Cattle producers are pressing auction markets and packers to charge less in assembly fees and commissions to help producers during times of depressed cattle prices.
“It just seems that if our price has been cut in half, then the auctioneer should do likewise. Why should I have to take the whole hit?” said Greg Hemming, a cattle producer from Esterhazy, Sask.
Hemming takes exception to deductions from the sale of his cattle at auctions since the bovine spongiform encephalopathy crisis pulled down prices for feeder cattle and cull cows.
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“On six head (of feeder calves) my sale costs were still $117.90 when the cattle brought half what they did a year ago and the deductions were the same,” he said.
His costs on the sale of feeder animals included a checkoff of $2 per animal, insurance of $1, brand inspection fee of $1.65 and a $15 sale fee.
Cull cow prices have fallen more than feeder animals, but the costs for selling them have remained the same.
Michael Burgess, a Big Beaver, Sask., rancher and director of the Saskatchewan Stock Growers Association, said cattle producers who once hauled their cull animals directly to the packers and received $700 each find it hard to swallow.
“The process of direct delivery (to the packing plant) has been stopped by the packer. And then to be told they are being charged $18 to sell a cow locally to the same packers without the benefit of even an auction sale. They don’t think it’s fair,” said Burgess.
“First the price drops $500, then (the producer) pays a fee to ‘source’ their cows.”
Before June 2003, cattle producers in southern Saskatchewan could deliver cull cows to XL Foods in Moose Jaw. After that date, the packer, having lost export markets for meat from animals older than 30 months, stopped accepting direct delivery of animals.
Lee Nilsson of XL Foods said the company was attempting to balance supply with the new limited domestic demand for older beef.
“We didn’t want to say a flat out ‘no’ to the guy who had to haul his animals 300 miles to us because all the producers within an hour’s drive of the plant were giving us all we needed. So we sort of rationed it out, trying to take deliveries as fairly as we could,” he said at a Saskatchewan Stock Growers Association meeting in Minton, Sask.
Nilsson said in addition to rationing incoming cull animals, his company had additional costs of sorting and assembling truckloads of animals at central shipping points.
Auctioneer Roy Rutledge of Assiniboia, Sask., said the system of assembling cull cows costs more than the old way.
“We have to call folks, check the animals’ condition and age, tag them, then get them all together for the trucks. It was easier to have the farmer deliver them and me sell them,” he said.
“The $18 covers our costs on a good day.”
Rutledge said the costs of selling animals have remained even though the prices being paid have dropped.
“I guess we could all go broke together, but then who would be left to service what’s left of the industry,” he said.
“I sure do feel for the cow-calf producer, no doubt about it, but we’ve staff to pay, buildings to operate and bills for feed, operations of our own. Our only alternative is to not take the cows.”
Stewart Stone operates Heartland Livestock, a prairie-wide livestock marketing and auction company.
He said many auctions charge a flat fee to avoid surges in prices that would affect day to day prices being paid by producers and the cash flows of the businesses.
“If we were charging three percent commission then, when prices were $900 (per head), we would have been getting $27. Instead it was our flat fees of between $13 and $17,” he said.
Three percent is a common commission for livestock auctions that don’t charge flat fees, said industry members.
A 650 pound feeder steer bringing 65 cents per lb. on that basis would provide a commission of $12.68 to the auction company.
Stone said the fees he and other livestock marketers charge haven’t increased much, “if at all in the last 10 years. We’ve charged the same in good times and in bad.”
Alberta Beef Producers recently increased its beef checkoff from $2 to $3.
