th e
s h rin k a g e .
F u rth erm o re , i t i s b e lie v e d t h a t th e s h rin k a g e i s h e a v ie r d u r­
in g th e f i r s t p a r t o f th e jo u rn e y , th a n i t i s d u rin g th e l a s t p a r t .
This
p o in t i s r a t h e r w e ll i l l u s t r a t e d b y use o f a t a b l e from th e s tu d y made by
Abbenhaus and Penny i n 1951« l /
These f ig u r e s in d ic a te t h a t a lm o st one-
h a l f o f th e t o t a l s h rin k a g e ta k e s p la c e w ith in th e f i r s t o n e -e ig h th o f th e
t o t a l 200 m ile t r i p .
A t th e end o f o n e -fo u rth o f th e d is ta n c e th e s te e r s
had com pleted a b o u t tw o -th ird s o f t h e i r t o t a l s h rin k .
A f te r th e f i r s t -
o n e - h a lf o f th e h a u l, th e s h rin k was 8kok% o f th e t o t a l s h r in k .
The r e ­
s u l t s in d ic a te t h a t v e ry l i t t l e s h rin k a g e o ccu rs a f t e r th e f i r s t 100 m iles'
I/
I b i d , p . 7.
i
Table X I.
P e rc e n t S h rin k F o r 60 F a t C a ttle Between Each Check
Weighing During a 200 Mile Truck Haul. ( Total Animal
Weight Equals 100$).
No. o f
Head i n
Each C lass
Weight
C la ss e s
M iles T rav eled Between Wei ehings
Average
Weight 0-2g 25-50 5 o -io o 100-200 T o ta l %
lro u p Average
60
1122
1 .8
.7
*8
.6
3 .9
Under 1000 l b s .
11
95U
1 .5
.7
.9
.8
3 .9
1000-1099 l b s .
10
1056
2 .1
.9
.8
.3
U .l
1100-1199 l b s .
2h
1139
1 .8
.8
.8
.7
k .l
Over 1200 l b s .
15
1263
1 .9
.5
j_______
.7
.5
3 .6
and i t ta k e s p la c e a t a d e c re a s in g r a t e from then on.
2.
The d eg ree o f com fort to th e anim al i n th e shipm ent has been con­
s id e r e d ore o f th e f a c t o r s which in f lu e n c e s s h rin k a g e .
By th i s i s meant
th e e f f e c t s o f extrem e v a r ia tio n s i n w e a th e r c o n d itio n s , b a d ly crowded
c a r s , and slow , rough t r a i n ru n s .
I f th e w eath er i s extrem eI y h o t o r
c o ld , th e a n im als a re n a t u r a l l y u n co m fo rtab le and th e y w i l l s h rin k g r e a te r
th a n u n d er norm al w e a th e r c o n d itio n s .
T h e re fo re , c a t t l e te n d to s h rin k
more when sh ip p ed d u rin g e x tre m ely h o t o r c o ld seaso n s o f th e y e a r.
3.
Ihe number o f , and ho u rs a t , fe e d and r e s t s to p s i s a n o th e r f a c ­
t o r t h a t i s b e lie v e d t o in flu e n c e s h rin k a g e .
I f th e re a re fe e d and r e s t
s to p s a v a ila b le f o r th e an im als t o spend some tim e e a ti n g , d r in k in g , and
r e s t i n g , then th e sh rin k a g e may be d e c re a se d a c c o rd in g ly .
I*.
Age o f th e an im al i s th o u g h t to be a f a c t o r which in flu e n c e s
s h r in k , s in c e th e body w eight o f younger an im als c o n ta in a l a r g e r p e r c e n t-
k6
age o f W t e r 6 I /
Mien w a te r i s l o s t a s sh rin k a g e i t c o n s t i t u t e s a heavy
l o s s i n pounds and c o n se q u e n tly a heavy sh rin k a g e r e s u l t s .
O ld er a n im a ls5
th e r e f o r e , do n o t s h rin k a s much as do young c a lv e s a c c o rd in g to t h i s
assu m p tio n ,
So
G lass and b re e d o f anim al a ls o a re b e lie v e d to in flu e n c e s h r in k ­
age i n th e same manner as does th e age o f th e a n im a l.
Many p e o p le b e lie v e
t h a t c e r t a i n c la s s e s and c e r t a i n b re e d s have a l a r g e r p e r c e n t o f body
w eig h t made up o f w a te r which in flu e n c e s th e s h rin k a g e t o t a l a c c o rd in g ly ,
6,
ages,
S iz e o f th e a n im al i s supposed t o in flu e n c e sh rin k a g e p e r c e n t­
The l a r g e r th e anim al th e more pounds i f w i l l s h r in k , b u t th e se
pounds a re a s m a lle r p e rc e n t o f th e l a r g e r a n im a ls, 2 /
7 o P rogeny o r fa m ily l i n e may a ls o in flu e n c e sh rin k a g e a c c o rd in g to
th e in d iv id u a l o r h e r i t a b l e , p h y s io lo g ic a l c h a r a c t e r i s t i c s o f each fa m ily
lin e .
Some f a m ilie s may be g e n tle and d o c ile , and s h rin k a t a slow r a t e ,
w h ile o th e r fa m ily l i n e s a re f l i g h t y and w ild which causes a r e l a t i v e l y
r a p id r a t e o f sh rin k a g e when th e an im al i s s u b je c te d to th e u n u su a l c o n d i­
t io n s o f sh ip m e n t.
This th e o ry was not s u b s ta n tia te d b y a t e s t run on th e
s ig n if ic a n c e o f d if f e r e n c e betw een l i n e s one and two, and one and fo u r , o f
th e Montana E xperim ent S t a t i o n s to c k ,
8,
Feed fe d b e f o r e , d u rin g and a f t e r shipm ent may in flu e n c e th e ex­
t e n t o f s h rin k a g e t h a t o ccu rs i n an a n im a l.
The amount and ty p e o f fe e d
I / Snapp, Eoscoe E ,, B eef C a t t l e , T h eir Feeding and Management i n th e
Corn B e l t S t a t e s , J o h n m i e y and Sons, I n c . , New York, 1950, p , 233,
2/
Abbenhaus and Penny, op, c i t . , p , 8 ,
h7
b e fo re shipm ent may in flu e n c e th e r a t e o f s h r in k , inasm uch as g reen fe e d s
w i l l be l o s t as e x c r e to r y sh rin k a g e r a t h e r r a p id ly , w h ile d ry p a s tu r e
fe e d in g o r d r y l o t fe e d in g b e fo re shipm ent i s th o u g h t to be a s s o c ia te d
w ith a l e s s ra p id sh rin k *
flu e n c e sh rin k ag e*
The amount and k in d o f fe e d en ro u te may i n -
I f ad eq u ate good fe e d i s a v a ila b le th e s h rin k a g e lo s s
can be d e c re a se d more th a n i f in a d e q u a te o r p o o r fe e d i s a v a i l a b l e .
W hile
th e a n im a ls a re i n th e s a le y a rd s a f t e r shipm ent th e y sh o u ld be allo w ed
s u f f i c i e n t good fe e d to p u t on a good f i l l to r e s t o r e w eig h t l o s t , a c c o id in g to th e p e rs o n a l o p in io n s o f p eo p le engaged i n th e liv e s to c k t r a d e .
Even more im p o rta n t th a n fe e d , many p eo p le b e lie v e , i s t h a t th e w a te r
sh o u ld be ad eq u ate and f r e s h b e f o r e , d u rin g , and a f t e r sh ip m en t,
C a ttle
w ith t h e i r t h i r s t quenched w i l l e a t more d ry fe e d a ls o ,
10*
The h a n d lin g o f th e anim als w h ile th e y a re i n th e m a rk e tin g p ro ­
c e s s i s b e lie v e d to be v e ry im p o r ta n t' s in c e e x c e s siv e ru n n in g o r " c u ttin g "
w i l l t i r e th e an im als and in d u c e a r a p id r a t e o f s h rin k a g e .
I f c a t t l e a re
h a n d led ro u g h ly th e r e i s a r e s u l t i n g l o s s due to b r u is in g o f th e animal*
B ru is in g cau ses a d e c re a se d d re s s e d w e ig h t.
This i s e s s e n t i a l l y c o n sid e re d
as a s h rin k a g e lo s s ( t i s s u e ) and c o n se q u e n tly a slow , e a s y movement o f th e
s to c k sh ould be t h e b e s t p o l i c y i n o rd e r t h a t sh rin k a g e and b r u is in g lo s s e s
can be h e ld to a minimum,
i
D*
F u n c tio n a l R e la tio n s h ip Between F a c to rs C ausing S h rin k ag e and th e Ext e n t o f S h rin k ag e
-------------From th e number o f f a c t o r s , which a re l i s t e d above as b e lie v e d t o i n ­
flu e n c e s h rin k a g e , i t i s r e a d ily seen t h a t th e r e can be many f a c to r s t h a t
may in f lu e n c e any one shipm ent o f s to c k .
Some o f th e s e f a c t o r s p o s s ib ly
<
h8
can be c o n tr o lle d , and o th e rs may n o t.
One o f th e b ig g e s t problem s i s
to d e term in e which f a c t o r s can be c o n tr o lle d o r a f f e c te d s u f f i c i e n t l y to
e f f e c t economic g a in s .
To s o lv e t h i s problem one m ust se e k answ ers to
q u e s tio n s such, as th e fo llo w in g :
Mhich a re th e m ost im p o rta n t f a c to r s
b e lie v e d t o in flu e n c e c a t t l e s h rin k a g e , and how im p o rta n t a re th ey ?
much v a r i a t i o n i n th e sh rin k a g e i s due to th e s e f a c to r s ?
How
How much v a r ia ­
t i o n i s due t o f a c to r s , im p o ssib le to measure w ith a v a ila b le d a ta ?
Answers to th e s e q u e s tio n s may be approached th ro u g h th e use o f
s t a t i s t i c a l a n a ly s is em ploying m u ltip le c o r r e l a t i o n .
This problem i s approached as i t i s r e l a t e d to th e s h rin k a g e o f s t e e r s
s o ld from th e M iles C ity Branch Experim ent S ta t i o n .
The c o n d itio n s s u r -
'
ro u n d in g th e s e p a r t i c u l a r shipm ents have been o u tlin e d i n th e p re v io u s
m a te ria l.
S u f fic e i t to sa y t h a t th e se an im als were y e a r lin g s la u g h te r
s t e e r s sh ip p ed from M iles C ity to South S t . P a u l i n J u ly f o r a p e rio d o f
9 y e a rs betw een 19h2 and 1952„
These s t e e r s were g iv e n one fe e d and r e s t s to p en ro u te to m ark et,
and th e c o n d itio n s o f shipm ent each y e a r were com parable w ith th e e x c e p tio n
o f th e f a c t o r s which w i l l be c o n sid e re d i n th e fo llo w in g a n a l y s i s .
These
f a c t o r s a s s e t up i n th e c o r r e l a t i o n problem a re s
Xi = pounds o f sh rin k a g e o f th e an im als as d eterm in ed b y th e d i f . fe re n c e betw een lo a d in g w eig h ts and s a le s w e ig h ts .
%2 = th e a c tu a l lo a d in g w eight o f th e an im als in pounds.
X3 = th e number o f h o u rs t h a t th e an im als s p e n t a c t u a l l y on r a i l
en ro u te to th e m arket*
'
= th e number o f h o u rs t h a t th e anim als s p e n t o f f - c a r a t feed
and r e s t s to p s . (Notes A ll shipm ents were fe d and r e s te d one
tim e •o n ly ) .
k9'
3T£ - th e number o f h o u rs th e an im als s p e n t i n th e y a rd s a f t e r
a r r i v a l and p re v io u s to s a le s ( r e f i l l p e r io d ) e
The r e g r e s s io n e q u a tio n was o b ta in e d from th e d a ta in v o lv e d by u s in g
d e v ia tio n s from th e mean o f each f a c t o r t o o b ta in th e r e g r e s s io n c o e f f j>
c ie n ts e
The r e g r e s s io n e q u a tio n was found to b e j
X1 = .6183 ♦ .7 7 ^ X 2 " .4377X3 - o020l|lXlt - 02613IX^
The b v a lu e s and th e r e g r e s s io n e q u a tio n can be i n t e r p r e t e d i n th e
fo llo w in g manners l /
"With a 10 pound ( I u n i t ) in c r e a s e i n th e lo a d in g w eig h t o f th e anim al
(Xg); th e r e i s a c o rre sp o n d in g . 77^45 pounds o f in c r e a s e i n th e pounds o f
s h rin k (X j) w h ile t h e e f f e c t s o f o th e r f a c t o r s
a re e lim in a te d .
'With a one hour (one u n i t ) in c r e a s e i n th e h o u rs on r a i l (X^) , th e r e i s a
d e c re a se o f .4377 pounds o f sh rin k a g e (X j) 5 w ith th e e f f e c t s o f th e o th e r
f a c t o r s e lim in a te d .
With a one hour in c r e a s e i n th e h o u rs a t fe e d and r e s t s to p s (X^ )5
th e r e i s a d e c re a s e o f .02041 pounds o f s h rin k a g e 5 . w hile th e e f f e c t s o f
■^2*35£5 e lim in a te d .
.
W ith a one h o u r in c r e a s e i n th e number o f h o u rs betw een a r r i v a l anri
s a l e (X3 ) , th e re i s a d e c re a se o f .2613I pounds o f s h rin k a g e 5 when th e
e f f e c t s o f th e o th e r f a c t o r s O bserved5 a re e lim in a te d .
"When a l l th e .in d ep en d en t v a r ia b le s a re z e ro (0) th e dep en d en t v a r ia b le
I/
Thus5 th e b v a lu e s were?
bl2.3k£ = .77545
b l3 .2 4 5 = .43770
bi4.2-35 = .02041
b l 5„234 = .26131
(X l), pounds o f sh rin k a g e ? has a v alu e o f <,61i83 jj(a) v a lu e ] «
By re fe re n c e to th e r e g r e s s io n c o e f f i c i e n t s th e c o r r e c te d m u l t i p l e '
c o r r e l a t i o n c o e f f i c i e n t i s o b ta in e d w ith a' v alu e o f R l.23ii5 = 0$k»
m easures th e d eg ree o f a s s o c ia ti o n betw een Z j and X2 5, ^
This
There i s a
f a i r d e g re e o f c o r r e l a t i o n betw een th e number o f pounds o f sh rin k a g e and
th e lo a d in g w e ig h t, hours on r a i l , h o u rs a t fe e d and r e s t s to p s , and ho u rs
i n y a rd s betw een a r r i v a l and s a l e s «
The c o r r e c te d c o e f f i c i e n t o f d e t e r - ‘
_2
m in a tio n i s R.l»23i|.5 = ,2 9 1 9 ,
This i s th e p e rc e n ta g e d e te r m in a tio n and i t
in d ic a te s t h a t , a c c o rd in g to th e d a ta u se d , 29. 2# o f the v a r i a t i o n in
sh rin k a g e fo u n d s) i s due to v a r ia tio n s i n lo a d in g w e ig h t, h o u rs on r a i l /
hours a t fe e d and r e s t s to p s , and h o u rs betw een a r r i v a l and s a l e s .
The
c o r r e l a t i o n c o e f f i c i e n t i s s i g n i f i c a n t a t th e 99% l e v e l , which means t h a t
th e chances a re l e s s th a n I i n a hundred t h a t a c o r r e l a t i o n c o e f f i c i e n t
a s h ig h a s ' . 3L i s due t o random e r r o r o f sam p lin g .
These s t a t i s t i c a l m easures a l l s u b s t a n t i a t e th e common b e l i e f s and
h y p o th e se s t h a t have b e en p r o je c te d i n r e l a t i o n to s h rin k a g e ,
Gne excep­
t i o n to t h i s s u b s t a n t i a t i o n i s th e r e l a t i o n s h i p betw een pounds o f sh rin k a g e
and hours on th e r a i l .
Many p eo p le have observed shipm ents which s h rin k more th e f u r t h e r they
a re s h ip p e d . I /
A ccording to th e r e g r e s s io n c o e f f i c i e n t o b ta in e d i n th e
p re v io u s a n a ly s is , th e f u r t h e r th e anim al i s sh ip p ed th e l e s s th e sh rin k ag e
w ill b e.
T h e re fo re , th e common b e l i e f i s n o t s u b s ta n tia te d b y th e s t a t i s -
1 / The r e g r e s s io n e q u a tio n and c o r r e l a t i o n a n a ly s is on page 39 o f t h i s
s tu d y i s an i l l u s t r a t i o n o f t h i s ' p o i n t .
' '%
t i c a l a n a ly s is on t h i s p o i n t .
I t m ig h t re a so n a b ly be assumed i n view o f
th e s tro n g b e l i e f i n th e c a u s a l r e la tio n s h ip o f tim e en ro u te to sh rin k a g e
t h a t th e re a re a number o f o th e r f a c to r s i n t e r r e l a t e d w ith tim e en r o u te ,
which a re n o t te s t e d o r re c o rd e d i n t h i s c o r r e l a t i o n a n a l y s i s .
This i n t e r ­
s e r i a l r e l a t i o n s h i p m ight w e ll be so im p o rta n t t h a t th e tim e r e l a tio n s h ip
i s n o t re v e a le d i n a s tu d y o f o n ly a sm a ll p o r tio n o f th e v a r ia b le s a s ­
s o c ia te d w ith s h r in k .
I The r e l a t i v e im p o rtan ce o f th e f o u r f a c t o r s i n r e l a t i o n to each
o th e r i s d e term in e d by th e use o f p a r t i a l c o r r e l a t i o n c o e f f i c i e n t s . I /
A ccording to th e s e , w eig h t o f th e an im al (Xg) and hours on r a i l (%_) a re
th e o n ly two t h a t a re s i g n i f i c a n t and th e y a re s i g n i f i c a n t a t th e 99#
le v e l.
The o th e r two f a c t o r s , h o u rs a t fe e d and r e s t s to p s , and hours
betw een a r r i v a l and s a l e , d id not p ro v e to be s i g n i f i c a n t .
This means
t h a t th e v a lu e s o f t h e i r r e s p e c tiv e p a r t i a l c o r r e l a t i o n c o e f f i c i e n t ,
r l l u 235 = -.2 1 2 and r 1 3 .23U = - .1 9 6 , c o u ld be t h i s la r g e due t o chance
a lo n e and t h e r e f o r e , c an n o t be c o n sid e re d t o be s i g n i f i c a n t .
The t o t a l e x p la in e d v a r i a t i o n i s o n ly 2 9 .2 # and c o n se q u e n tly i t may
be s t a t e d t h a t th e re m ust be numerous f a c to r s which have n o t been con­
s id e r e d which could e x p la in th e rem aining 70.8# o f th e v a r i a t i o n i n s h r in k ­
age.
Some, o f th e f a c t o r s which have n o t been c o n sid e re d i n th e problem
a re s
com fort o f th e an im als - which in c lu d e s extrem e te m p e ra tu re c o n d i-
1/
The p a r t i a l c o r r e l a t i o n c o e f f i c i e n t s a re s
rl2 .3 li3
rl3 .2 L 3
r i b . 233
rl3 o 2 3 b
=
=
=
=
+ .3 7 3
-.3 6 2
-.2 1 2
-.1 9 6
t i o n s rough t r a i n h a n d lin g , and p o o rly bedded and sanded c a r s , age o f
th e anim al i n r e l a t i o n t o n erv o u sn ess and m o istu re c o n te n t o f th e stom ach,
c l a s s and b re e d o f a n im a l, fe e d and w a te r before^ d u rin g and a f t e r sh ip m en t,
p ro g en y o f th e c a t t l e , a n d f i n a l l y , h a n d lin g o f th e an im als d u rin g th e
s h ip p in g p r o c e s s .
Any one o f th e s e f a c to r s may no t be to o im p o rta n t, b u t i f a l l o f
them were c o n sid e re d i t i s p ro b a b le t h a t a la r g e p o r tio n o f th e unex p lain ed
v a r i a t i o n c o u ld be e x p la in e d .
53
PART III.
Economic Im p lic a tio n s o f S h rin k ag e O ccu rrin g
D uring th e M arketing P ro c e s s ,
Ae
T h e o re tic a l Framework f o r A p p ra is a l o f Economic S ig n if ic a n c e .
Tb estimate from an economic Tiewpoint the importance of IiTe-: » -
stock shrink to society and to people directly concerned with the market­
ing process, the shrinkage problem will:be analyzed through the. use of
theoretical tools and criteria.
The a n a l y t i c a l economic framework a s s e t up i n S e c tio n I , o f P a r t I H
and S e c tio n 2 o f P a r t I I I , i s concerned w ith com bining th e e m p iric a l i n ­
fo rm a tio n o b ta in e d w ith th e s e economic c r i t e r i a o r fram ew ork,
Io
T h e o r e tic a l A ssum ptions.
To ap p ro ach any problem i n an economic
s e t t i n g i t i s n e c e s s a ry to make c e r t a i n assu m p tio n s w ith r e s p e c t to th e
problem a t hand.
Some o f th e assum ptions w hich a re deemed n e c e s sa ry to
a n aly z e th e problem , fo llo w s $
(a )
I t i s assumed t h a t i t i s d e s ir a b le to p re v e n t any n e t lo s s to
s o c ie ty .
C on seq u en tly th e f u n c tio n o f w e lfa re economics sh o u ld be con­
s id e r e d ,
!W elfare i s d e fin e d b y u s in g a d e f i n i t i o n o f a w e lfa re in d ic a to r
which in c r e a s e s and d e c re a s e s w ith w e lf a r e —w e lfa re i s t h a t which v a rie s
w ith th e i n d i c a t o r .
The i n d i c a t o r i s d e fin e d as fo llo w s s “W elfare in**'
c re a s e s w henever one o r more in d iv id u a ls become more s a t i s f i e d w ith o u t any
o th e r in d iv id u a ls becoming l e s s s a t i s f i e d . I /
(b )
The assu m p tio n i s made t h a t th e in d iv id u a l liv e s to c k p ro d u c e r
I / R eder, M elvin W arren, S tu d ie s i n th e Theory o f W elfare Economics,
Columbia U n iv e r s ity P r e s s , New Y ork, 1951.j p p . IR, 15«
i s f a c in g a p e r f e c t l y e l a s t i c demand c u rv e .
This p e r f e c t e l a s t i c i t y o f
demand i s r e f l e c t e d by a zero change i n p r ic e w ith any amount o f change
i n q u a n tity up to i n f i n i t y .
This i s to say t h a t an in d iv id u a l p ro d u cer
may p la c e as many anim als o r as la r g e an an im al on th e m ark et as he c an ,
and he w i l l re c e iv e th e same p r ic e f o r each u n i t (assum ing hom ogeneity
of u n its ).
The s i t u a t i o n o f a p e r f e c t l y e l a s t i c demand cu rv e w ith two
su p p ly le v e l s on th e m arket i s i l l u s t r a t e d i n f ig u r e 2 .
Q u a n tity o f P ro d u ct
F ig u re 2 .
A Firm F acing a P u re ly C o m p etitiv e Demand
Curve, P la c es Two Q u a n titie s on th e M arket.
The h o r iz o n ta l l i n e D i s th e demand cu rv e t h a t the in d iv id u a l firm
f a c e s , and p o in t A on curve SS, shows the amount o f p ro d u c t t h a t i s
o r i g i n a l l y p la c e d on th e m a rk e t.
P o in t B on su p p ly cu rv e S jS i shows a
new and g r e a t e r q u a n tity o f th e p ro d u c t p la c e d on th e m ark et by the firm
w ith no change i n p r ic e o c c u r rin g .
With th e su p p ly a t A, th e firm w i l l
re c e iv e (P%) (Q1 ) as a t o t a l re v e n u e .
B, th e t o t a l revenue becomes
W ith th e s u p p ly in c re a s e d to p o in t
, which i s an in c r e a s e i n t o t a l r e ­
venue o f (Q^-Q1 ) tim es Pj .
(c )
I t i s assumed t h a t r a n c h e r s a s e n tr e p r e Iieu rsj a re s t r i v i n g to
maximize n e t r e t u r n s .
The th e o ry o f th e firm i s a g e n e r a l s e t o f p r i n ­
c i p l e s r e l a t i n g to f a c to r s o f p ro d u c tio n which a re employed i n economic
u n i t s cap a b le o f p ro d u c in g economic goods.
I t s e rv e s a s a t o o l w ith which ■
th e firm may be reduced to i t s component p a r t s . I /
One a ssu m p tio n , b a s ic to th e th e o ry o f th e firm i s t h a t th e e n tr e ­
p re n e u r i s s t r i v i n g f o r maximum p r o f i t s .
The th e o r y i s as w id e ly a c c e p ted
i n th e a tte m p t to maximize p r o f i t s as th e law o f su p p ly and demand i n d e ­
te rm in in g p r i c e . _2/
The e q u ilib riu m p o s i t i o n o f th e firm depends upon th e s lo p e o f th e
m a rk e t su p p ly and demand c u rv es and th e p r ic e o f in p u ts and o u tp u ts .
E n te r p r is e co m b in a tio n , s iz e o f th e fir m , and optimum re so u rc e u se a re a l l
d i r e c t l y d ep en d en t on th e com binatio n o f th e s e f a c t o r s .
. (d )
The n e x t assum ption i s b ased on th e c o n c lu sio n t h a t an optimum
s o lu tio n t o c o s ts and r e tu r n s ta k e s p la c e where M.C. = M.R. u n d er co m p eti­
t i v e c o n d itio n s .
Under p u re c o m p e titio n as has b een assum ed, th e p r ic e p e r u n i t w i l l
e q u a l th e m a rg in a l revenue and where th e M .C .•= M.R. th e re i s an optimum
I / Quenemoen, M .E., Economic A spects o f W ater S p re a d e r Developments on
S o u th e a s te rn Montana R anches, (M ontana: E xperim ent S ta tio n . December.
1952'), P . 17.
2 / Heady, E a r l 0 . , "Economic Models i n Farm P ro d u c tio n .Economics R esearch ^
J o u rn a l o f Farm Econom ics, XXZ (May, 1 9 ^ 8 ), p . 202.
56
c o n d itio n o f p ro d u c tio n .
This p o in t i s shown i n f ig u r e 3 a t P o in t A,
where M.C. (m a rg in a l c o s t) e q u als M.R. ( p r i c e , o r m a rg in a l re v e n u e ).
P ro ­
d u c tio n w i l l in c re a s e as lo n g as the c o s t o f th e a d d itio n a l u n i t i s le s s
th a n th e r e tu r n s o b ta in e d from th e a d d itio n a l u n i t .
Khen th e s e two b e ­
come e q u a l, th e n th e in c r e a s e i n p ro d u c tio n w i l l s to p s in c e beyond t h i s
p o i n t th e a d d itio n a l c o s t w i l l be g r e a t e r th an th e added re v e n u e .
P ro d u c tio n
F ig u re 3«
Q
A Firm F acin g a P e r f e c t l y E l a s t i c Demand
Curve Seeks an Optimum.
In o b serv in g th e p re v io u s assum ptions i t may be see n t h a t two of them
would be i n c o n f l i c t w ith each o th e r i f th e m arket were under c o n d itio n s
o f monopoly r a t h e r th an i n c o n d itio n s o f p u re c o m p e titio n su rro u n d in g
a g r i c u l t u r a l com m odities.
P o s s ib le c o n f l i c t s i n a monopoly may come betw een p r o f i t m ax im izatio n
and n a tio n a l w e lfa re m a x im izatio n .
57
F or a m o n o p o lis t, th e s a le s sch ed u le o f th e firm i s i d e n t i c a l w ith
th e demand sch ed u le f o r th e p ro d u c t o f th e in d u s tr y , s in c e b u y ers can ob
t a i n th e p ro d u c t o n ly from t h i s fir m .
Thus, i n f ig u r e U th e Average
Revenue curve r e p r e s e n ts bo th th e t o t a l demand f o r th e p ro d u c t and the
s a le s sch e d u le f o r th e fir m .
For t h i s a v erag e -re v e n u e cu rv e th e r e i s an
a p p r o p r ia te m a rg in a l-re v e n u e c u rv e .
The firm w i l l o p e ra te a t th e p o in t
o f e q u a l i t y o f m a rg in a l revenue and m a rg in a l c o s t and w i l l s e t th e p r ic e
a t which t h i s q u a n tity can be s o ld (P1 i n f ig u r e b , i f i t i s se e k in g to
maximize p r o f i t s . ) I /
Ql
Output
F ig u re It.
Qg
A Firm F acing M o n o p o listic M arket C o n d itio n s .
W ith a monopoly th e firm w i l l produce q u a n tity Q1 b u t w i l l ch arg e P1
r a t h e r th a n Pg.
I f t h i s f ir m were se e k in g to maximize n a tio n a l w e lfa re
i t would produce e i t h e r q u a n tity Q1 a t p r ic e Pip, o r i t would produce quan­
t i t y Qg a t p r ic e P y
From t h i s , i t i s seen t h a t th e m o n o p o list is n o t
I / Due, John F ., In te rm e d ia te Economic A n a ly s is , (C hicago, I l l i n o i s .
R ichard D. Ir w in , 19^±)3 p . 256.
58
u s in g a l l a v a il a b le re s o u rc e s , (o r g r e a t e r q u a n tity would be p ro d u c e d ),
o r he i s c h a rg in g a p r ic e which i s h ig h e r th a n th e s o c i a l l y r e le v a n t p r ic e
(P2 ) , f o r h is p ro d u c t.
C o n sid e rin g p ro d u c tio n (a s i n a g r i c u l t u r e ) c a r r ie d o u t u n d er m arket
c o n d itio n s o f pure c o m p e titio n , th e fo llo w in g i l l u s t r a t i o n ( f ig u r e 5) i s
u s e fu l.
Q u a n tity
F ig u re 5 .
A T y p ica l Demand and C ost F u n c tio n i n A g ric u ltu re
In f ig u r e 5 M arginal Revenue e q u a ls Average Revenue s in c e th e same
p r ic e w i l l be o b ta in e d f o r each a d d itio n a l u n i t .
The firm w i l l produce
Tidiere M arginal C o st e q u a ls M argin al Revenue as was th e case i n the mono­
p o lis tic s itu a tio n .
The in d iv id u a l p ro d u c e r c an n o t a f f e c t th e m arket by
h is s a le s u n d e r c o m p e titiv e c o n d itio n s .
The o th e r d i f f i c u l t y found i n a
monopoly i s a ls o e lim in a te d under c o m p e titiv e c o n d itio n s s in c e more firm s
w i l l come i n t o th e in d u s tr y , when re s o u rc e s a re a v a ila b le and p r ic e s a re
f a v o ra b le , to use up e x c e ss r e s o u r c e s .
59
2«
(a)
Economic A n a ly sis o f E m p iric a l E vidence*
Welfare is increased as total satisfactions are increased (See
Assumption (a), page 5 3 )o
I f an individual producer or firm can increase
his satisfactions without decreasing any other person's satisfactions,
then welfare is increased*
Under market conditions that are in effect at
■the present time, a firm may absorb a loss through a shrinkage or i t may
undergo a cost of reducing shrinkage as an alternative.
The direction of
the firm's action is determined by the relative prices of beef and the
prices of factors that may be used to reduce shrink*
Illustrated in figure 6 is an iso-cost curve I1 at a given level of
income.
Pounds of beef lo st due. to shrinkage is plotted on the vertical
axis, and the index of factors which constitute costs of shrinkage reduc­
tions on the horizontal axis.
Without considering the price relationships
the firm may take a position any place along the curve.
I t may absorb a
shrinkage loss of X1 and a resource cost of Y1 or i t may.absorb a shrink­
age loss of X2 and an index o f 'shrinkage reduction of Y2, or any other
combination of the two on the curve. Any position on the curve w ill give
equal satisfactions.
The factors that determine the position of the firm on the iso-outlay
curve are the relative prices of beef lo st and prices of factors which
make up costs of reducing shrinkage.
In figure 6 the equilibrium position
is shown at Point (a) where the price line (PP)is tangent to the iso-cost
curve.
At this point the ratio of the price of beef to price of cost fac­
tors is equal to the marginal rate at which loss through shrinkage w ill •
60
s u b s t i t u t e f o r expenses in c u rre d to reduce s h r in k . I /
Any o th e r p o in t
on th e i s o - c o s t curve i s n o t a tr u e e q u ilib riu m p o s itio n i f a firm i s
a c ti n g in a r a t i o n a l manner w ith r e s p e c t to th e p r ic e r e l a t i o n s h i p s in
e ffe c t.
Pounds o f
B eef l o s t
through
S hrinkage
To
PB
Index o f c o s t f a c t o r s _2/
F ig u re 6 .
I/
Pb
Pc
= M .R.S. (c )
(b)
E q u ilib riu m P o s itio n o f a Firm A ctin g R a tio n a lly
and I r r a t i o n a l l y W ith R esp ect to W elfare Maximi­
z a tio n .
w heret
Pb = p r ic e o f
Pc = p r ic e o f
M.R.S.= m a rg in a l
(c ) = c o s ts o f
(b ) = lo s s due
beef
c o s t f a c to r s
ra te o f s u b s titu tio n
re d u c in g s h rin k
to sh rin k a g e
2 / The index o f f a c to r s i s made up o f th e number o f u n its o f la b o r , fe e d ,
and o th e r e x tr a s which c o n s t i t u t e means o f re d u c in g s h rin k a g e .
61
When the firm is operating" at point (a) in figure 6, the greatest
• possible net income is obtained and the. welfare of society is also maxi­
mized with respect to the individuals income=
I t may b e , that due to
poor management, or lack of knowledge with respect to the equilibrium
position, the individual producer or firm w ill not reach the equilibrium
position at point (a),
At the equilibrium point,
a loss through shrinkage, and
would be absorbed as
would be spent to reduce shrink.
A pro­
ducer may unknowingly; be located any place on I 1 outside of point (a),
while i t is desirable from his own and society's viewpoint to be operating
at point (a) where satisfactions are greater. I /
The nearer the optimum
point that a firm operates then the greater the income, and through more
income satisfactions can be increased.
The assumption of welfare economics seems to be a rather valuable
tool for determining whether or not shrinkage should be controlled.
If
the welfare or to ta l satisfactions can be increased by reducing shrinkage,
then this logically should be the course to follow.
The d iffic u lty in
th is matter lie s in the problem involved in determining just when during
the marketing process does excretory shrinkage occur, and when does tissue
shrinkage occur.
I t is also very d iffic u lt to determine how much of the
shrinkage is excretory and how much of i t is tissue shrink.
This d iffer­
entiation is essential as social loss is a result of tissue shrink.
With
the present method of handling and weighing of animals in the market, i t
“
~
I / The firm may even operate at point
and Pb equals the price of beef, or it
equals total outlay and PCF equals the
To
:
:
Pb, where To equals total outlay
may operate at point
, where To
price of cost factorsV3f
62
seems that there is no way, outside of a closely controlled study, of
determining when and how much of each type A shrinkage occurse
Even with
a controlled study the two types of shrinkage may occur simultaneously
which would make it next to impossible or ,at least economically unfeasible
to determine when, and how much of, each of the shrinkage takes placee
There are two. major ways that the shrinkage could possibly occur.
One of these would be where excretory and tissue shrinkage begin at prac­
tic a lly the same time and occur simultaneously throughout the marketing
of the animal.
I f this were the predominant method, then i t would be so
d iffic u lt to differentiate between the two as to be an impracticality.
The other way that the shrinkages may occur is where excretory shrinkage
occurs, for example,, the f ir s t one-third of the period en route to mar­
ket, then for the next one-third of the period both excretory and tissue
shrinkage occur, and the la s t one-third of the time consists, of tissue
shrinkage occurring individually.
Unless some practical method for,determining when each of the two
types of shrinkage occurs and a method of ascertaining the extent of each
i s developed, i t would be impossible to determine precise measures of
society's' loss due to a loss in weight of the animal.
I f the amount of
society's lo ss, due to tissue shrink could be designated then some econo­
mic tools could be used to determine an optimum control range.
this range, factors' affecting tissue shrink could be maintained.
Within
Until
the time comes that these measuring methods can be incorporated into the
marketing process, i t seems that the best way would be to assume that by
controlling shrinkage in general at an optimum point, tissue shrinkage
63
would a ls o be d e c re a s e d .
would in c r e a s e .
C onseq u en tly , t o t a l s a t i s f a c t i o n s and income
An in c r e a s e i n th e w e lfa re o f s o c ie ty would r e s u l t .
(b ) As h as been s t a t e d , un d er m o n o p o lis tic c o n d itio n s , th e p r ic e may
v a ry a c c o rd in g to the amount o f th e p ro d u c t p la c e d on th e m ark et b y th e
monopoly f ir m .
This i s n o t th e case under c o n d itio n s o f p u re co m p etitio n *
f o r an in d iv id u a l f ir m .
Itfhen pu re c o m p e titio n i s i n e f f e c t , th e amount o f
any one good t h a t a firm o r p ro d u c e r p la c e s on th e m ark et w i l l n o t have any
e f f e c t upon th e p r ic e he w i l l r e c e iv e .
fa c e s a p e r f e c t l y e l a s t i c demand c u rv e .
The firm u n d er p u re c o m p e titio n
This s i t u a t i o n seems t o e x i s t i n
a good d e a l o f th e a g r i c u l t u r a l com m odities.
There a re so many p ro d u cers
who produce th e same good# b u t i n such sm all q u a n t i t i e s i n r e l a t i o n to t h e .
t o t a l su p p ly , t h a t th e y do n o t in flu e n c e p r ic e b y t h e i r p ro d u c tio n .
If a
ra n c h e r o r d e a le r can p la c e more p ro d u c t on th e m ark et he w i l l re c e iv e a
g re a te r re tu rn .
.T herefore, i f a p ro d u c e r o r d e a le r can d e c re a s e th e amount
o f sh rin k a g e t h a t ta k e s p la c e in th e liv e s to c k i n 'th e m a rk e tin g p ro c e ss he
w i l l have more pounds o f anim al to p la c e on th e m ark et and re c e iv e a
"
g re a te r t o t a l re tu rn .
The p e r f e c t l y e l a s t i c demand f o r b e e f , fa c ed b y th e in d iv id u a l p ro ­
d u c e r, i s d e s ig n a te d i n f ig u r e 7 by D, which has been assumed t o be a t a
l e v e l o f tw e n ty c e n ts p e r pound.
I f 'a p ro d u c e r w ith a su p p ly cu rv e demon­
s t r a t e d by SS p la c e s a 1000 l b . anim al on th e m ark et, he w i l l r e c e iv e $ .2 0
p e r pound,, o r a t o t a l revenue o f $200.00 (&20 tim e s 1000 l b s . ) f o r the
a n im a l.
I f i t i s assumed t h a t th e sh rin k a g e i s c o n tr o lle d i n such a man­
n e r by th e firm , as t o in c r e a s e th e t o t a l w eig h t o f th e an im al to 10^0 l b s .
(S iS 1 ) th e n th e t o t a l revenue would be $210.00 ( $ .2 0 ) (IOgO) f o r th e a n im a l.
6k
S
tS
CD
$•
m
cS
CD
F ig u re 7.
A B eef P roducing Firm Facing a P e r f e c tly
Elastic Demand for Beef, Places Two Quanti­
tie s on the Market at a Price of 200 per lb.
The difference of $10.00, the shaded portion of figure 7, is an increased
return to the producer or firm as compensation for a reduction in the
shrink.
This reduction in shrinkage may be attained by controlling the
factors which influence shrinkage as has been suggested in Part II of
this study.
The assumption, of equal prices to be paid for different quantities,
is only applicable when the product is homogenous in every unit.
I f the
product is not homogenous, there would technically be a different product
placed on the market and a resulting sh ift of prices would occur.
A d if­
ferent product would be in evidence i f an excessive shrinkage or an ex­
62
cessive f i l l took place in cattle placed on the market.
I buyer is
actually paying his price according to the dressing percentage expected
on an animal or the weight of the dressed carcass.
Therefore, the price
offered w ill vary according to the amount of f i l l the buyer judges the
animal to have.
If an animal is well fille d a lower price w ill be bid.
I f an animal
is well shrunk out, then the buyer w ill bid a higher price and s t i l l be
obtaining the same dressed weight.
A differentiation of prices;pdid i&
Shown in figure 8, where various "products" are placed on the market, the
variation being caused by the amount of f i l l in the animals.
Mth the
use of hypothetical figures various returns to the firm (seller) can be
shown
Quantity
Figure 8.
Price-Supply Relationship for an Individual
Firm Placing Animals on the Market Under
Three Shrinkage Conditions.
66
I f an a n im a l -with a norm al ap p earan ce i s p la c e d on th e m a rk e t, th e
p r ic e may be b id on th e $ e20 p e r pound b a s i s »
I f th e an im al w eighs 1000
pounds when i n norm al c o n d itio n th e s e l l e r would r e c e iv e $200,00 ($ 4, 20)
(1000) f o r th e a n im a l.
I f th e s e l l e r t r i e d to g e t a g r e a te r t o t a l r e tu r n
from h is an im al b y in c r e a s in g th e s e l l i n g w eig h t by p u ttin g a good f i l l
on th e an im al, th e n th e p r ic e may be q u o ted a t $»18 p e r pound.
I f th e
an im a l has ta k e n on a f i l l o f %0 pounds o v e r th e norm al w eight o f 1000
pounds, th e r e tu r n to th e s e l l e r would be $189,00 ($ .1 8 ) (1 0 £ 0 ).
This
would mean a lo s s o f $11,00 t o th e s e l l e r due to an e x c e s siv e f i l l on
th e a n im a l,
Ttfhen a n anim al i s shrunk o u t e x c e s s iv e ly , 10_ p e rc e n t below
th e norm al w e ig h t f o r exam ple, th e n a h ig h e r p r ic e o f , sa y , $ .2 1 can be
p a id by th e p u r c h a s e r ,
If ith a 10 p e rc e n t s h rin k , th e norm al 1000 l b ,
a n im al would w eigh 900 l b s , and th e r e tu r n s t o th e s e l l e r would be $189.00
($ .2 1 ) ( 9 0 0 ) .
This would a ls o mean a lo s s o f $11.00 t o th e s e l l e r . ' As i s
shown i n t h i s c a s e , an e x c e s siv e s h rin k o r an e x c e s siv e f i l l m ay 'b o th be
d e tr im e n ta l to th e s e l l e r .
This i s in view o f th e f a c t t h a t b u y e rs w i l l
o f f e r d i f f e r e n t p r ic e s when d i f f e r e n t amounts o f s h rin k o r f i l l a re i n
e v id e n c e ,.
A s e l l e r m ust be v e ry c a r q f u l th e n , i n th e amount o f sh rin k a g e or
th e amount o f f i l l t h a t ta k e s p la c e .
E x c e ssiv e sh rin k a g e sh o u ld n o t be
allow ed i f th e p r ic e and w eight r e la tio n s h ip i s com parable to t h a t i n th e
above exam ple.
A lthough a sh rin k a g e r e d u c tio n i s recommended, a r e f i l l
beyond th e "norm al" f i l l o f an an im al sh o u ld no t be encouraged u n d er th e s e
c o n d itio n s ,
(c ) .The th e o r y o f th e firm assumes t h a t each in d iv id u a l o r firm i s
67
a tte m p tin g to maximize re tu rn s *
The two f a q to r s re s p o n s ib le f o r t o t a l
r e tu r n s to a ra n c h e r from s a le o f c a t t l e a re p r ic e p a id p e r pound and th e
number o f pounds. • Under c o n d itio n s o f p u re c o m p e titio n , a s has been d e­
m o n stra te d p r ic e w i l l be e x a c tly t h e same r e g a r d le s s o f th e q u a n tity o f
th e same commodity t h a t th e firm p la c e s on th e m a rk e t.
T h is le a v e s pounds
o f anim al to be c o n tr o lle d o r v a rie d by th e p ro d u c e r as a means o f m axi­
m izin g r e t u r n .
Under th e s e c o n d itio n s th e number o f pounds should be
maximized to maximize t o t a l r e t u r n s .
I f the p ro d u c e r or d e a le r can reduce
s h rin k a g e o f th e an im als as much as p o s s ib le , t h i s w i l l b e an a id to i n ­
c r e a s in g th e number o f pounds, o f anim al t h a t i s p la c e d on th e m ark et
(assum ing i d e n t i c a l p ro d u c ts b e fo re and a f t e r sh rin k a g e , w hich i s tr u e i f
an e x c e s s iv e s h rin k a g e o r f i l l does n o t o c c u r ) .
C o n seq u en tly t h i s i s
seen to be one o f th e methods a v a ila b le to a id i n m axim izing t o t a l re tu rn s *
A v a ila b le methods f o r th e r e d u c tio n o f s h rin k a g e a c c o rd in g t o th e
p re c e d in g e m p iric a l a n a ly s is a r e ;
t o in c re a s e th e ho u rs a t fe e d and r e s t
s to p s and to in c r e a s e th e hours f o r a r e f i l l p e rio d i n th e y a rd s a f t e r
a r r i v a l and b e fo re s a l e .
I f the hours a t fe e d and r e s t s to p s a re i n ­
c re a s e d one h o u r, th e a n im als w i l l g a in back .02 pounds o f w eig h t on th e
a v erag e b ased on a p a r t i a l - a n a l y s i s .
An in c re a s e o f t e n h o u rs , t h e r e f o r e ,
would r e s u l t i n an in c r e a s e o f .2 p o u n d s.
I n o th e r c irc u m sta n c e s th e r e g a in a t fe e d and r e s t s to p s may be
g re a te r.
used.
The an im als may s h rin k s t e a d i l y u n t i l a fe e d and r e s t s to p i s
Then th e s h r in k may d e c re a se w h ile a t th e ^ e e d and r e s t s to p , b u t
w i l l in c re a s e a g a in as soon as th e an im als a re re lo a d e d and en ro u te once
a g a in .
(See f ig u r e 9 ) .
This c y c le may be r e p e a te d
a g a in fo r as many
68
fe e d and r e s t s to p s a s a re used*
S hrin k ag e may be re p la c e d a t a f a i r l y r a p id r a t e a t f i r s t . I /
R egain
may be as r a p id as th e c o rre sp o n d in g lo s s f o r a s h o r t p e r io d o f tim e .
As
th e w e ig h t becomes more d i f f i c u l t - to re g a in th e sp re ad becomes w id er and
w id er betw een s h rin k and r e g a in , and a lo n g e r tim e i s n e c e s s a ry t o re g a in
th e w eig h t l o s t d u rin g th e l a s t p a r t o f th e sh ip m en t.
T h is may o ccu r even
w ith e q u a l d e c re a s e s i n s h rin k a g e d u rin g su b se q u e n t fe e d and r e s t s to p s .
A fe e d and r e s t s to p a t any tim e d u rin g th e shipm ent w i l l , n e v e r th e le s s ,,
be a b e n e f it, o r a n a id i n sh rin k a g e r e d u c tio n , and in c r e a s e th e pounds
p la c e d on th e m a rk e t, (se e f ig u r e 9)
To in c r e a s e th e number o f pounds on th e m a rk e t, a firm may a ls o i n ­
c re a s e th e number o f ho u rs i n th e y a rd s p re v io u s to s a l e .
F o r each a d d i­
t i o n a l h o u r i n the y a rd s a f t e r a r r i v a l and b e fo re s a l e , th e an im als
ship p ed from M iles C ity S ta tio n in c re a s e d t h e i r w eight by .2 6 pounds on
th e a v e ra g e .
This means t h a t f o r e v e iy a d d i t i o n a l day s p e n t i n th e y a rd s
b e fo re s a l e , an a n im al w eighing 956 pounds w i l l re p la c e 6 .2 k pounds, u n t i l
th e a n im al i s back n e a r the lo a d in g w e ig h t.
(Animals o b serv ed were n o t
h e ld i n th e y a rd s f o r more th a n 5 o r 6 d a y s, th e r e f o r e th e r a t e o f r e g a in
sh o u ld n o t be p r o je c te d beyond t h i s tim e ).
I n c r e a s in g t o t a l w eig h t w i l l g iv e th e in d iv id u a l a maximum t o t a l r e ­
t u r n b u t does h o t c o n s id e r th e c o s t o f in c r e a s in g w eight by d e c re a s in g
s h rin k a g e .
To in tro d u c e c o s ts in to th e a n a l y s i s , assu m p tio n (d ) i s con­
s id e r e d .
I/
See pages Tlfand 72 :6f '.this'"-study.
HO
Pounds
g a in ed 90
R egain
Time ( in h o u rs)
F ig u re 9
Pounds o f Beef L ost in One Time P e rio d
and Regained i n A n o th er,
70
(d)
Optimum s o lu tio n - o f c o s t and r e tu r n s ta k e s p la c e where m a rg in a l
c o s t e q u a ls m a rg in a l rev en u e under c o m p e titiv e c o n d itio n s .
I f th e r e tu r n s
f o r th e l a s t u n i t p la c e d on the m a rk e t i s g r e a t e r th a n th e c o s t o f p la c in g
. t h a t u n i t on th e m a rk e t, th e optimum i s n o t a t t a i n e d .
More u n i t s may be
p la c e d on th e m ark et even though the c o s t o f p la c in g t h a t u n i t on th e
m a rk e t i s g r e a t e r th a n th e p re v io u s u n i t c o s t s .
I f w eig h t can be iris-
c re a s e d th e in c r e a s e sh o u ld be s t r i v e n f o r , u n le s s m a rg in a l c o s t i s e q u a l
to o r g r e a t e r than m a rg in a l re v e n u e .
To in c r e a s e th e w eig h t o f an animal
a f t e r s h rin k a g e , two o f th e p o s s i b i l i t i e s a v a il a b le a re ?
( l ) to in c re a s e
th e number o f h o u rs a t fe e d and r e s t s to p s and (2 ) t o in c r e a s e th e number
o f hours i n th e y a rd s b e fo re th e s a l e .
These in c r e a s e s can ta k e p la c e
o n ly w ith a d d i t i o n a l c o s t s .
The av erag e c o s t p e r h o u r a t fe e d and r e s t s to p s i s a p p ro x im a te ly
sev en c e n ts p e r h e a d . I /
By in c r e a s in g th e tim e a t fe e d and r e s t sto p s
b y one hour th e w eight i s in c re a s e d .0 2 p o unds. 7M ith a h y p o th e tic a l
v a lu e o f 20 c e n ts p e r pound a 95>6 pound anim al w i l l y i e l d a r e tu r n o f oneh a lf c e n t.
C o n seq u en tly , th e m a rg in a l c o s t p e r hour e q u a ls seven c e n ts
w h ile th e m a rg in a l revenue e q u a ls o n e ^ h a lf c e n t; th e r e f o r e , u n le s s o th e r
f a c t o r s a re c o n sid e re d such a s Hkumaneness R and h e a lt h o f th e an im als i t
would n o t be econom ical to keep them f o r a d d itio n a l tim e a t fe e d and r e s t
s to p s .
This i s i n th e s p e c if ic case o f E xperim ent S t a t i o n s la u g h te r
s t e e r s , and i t w i l l p ro b a b ly v a ry a good d e a l from t h i s i n o th e r c a s e s ,
e s p e c i a l l y where th e an im als a re n o t so h ig h ly f in i s h e d , and assum ing no
____________
•
-
_________________________
-
■
:
____________________
I / M isc e lla n eo u s d a ta from Montana B ranch E xperim ent S t a tio n , H avre,
M ontana, 19^6-19^2.
71
change i n p r i c e o f anim als r e s u l t i n g from s h rin k o r f i l l .
I f th e hours a t th e y a rd s a f t e r a r r i v a l and p re v io u s to s a le a re i n ­
c re a s e d a s a means o f m axim izing r e t u r n s , th e optimum i s d eterm in ed by
th e m a rg in a l c o s t a s w e ll a s r e t u r n s e
The av erag e c o s t f o r fe e d in g an
an im al i n th e y a rd s e q u a ls 2% c e n ts p e r h o u r. I /
The r e tu r n s p e r aiUmqi
f o r one hour e q u a ls a n a d d itio n a l .2 6 pounds m u ltip lie d b y a h y p o th e tic a l
20 c e n ts which i s e q u a l to 5«2 c e n t s .
The m a rg in a l revenue e q u als 5 .2
c e n ts w h ile th e 'm a rg in a l c o s t e q u a ls 2 | c e n t s .
T h e re fo re , i t i s economi­
c a l f o r th o s e p e o p le concerned t o keep t h e i r anim als i n th e y ard s u n t i l
th e a n im als have r e f i l l e d enough to have a norm al ap p earan ce w ith th e
above r e la t i o n s h i p s i n e f f e c t .
O ther c a s e s may be i l l u s t r a t e d where th e m a rg in a l revenue i s even
g r e a t e r f o r each h our i n th e y a rd s , th a n was found i n th e E xperim ent S ta ­
t i o n s la u g h te r s t e e r s .
A nother example may be o b serv ed i n T able X U .
In
t h i s case th e m a rg in a l c o s t would be e q u a l t o 2 c e n ts p e r h o u r W iereas th e
m a rg in a l rev en u e would be e q u a l to ( . 7h ) ( # . 20) l£ c e n ts p e r h o u r (59 .2
d iv id e d b y 80 e q u a ls c7h)o
There i s th u s a d if f e r e n c e o f 13 c e n ts p e r
h o u r betw een m a rg in a l c o s t and m a rg in a l re v e n u e .
T h e re fo re , i t would be
econom ical t o fe e d i n the y a rd s p re v io u s to s a le u n t i l th e tim e came t h a t
■the c o s ts in c re a s e d due to fe e d s c a r c i t y o r in c re a s e d demand5 o r u n t i l
h ig h e r la b o r and h a n d lin g c o s ts ,-were e f f e c t i v e .
The r a t e o f r e f i l l f o r
v a rio u s tim e p e rio d s i s o b ta in e d b y d iv id in g th e d a ta i n T able X II i n t o 3
I / M isc e lla n eo u s d a ta o b ta in e d from a u c tio n m ark ets i n M ontana, see
Appendix T able X I I I 0
72
T able Z I I .
Hours
En ro u te
S hrinkage and R e f i l l o f F eed er C a ttle i n Montana
Loading
W eight
Pounds
S h rin k
En ro u te
Pounds
Gained i n
Yards
Pounds S h rin k
A f te r R e f i l l
i n Yards
Hours
Allowed
For R e f ill
i n Yards
No.
Head
he
96
72
96
U8
72
72
72
72
108
96
W
667
723
798
793
705
72h
757
767
759
88U
667
685
5 3 .h
5 5 .0
6 0 .7
5 3 .9
5 0 .8
h i, 3
h7.7
6 6 .0
6 9 .1
8 3 .1
6 8 .0
97.3
6 9 .4
5 7 .2
42.8
3 8 .0
5 0 .8
3 4 .1
5 6 .0
6 9 .1
6 1 .5
7 3 .4
61 .8
86.3
+1 6 .0
+ 2 .2
1 7 .9
15 .9
0 .0
7 .6
* 8 .3
* 3 .1
7 .6
9 .7
6 .2
1 1 .0
48
48
48
48
72
72
72
72
72
108
120
144
153
83
102
86
33
53
48
140
67
185
74
39
Ave.75
7hh
62.2
59 .2
3 .9
80
88 .6
Source!
D ata o b ta in e d f o r th e C ost o f M ark etin g s tu d y , M,. S . t i . , 1952- 53.
g ro u p s— -th o s e r e f i l l e d f o r 1|8 , 72 and 10CI and o v e r ho u rs •
The r a te o f
g a in p e r h o u r o f r e f i l l was as fo llo w s I
U8 h r . r e f i l l =
72 h r . r e f i l l =
Ave. 124 h r . r e f i l l =
1 .0 8 # p e r hour
.7 5 # p e r hour
.5 9 # p e r hour
I f th e m a rg in a l revenue d e c re a se d r e l a t i v e to th e m a rg in a l c o s t s , because
o f low er b e e f p r ic e s o r a d e c re a se i n th e r a t e o f g a in , th e n i t would n o t
be a d v is a b le to fe e d i n th e y ard s a f t e r m a rg in a l c o s ts exceeds m arg in al
re v e n u e .
The optimum c o n d itio n o f m a rg in a l c o s ts and m a rg in a l revenue may
a l s o be i l l u s t r a t e d i n g ra p h ic form as i n fig u r e 10.
The c o s t o f re g a in in g each pound in c r e a s e s because i t ta k e s more time,
f e e d , la b o r , e t c . , to r e p la c e th e pounds l o s t th ro u g h t i s s u e s h rin k o r
73
M arg in al C ost
M arg in al Revenue
Number o f pounds l o s t o r g ain ed
F ig u re 1 0,
An Optimum P o s itio n i s Sought by a Firm Where
M arg in al C ost Equals M arg in al Revenue. I /
even more to re p la c e th e l a s t pounds l o s t through e x c r e to r y s h r in k , th a n
i t does to re p la c e th e f i r s t w e ig h t l o s t th ro u g h stomach l o s s . 2 /
T here­
f o r e , th e m a rg in a l c o s t curve has a c u r v ilin e a r f u n c tio n and i s in c r e a s in g
s t an in c r e a s in g r a t e .
This makes th e two cu rv es m eet a t p o i n t P , (when
I / N otej The s lo p e o f th e m a rg in a l c o s t curve i s d eterm in ed b y th e p r ic e s
o f c o s t f a c to r s a s r e l a t e d to le n g th o f tim e needed f o r each a d d itio n a l
pound o f r e g a in , see page 69 o f t h i s s tu d y .
2/
See fig u r e 12 page 75»
7h
b e e f i s 20 c e n ts p e r pound) where th e m a rg in a l c o s t becomes e q u a l to mar­
g in a l re v e n u e ---- added c o s t e q u a ls 20 c e n t s | added revenue e q u a ls 20 c e n ts e
A t t h i s p o i n t , an optimum i s re a c h e d and i t would be uneconom ical to go
beyond t h i s p o in t a s th e m a rg in a l c o s t exceeds th e m a rg in a l re v e n u e .
It
would a ls o be uneconom ical to s to p b e fo re p o in t P i s a t t a i n e d b ecau se th e
added revenue i s g r e a t e r th a n th e added c o s t i n t h a t a r e a .
This a p p lie s
to any o th e r i n t e r s e c t i o n o f m a rg in a l c o s t and m a rg in a l revenue depending
on p r ic e s i n e f f e c t*
The pounds o f lo s s in c u rre d th ro u g h s h rin k a g e i n a tim e p e rio d , and
a ls o th e pounds r e l a t e d to th e c o s t o f re g a in in g w eight may be shown d i a g r a m a tic a lly as i n f ig u r e s 11 and 12*
F ig u re 11 shows th e pounds o f lo s s on th e v e r t i c a l s c a l e , and th e
tim e i n hours on th e h o r iz o n ta l s c a le .
Line D r e p re s e n ts the amount o f
sh rin k a g e t h a t o ccu rs a s tim e e n .route in c r e a s e s .
S h rin k ag e i s v e ry heavy
f o r th e f i r s t two tim e p e r io d s , and a f t e r t h a t i t in c r e a s e s b u t a t a
r a p i d l y d e c re a s in g r a t e .
A f te r fo u r tim e p e rio d s have p a s t , th e sh rin k a g e
does n o t in c r e a s e v ery much.
I n f ig u r e 12 th e pounds o f r e g a in (com parable to th o se pounds l o s t i n
f ig u r e 1 1 ), a re p l o t t e d on th e v e r t i c a l a x is a g a in s t th e c o s t o f re g a in in g
w eight i n d o l l a r s .
The c o s t o f re p la c in g th e f i r s t w eight l o s t i s v ery
s m a ll u n t i l about lj.2 pounds have b e en re g a in e d .
The c o s t in c re a s e s a t an
in c r e a s in g r a t e as th e l a s t pounds l o s t a re more d i f f i c u l t to r e g a in th a n
th e e a r l i e r p a r t o f th e s h r in k .
This may be due to th e p o s s i b i l i t y o f
th e l a s t p a r t o f th e sh rin k a g e c o n s is tin g o f t i s s u e s h rin k w h ile th e f i r s t
s h rin k was o f an e x c r e to r y n atu re*
Pounds o f 70lo s s th ro u g h
s h rin k
Pounds
»D o f
r e g a in (
when fe d
Time p e rio d s ( in 12 hour u n i t s )
F ig u re 1 1.
Pounds o f Beef L ost Through
S hrinkage in S e v e ra l Time
P e rio d s . I /
^
U
b
o
10
C ost o f re g a in ( in d o lla r s )
F ig u re 1 2 .
12
Pounds o f Beef Regained as
Compared to th e C ost o f
R egain. 2 /
I / See Abbenhaus, G erald R ., and Penney, Roland C ., S h rin k C harac t e r i s t i c s o f F a t C a t tle T ra n sp o rte d by T ruck, Chicago Union Stock Yards and T r a n s it Company, C hicago, I l l i n o i s , 1951.—--------2/
See T able XII o f t h i s s tu d y .
76
From th e fo re g o in g i l l u s t r a t i o n s on e q u a li ty o f m a rg in a l c o s t and
m a rg in a l re v e n u e , th e optimum has b een d em o n strated i n s e v e r a l ways*
N e v e rth e le s s , th e optimum i s alw ays found a t th e same p o in t and t h a t i s
where th e added c o s ts o f re d u c in g s h rin k a g e a re e q u a l t o th e 'added revenue
from re d u c in g sh rin k ag e*
Be
R a tio n a l M arketing B eh av io u r*
A p ro d u c e r has th e d i f f i c u l t ta s k o f d e te rm in in g how to s e l l h is
s to c k i n a tte m p tin g t o a t t a i n th e g o a l o f a m ax im izatio n o f n e t income as
has b een s e t up i n th e ttTheory o f th e F irm tt* "What ty p e o f a s a le s ch an n el
sh o u ld he choose as a m ark et o u t l e t f o r h is c a t t l e ?
As m ost o f th e p ro ­
d u c e rs and d e a le r s r e a l i z e , th e r e a re many a l t e r n a t i v e m ark ets which can
be u sed to s e l l sto ck *
These m ark ets in c lu d e c e n t r a l m a rk e ts, a u c tio n
m a rk e ts , and d i r e c t s a le s to p u rc h a se r*
The p ro d u c e r, i n o rd e r t o maxi­
m ize p r o f i t s , w i l l a tte m p t to a c t r a t i o n a l l y and s e l l th ro u g h th e ch an n el
w here th e g r e a t e s t n e t r e tu r n s can be o b tain ed *
I*
B udget A n a ly s is *
A ra n c h e r may use a s e t o f a l t e r n a t i v e b u d g ets
to a id i n d e te rm in in g w hich method o f s a le i s m ost p r o f ita b l e *
These
b u d g e ts a re u s e f u l i n s e t t i n g up and ch eck in g p o s s ib le p ro d u c tio n and
s a le s methods*
D isap p o in tm en t and f i n a n c i a l lo s s can b e a v o id ed b y f i r s t
t e s t i n g f u tu r e p la n s b y th e b u d g e tin g method r a t h e r th a n by a c t u a l o p e ra ­
tio n *
I t i s much c h e a p e r to make m ista k e s on p a p e r th an i n p ractice®
In a p p ly in g th e budget-m ethod to a p a r t i c u l a r ra n c h e r who i s tro u b le d
by th e dilemma o f ch o o sin g th e c o r r e c t method o f s e l l i n g h is c a t t l e , a
h y p o th e tic a l Montana ra n c h e r who i s p ro d u c in g g rad e H erefo rd c a t t l e may be
co n sid e re d *
T his p a r t i c u l a r ra n c h e r h as th e th r e e methods o f s a le a v a i l ­
77
a b le to him ; c e n t r a l m a rk e t, a u c tio n m a rk e t, and d i r e c t s a l e .
Some o f
th e c irc u m sta n c e s su rro u n d in g th e p o s s ib le p ro d u c tio n and s a l e s p ro c e d u res
a re o u tlin e d below*
The r a n c h e r has an economic u n it o f 125 b re e d in g cows, which g raze
on t y p i c a l M ontana range*
The u n it i s o p e ra te d on a cow and c a l f b a sis*
The c a lv e s a re born- i n th e s p rin g o f th e y e a r , g e n e r a lly n e a r th e end o f
March*
A ll o f th e s to c k a r e ru n on th e range la n d d u rin g th e summer and
i n th e f a l l o f th e y e a r th e c a lv e s a re ta k e n from t h e i r m o th ers and s o ld
g e n e r a lly i'n O ctober*
"When th e c a lv e s a re s o ld th e y weigh a p p ro x im a te ly
UOO lb s* each*
C e n tr a l M arket—- - I f th e c a lv e s a re sh ip p ed t o a c e n t r a l m ark et from
:M ontana, St* P a u l may be c o n sid e re d a s a t y p i c a l d e s t i n a t i o n o f th e s h ip ­
ment*
The c a lv e s a re tru c k e d t o a r a i l r o a d p o in t a b o u t IB m ile s from th e
ranch*
They a re w eighed (U 00 pounds each ) and lo ad ed on th e s to c k c a r s
and sh ip p ed t o St* P a u l,
En ro u te th e r e a re two fe e d and r e s t s to p s ,
where th e c a lv e s a re fe d 150 pounds o f hay p e r c a r a t each s to p , and w a te r
i s a v a ila b le *
These s to p s a re f o r a p p ro x im a te ly 8 h o u rs each i n o rd e r
,t h a t th e a n im als may e a t , l i e down, and r e s t*
S t , P a u l th e y a re w eighed a g a in .
"When th e s to c k a r r iv e i n
I f a t e n p e rc e n t s h rin k i s assumed, th e
/w eight upon a r r i v a l i s 360 pounds p e r a n im a l.
I f th e r e a re 100 c a lv e s s o ld a t a w eig h t o f 360 pounds each th e p ro ­
d u c e r would have a g ro ss r e tu r n o f $ 7 ,2 0 0 ,0 0 f o r th e c a lv e s when a p r ic e
p f $20.00 p e r hundred w e ig h t i s assumed*
A u ctio n M arket-T jFhe .g alv es may be s o ld th ro u g h a l o c a l a u c tio n mar­
78
k e t w hich i s lo c a te d a t th e r a i l r o a d sh ip p in g p o i n t e
The s to c k a re
tru c k e d i n t o th e m a rk e t and s o ld th ro u g h ,th e a u c tio n r i n g v e ry soon a f t e r
a rriv a l.
They a re s o ld on th e b a s is o f a
w e ig h t e a c h , %/
s h rin k on an a c t u a l 380 l b ,
The r e tu r n s a r e $7220,00 f o r 100, 38O pound c a lv e s , a t an
assumed p r i c e o f $19,00 p e r h u n d red w eig h t.
D ir e c t t o p u rc h a s e r---- b y t h i s i s meant a s a l e d i r e c t to th e p a c k e r o r
f e e d e r a t th e l o c a l s h ip p in g p o in t th ro u g h b a rg a in in g betw een th e p ro d u c e r
and p u rc h a s e r.
The b u y e r o f f e r s to pay $18,80 p e r hundredw eight and ask s
f o r a k% p e n c i l s h r in k .
A gain th e p ro d u c e r re c e iv e s $ 7 ,2 2 0 ,0 0 g ro ss r e ­
tu r n s - f o r th e c a lv e s .
To th e p ro d u c e r i t may a t f i r s t a p p e a r t h a t a l l th r e e s a le s a l t e r n a ­
t i v e s w i l l y ie ld a p p ro x im a te ly th e same r e t u r n f o r th e c a lv e s he s e l l s ,
I n o r d e r t h a t any m ajor n e t d if f e r e n c e s can b e d e term in e d i t i s n e c e s s a ry
to in c lu d e th e c o s ts o f m a rk e tin g th e an im als i n each s a l e c h a n n e l.
To
do t h i s th o ro u g h ly , a s e t o f a l t e r n a t i v e b u d g e ts may be s e t up p re v io u s
to th e s a le i n o r d e r t h a t d e f i n i t e knowledge i s g ain ed w ith r e s p e c t to
th e problem a t hand.
W ith in th e b u d g e t th e p ro d u c tio n and s a le s o p e r a tio n a re found t o b e '
a p p ro x im a te ly th e same up t o th e r a i l r o a d s h ip p in g p o i n t .
A ls o , th e g ro s s
income i s found to be a p p ro x im a te ly th e same i h each c a s e .
The d if f e r e n c e l i e s i n th e expenses in c u rre d i n s e l l i n g th e sto c k
th ro u g h th e d i f f e r e n t c h an n e ls and i n p r i c e d i f f e r e n c e s .
The d if f e r e n c e s
I / S hrinkage r a t e i s d eterm in ed from m a te r ia l i n Table V on c a lv e s sh ip p ed
Dy tru c k a d is ta n c e com parable to th e 15 m ile s .
I
Ii
79
i n c o s ts o f m a rk e tin g may be s u f f i c i e n t l y g r e a t t h a t one method can be
d eterm in ed a s p r e f e r a b le o v e r th e O th e rs6
Upon c o m p letio n o f th e a l t e r n a t i v e b u d g ets th e ex p en ses o f s e l l i n g
th e s to c k , th ro u g h th e c e n t r a l and a u c tio n m a rk e ts , a re found to exceed
th e c o s ts e n t a i l e d b y s e l l i n g d i r e c t to th e p u rch aser*
The c o s ts e n ta i le d
b y s e l l i n g th ro u g h th e c e n t r a l m a rk e t a re a ls o above th o se in c u rre d i n th e
l o c a l a u c tio n m arket*
As has b een s t a t e d , th e c o s ts f o r a l l methods a re
e q u a l up t o th e s h ip p in g p o in t, b u t beyond t h a t s ta g e th e c a lv e s s o ld
th ro u g h th e a u c tio n r e q u ir e th e fo llo w in g a d d itio n a l e x p e n d itu re s above
th o se r e q u ir e d .when a d i r e c t s a le i s made*
lh e s e a r e s I /
In s u ra n c e , Yardage and Commission -------- $309*00
'
T o ta l
$309*00
T?he c e n t r a l m arket s a l e re q u ire d th e fo llo w in g e x p e n d itu re s o v er
above th o se made th ro u g h th e l o c a l a u c tio n s 2 /
V e te rin a ry in s p e c tio n
$15*00 ( s t a t e law s)
Feed and h a n d lin g en ro u te
$8O.O0 (a p p ro x im a te ly )
T r a n s p o rta tio n
$38h*00
T o ta l
$679.00
B y .a com parison: o f th e s e t o t a l c o s t f i g u r e s , i t i s seen t h a t th e
a u c tio n c o s ts exceed d i r e c t s a l e c o s ts b y $309.00 and a ls o t h a t th e cen­
t r a l m ark et c o s ts exceed th e a u c tio n c o s ts b y $1*79.00.
T -
;
I/
:-•••
. .7
.. r I.,.;;
,
,
The c e n t r a l m ark et
-'■ ■,_________ .
I / The so u rc e o f th e s e f ig u r e s i s d a ta o b ta in e d i n th e liv e s to c k m a rk e t­
in g s tu d y P r o je c t tWMh i n c u r r e n t s tu d y — See Table X H I and XIV, appendix*
.2/
Ib id .
80
;,,.M c o s ts a re $788„00 g r e a te r th a n th e d i r e c t s a le c o sts*
Ihe s p re a d o r m argin allow ed f o r sh rin k a g e betw een l o c a l s a le s (a u c ­
t i o n and d i r e c t ) and c e n t r a l m ark et i s $1 .0 0 ($ 20.00 minus $19. 0 0) p e r
h u n d red w eig h t.
The m argin t h a t sh o u ld have been allow ed f o r c o s ts o th e r
th a n sh rin k a g e to o b ta in e q u a l n e t r e t u r n s 5 betw een s a le s d i r e c t to p u r­
c h a s e r and l o c a l a u c tio n m arket i s $ .8 1 p e r h u n d red w eig h t.
The m argin
t h a t sh ould have been allo w ed b e tw e e n -th e a u c tio n m ark et and th e c e n t r a l
m ark et f o r c o s ts o th e r th a n s h rin k a g e i s $1 .2 6 p e r hundredw eight b ased on
lo a d in g w e ig h t.
The m argin to a llo w betw een d i r e c t s a le t o p u rc h a s e r and
c e n t r a l m a rk e t f o r c o s ts o th e r th a n sh rin k a g e i s $2.07 p e r hundredw eight
b a se d on th e lo a d in g w eight o f th e c a lv e s .
W ith th e s e ,m a rg in s th e p r ic e
o f f e r s sh o u ld have b e e n , $20.00 p e r hundredw eight a t the c e n t r a l m a rk e t,
$ l8 .7 ii p e r hundredw eight a t th e a u c tio n m a rk e t, $17.93- p e r hundredw eight
on th e d i r e c t s a le t o p u rc h a s e r.
These a re a l l p u r e ly t h e o r e t i c a l c a s e s , and f i g u r e s , and i t should be
r e a l i z e d t h a t a d i f f e r e n t p a t t e r n o f p r i c e s and c o s ts m a y b e o b ta in e d u n d er
v a rio u s c o n d itio n s .
I t sh o u ld a ls o be r e a liz e d t h a t a l l b u y e rs b i d . a
p r ic e a c c o rd in g to th o se p r ic e s a v a ila b le e lse w h e re .
A method o f d e te r ­
m ining th e p r ic e d if f e r e n c e s th ro u g h a b u d g e t a n a ly s is may be h e lp f u l i n
showing sp re a d s among p r i c e s .
To a n a ly z e th e s a l e s p ro c e d u re s and o b ta in th e p r i c e m a rg in s5 c o s t s ,
s a le s w e ig h ts , and s h r in k c o n d itio n s m ust be a s c e r ta in e d .
The same arvimalg
( c a lv e s ) observed i n th e p re v io u s s e c tio n may be used f o r th e a n a ly s is .
The 100 head o f c a lv e s would re a c h th e c e n t r a l m arket w ith a 10 p e r c e n t
s h rin k and th e s a l e s w e ig h t would be 36,000 pounds.
The c o s ts f o r th e
81
c a lv e s sh ip p e d to S t,' P a u l in c lu d e s
V e te rin a ry in s p e c tio n
•
o
o
Feed and h a n d lin g en. r o u te *
e
e
e
e
o
e
e
T r a n s p o r ta tio n .. . . . . . . . .
In s u ra n c e 3 Yardage Sc. Commission
O
e
.$ 1 5 .0 0 ( s t a t e la w s)
e
e
o
*
80,00
6
0
0
3814.000
o
e
o
T o ta l c o s t i f s o ld on a r r i v a l
309 .0 0
788.00
E x tra fe e d and w a te r p e r day a f t e r a r r i v a l . .
61.00
T o ta l c o s ts i f s o ld one day a f t e r a r r i v a l . . , 81+9.00
T o ta l c o s ts i f s o ld f o u r days a f t e r a r r i v a l . .103 2 .0 0
I f th e an im als a re s o ld on a r r i v a l a t a t h e o r e t i c a l p r i c e o f $>20.00
p e r h u n d red , th e g ro ss r e t u r n w i l l be # 7 ,2 0 0 .0 0 , and th e n e t r e t u r n w i l l
be #6,1+12.00.
I f th e c a lv e s a re s o ld one day a f t e r a r r i v a l th e s h rin k .may
be d e c re a se d from 10# t o 6#, and th e s a le s w eig h t w i l l be 37,600 pounds.
The c o s t f o r th e a d d itio n a l day i s e q u a l t o # 6 l.0 0 and t o n e t th e same
amount a s was re c e iv e d on a r r i v a l th e s a le s p r ic e would have to be #19.30
p e r h u n d re d .
The c a lv e s w i l l p ro b a b ly g a in back m ost o f t h e i r w eig h t l o s t ,
i n fo u r days i n th e y a r d s . I /
I f th e y a re fe d o v er t h a t p e r io d , th e s a le s
w eig h t w i l l be a b o u t 39,200 pounds, ( r e g a in o f 8 # ).
The t o t a l c o s t w i l l
be # 1 ,0 3 2 .0 0 so i n o rd e r to n e t a s im ila r #6,1+12.00, th e s a le p r ic e co u ld
drop t o #1 9.00 p e r h u n d red .
I f th e .c a l v e s a re n o t shipped t o a c e n t r a l m a rk e t, b u t a re s o ld a t
th e l o c a l a u c tio n , th e r e a re a few p o s s i b i l i t i e s to fo llo w .
The sa le 'm a y
be made on th e day o f a .r r iv a l, or any number o f days a f t e r a r r i v a l .
I/
See Table V o f t h i s s tu d y .
If „
82
th r e e p o s s ib le s a le days a re ' examined i n t h i s c a s e , th e fo llo w in g so ld
on a r r i v a l , one d ay a f t e r a r r i v a l , o r fo u r days a f t e r a r r i v a l may be
r e p r e s e n ta tiv e s
The c o s ts t o th e s e l l e r when he s e l l s h i s sto c k th ro u g h th e a u c tio n
may be l i s t e d as fo llo w s g
In su ra n ce ^ y a rd a g e , fe e d , and commission - —
Feed and h a n d lin g p e r day a f t e r a r r i v a l
—
$29^,00
6 l„0 0
T o ta l c o s t i f s o ld on d ay o f a r r i v a l
309*00
T o ta l c o s t i f s o ld one day a f t e r a r r i v a l - —
370*00
T o ta l c o s t i f s o ld f o u r days a f t e r a r r i v a l -
533*00
I f th e s e l l e r i s t o n e t th e same amount o b ta in a b le a t the c e n t r a l mar­
k e t u s in g th e $20.00 p e r hundred p r ic e a s a b a s e , th e p r ic e p a id on th e
d ay o f a r r i v a l a t th e a u c tio n m ust be $17.69 p e r hundred i f a s h rin k o f
5$ i s assum ed.
This p r ic e i s r e q u ir e d when a s h rin k o f #
p r i o r t o s a le i n th e a fte rn o o n ..
i s assumed as o c c u rrin g
The t o t a l s a le s w eig h t would th e n be
38,000 p o u n d s.. When th e c a lv e s a re s o ld one day a f t e r a r r i v a l th e y may
have re g a in ed some o f th e w eight l o s t th e day b e fo re and p re s e n t a t o t a l
sales weight of 38,800 pounds with 3* shrink in effect.
Tb cover costs
and re c e iv e a n e t r e t u r n on th e s a le o f $6,1+12.00 th e p r i c e m ust be $17.1+8
p e r h u n d red .
The c a lv e s may make a g a in back t o t h e i r o r i g i n a l w e ig h t, i f
fe d i n th e a u c tio n y a rd s f o r f o u r days a f t e r a r r i v a l .
t o t a l s a le s w eight o f 1+0,000 p oun d s.
T his would g iv e a
The p r i c e now must be $17.1+1 p e r
hundred t o n e t th e p ro d u c e r $6,1+12.00 on the s a l e .
The l a s t m a jo r s a le s c h an n e l to be d is c u s s e d i s , d i r e c t to p u rc h a s e r.
•
83
T his method would e n t a i l no e x tr a c o s t s 0
The p u rc h a s e r may demand a c e r ­
t a i n s h rin k a g e b u t w i l l u s u a ll y b id a c c o rd in g to th e sh rin k a g e a sk e d .
If
th e p u rc h a s e r o f f e r s t o ta k e th e an im als w ith no s h r in k , th e p r i c e m ust
be $16.03 p e r hundred i n o r d e r t o n e t th e $ 6 ,^ 1 2 .0 0 o b ta in a b le e lse w h e re .
I f th e b u y er w ants t o p u rc h a se th e anim als on a p e n c i l s h rin k (sa y
3 p e r c e n t ) , th e n th e t o t a l s a le s w eig h t would be 38,800 p o u n d s, and th e
p r ic e would be $16.53 -p e r hundred t o o b ta in a n e t $ 6 ,^ 1 2 .OOo
Tfflaen an o v e rn ig h t ( s a y h p e rc e n t) s h rin k i s a sk e d , th e n th e p r ic e
w i l l be $16.70 p e r hundred to n e t $6,1+12.00 on 38,1+00 p ounds.
I n sum m arizing th e p r ic e s t h a t m ust be re c e iv e d a t a l l s a le s o u tle ts
o b se rv e d , t o o b ta in a n e t r e t u r n on th e s a le o f $ 6 ,^ 1 2 .0 0 , Table XV may
be o b se rv e d .
Of c o u rs e , a llo w an ces a re sometimes made f o r r i s k an d u n c e r ta in ty
when s a l e s a re made and t h i s would be a n o th e r p o s s ib le f a c t o r to consider®
N e v e rth e le s s , i t seems t h a t a p ro d u c e r sh o u ld c e r t a i n l y s ta n d on h is own
judgm ent and on b u d g e ta ry c a lc u la tio n s i n o rd e r t h a t he w i l l know which
s a le s method would be th e m ost p r o f i t a b l e u n d e r v a rio u s c o n d itio n s .
Qh
Table XV.
from D if f e r e n t S a le s C h an n els, to N et Equal
I P ric e *
p e r Eunurea
S a le s
Channel.________
Time of
S ale_________ _
C o n d itio n of
S ale
p 2 0 .00
C e n tra l M arket
On a r r i v a l
10% s h rin k
19.30
C e n tra l M arket
One day a f t e r a r r i v a l
6% s h rin k
19.00
C e n tra l M arket
Four days a f t e r a r r i v a l
2% s h rin k
17.70
A uction M arket
On a r r i v a l
5% s h rin k
17.50
A uction M arket
One day a f t e r a r r i v a l
3% s h rin k
17. UO
A uction M arket
Four days a f t e r a r r i v a l
No s h rin k
16.70
D ire c t t o Buyer
16.55
D ire c t to Buyer
16.05
D ir e c t to Buyer
S o u rc e :
O v ern ig h t shrink(U%]
P e n c il s h rin k (3%)
No s h rin k
H y p o th e tic a l Data P re s e n te d E a r l i e r in t h i s P ap er.
^ F ig u re s a re rounded to th e n e a r e s t .0 5 .
82
PART IV
Summaiy and C onclusions
A0
Summary o f I n v e s tig a t io n .
liv e s to c k m a rk e tin g i s im p o rta n t to b o th p ro d u c e rs and m eat consum erse
A pproxim ately o n e - th ir d o f t h e farm ers income i s d e riv e d from liv e s to c k
and ab o u t o n e -fo u rth o f th e consumers food e x p e n d itu re s go f o r meat# I /
The liv e s to c k in d u s tr y c o n s t i t u t e s a p p ro x im a te ly o n e - h a lf o f th e farm
c ash r e c e i p t s i n M ontana, 2 /
H Lthin th e m a rk e tin g in d u s tr y th e r e i s a la r g e m a rk e tin g c o s t due to
lo c a t io n o f p ro d u c e rs i n th e W est5 and th e m ajor p a r t o f th e consumers r e ­
s id in g e a s t o f th e M is s is s ip p i r i v e r .
One o f th e m ajo r ite m s 5 which con­
s t i t u t e m a rk e tin g c o s ts , i s an im al s h rin k a g e .
In fo rm a tio n on sh rin k a g e i s
a ls o v e ry in a d e q u a te , c o n se q u e n tly an i n v e s t i g a t i o n i n t o t h i s problem seems
ra th e r ju s tif ia b le .
An economic i n v e s t i g a t i o n in to c a t t l e sh rin k a g e i s n e c e s s a r ily lim ite d
b y tim e and fin a n c e s a v a i l a b l e .
C o n seq u en tly much o f th e m a te r ia l used i n
t h i s d i s s e r t a t i o n was o b ta in e d from th e Montana B ranch Experim ent S ta tio n s
a t Havre and M iles c i t y , w ith some su p p lem en tary m a te r ia l ta k e n from r e ­
c o rd s o f shipm ents made b y Montana ra n c h e rs and d e a l e r s .
Most o f th e m a t e r i a l used was p rim a ry d a ta , s in c e v e iy l i t t l e second­
a r y in fo rm a tio n was a v a i l a b l e .
L i te r a tu r e on th e s u b je c t o f hog sh rin k a g e
I / U nited S ta te s D epartm ent o f A g ric u ltu re ,. Bureau o f A g r ic u ltu r a l Econo­
m ic s , A g r ic u ltu r a l S t a t i s t i c s , 1922,
2/
U nited S ta te s D epartm ent o f A g r ic u ltu r e , Bureau o f A g r ic u ltu r a l EconoFarm P ro d u c tio n , D is p o s itio n and Income, W ashington, D ,C ,, A p r il 1923,
m ic s J
86
i s a v a il a b le to a g r e a te r e x te n t th a n on c a t t l e s h rin k a g e .
D ata on c a t t l e
sh rin k a g e i s e i t h e r n o t c u r r e n t o r i s in a d e q u a te f o r a n a ly z in g th e e n t i r e
problem of. c a t t l e sh rin k a g e i n M ontana.
The e m p iric a l d a ta were a n aly z e d t o d e term in e th e e x te n t o f sh rin k a g e
i n th e d i f f e r e n t c l a s s e s , . a g e, and sex groups o f c a t t l e i n th e s t a t e .
C alv es, d ry cows, fe e d e r s t e e r s , f e e d e r h e i f e r s , s la u g h te r s t e e r s , and
s la u g h t e r h e i f e r s were o b serv ed a c c o rd in g to th e g ro ss s h rin k a g e o r 's h r i n k ­
age i n t r a n s i t and n e t s h rin k a g e o r s h rin k a f t e r r e f i l l a t s a le s y a rd .
A
c o n s id e ra b le d if f e r e n c e was observ ed betw een g ro ss s h rin k and n e t s h r in k ,
depending upon th e number o f ho u rs allo w ed f o r a r e f i l l a f t e r sh ip m en t.
V a ria tio n w ith in a l l groups was n o tic e a b le , depending upon th e d i f f e r e n t
c o n d itio n s su rro u n d in g th e h a n d lin g and s h ip p in g o f th e a n im a ls.
Numerous f a c to r s were d e fin e d as b e in g p o s s ib le in flu e n c e s on th e
sh rin k a g e o f c a t t l e , b u t o n ly fo u r o f th e more im p o rta n t f a c t o r s were
u sed i n a s t a t i s t i c a l a n a ly s is o f s h rin k a g e .
The fo u r f a c t o r s , which were
assumed to be th e m ost im p o rta n t w ith r e s p e c t to s h rin k a g e , w ere, lo a d in g
w e ig h t o f th e an im al (Z g ); number o f h o u rs s p e n t on r a i l en ro u te to m ar­
k e t (X^), th e number o f h o u rs a t fe e d and r e s t s to p s (%^), and th e number
o f ho u rs a llo w ed f o r a r e f i l l a f t e r shipm ent was com plete (X5 ) .
TJhen s e t
up i n a c o r r e l a t i o n a n a ly s is th e s e f a c t o r s gave th e e s tim a tin g eq u atio n s
X1 = .61*83 + o7751*5x 2 - .U377X3 - .0201*1%^ - .26l31Z g
T his e q u a tio n shows a p o s i t i v e r e la tio n s h ip betw een pounds o f s h rin k
(X1 ) , and lo a d in g w e ig h t, and a n e g a tiv e r e l a t i o n s h i p betw een pounds o f
s h r in k and h o u rs en r o u te , ho u rs a t fe e d and r e s t s to p s , and h o u rs allow ed
fo r a r e f ill.
These r e l a t i o n s h i p s seem l o g i c a l w ith th e e x c e p tio n o f th e
87
negative correlation between pounds of shrink and hours en route®
A posi­
tive relationship is more feasible and is illustrated by the regression
equation Y = 6 o 3 h * »026X on feeder steers on page 39 of th is study®
The corrected correlation coefficient was R 1,231*5 = „51* and the
__2
coefficient of determination was R 1,231*5 = »29 Wien calculated in the
multiple correlation analysis®
in shrinkage unexplained®
This leaves 71 percent of'the variation
This would seem to point up the large number
of factors which might be responsible for variations in shrinkage®
To. analyze the empirical evidence by the use of economic tools
■several economic models and assumptions were set up in Part III®
The as­
sumptions that i t is desirable to maximize social welfare, that an in­
dividual beef producer faces a perfectly elastic demand curve, that the
”Theory of the Firm" is in effect, and that an optimum position for a
firm would take place where marginal cost equals marginal revenue, are
a l l made.
These assumptions are made in reference to the specific problem
of cattle shrinkage®
Be
E x te n t to Which H ypotheses Were S u b stan tiated ®
An excessive shrinkage of cattle in transit is indicated by evidence
which shows that shrinkage can be reduced at a cost below the added revenue
obtained through the reduction, under current price conditions®
As long
as this reduction is economical, then the current shrinkage may be indi­
cated as being excessive®
The equality of marginal cost and marginal
revenue indicates the point of optimum conditions at which excessive
shrink is eliminated®
88
A, lo s s t o s o c ie ty th ro u g h t i s s u e sh rin k a g e i s p ro b a b ly due to th e
la c k o f knowledge and im proper management o f in d iv id u a l firm s (p ro d u cers
1
o r d e a le r s ) concerned w ith th e li v e s t o c k in d u s tr y .
I f a firm i s u n ab le
to reach th e optimum e q u ilib riu m th e n h i s income w i l l n o t be maximized
and s o c ie ty a s a whole w i l l abso rb a l o s s .
The la r g e number o f f a c t o r s re s p o n s ib le f o r sh rin k a g e can be i l l u s ­
t r a t e d by th e use o f a c o r r e l a t i o n a n aly sis©
A lthough th e f a c t o r s b e­
lie v e d to in f lu e n c e sh rin k a g e th e most were used i n t h i s s tu d y , o n ly 29
p e r c e n t o f th e v a r i a t i o n i n s h rin k i s e x p la in e d b y f o u r r e l a t i v e l y im por­
ta n t v a ria b le s .
The fo u r v a r ia b le s u sed in c lu d e d s
w eight o f th e a n im a l,
h o u rs on r a i l en ro u te t o m a rk e t, number o f h o u rs a t fe e d and r e s t s to p s ,
and th e number o f h o u rs betw een a r r i v a l and s a l e .
The f a c t o r s l e f t 71
p e r c e n t o f th e v a r ia tio n i n sh rin k a g e to be .e x p la in e d b y o th e r f a c t o r s ,
o b v io u s ly , numerous o th e r f a c t o r s have n o t b een c o n s id e re d ,
A r e d u c tio n i n sh rin k a g e i s p o s s ib le th ro u g h th e c o n tr o l o f f a c to r s
t h a t a f f e c t s h rin k a g e .
A lthough many f a c t o r s a re r e s p o n s ib le f o r th e
v a r i a t i o n i n s h rin k a g e , a g r e a t e r c o n tr o l o f each f a c t o r would make i t
p o s s ib le t o p la c e more b e e f on th e m arket th ro u g h a sh rin k a g e r e d u c tio n .
R eduction in s h rin k would be econom ical u n d e r c e r t a i n p r ic e r e l a t i o n ­
s h ip s ,
I f th e p r ic e o f b e e f i s p r o p o r tio n a te ly g r e a t e r th a n th e p r ic e of.
f a c t o r s used t o c o n tr o l s h rin k a g e , th e c o n tr o l would be e co n o m ical,
U hen-
e v e r th e c o s t o f r e d u c tio n exceeds th e r e tu r n s o b ta in e d th ro u g h th e re d u c ­
t i o n , th e r e d u c tio n would n o t be eco n o m ical, ■
By re v ie w in g th e h y p o th e se s , w ith r e s p e c t to th e m a te r ia l u sed to
t e s t them , i t can be se e n t h a t a l l - o f th e h y p o th eses p r o je c te d e a r l i e r
89
i n t h i s s tu d y have been s u b s ta n tia te d b y th e i n v e s t i g a t i o n .
C.
Recommendations Based on th e F in d in g s o f t h i s S tu d y .
S in ce sh rin k a g e can be redu ced e c o n o m ica lly u n d er th e p r e v a ilin g
c o n d itio n s ^ i t i s a d v is a b le f o r an e f f o r t to be made b y p ro d u c e rs and
d e a le r s to d e c re a se th e amount o f s h rin k a g e t h a t o c c u rs .
The f i r s t th in g t h a t i s n e c e s s a ry i n o b ta in in g a r e d u c tio n i n s h r in k ­
age i s th e d e te r m in a tio n o f th e e x te n t o f s h rin k a g e .
Tb do t h i s i t i s
n e c e s s a ry to o b ta in an a c c u ra te re c o rd o f th e o r i g i n a l w e ig h t.
Many
ra n c h e rs f e e l t h a t s c a l e s , i n s t a l l e d on the ra n c h , w i l l p a y f o r th em selv es
many tim es o v e r d u rin g t h e i r l i f e t i m e , by g iv in g th e p ro d u c e r a d e f i n i t e
s e l l i n g b a s is and a c c u r a te w eight f o r sh rin k a g e c a l c u l a t i o n s .
I n view o f
t h i s f a c t , ra n c h e rs and p ro d u c e rs c o u ld be a d v ise d t o i n s t a l l s c a le s a t
t h e i r ra n c h h e a d q u a r te r s .
A nother recom m endation t o th o se co ncerned w ith liv e s to c k m a rk e tin g ,
i s c a r e f u l c o n tr o l o f a l l f a c t o r s l i s t e d i n t h i s s tu d y which may in flu e n c e
s h rin k a g e .
This c o n tr o l may be in c u rre d a t a sm all expense i n many c a s e s ,
and i n some c a se s a t no e x p en se.
Even i f an expense i s undergone, i t i s
s t i l l econom ical t o red u ce sh rin k a g e a s lo n g as th e p r ic e r e la tio n s h ip s
m entioned p r e v io u s ly a re f a v o r a b le .
The b e s t a d v ic e t h a t can be -given i s
f o r th e p e o p le h a n d lin g liv e s to c k t o be v e ry c a r e f u l w ith th e s to c k w h ile
th e y a re i n th e m a rk e tin g p r o c e s s .
Many d o l l a r s a re l o s t th ro u g h c a r e l e s s ­
n e s s and i n e f f i c i e n c y o f liv e s to c k h a n d le r s .
At tim e s t h i s lo s s - i s i n ­
c u rre d unknow ingly, b u t i n any case more c a re co u ld be ta k e n t o p re v e n t
s h rin k a g e .
The p r o v e r b ia l sa y in g t h a t "An ounce o f p r e v e n tio n i s w orth
90
a pound o f c u r e " , i s c e r t a i n l y a p p lic a b le t o th e s h rin k a g e p ro b lem »
Con­
s e q u e n tly , i t i s recommended t h a t a l l p o s s ib le a s p e c ts o f th e s a le s p ro b ­
lem be c a r e f u l l y a n a ly z e d e
A com plete a n a ly s is o f t h e p roblem , and a l t e r ­
n a tiv e s o lu tio n s to th e problem , can be made b y th e use o f th e b u d g et
m ethod.
A l i t t l e tim e and e f f o r t s p e n t i n t h i s m anner co u ld mean an i n ­
c r e a s e i n n e t r e tu r n s to th e p e rso n o r p e rso n s co n cern ed .
Do
S u g g e stio n s f o r F u r th e r lte se a rc h
Throughout th e c o u rse o f th is , i n v e s t i g a t i o n i t h as b een e v id e n t t h a t
th e d a ta used were n o t e n t i r e l y ad eq u ate t o answ er a l l o f th e problem s
w ith r e s p e c t to c a t t l e s h rin k a g e .
I n view o f th is f a c t , a s u g g e s tio n
f o r f u r t h e r r e s e a r c h would be i n th e form o f a p a r t i a l l y c o n tr o lle d s tu d y .
I h is s tu d y could be c a r r ie d out s im ila r t o o th e r c o n tr o lle d s tu d ie s i n th e
p h y s ic a l s c ie n c e s .
The m ain o b je c t o f th e s tu d y would be to o b ta in com­
p l e t e d a ta on a l l f a c t o r s su rro u n d in g c a t t l e sh ip m en ts.
c o u ld be p a r t i a l l y c o n tr o lle d in c lu d e s
F a c to rs t h a t
f in i s h e d w e ig h ts, h o u rs en ro u te
t o m a rk e t, hours a t fe e d and r e s t s to p s , h o u rs i n y a rd s p re v io u s to s a l e ,
fe e d and w a te r th ro u g h o u t th e sh ip m en t, and h a n d lin g o f th e a n im a ls.
F a c to rs t h a t co u ld n o t be c o n tr o lle d in c lu d e s
progeny o r fa m ily l i n e o f th e a n im a l.
be o b serv ed and re c o rd e d .
te m p e ra tu re o r c lim a te , and
N e v e rth e le s s , a l l c o n d itio n s co u ld
A f te r com plete d a ta were o b ta in e d on an ad eq u ate
number o f sh ip m e n ts, a v e ry d e t a i l e d and rig o r o u s e m p iric a l a n a ly s is would
be acco m p lish ed .
This a n a ly s is sh o u ld a v o id one o f th e b ig w eaknesses
in c u r r e d i n t h i s p r e s e n t s tu d y .
This w eakness i s th e assu m p tio n o f l i n e a r
r e la tio n s h ip s betw een sh rin k a g e and o th e r f a c t o r s .
.There may be l i n e a r i t y
91
i n some c a s e s , b u t i n o th e r s a c u r v i l i n e a r a n a ly s is w ould.be b e s t to d e fin e
th e t r u e r e l a t i o n s h i p s t h a t e x is t#
C u r v ilin e a r a n a ly s is h a s n o t been
c a r r i e d out i n th e c u r r e n t s tu d y due t o in ad eq u acy o f th e d a ta used#
a n a ly s is o f d e t a i l e d a c c u ra te e m p iric a l d a ta sh o u ld in c lu d e th e use o f
economic to o ls i n b o th a p r a c t i c a l and t h e o r e t i c a l s e ttin g #
The
92
A P P E N D I X
Appendix A
Q u e stio n n a ire
WESTERN REGIONAL LIVESTOCK COST OF MARKETING STUDY - W Ii
MONTANA STATE COLLEGE, AGRICULTURAL EXPERBtENT STATION
Name o f s h ip p e r
A ddress
Number, C la s s , Breed and Kind of C a t tle :
Number
m
shipm ent
C alves
H e ife rs
S te e r s
In d ic a te
b reed
w ith check
Wet Cows
Dry Cows
O ther
( H ereford
\ S h o rth o rn
\D a iry
I n d ic a te
kind by
check
S la u g h te r
Feeder
S to c k e r
C rossbred
Angus
H andling and F eeding P r io r to I n i t i a l W elch in g :
A.
Peed u sed p r i o r to w eighing (check a p p ro p ria te lin e and column)
12 hours
p rio r
12 to Ii8
hours
I
1S
q
>L
Kind of
Feed
2 to ?
days
More than
7 days p r io r
ureen p a s tu r e
P a s tu re and g ra in
D r y l o t fe e d
Ofl fe e d and w a te r
O ther
B.
1.
2.
C.
I f c a l f shipm ent - were c a lv e s c u t from m others and w eighed im­
m e d ia tely ? yes____ no____
How long p r i o r t o shipm ent were th e y o f f m o th e rs?
days.
Movement to s c a le s a n d /o r lo a d in g p o in t
2 . M iles by tru c k ________ , c o s t $
w eig h in g
__________
M iles by tr u c k _______ , c o s t $
w e ig h in g ________
T o tal hours o f f fe e d b e fo re
T o ta l hours o f f w a te r b e fo re
I n i t i a l W eighing:
A.
P lace weighed_________ _____ , d a te and hour weighed
s c a le in s p e c tio n
B.
Hours e la p s e d between w eighing and lo a d in g . . .
a t sh ip p in g p o i n t _________
, d a te l a s t
g ro ss w eig h t
95
Movement o f L iv esto c k from I n i t i a l W eighing P o in t to D e s tin a tio n :
A.
Method o f tr a n s p o r t a t i o n :
or to ta l S
B.
D e s tin a tio n ______
hours in t r a n s i t
G.
I f liv e s to c k were fe d and w a te re d in t r a n s i t , g iv e th e fo llo w in g d a ta
when a v a il a b le :
P lace
r a i l _____ , tr u c k _____ , c o s t p e r cw t.
, m ile s
Hours r e s t C ost o f fe e d Off c a r
and fe e d
& h a n d lin g w eig h t
On c a r
w eight
o f f c a r w eig h t
, to whom
H andling a t D e s tin a tio n :
A.
Date and hour u n lo ad ed
con sig n ed
B.
Date and hour o f s a le
p r ic e $________
C.
Were liv e s to c k fe d and w a tered a t m arket?
, s a le w eig h t____
yes
____ , s a le
no
Expenses P a id a t M arket f o r t h i s Shipm ent:
Yardage $
o th e r
, commission $_______ , fe e d $______
T o ta l
, in s u ra n c e $
E x p lain any U nusual W eather, Feed, W ater o r H andling C o n d itio n s t h a t c ouId
A ffe c t Shrinkage of Shi pment : ( i f a d d i t i o n a l space i s needed p le a s e use
back of s c h e d u le .)
A.
A t ranch
B.
At s h ip p in g p o in t, i f n o t a t ranch
C.
In t r a n s i t
D.
A t m arket
E.
O th er comments
____________________
96
I f L iv e sto c k Were S o ld on C o n tra c t P r io r to D e liv e ry , L i s t C o n tra c t Terms;
A.
P e rc e n ta g e s h rin k ________ , ho u rs o f f fe e d and w a te r
d riv e n ____________ __ ___.
m iles
B•
C o n tra c t p r ic e $_____________, down payment | _________, d a te o f c o n tr a c t
Grade and Y ie ld of S la u g h te r L iv e sto c k ;
A.
E stim a te d
1. No.
2 . No.
3. No.
&. No.
l iv e grade
c h o ice ____
good ____
medium ___
C.
E stim a te d y i e l d _____________%
B.
A c tu a l c a r c a s s grade
1. No. c h o ice ____
2. No. good ____
3. No. u t i l i t y
Iu No.
D.
A c tu a l y i e l d ___________ %
•Appendix B
Supplem entary Tables
98
Table X III
L o cation
S a le s c o s ts f o r s e l l i n g c a lv e s through
v a rio u s a u c tio n s in M ontana, 1953
Commission & o th e r
y a rd c o s ts *
C ost o f fe e d f o r one
e x tr a day
$ 2.90
B illin g s
$2.51
$ .51
B utte
$ 2.85
$ .70
M issoula
$ 2 .1 0
$ .1*5
Havre
$3.50#
No Data
Lewistown
$3.38
$ .65
l r e a t F a lls
$ 2 .9 0
$ .65
B lendive
$ 3 .1 0
$ .75
Glasgow
$3 .6 0 #
$ .50
Sidney
$3.0Q#
$ .5o
Averages
$ 3 .0 9
$ .6 1
CO
O
Bozeman
In c lu d e s com m ission, y a rd a g e , in s u ra n c e , and fe e d d u rin g s a le day.
^ In c lu d e s com m ission, y a rd a g e , in s u ra n c e , fe e d one day b e fo re and a ls o s a le
99
Table XIV
O rigin
C ost o f f r e i g h t on fe e d e r s to c k sh ip p ed from v a rio u s
p o in ts in Montana to S t . P a u l, M innesota, 1953
D e s tin a tio n
E f f e c tiv e f r e i g h t / c w t .
i
---------------
M issoula
S t . P au l
B illin g s
S t . P au l
Iav re
S t . P aul
$ .90
B u tte
S t . P au l
$ 1.08
p i l e s C ity
S t. Paul
$ .77
1
$1.13
O
CN
------ 1
Average f r e i g h t from
Montana to S t . P a u l.
—
$ . 96/c w t.
108571
_I
100
■BIBLIOGRAPHY
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*
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U npublished d a ta .
*
M isc e lla n eo u s d a ta from Montana Branch E xperim ent S t a t i o n , H avre, Montana,
1940- I 952.
’
M isc e lla n eo u s d a ta o b ta in e d from a u c tio n m arkets in M ontana, see Appendix
Ji8 DeL6 JvXkLkL*
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D .C ., December, 193J+, P a r t I I .
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*
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December, 1952).
*
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“
U n ited S ta te s D epartm ent of A g r ic u ltu r e , Bureau of A g r ic u ltu r a l Econom ics,
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*
\
W ard, W. F. and Downing, James E ., U nited. S ta te s D epartm ent o f A g r ic u ltu r e ,
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' ~ '
W ilcox, R. H ., R. D. J e n n in g s , G. W. C o l l i e r , W. H . 'B lack and E. W.. McComas,
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M O N T A N A S T A T c m i . tw .- _ ____
3 1762 10015319 4
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Purnell, G.R.
Economic analysis of cattle
shrinkage
P 9 9 5 e
C o p .a .
SEISSI
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