Generally speaking, the two largest cost components in a livestock marketing situation are shrink and transportation costs. And, shrink is one area of marketing with management opportunities, says Chris Bastian, a University of Wyoming associate professor of agriculture and applied economics.
“It’s your job, as the seller, to negotiate as much of that away as possible, because shrink means money out of your pocket,” he says.
Bastian says producers need to be mindful that shrink is a point of negotiation when marketing livestock, especially in private sales, and it’s a way to potentially improve return when marketing each year.
“It’s not that cattle buyers are evil; they’re providing a necessary service. Their incentive is to try to get the best possible price for whoever they’re buying for, and that’s just how the market works,” he explains.
A general rule of thumb is cattle will shrink 1% of their bodyweight per hour for their first few hours off feed and water, and continue to shrink at a lower percentage of their bodyweight after those first hours. He adds that the first couple of hours are primarily excretory shrink, followed by tissue shrink.
“Cattle will gain excretory shrink back fairly quickly upon being put on hay and water, but tissue shrink is a loss of moisture in the muscle mass. That takes longer to gain back (a few days),” he adds. He notes that, depending on the weighing situation, the buyer can end up with a lot more weight in cattle than he originally purchased, due to shrink.
“There has been research done that shows you can lose up to 5.5% in about eight hours, that’s 44 lbs. on an 800-lb. steer. So, if you’re selling that animal for $1.10/cwt., that’s $48.40/head that you’re sacrificing in terms of pay weight. Multiply that out over however many steers you’re marketing, and it becomes a large number fast.”