CALIFORNIA AGRICULTURAL EXPERIMENT STATION BULLETIN 740 Western Livestock Marketing Research Technical Committee Regional Administrative Advisor: Sherman S. Wheeler, Colorado Agricultural Experiment Station, Fort Collins, Colo. Subcommittee for Auction Study: Dee A. Broadbent, Chairman, Logan, Utah E. C. Voorhies, Davis, California Clive R. Harston,* Pullman, Washington Vincent A. Nally,f Boise, Idaho Howard G. Mason, Reno, Nevada C. W. Vrooman, Corvallis, Oregon John G. McNeely, College Station, Texas Ira M. Stevens, Laramie, Wyoming Harold Abel. Denver, Colorado Western Livestock Marketing Research Technical Committee: Arizona R. E. Seltzer California James B. Hassler Colorado R. T. Burdick, Chairman Hawaii R.C.Elliott Idaho D. D. Caton Montana C. B. Brotherton Nevada F. S. Scott, Jr. New Mexico H. B. Pingrey Oregon C. W. Vrooman Texas J. G. McNeely Utah D. A. Broadbent Washington 0. L. Brough Wyoming I. M. Stevens Cooperating Government Members: Harold Abel, Coordinator for the Committee, U. S. Department of Agriculture, Denver, Colorado Fred W. Beier, Jr., Consultant to Committee, U. S. Department of Agriculture, Denver, Colorado R. T. Clark, U. S. Department of Agriculture, Denver, Colorado * Transferred to Montana, September 1, 1951. t Resigned May 1, 1951; replaced by Douglas Caton. THE AUTHOR: Edwin C. Voorhies is Professor of Agricultural Economics, Agricultural Economist in the Experiment Station, and Agricultural Economist on the Giannini Foundation, Davis. Submitted for publication July 22, 1953. APRIL, 1954 [2] CONTENTS SUMMARY 5 INTRODUCTION 7 A. Objectives of Study 7 B. Methods 7 C. Size of Farms 8 D. Types of Farms 9 PART I: BACKGROUND INFORMATION 10 A. Livestock Production Characteristics in the West 10 B. Methods of Selling and Buying Western Livestock 11 C. Relative Importance of Several Methods Used Over Time 13 PART II: AGENCIES THROUGH WHICH PRODUCERS SOLD LIVESTOCK IN 1949. . 15 A. Pacific Coast 15 B. Intermountain States 19 PART III: FACTORS INFLUENCING PRODUCERS' CHOICE OF MARKET SELLING. . 23 A. Type of Farm 23 B. Size of Farm 26 C. Size of Lot Marketed 29 D. Quality of Livestock 30 E. Distance 31 PART IV: AGENCIES FROM WHICH PRODUCERS BOUGHT LIVESTOCK IN 1949. . 33 A. Pacific Coast 33 B. Intermountain States 35 PART V: FACTORS INFLUENCING PRODUCERS 7 CHOICE OF MARKET BUYING. . 36 A. Type of Farm 36 B. Size of Farm 38 C. Size of Lot Purchased 40 D. Quality of Livestock 41 E. Distance 41 PART VI: PRODUCERS 7 APPRAISAL OF BUYING AND SELLING AT AUCTIONS. ... 42 A. Advantages for Selling 44 B. Disadvantages for Selling 46 C. Advantages for Buying 47 D. Disadvantages for Buying 48 E. Reasons for Not Patronizing Auctions 49 PART VII: MARKET INFORMATION 51 A. Source 51 B. Adequacy 51 PART VIII: SUGGESTIONS FOR IMPROVING LIVESTOCK MARKETING 53 A. Producers 7 Suggestions 53 B. General Suggestions 55 APPENDIX 59 LITERATURE CITED 67 [3] TRADE in WEST? 3. Some Factors Affecting Producer A Western Regional Research Publication This bulletin was prepared by Edwin C. Voorhies in collaboration with the following members of the subcom- mittee for auction study of the Western Livestock Market- ing Research Technical Committee: Dee A. Broadbent, Clive R. Harston, Vincent A. Nally, Howard G. Mason, C. W. Vrooman, Ira Stevens, and Harold Abel. For cooperation and assistance which in turn made possible this study, the following acknowledgments are given: farmers and ranchers in Idaho, Nevada, Utah, Wyoming, California, Oregon, and Washington for pro- viding the basic data on which the study is based; state statisticians; and B. H. Crandall, Director, Statistical Laboratory, Utah State Agricultural College, for the as- sistance given with sampling and other problems. The research on which this report is based was partially supported by funds provided under the Agricultural Research and Marketing Act of 1946. Under the procedure of cooperative publications, this report becomes, in effect, an identical publication of each of the cooperating agencies and is mailed under the frank and indicia of each. It is suggested that copies be requested through one source only from the small supplies available to the directors of the above experiment stations. [4] IN LIVESTOCK at AUCTIONS Jioice of Marketing Agencies Edwin C. Voorhies SUMMARY Volume of Stock Sold Western farmers and ranchers use dif- ferent marketing agencies when they sell and when they buy livestock. In 1949, the year of this study, they sold twice as much as they purchased. A larger pro- portion of purchases in relation to sales was made on the Pacific Coast than in the Intermountain states. On the Coast, direct sales to packers, dealers, and farmers accounted for the largest volume of sales, while in the In- terior a greater volume went to organ- ized terminal and livestock auction mar- kets. On the Coast, the largest proportion of stock went directly to packers; in the Interior the chief outlet was to dealers and order buyers. Volume of Stock Bought Fully half of all purchases of farmers came directly from other farmers and ranchers. Dealer and order buying was relatively more important to Coast farm- ers than to those in the Interior. Inter- mountain farmers relied more strongly than Coast farmers on organized markets for purchases, and the main reliance on these was placed upon livestock auctions. The auction in the Interior performed many of the functions normally attached to terminal markets. Individual Transactions in Selling A greatly different picture of selling and buying activities presented itself when individual transactions with mar- keting agencies — rather than volume of stock bought and sold — were considered. In selling, more transactions in both areas were consummated between pro- ducers and livestock auctions than be- tween producers and any other agency — especially in the Interior. The terminal market accounted for the next largest number of sales transactions. Of the di- rect sales transactions, packers on the Coast and dealers and order buyers in the Interior stood out. Farmer-to-farmer sales transactions were similar in the two areas. Individual Transactions in Buying On purchase transactions, deals made by producers with the supplying agencies were very similar in the two areas. Slightly less than half of all transactions were made with other producers and over a third at livestock auctions. Ap- proximately a tenth of purchase deals were concluded with dealers and order buyers, while the balance of between 5 and 10 per cent was made with commis- sion firms at terminal markets. Factors Influencing Choice of Agency There were considerable variations in the volumes of major and minor live- stock classes bought and sold through different agencies, and a number of fac- 5] tors influenced the farmer or rancher in arriving at a choice. Production opera- tions and the type of farming practiced had a vital influence on choice of agency. Size of operation had a basic influence in sales and purchases as was indicated by the relatively small packages of live- stock passing through auction yards. Large producers could market or pur- chase a carload — or several carloads — of beef steers and/or heifers at one time, and this made it possible to economically widen the sales and purchase channels open to them. Size of package had an effect on transactions of all producers — large and small. Livestock quality fre- quently exerted a vital influence in deter- mining the place to which livestock was sent or at which it was obtained. For example, on the Pacific Coast the sale of odd lots and low-quality livestock appar- ently had more of an affinity for livestock auctions than for other agencies. Dis- tance had a decisive effect on the mar- keting and purchase of livestock — many producers believing that home sales were preferable. Appraisal of Auction Farmers and ranchers made appraisals of auction selling and buying — the entire study being a continuation of the work originally started on livestock auctions. The basic consideration as to the choice of an agency involved the net income to the farmer or rancher. It is — at least at the moment — difficult to appraise the auction in terms of either prices or in- come as compared with other agencies. Auctions in themselves vary widely — in size, charges, services, etc. — and to make dogmatic statements about "auctions" would be suspect. That the auction was a market for odd and small lots of live- stock — including in many instances low- quality animals — was emphasized. Also, the conclusion was substantiated that the distance from a marketing center has an effect on the livestock marketed. Shrink was said to be an influence, but it must be admitted that farmers on the whole do not understand too well the shrink which livestock undergoes. Auction buying was viewed far less enthusiastically than selling. There was considerable unanimity among buyers, however, on the advantage of being able to choose the type and quality desired and of convenience in attending local auctions. The question of price paid led to a distinct division of opinion between auction and nonauction patrons alike. Disadvantages of auction purchases were pretty clearly stated — the danger of dis- ease transmittal being the chief one men- tioned. While sellers admitted that auc- tion consignments were in many in- stances of low quality, buyers criticized the presence of such animals. Since auc- tions are largely dependent financially upon the volume going through the sales ring, the criticism of fast selling in the ring might well permit certain speed-ups in operations, allowing more time for effective bargaining. Numerous farmers and ranchers never patronized auctions. Two apparent rea- sons stood out: a preference for dealing directly with buyer and seller and a be- lief that it was more profitable to deal through terminal markets. Market Information Sources of market information utilized were many and varied. The main vehicles used were (1) newspapers and (2) radio. The great majority believed mar- ket information was adequate. Suggestions for Improvements Most strongly emphasized by western ranchers and farmers as a method of improving livestock marketing was im- proved transportation — highways, faster rail schedules, fewer stops, and better feeding on public carriers, etc. More co- operative selling, more local markets, and more competition were also empha- sized. [6] INTRODUCTION A. OBJECTIVES OF STUDY This bulletin describes and analyzes the way in which western livestock produc- ers* bought and sold cattle, sheep, and hogs in 1949. It appraises the reasons advanced by producers for selecting the marketing agencies used. It reports how farmers obtained economic information on conditions in the livestock industry which enabled them to time their selling and buying operations and it appraises this information. It contains favorable and unfavorable criticisms of auction ring transactions and the changes farm- ers believed would improve livestock marketing. This bulletin contains the sixthf re- port on research prepared under the supervision of the Western Livestock Marketing Research Technical Commit- tee. The present study developed as a result of research started on livestock auctions. This work was already under way when it was realized that it would be more meaningful if more were known about the operations of dealers in the marketing of livestock and about the dealers' viewpoints on auctions. It also seemed advisable to obtain information directly from producers as to the agen- cies through which western farmers and ranchers bought and sold livestock in 1949. No such information had been ob- tained previously. It also seemed impor- tant to get the farmers' views about ad- vantages and disadvantages of auction buying and selling as well as the views of those farmers who did no auction trading. This information, it was hoped, would point up the reasons why patrons and nonpatrons of auctions traded through the different agencies. B. METHODS Information upon which this report is based was gathered by experiment sta- tion personnel in Idaho, Nevada, Utah, and Wyoming (Intermountain states) and in Washington, Oregon, and Cali- fornia (Pacific Coast). With the cooper- ation of the Bureau of Agricultural Eco- nomics of the U. S. Department of Agri- culture and the state statisticians, these workers mailed approximately 31,500 questionnaires to producers. In 4 of the states — Washington, Cali- fornia, Utah, and Wyoming — a follow-up schedule was sent to about 7,000 non- respondents. In 2 states, some 500 ques- tionnaires were filled out as a result of personal interviews. Information recorded for each sampled farm or ranch included the following: number, kind and class of livestock bought and sold through specific market- ing channels in 1949; acreage owned and leased; crops grown; use of public range; livestock on farm on January 1, 1950; patron or nonpatron of auction; reasons for patronage and nonpatronage * In this report the term farm is used to cover range operations and dairy, crop, and livestock farms. The terms farmers, farm operators, or producers include the producers or operators of these farms. f The bulletins published have been the following: Western Livestock Marketing Research Technical Committee. Shifts in the trade in western slaughter livestock. U. S. Department of Agriculture. Agricultural Information bul. 14:1-67. 1950. Abel, Harold and Dee A. Broadbent. Trade in western livestock at auctions. 1. Development, relative importance, operations. Utah Agricultural Experiment Station bul. 352:1-128. 1952. Harston, Clive R. and Edwin C. Voorhies. Trade in western livestock at auctions. 2. Analysis of livestock marketing. Washington Agricultural Experiment Station bul. 537:I-VIII, 1-112. 1952. Stevens, I. M., R. T. Burdick, H. G. Mason, and H. P. Gazaway. Marketing western feeder cattle. Wyoming Agricultural Experiment Station bul. 317:1-92. 1952. Turner, George E., John G. McNeely, Charley V. Wootan, and Stanley W. Burt. Texas livestock auction markets — methods and facilities. Texas Agricultural Experiment Station. Misc. Pub. 93:1-59.1953. [7] of auctions; advantages and disadvan- tages of auction trading; source and ade- quacy of market information; and sug- gestions for improvement of livestock marketing. The questionnaires containing answers were sent to the Utah State Statistical Laboratory. Data were examined and key punched on Hollerith cards and certain tabulations made with IBM equipment. The data were analyzed and compiled for most of the tables used in this bulletin at the Statistical Laboratory of the Gian- nini Foundation of Agricultural Eco- nomics, Berkeley, California. Close to 9,000 questionnaires were re- turned, including those obtained by per- sonal interview. Of the returns, 7,065 were used. A considerable number con- tained statements indicating that some farms bought or sold no livestock in 1949 or that others traded horses only. Distri- bution of the questionnaires used in the survey was as follows: Number Pacific Coast California 1,749 Oregon 282 Washington 1,378 Total 3,409 Intermountain Idaho 1,320 Nevada 140 Utah 926 1,270 Wyoming Total 3,656 In making the division between the Pacific Coast and Intermountain areas, it was realized that state lines are not ideal dividing lines between sections. The agriculture of eastern Washington and Oregon and northeastern California is more similar to the states to the east of them than to that in areas within the same state to the west. No claim can be made that the four states included in the Intermountain area have similar char- acteristics. C. SIZE OF FARMS The survey covered farms of less than 10 to more than 5,000 acres. Farm acre- age is ordinarily a poor measure of the size of most operations. Yet, a compari- son of percentages of farms in certain size groups showed a fairly close corres- pondence between the 2 sections. In the Intermountain area, as well as on the Pacific Coast, operators who farmed 220 acres or less accounted for approximately 55 per cent of the total (Appendix Table 1 ) . An almost equally close correspond- ence was evident in the farms from 220 to 5,000 acres. The greatest difference between the 2 sections was found in the extremes in acreage: less-than-10-acre farms were more numerous on the Coast (especially in California), and farms with more than 5,000 acres were more frequent in the Intermountain area (es- pecially in Wyoming). A considerable number of these same operators used public range as follows: Number Pacific Coast California Oregon Washington Total Intermountain Idaho Nevada Utah 163 58 164 385 290 55 317 432 Wyoming Total 1,094 [3] The farms and ranches in the sample were segregated on the basis of the num- ber of animal-unit inventory (Appendix Table 2). In each area, more than 60 per cent (Coast, 61 per cent; Intermoun- tain, 66 per cent) reported inventories of less than 50 head. Farms with be- tween 50 and 300 animal units consti- tuted a larger number and a greater pro- portion of the total on the Coast than in the Interior. Ranches with more than 500 animal units constituted a larger proportion of the total in the Interior, especially in Wyoming. All of the data in Appendix Table 5 are for January 1, 1950, or for some date in the spring of 1950. Proportions of beef cattle and sheep either bought or sold increased rapidly with the increase in farm acreage. No such relationship could be shown be- tween acreages and sales or purchases of dairy cattle or hogs. D. TYPES OF FARMS Although there was a general simi- larity between area and livestock inven- tories in the 2 sections, the types of farms represented differed (Appendix Table 3). The greatest difference was found in dairy farms. More than a third (34 per cent) of the Coast farms were classified as dairy farms while less than a fifth of the Intermountain group were so placed. Cattle, sheep, combination cattle and sheep, and diversified farms were rela- tively more numerous in the Intermoun- tain sample. Although it is believed that the sample is representative of farmers in the areas studied, the information has a restricted application to individual states. Varia- tions within each section and state are considerable. Of necessity, these differ- ences must be passed over in this analy- sis except as they pertain to area differ- ences. Another limitation of data pre- sented results from the rapid changes in relationships that occur over time. The data recorded were for 1949 sales and purchases and findings relate specifically to that year. General relationships found are believed to exist over a longer time and they may be used with wide appli- cation. [9] PART I. BACKGROUND INFORMATION A. Livestock Production Characteristics in the West The 12 western states have, within their boundaries, several distinctly dif- ferent types of livestock production. The differences are dictated by a variety of factors such as climate, soils, forage types, topography, elevation, seasonal use of forage, carrying capacity, land ownership, availability of water, preda- tory animals, livestock diseases, and mar- kets. To a large extent, these differences can be resolved in terms of several nat- ural regions. Within each of these re- gions the natural and economic factors influencing livestock production, for the most part, can be satisfactorily depicted and analyzed. The Intermountain states — the eastern tier of states — are an important source of feeder cattle and sheep for the fattening areas of the Corn Belt, the winter wheat pastures of the Central Great Plains and, in recent years, for the fattening opera- tions of the West itself. This area has long been a surplus producing area for all classes of livestock except hogs, pro- ducing more livestock than it consumes. It includes several subregions such as the Great Plains, the Mountain, and the Intermountain areas. While an intensive study of livestock production problems should treat each of these subareas sep- arately, they have been grouped together in this report. The Pacific Coast, comprising roughly the states of California, Oregon, and Washington, is characterized as a deficit livestock producing area. Here livestock slaughter exceeds production. Recent population growth has increased the need for more meat. To fulfill a part of this need, the Pacific Coast, particularly California, has become an important cattle finishing area. A third section of the West, the South- west, has not been covered by the survey. This section consists of New Mexico, Arizona, and parts of Texas. A surplus producer of cattle and sheep, this area, where yearlong grazing is practiced, is an important source of feeder stock. In recent years, the Southwest has found an outlet for its livestock on the Pacific Coast and in the states directly to the east and southeast. The entire West is a deficit producing area for hogs. Large inshipments of live hogs and dressed pork move from the Corn Belt to the West Coast each year. In many of the principal livestock produc- tion areas, livestock is the chief form of agricultural production; in other cases, livestock is merely a part of a diversi- fied farming, dairying, fruit, cotton, or wheat production program. In any analysis of livestock production characteristics, the contribution of "dairy" animals to the meat supply can- not be ignored. The Pacific Coast lists 53 to 63 per cent of all cows as milk cows, compared with from 18 to 29 per cent in the Inter- mountain states. The influx of people in recent years has influenced the location of dairy animals more than that of ani- mals grown primarily for their meat. The market milk needs of this added population have increased the production of fluid milk at a rapid pace, especially in the vicinity of large population cen- ters. Cows culled from herds and dairy calves make sizeable contributions to the meat supply of the Coast. The Intermountain area has developed a dairy industry, especially in its irri- gated valleys, to supply population cen- ters with market milk and to provide the raw material for manufactured dairy products. In addition, such states as Idaho and Utah have sent thousands of dairy cows and heifers to the Pacific Coast for herd replacements. Normally, after a few lactation periods, these ani- [10] mals are slaughtered. In both areas, small but widely scattered shipments of steers of dairy breeding have been pro- duced, especially in times of relatively high meat prices. In recent years the West, and espe- cially the Pacific Coast, has developed fryer and turkey industries whose prod- ucts compete with the beef and lamb pro- duced in the West. One fundamental problem in market- ing western livestock is directly associ- ated with production characteristics. Contrary to a widespread belief, the West is not made up primarily of large ranches. Many large farms and ranches do exist and producers on them ship largely in carloads or trainloads, but the majority of the farmers and ranchers have less than a carload of livestock to sell each year. It is on these smaller units that one faces some of the most difficult problems in livestock marketing. B. Methods of Selling and Buying Western Livestock Selling. Sales of western livestock are divided among five main outlets: (1) direct to packers, slaughterers, or butch- ers; (2) direct to or through dealers, traders, or order buyers; (3) livestock auctions; (4) commission firms at ter- minal markets; and (5) direct to farm- ers, ranchers, and feeders. Within these somewhat arbitrary cate- gories of first handlers (after leaving producers) are many variations. Under (1) the first handler may be a country butcher or a locker-plant operator who handles a few head per month and sells meat over a local area, a packer whose business is nationwide, or an interior packer whose operations are restricted to a smaller area. While the essential business of those classed under ( 1 ) is livestock processing, many animals purchased are not slaugh- tered immediately. In some cases pur- chases are further fed by custom feeders, packers, and farmers. Animals are some- times bought by this group as an insur- ance against cutting off supplies, for ex- ample, by storms, while in many situa- tions an even supply of animals is neces- sary for the proper functioning of a slaughter plant. Among traders (2) are some who buy and sell on their own account while others merely arrange to transfer title from one owner to another. These latter dealers may operate independently or they may be attached to a packer, butcher, or an auction. Under (3) are included auctions which handle annu- ally from less than 2,500 to more than 100,000 head. Some auctions are held at terminal markets. Some sales, especially on the Pacific Coast, are concerned with dairy stock (often cows exclusively). Many auctions hold sales on specific days. Others arrange on irregular days sales largely of special livestock classes such as feeders, dairy cows, and others. The organization of auctions varies widely. Types found in the West include independent operators of single or chain auctions, partnerships, corporations, and cooperatives. Still other auction sales under (3) are those which occur as "farm dispersal sales." Sales made through (4) would exclude (in this re- port) animals bought and sold through auction methods at terminals. Under (5) sales and purchases made for either breeding, feeding, or stocking would be included. In 1949, each of the first four listed agencies accounted for a fifth or more of the total marketings* of producers in the seven states (Table 1) . Direct sales to farmers accounted for the balance of ap- proximately an eighth. This division was true for 1949, but considerable varia- tions probably occur from year to year. A capital distinction must be made be- tween the volume of livestock sold and * Sales in terms of marketing equivalents. One marketing unit equals one head of cattle, three calves, four hogs, and ten sheep. [in p ■oll-aS^ m| MONN CO n O s N lO CO O O * e flTSg-g-H-l g (N <9 ._ 00 l> t» CN CO rt O ^ 00 CO CO o o N N N H © rH CO lO o n bo O ^ CO t- t- ^ O H CO t- t*l> o fl o rH rH TF rH o "^ CO '3 H rH rH 0) E c 9 o a ca 0) 3 V ft tn * * * T5 (3 o 05-0^ © CN 00 CO C- * 8 rH H CO CO IO CO o i-i •4 © 2 c a W .2 H CO CN CN rH t- O i-H O C a — 3 w o> 0) 01 fi c V t- t> © CN ">tf s 8 rH d CO H CO o o o — c 1 u CD CN CO CN i-l ^ ^ o ft •— 8 (A if Jrf > "S io m oo cm o * 8 a f OS t- o o M H q OP - M H H N H H H rl Ifl O E o to bo H H Tf IT) t* N O d COrlOCO O +, o CO rH CN CN o CN Tj* CO 09 o 8 rH rH U cS o 3 1 *o ft 0) rH Tji ^ b- CN CN o d CO IO CO 05 o 2 ^ s « a CO CN CN tH o CN CN -* •- V tH rH c u CD w _ (C < 0) to at) « CO ^ 00 H H «s 8 t-i S T(l H ^ rl 8 g> CL .E CO H H N H rH CN rH If3 O +■ -* v ^ u £ .£ • 13 •— o CO n c c 4J '3 o CO CO 3 G 1- o G e 5? CO & M CO ■a 1 CO CO & 43 M CO "el Pi 1 CO TJ 4a a TJ -ua fl° O £ O 43 cd •5 43 o t- bo eg I P C 1 1 i i t c >- B 31 11*1 C « g -o c M 09 ft S g w » w g 2 fi-H 1 1 § 1 "e3 4» O S B B I 1 I bo § « > O rt 3 o H eg £ CO CO CO i-3 a •J H N CO ^ W SO ^» rH CN CO Tt<" IO n a CO the number of farmers selling. A clear- cut separation among individual farmers marketing through each channel men- tioned cannot be made. Some farmers sold livestock exclusively through one channel, others through all five. In 1949, farmers and ranchers in both areas sold some livestock on the average through at least three marketing agencies. An esti- mate made for California only indicated that considerably more than half of the farmers used more than one channel to dispose of their livestock. The most prev- alent method used for selling in the states under consideration was the live- stock auction (3), followed by commis- sion firms at terminal markets (4), deal- ers, truckers, and order buyers (2), farmers and feeders direct (5) , and pack- ers direct (1) (Table 2). Buying. Purchases of livestock by western farmers amounted to approxi- mately a third of sales — expressed in marketing equivalents. The volume pur- chased was far more concentrated than that of sales: half of the purchases were obtained direct from other farmers, a fourth came from auctions, and the re- mainder from terminals and dealers in almost equal proportions (Table 1). Slightly fewer than a third as many producers bought as sold livestock. Ap- proximately half of these buyer trans- actions were between farmer and farmer; a third were between farmers and live- stock auctions (far larger than the pro- portion of livestock bought) ; and a sixth came through dealers and commission firms at terminals (Table 2). C. Relative Importance of Several Methods Used Over Time The exact changes that have occurred in western livestock selling and buying over a period of time cannot be shown. Prior to 1949, comprehensive data show- ing all producer sales and purchases were not available. But inferences can be drawn from comparative rates of growth of certain agencies. During the past 25 years western live- stock marketing has become more de- centralized. Three developments — the Table 2. Percentages of Total Transactions Between Farmers and Types of Marketing Agencies Used in Sales and Purchases of Major Livestock Classes, by Areas, 1949 Sales Purchases Agency Pacific Coast Inter- mountain Two areas Pacific Coast Inter- mountain Two areas per cent Packers, direct Dealers, truckers, order buyers . Livestock auctions 16 14 32 23 15 100 4 19 41 23 13 100 9 17 37 23 14 100 1 10 34 8 47 100 b 11 36 5 48 100 1 10 35 Commission firms at terminals . Farmers, direct 7 47 Total 100 » A transaction represents the annual sales of a farmer or rancher through a marketing agency. For example, the sale or purchase of animals during 1949 through each of the agencies listed represents one transaction. b Less than 0.5 per cent. [13 Weighing cattle at a country point. Half of the volume of all livestock is purchased from other farmers directly. livestock auction, "country buying," and direct packer sales — have been especially significant. Changes were caused, in part, by such factors as population shifts, de- velopment of a western commercial feed- ing industry, increased use of motor transport, and improvements in refrig- eration and retail distribution of meat. The concentration at certain terminal markets, usually in the vicinity of crowded cities, was slowed down. Such concentrations moved closer to produc- tion areas, in many cases to areas not formerly so used. As more of their busi ness was diverted to livestock auctions local dealers and traders became less im portant. The function of assembling uni form lots and grades, in many instances shifted from the dealers to the auctions although dealers still perform this func tion to some extent through buying. It is questionable whether a decrease in the operations of the local dealers has extended to those who act as order buy- ers, packer buyers, etc. Although no di- rect evidence is available, the general belief is that the share of these latter dealers has actually increased. Prior to World War I river markets along the Mississippi and Missouri were important receiving points for western- produced cattle and sheep. As the de- mand for slaughter and feeder livestock increased within the West, western mar- kets became more significant, as they re- ceived increased patronage from ranch- ers, dealers, and packer buyers. Move- ment of livestock to the East (especially from the Intermountain area) is still large but has decreased in importance. The West saw the greatest growth of live- stock auctions in the past 25 years, partly because of increased volume of output. The rapid population growth in the West made it necessary to ship to the Coast animals (especially beef animals) for immediate slaughter. Even more im- portant has been the increased number of stocker and feeder cattle shipped west- ward to be fed by farmers, packers, or custom packers, or to be kept on native or, in some sections, irrigated pastures. [14] PART II. AGENCIES THROUGH WHICH PRODUCERS SOLD LIVESTOCK IN 1949 A. Pacific Coast Channel movements for major live- stock classes on the Pacific Coast are shown in Table 1 and Figure 1. Percent- ages shown inside each circle in this figure indicate the relative importance of each outlet used. Farmers and ranch- ers are identified as the sole source for the entire movement. This section of the publication is concerned only with the first agency receiving the farmers' live- stock. For example, dealers accounted for 14 per cent of all sales of cattle and calves, terminal markets for 21 per cent, farmers and feeders for 11 per cent, packers and butchers for 36 per cent, and livestock auctions, including animals sold at auctions at terminals, for 18 per cent. Livestock shipping associations ac- counted for a small percentage, included with sales to actual buyers, as shown in the figure. Only the pattern of movement for cattle, sheep, and hogs is shown in the chart on page 16. Cattle. Although the larger volume of cattle sales was made direct to packers, not all such purchases were destined for immediate slaughter; a considerable number were placed in feed yards. Sales to terminals, dealers, and auc- tions followed in importance each chan- nel accounting for a fifth or more of all sales of cattle while direct farmer-to- farmer sales made up only a little more than a tenth of the total. The picture of cattle sales on the Coast is made some- what indistinct by the large numbers of "dairy blood" animals. The cattle represented in Table 1 and Figure 1 include beef steers, dairy cows, beef calves, bulls, and other classes of cattle. This variety of minor classes makes it desirable to point out differ- ences in channels used in disposing them. Beef Cattle. Beef steers, in number and marketing equivalents, far out- weighed other minor classes of beef cat- tle sold. Beef steers and beef heifers fol- lowed similar sales channels: 60 per cent of the combined volume went directly to packers; less than 20 per cent to com- mission firms at terminals; and more than 20 per cent to livestock auctions, dealers, and farmers (Table 3). Table 3. Percentage of Beef Animals Sold Through Various Marketing Agencies, by Areas, 1 949 Pacific Coast Intermountain Agency Beef steers Beef cows Beef heifers Beef calves Beef steers Beef cows Beef heifers Beef calves per cent Packers, direct. . 60 8 8 18 6 100 34 9 17 26 14 100 60 4 8 17 11 100 21 16 19 23 21 100 7 22 21 38 12 100 3 16 26 45 10 100 5 20 24 34 17 100 2 Dealers, truckers, order buyers Livestock auctions 23 27 Commission firms at terminals Farmers, direct 20 28 Total 100 [15] MARKETING CHANNELS FOR LIVESTOCK Pacific Coast Area, 1949 CATTLE 6- CALVES Farmers €r ranchers Dealers Terminal markets Farmers, stockers & feeders * LESS THAN 1 PERCENT ALL FIGURES EXPRESSED IN TERMS OF TOTAL VOLUME U. S. DEPARTMENT OF AGRICULTURE NEC 48386-X BUREAU OF AGRICULTURAL ECONOMICS Beef cows and calves sold at only half the volume of steers and heifers and also differed materially in the sales channels used. Direct sales to packers dropped by more than half, while the remaining out- lets received larger shares. The distribu- tion of beef calves was fairly evenly di- vided among all receiving agencies. The influence of the distribution of females to farmers' and ranchers' herds was no- ticeable. Proportions of transactions between farmers and marketing agencies for beef cattle (Table 4) present a different pic- ture than that shown by proportions of total animals going through the same agencies (Table 3). Commission firms at terminals and livestock auctions were [16] used most regardless of the type of beef animals sold. Farmers who disposed of beef cows and calves especially used auc- tions, probably to get the animals to other local farmers. Throughout the study, it was apparent that information was lacking as to the needs of local farm- ers for desired livestock of almost all classes. Dairy Steers* Dairy steers were mar- keted on the Coast at the rate of only 5 to 6 per cent of beef steers. Many farm- ers sold dairy steers, but the sales of a few who marketed through terminals colored the disposal picture. Dairy Cattle. Sales of dairy cattle loomed large, especially when compared to sales in the Intermountain region. Be- cause of methods used in some of the largest milksheds, more than half of the dairy cows went to commission firms at central markets (Appendix Table 4). Most of these animals had outlived their economic life as milk producers and were destined for slaughter. Auctions (many of which were specialized dairy auctions) were used to sell dairy cows for milk production. Sales to other farm- ers accounted for an eighth of the total, and the same percentage went to dealers and packers combined. Of the dairy calves, two thirds went to dealers ( usu- ally highly specialized) and auctions. Individual producers sent dairy cows to commission firms at terminals, auc- tions, dealers, producers, and packers in that order (Appendix Table 5). Almost half of the sellers of dairy calves went to auctions, and most of the rest to other farmers and dealers. Buffs. Bulls in approximately equal numbers went directly to farmers, com- mission firms at terminals, and packers; smaller numbers went to auctions and dealers (Appendix Table 6). The data did not indicate how the bulls that were sold were used. The largest proportions of sellers were attracted to auctions, the second largest to terminals. Sheep. As with cattle, the largest pro- portion of sheep sold on the Pacific Coast went directly to packers, although com- mission firms at terminals and dealers each attracted almost as many (Table 5) . Relatively, the last two agencies men- tioned were more important for sheep than for cattle. Other producers took about an eighth while the share going to auctions was minor. Probably several factors accounted for the small propor- Table 4. Percentages of Total Transactions Made by Farmers for Selling Beef Animals Through Various Marketing Agencies, by Areas, 1949 Pacific Coast Intermountain Agency Beef steers Beef cows Beef heifers Beef calves Beef steers Beef cows Beef heifers Beef calves per cent Packers, direct .... 23 12 27 31 7 100 17 13 37 27 6 100 21 10 29 28 12 100 16 14 36 22 12 100 4 18 41 31 6 100 3 15 44 33 5 100 4 15 39 34 8 100 3 Dealers, truckers, order buyers Livestock auctions 18 42 Commission firms at terminals Farmers, direct 22 15 Total 100 [17] ■- «s V-i M& Left: Large volumes of sheep in both areas are sent through terminal markets. Right: Unloading hogs at an auction which is a major marketing agency in both Western areas. tions going to auctions. Size of shipment was important as packages sent via auc- tions were far smaller. The larger sheep- men were often far distant from where they were held. Only at comparatively few auctions were there many sheep buyers present. Pronounced differences were apparent between the ways lambs and ewes were disposed of. Almost two fifths of the lambs went directly to packers while more of the ewes were sold to farmers (Table 5). Terminal commission firms claimed the second largest share of both lambs and ewes, and dealers were third. Shares consigned to auctions were small regardless of class. Individual- producers appeared to favor commission firms and dealers in selling lambs (Appendix Table 7). Deal- ers and packers claimed one fifth of the lamb sales each, and livestock auctions and farmers accounted for about 29 per cent of the transactions together. Largest numbers of producers sold ewes through commission firms at termi- Table 5. Percentage of Sheep Sold by Farmers Through Various Marketing Agencies, by Areas, 1949 Agency Pacific Coast Intermountain Lambs Ewes Lambs Ewes Packers, direct per cent 38 22 3 29 8 100 11 16 9 23 41 100 7 23 9 33 28 100 1 27 8 18 46 100 Dealers, truckers, order buyers Livestock auctions Commission firms at terminals Farmers, direct Total [18] Table 6. Volume of Swine Sold by Farmers Through Various Agencies, by Areas, 1949 Agency Pacific Coast Intermountain Butcher hogs Feeders Sows Boars and stags Butcher hogs Feeders Sows Boars and stags Packers, direct Dealers, truckers, order buyers Livestock auctions per cent 41 7 11 41 100 2 23 30 12 33 100 24 9 17 42 8 100 6 4 76 7 7 100 15 17 48 19 1 100 2 8 55 9 26 100 8 23 48 17 4 100 13 8 45 25 9 100 Commission firms at terminals Farmers, direct Total rials or through livestock auctions, the latter receiving small packages. Rela- tively fewer producers sold ewes through dealers than to packers compared with lamb disposals. Swine. The use to which butcher hogs are put differs radically from that for feeders. Butcher hogs on the Pacific Coast were largely routed directly to packers or to commission firms at termi- nals with minor shares being sold at auc- tions and through dealers (Table 6) .The largest numbers of transactions occurred between farmers and the agencies named plus the auctions (Appendix Table 8) . Feeder pigs were sent in greater vol- ume directly to producers or sold through auctions by the largest numbers of farmers. Although relatively few farmer-dealer transactions occurred, the volume sold to dealers was relatively large. B. Intermountain States Cattle. The most striking difference between the four Intermountain states and the Pacific Coast in 1949 volume of cattle disposals was that the Intermoun- tain area used more dealers and auctions and less packers (Figures 1 and 2). One reason for this difference lies in the phys- ical characteristics of the two regions. The Intermountain area in general is the source of large numbers of animals des- tined for further finishing or growth. The Pacific Coast, in part at least, is more largely adapted to the finishing of livestock for slaughter. Such compari- sons at best are only general. Both the Intermountain area and the Pacific Coast produce animals suitable for immediate slaughter as well as for use as feeders and stockers. In general, dealers and auctions, to- gether with terminals, are used more widely to move unfinished cattle into other areas than are other producers or farmers. Order buyers were responsible for moving considerable numbers of cattle and sheep both to the Coast and eastward. Likewise, auctions in the area generally were larger than those on the Coast, and many buyers also assembled and shipped the cattle out of the area.* It was stated repeatedly that many of the larger interior auctions serve the same * See Harston, Clive R., and Edwin C. Voorhies. Trade in western livestock auctions. 2. Analysis of livestock marketing. Washington Agricultural Experiment Station bul. 537:60-66. 1952. [19] MARKETING CHANNELS FOR LIVESTOCK Intermountain Area, 1949 CATTLE 6- CALVES Farmers G» ranchers Dealers Terminal markets Farmers, stockers G- ■f eeders Livestock Shipping Assn SHEEP & LAMBS Auctions Oth« * LESS THAN 1 PERCENT ALL FIGURES EXPRESSED IN TERMS OF TOTAL VOLUME U. S. DEPARTMENT OF AGRICULTURE NEC 48387-X BUREAU OF AGRICULTURAL ECONOMICS functions as terminal markets and have tended to replace them in the marketing structure. Beef Cattle. As on the Coast, beef steers stood out as the main beef animals marketed. Compared with the Coast, beef steers and heifers were less important in beef cattle classes marketed while beef cows and calves occupied a relatively more important place. Beef steers and heifers did not vary much in the disposal agencies utilized, but they were routed differently from those on the Coast. Fewer went to pack- ers which left a greater relative share going through the other channels as com- [20] pared with the Coast movement. The most pronounced increases in relative shares were those leading to dealers and auctions (Table 3). Beef cows were sent in largest num- bers through terminals and auctions, with dealers and farmers taking most of the remainder. Many of these were prob- ably dry cows sold for slaughter. Beef calves, unlike cows, were sent in approxi- mately the same proportions through all channels except to packers. Calves were sought for feeding and breeding animals, and the recorded distribution indicates that they tended to go to farmers. Regardless of class, more transactions occurred through livestock auctions than through any other channel (Table 4). Commission firms followed, with dealers, farmers, and packers in the order named accounting for the remainder. Dairy Cattle. As on the Coast, a num- ber of dairy steers were marketed, the total being between 5 and 6 per cent that of beef steers. The number of farmers or ranchers who reported sales of these animals was large. Considering the num- ber of producers involved and the ab- sence of a bias because of large indi- vidual sales, it is believed that the mar- keting channels were typical. Auctions claimed more than a third, packers only a twentieth. The remaining three fifths were divided fairly evenly among farm- ers, dealers, and terminals. Compared with the Pacific Coast, sales of all kinds of dairy stock (except dairy steers) were minor. Dealers moved the largest shares of milk cows and heifers (Appendix Table 4). They transacted deals between Intermountain farmers and moved sizable shipments to other dealers, auctions, and farmers on the Coast. Auction and direct farmer sales were relatively more important than on the Coast. The largest share of dairy calves was taken to auctions while direct sales to farmers and dealers took an ap- proximately equal number. Regardless of livestock class, the larg- est number of farmers used auctions for the sale of dairy animals (Appendix Table 5). Dealers were second in cow and heifer sales, while calves went in approximately equal numbers to dealers, other farmers, and commission firms. Bargaining for cattle at a terminal market. [21] Bulls. As with so many other classes of livestock, auctions and dealers were more important in the disposal of bulls than on the Coast, and packers were less important (Appendix Table 6). Sheep. Commission firms and dealers in the Intermountain area received shares of lambs which tallied very closely with those received on the Coast (Table 5) . The percentage of lambs sent directly to farmers was much higher, those sent to packers much lower than on the Coast. Auctions received a minor share although larger than on the Coast. Of the ewes, almost three fourths went directly to other producers or to dealers, the remainder largely to commission firms. In a general way, sales in both areas were similar except that dealers in the Intermountain area and packers on the Coast received larger sales. Numbers of transactions involving commission firms, auctions, other farm- ers, and dealers did not vary greatly. The main difference in the two areas was that relatively more producers in the Intermountain states sold directly to farmers, while more Coast operators sold to packers (Appendix Table 7). Swine. The charts (pages 16 and 20) show the contrasts between all disposals of hogs in the two areas. Two differences stand out. One, as with cattle and sheep, a lesser proportion of swine went directly to butchers. Two, a larger proportion of the swine was sold at auctions. The percentage of butcher hogs sold directly to packers was far less than on the Coast but considerably greater than the percentage of cattle or sheep going through this channel (Table 6) . This re- flects partly the demand of local butchers and packers for hog supplies. Commis- sion firms, dealers, and packers com- bined accounted for about as many butchers as were sent through auctions. As the Intermountain producers of butcher hogs sold about the same small average number to all agencies — except to farmers — there was a close corre- spondence between the relative number of butcher hogs sold through these dif- ferent agencies and the proportion of all transactions made through them. A few butcher hogs were sold to producers, probably for the latter's own use. More than half of the feeders were sold through auctions, more than a fourth through direct sales to farmers, the rest through terminals and dealers. As with butcher hogs, proportions of transactions with each agency corre- sponded closely with the relative share of the volume routed through that agency. Selling a single cow at a community auction. [22] PART III. FACTORS INFLUENCING PRODUCERS' CHOICE OF MARKET SELLING A. Type of Farm Beef Cattle. Operators* of cattle ranches on the Pacific Coast sent far larger proportions of beef steers, heifers, and even cows directly to packers than did other types of farm operators. At the same time, terminals and auctions were apparently used more widely by farmers who raised these same classes of beef cattle. Many farmers are aware of the demand for the product desired by packers and also have the facilities and feed to prepare such animals. Terminals received numerous slaughter animals but also supplies of animals to be distributed for feeding and stocking. While many small diversified farmers sent beef ani- mals to Coast auctions, specialized farm- ers also tended to sell small packages at auctions. Although some sold large aver- age numbers annually to auctions, a con- siderable number used this agency to dispose of odd lots as well as animals which differed in quality from those usually sold. Farmers who specialized in raising beef cattle sold approximately a fourth of their calves each to terminals, other farmers, and packers, the remaining fourth being divided between auctions and dealers. Diversified farmers sold more through auctions and less to farm- ers, dealers, and packers. Calculations indicate that "cattle ranches" on the Coast sold 90 per cent of all beef steers and heifers and 77 per cent of all beef cows and calves. The op- erators of these cattle ranches made up less than 65 per cent of the individuals who sold beef steers and heifers and 55 per cent of the individual sellers of beef cows and calves. Operators of cattle ranches sold the largest numbers of all classes of beef animals. In the Intermountain area, many beef cattle ranchers and farmers were con- fronted with fundamentally different problems than those on the Coast. In large parts of the four states involved, the chief problem was to ship out ani- mals because there was a surplus of beef. Producers specializing in cattle sold more largely to terminals, dealers, and auctions than those on the Coast. Specialized ranchers in the Intermoun- tain area differed from other farm oper- ators in methods of disposal. The former relied more on terminals and less on auc- tions; the latter sold larger shares di- rectly to other producers, except beef calves. A considerable share of the beef calves from nonspecialized operators was evidently bought by dealers — a larger proportion than the share that came from specialists. Regardless of class, from 72 to 77 per cent of all beef animals were sold from fewer than 60 per cent of the cattle ranches. Combination and diversified farms were more important sources of beef cattle in the Intermountain area. Dairy Cattle. Disposals of dairy cattle on the Coast were influenced by production techniques practiced by dairymen who specialized in market milk. Great differences appeared between dairymen and other types of producers and even among those classified as dairy- men. Dairymen who specialized in mar- * Producers were divided as operating the following types of farms: (1) cattle ranches (exclud- ing dairy farms) ; (2) sheep ranches; (3) combination cattle and sheep ranches; (4) dairy farms; and (5) diversified farms on which crops and livestock were produced. Farms and ranches were placed in these categories as well as (6) farms with insufficient information to classify after a review of the descriptive information was made (see Appendix Table 3). [23] ket milk, particularly in southern Cali- fornia, sold cull dairy cows after a very few profitable lactation periods largely through terminal markets. Another con- siderable share was channeled through auctions, while minor proportions went directly to farmers. Other dairymen depended less upon commission firms and sold larger shares to farmers through auctions and to deal- ers. Diversified farmers sold dairy cows largely through the latter three agencies. Disposals of dairy calves on the Coast were influenced largely by the tech- niques. Market milk operators sold large numbers of calves through dealers who specialized in dairy calves. Other dairy- men apparently used auctions to a greater extent and relied more upon di- rect sales to other farmers. Coast dairy farms were highly special- ized. They sold from 80 to 90 per cent of the dairy cows and calves reported. A very considerable number of dairy heif- ers were sold from cattle farms. Intermountain dairymen tended to sell larger numbers of dairy cows through traders, although sizable numbers were routed through auctions and to farmers. Dairymen evidently used auctions as the chief disposal agency for calves al- though, as might have been expected, a considerable volume was sent to other producers. Unlike the Coast area, sales of dairy stock did not concentrate on sales from dairymen. General and cattle farmers furnished a far larger proportion. Sheep. As with cattle, the Pacific Coast is a deficit area with sheep, espe- cially during certain seasons. Specialized sheepmen sent larger shares of lambs di- rectly to packers or through dealers and smaller shares to terminals and other producers. Auctions received an insig- nificant share of lambs from the non- specialized as well as from the special- ized sheepmen, although in terms of number of sellers the patronage was large. In the Intermountain area, range sheepmen shipped larger proportions of lambs to terminals and dealers than did other farmers who sold lambs. They also sent smaller shares directly to producers and through auctions as compared with the nonspecialists. Coast ranchers' outlets for ewes appar- ently varied only slightly because of spe- cialization. In the Intermountain area, ewes were sold in larger relative volume by sheep rangemen to dealers, many of whom shipped the animals out of the area. Numbers sent to terminal markets by this group were also larger. Swine. Largest net meat deficits on the Pacific Coast have been in pork, and this fact has accounted in part for the hog distribution channels of the area. The relatively few Coast producers who specialize in the production of butcher hogs sent larger shares to packers or terminals than did other types of farm- ers. A number of the specialists were garbage feeders. When the operators of all types of farms are considered, more of them sent butcher hogs to auctions than to any other agency. Relatively few of the Coast's farmers who sold feeder pigs could be classified as operating any particular type of farm. Sales were generally scattered among cattlemen, dairymen, and diversified farmers. Various types of farmers and ranchers in some sections of the area raised feeder pigs up to certain weights for garbage feeders. The original raisers thought they could not finish the animals on grains to be sold as butcher hogs. Principal channels for distribution were auctions and other farmers, the latter obtaining a large number of small pack- ages. In the Intermountain area, most sell- ers of feeder pigs were either specialized cattlemen or diversified farmers who de- pended upon auctions for the bulk of their sales. In this area, only a few small packages went directly to other farmers. [25] Auction Patronage. Respondents gave some indication as to the extent of auction patronage by different types of farmers. Combined cattle and sheep op- erators were most inclined to patronize auctions, while sheep range operators used auctions least (Table 7). Sheep range operators were more dis- tant from auctions; their stock was prob- ably more uniform, in larger lots and with fewer classes than the stock of op- erators with both cattle and sheep. Range cattlemen also patronized auctions fre- quently, particularly in the Mountain section. Dairymen traded at auctions more often on the Coast, while diversi- fied farm patrons were found more fre- quently in the Mountain section (see Table 7). Among nonauction patrons, diversi- fied farmers formed the largest group (Appendix Table 9). A considerable number had very small livestock inven- tories. In some instances, personal inter- views revealed that diversified farmers sold to dealers regularly at the ranch. This was one reason why they did not use auctions. A similar percentage of the nonpatrons in each section was classed as cattlemen. However, these proportions were smaller than with the patrons. Dairymen differed considerably — less prominent among nonpatrons than among patrons on the Coast — while in the Interior the opposite situation pre- vailed. B. Size of Farm Although no entirely satisfactory measure of "size" was obtained, there were indications of how larger and smaller producers operated. The larger the holding, the higher was the percent- age of beef animals and sheep of the total of animals sold. This situation did not prevail with dairy cattle and hog sales. Beef Cattle. As Coast farmers in- creased operations, they tended to send beef animals directly to packers. This channel was used for 71 per cent of the beef animals from farms of more than 500 acres but for less than 24 per cent from farms with smaller acreages. Thirty- eight per cent of the large farms, but only 13 per cent of the smaller farms, sold directly to packer shippers. Accom- panying this tendency was one that pointed to lessened sales at auctions as the size of farms increased. Numbers of producers using auctions declined less rapidly than volume sold, an indication that some larger operators sold small packages at auctions. Other tendencies of this kind were less pro- nounced. Marketings of steers at termi- Table 7. Percentage of Farmers Trading at Auctions by Type of Farm, by Areas, 1 949 Type of farm Pacific Coast Intermountain Two areas per cent Cattle Sheep Cattle and sheep Dairy Diversified Total 72 66 84 74 61 69 80 53 81 66 67 71 77 59 82 71 64 70 [26] Typical small auction in an area far from urban centers. nals increased up to the modal — aver- age — class. Thereafter, a downward trend set in. The percentage of steers marketed through dealers also increased perceptibly with the increased size. But the share of steers sold directly to farm- ers apparently varied little with an in- crease in farm size. In the Intermountain area, the most pronounced trend was that larger farms sold less beef cattle through auctions and more through other outlets. For example, farmers and ranchers operating less than 70 acres sent about half of their steers through auctions, while the proportion from farms and ranches of more than 220 acres was about an eighth. As to beef calves, the farmers and ranchers of larger acreage tended to sell bigger shares directly to farmers. Dealers were an important avenue of sale for beef by the small farm operators, while order buyers, rather than local dealers, were patronized by the larger cattle producer. Most of those who bought from the smaller operators were doubtless in what is generally referred to as the "specu- lator" section of the dealer group; that is, they bought animals on their own ac- count. A considerable number of those who dealt with larger operators were simply transferring ownership of ani- mals from one group of farmers to an- other — or to specific agencies such as packers. The size of farm reported upon did not take into account the use of public range. Fortunately, such information was obtained from cattle and sheep ranchers. The larger farmers were the frequent users. For example, about 37 per cent of all cattlemen in the Intermountain states used the public range. These cattlemen sold 58 per cent of all cattle. A similar situation prevailed on the Coast, but the differences between proportions were not as great (Appendix Table 10). Dairy Cattle. In both sections, there was a marked tendency for larger dairy- men to dispose of cows through terminal markets. These were destined largely for slaughter. A similar proportion of groups 27] of all sizes sold dairy cows at auction, although the share of the total volume became smaller with the increased size of operation. Direct sales to other pro- ducers were more prevalent among small producers. Highly specialized dealers in dairy calves were most likely to take the crop of dairy calves of large intensively oper- ated market milk farms on the Coast. Smaller and medium-sized producers used livestock auctions as outlets. Num- bers and differences in size in the Inter- mountain states were not sufficient to permit the drawing of conclusions. Sheep. Generally the most frequent auction sellers of lambs in both sections were the smaller ranch operators (under 70 acres) . On larger ranches the drop in auction sellers was rapid. A less pro- nounced trend in the opposite direction occurred in the proportion of farmers sending lambs to terminals, but appar- ently this did not follow through to the largest farmers and ranchers. In the Intermountain area, larger op- erators tended to sell through dealers and directly to farmers. Comparatively few sold directly to packers. The main tendency with the increase in size of Coast operations, especially with the largest producers, was to send more lambs directly to packers. Many farmers who operated less than 10 acres sold lambs to dealers. In general, the relative volumes of lambs moved fol- lowed the trends in numbers of produc- ers described above. In the sale of ewes, there were several points of similarity between the two areas. Terminals and dealers were used to move ewes from ranches of more than 5,000 acres — the Intermountain move- ment showing a greater acceleration than that on the Coast. In both areas, as farm size increased, the numbers sold at auc- tion declined relatively more rapidly than the numbers of sellers. Sales of ewes from the larger Intermountain sheepmen were relatively greater than on the Coast. Sheepmen used the public range in a similar manner as cattle ranchers. In the Intermountain area, between 50 and 60 per cent of the sheepmen in the sample used the public range, and they disposed of more than 80 per cent of the sheep. Coast sheepmen did not depend so much upon public range — only between a fifth and a tenth reported such use. Still, these same individuals disposed of almost half of all the sheep sold. Swine. There is not necessarily a re- lationship between farm area and hog enterprise size. In both sections, more butcher hogs were sent to market from the 10-to-69-acre group than from any other. If the farms of less than 70 acres are compared with the larger ones, the number of operators who sent butcher hogs to terminal markets changed rela- tively little. However, the proportionate volume sent through this channel in- creased materially because of the oper- ations of a few large operators. On the Coast about the same number of sellers tended to patronize auctions regardless of volume of disposals al- though the volume sent to auctions de- creased with the larger operators. A sharp upturn in the volume marketed through commission firms occurred with the largest operators. Dealers' volume did not appear to follow any definite trend. The percentage of disposals di- rectly to packers was high regardless of size of disposal. More Intermountain farmers and ranchers sent larger numbers of butcher hogs to auctions than to any other agency. As the size of farm increased, a greater number sold a larger volume through this channel. Many farmers sold through commission firms and dealers, but the accompanying volumes varied little as between size groups. Sales di- rectly to packers attracted a greater per- centage of small farmers who accounted for a larger share of the hogs than the larger size groups. Probably large num- bers of hogs went to local butchers. [28] In both areas, more farmers sold more feeders through the livestock auctions than through any other channel regard- less of size of operation. With those sell- ing largest numbers, the shares going to dealers and farmers increased noticeably on the Coast. It is probable that many dealers supplied feeder hogs to garbage feeders. C. Size of Lot Marketed Each farmer or rancher reported the number of head within each minor class of livestock sold to or bought from the various marketing agencies in 1949. The number of producers and the number of livestock of different classes sold or bought offered information as to average annual sales and purchases through each marketing agency. The exact size of lots marketed and bought was not obtained. It is believed that the data obtained offer a picture of the relative sizes of lots which were sent to and bought from the various channels. It is probable that the contrasts between sizes of lots offered through and bought from the various marketing agencies would be even more pronounced than appears from the data obtained. Beef Cattle. The correlation between size of lot marketed and agencies selected was high in many instances. Unquestion- ably, the smallest packages of beef ani- mals were sent through auction rings in both areas — but here the similarity ceased. On the Coast, the largest offerings of beef steers and heifers went directly to packers and those of beef cows and calves to farmers and ranchers, although aver- age receipts to packers were almost as large. Average offerings to commission firms at terminals or to dealers were in general about the same — below ship- ments of packers and direct producers but above those of auctions (Appendix Table 11). In the Interior, direct shipments to farmers and ranchers accounted for the largest averages while dealers and termi- nals followed — in about the same posi- tion as on the Coast. There is little doubt that, for farmers with small packages of cattle for sale, auctions were the "big" outlet. In many instances, these producers would not market a carlot of animals even in a year's time. In many instances, the auc- tions took over the function of assembly largely from dealers, although in many instances assembling at auctions was done by the latter or other agencies. The larger farmer with the larger package — often a carload — had a more marketable package especially for certain types of demand. This was especially the case when the receiver needed large numbers of animals of uniform quality to be used in distant areas. The larger producer with the larger packages of livestock ap- parently had a greater choice of channels through which he could sell. Dairy Cattle. The situation was dif- ferent with dairy stock. In both sections, largest average numbers of dairy cows were consigned to terminals for slaugh- ter, not for milking. On the Coast, the cows came from intensively operated market milk dairies where the inventory turnover of dairy cows was extremely rapid. Auctions ranked second as far as average numbers sold per operator were concerned. Data did not specify the use to which animals were to be put, but even some "terminal" dairy cow receipts were "re- covered" for further milking. The largest number of dairy calves per farmer was sent to dealers and packers. This does not necessarily mean that the largest packages at any one time were marketed through either of these chan- nels. Dealers removed calves from certain large dairies as a regular practice, and it was the dealer who performed the func- tion of assembly. The dairy industry's main product is milk, and animals — especially dropped calves — are sold dur- ing every month of the year. [29] Intermountain auctions received the smallest average number of dairy ani- mals per farmer selling during the year, but the contrast between this and the averages sent to other agencies was not sufficient for conclusions. Sheep. Intermountain ranchers sent the largest packages of lambs and ewes directly to other farmers and ranchers, followed by shipments to dealers, com- mission firms, and auctions. Packer ship- ments were too few to permit compari- sons. Largest packages of lambs on the Coast were sold directly to packers while other farmers accounted for the largest aver- age number of ewes sold. Commission firms and dealers received the second- and third-size lots of both lambs and ewes. No pronounced difference appeared between averages sent through either agency. By far the smallest averages of either lambs or ewes were sent through auction rings. Swine. Butcher hogs and feeder pigs are used for different purposes. Largest averages of butcher hogs on the Coast were sent to either commission firms or packers. In the first instance, they were undoubtedly routed to slaughterers in the vicinity of the yards. Averages for both dealers and auctions were consider- ably lower. A few were sold in very small packages and went directly to other pro- ducers — the latter probably putting the animals to their own uses. Differences in the Intermountain states were not great in the size of butcher hog packages that went to the various agen- cies. General indications were that the relatively larger sized packages went to auctions and dealers. Dealers took the largest averages of Coast feeder hogs, the other agencies showing only small differences. Several of the dealers apparently were order buyers for feeding establishments. Inter- mountain feeder averages varied little as between disposal channels. D. Quality of Livestock Approximately two fifths of all cor- respondents (in both areas) followed the practice of selling different qualities of livestock through different agencies (Table 8) . While the practice did not dif- fer greatly between farmers and ranchers in the two areas, auction patrons tended more to follow the practice, especially on the Coast. The chief reason advanced for varia- tion in selling was that "the results Table 8. Percentages of Producers Reporting Practice of Selling Livestock of Different Quality Through Different Marketing Channels, by Area, 1949 Pacific Coast producers Intermountain producers Producers in both areas Total Auction patrons Non- auction patrons Total Auction patrons Non- auction patrons Total Auction patrons Non- auction patrons per cent Producers following practice. Producers not following practice Total 40 60 100 44 30 38 39 35 39 42 56 70 62 61 65 61 58 100 100 100 100 100 100 100 32 68 100 30] Table 9. Distance Auction Patrons Traveled to Auctions, by Areas, 1 949 Distance, miles Pacific Coast Inter- mountain Two areas per cent Less than 25. . 62 23 43 21 52 25-49 22 50-99 11 22 17 100-199 3 11 7 200 and over.. 1 3 2 Total 100 100 100 a Number of patrons: Pacific Coast, 2,083; Intermountain, 2,272; Two areas, 4,355. (financial) were better when livestock was sent to specialized markets." Among the latter were those for (1) slaughter livestock; (2) cows; (3) feeders; and (4) breeding stock. Although it might have been anticipated that emphasis would vary with different management or ranch organization, uniformity of re- plies was significant. Coast producers stressed the sending of slaughter live- stock to terminals and packers, special cow markets, and the particularly favor- able breeding stock markets, while Inter- mountain operators emphasized special feeder markets. In both sections a fourth of the cor- respondents stated that auctions were used especially for low quality and odd lots. This was stressed more frequently by large producers. Special markets for cows were particularly emphasized by producers with inventories of less than 50 animal units while the specialized feeder market was stressed by those with more than 100 animal units. Special out- lets for breeding animals were stressed by those with inventories of less than 100 animal units. E. Distance Distances which farmers and ranchers moved livestock to market influenced the selection of a market even though data supporting this conclusion can only be shown by the distances producers trav- eled to auctions (Table 9) . On the Coast, 85 per cent of the auction patrons trav- eled less than 50 miles to the auction most patronized, and only 4 per cent traveled more than 100 miles. In the four Intermountain states corresponding per- centages were 64 and 14. Data obtained previously from auctions indicated sim- ilar relationships for the marketing of the major classes of livestock at auctions. A careful evaluation of individual farmer records indicated that one reason for nonpatronage of auctions was dis- tance (Table 16). Where the nearest auction was distant, there appeared to be a pronounced increase in those "do- ing business at home" — primarily with dealers. At times the dealers, especially when trading with smaller operators, were speculators; at other times, and especially when trading with the larger operators, they were buyers for packers or other farmers and ranchers. This in- crease was pronounced in the Inter- mountain area. Distance was not the deciding factor with 26 per cent of pa- trons as to the auction selected. Twenty- nine per cent of the patrons on the Coast and 23 per cent in Mountain states by- [31 Distance from auction is a very important factor in sellers' choice of market. Transportation of livestock is almost exclusively done by trucks. passed the nearest auction. Rings in the Coast area were generally closer together, so distance and travel time to alternative auctions were shorter than in the Inter- mountain area. The size of auction patronized and the distance from the farmer or rancher were rather clearly related in the Intermoun- tain area. Farmers and ranchers tended to make longer trips to auctions with a turnover of more than 60,000 head a year. Equally definite was the tendency in the opposite direction for farmers to use less frequently "the auctions with a turnover of less than 10,000 head an- nually" as distance increased. With Coast farmers, there was no clear-cut relation- ship between the size of auction most fre- quently used and the distance from the place of the auction. [32] PART IV. AGENCIES FROM WHICH PRODUCERS BOUGHT LIVESTOCK IN 1949 In 1949, western farmers and ranchers bought only about a third as much live- stock (in animal units) as they sold (Table 10). But there was a far greater concentration in agencies used in buy- ing. Half of all purchased stock came directly from other farmers and ranch- ers, a fourth from livestock auctions, the remaining fourth, in almost equal volume, from commission firms at termi- nals and dealers (Table 1). The volume of livestock purchased is not necessarily related to the number of transactions made. Almost half (47 per cent) of all animal transactions between farmers and all selling agencies were made between farmer and farmer (Table 2 ) . Over a third was made with auctions while the remainder involved dealers and commission firms at terminals. A. Pacific Coast Cattle. The largest share (60 per cent) of all purchases of beef animals on the Coast came directly from other farm- ers and ranchers. Commission firms, auctions, and dealers made up the rest. Shares originating with farmers were relatively larger with steers and heifers than with calves and cows (Table 11). When transactions of individual agen- cies were considered fully, three fourths were made through other farmers and at auctions (Appendix Table 12). Table 10. Purchases of Livestock as Percentages of Sales, by Areas, 1 949 Livestock class Pacific Coast Inter- mountain Two areas Beef steers Beef cows Beef heifers Beef calves Dairy steers Bulls Milk cows Milk heifers Dairy calves Ewes Lambs Other sheep Sows Boars and stags Butcher hogs Feeder and weaner pigs Horses and mules Average a 42 38 40 44 70 31 68 89 7 75 23 8 16 9 5 214 45 42 per cent 17 22 26 50 23 43 31 61 32 47 14 39 18 74 3 71 23 24 35 30 35 47 52 36 59 81 10 55 17 ie 17 20 4 172 31 35 a Expressed in marketing equivalents. [33] Table 11. Percentages of Beef Cattle Purchased Through Various Agencies, by Areas, 1 949 Pacific Coast Intermountain Agency Beef steers Beef cows Beef heifers Beef calves Beef steers Beef cows Beef heifers Beef calves per cent Dealers, truckers, order buyers Livestock auctions 10 13 13 63 1 100 15 18 22 44 1 100 10 11 16 63 100 15 17 11 56 1 100 6 49 12 33 100 12 37 5 46 100 6 46 13 35 100 7 41 Commission firms at terminals Farmers, direct 2 50 Others Total 100 More farmers went to other producers than to any other agency to obtain dairy cows, yet the greatest number of animals came through dealers ( Appendix Tables 13 and 14). The dealers' position was prominent primarily because of the op- erations of producers of market milk, especially in the Los Angeles Basin. Many dairy cows were sent into this area by dealers who operated in all of the western states as well as in areas further east. Producers and auctions furnished Terminal markets— as the one shown here— are usually a large assembly point for animals destined for slaughter or stocking and feeding. [34] the next largest shares, even though more individual purchasers went to auctions than to dealers to obtain cows. Many auctions — especially in market milk- sheds — specialized in disposing of dairy cows and heifers exclusively at irregular intervals. The main channels used to buy such heifers and calves were auctions and other farmers. Sheep. Producers and terminals fur- nished lambs in largest numbers to buy- ers, while only small shares came from either dealers or auctions (Appendix Table 15). Although farmers obtained lambs from other producers, half as many went to auctions where they made their purchases in small packages (Ap- pendix Table 16). At terminals there were fewer patrons, but lambs procured were in much larger packages. The largest volume (57 per cent) of ewes came directly from other farmers. Dealers furnished less than half as many, and terminals less than a fourth. Auc- tions were the source of only 3 per cent. Producers who had contacts with other farmers made up the majority (58 per cent) of transactions, while the re- mainder (42 per cent) was concerned with auctions, terminals, and dealers in approximately equal numbers. Swine. Although the majority (87 per cent) of purchase transactions on the Coast involving feeder pigs were made with other farmers and auctions, more than three fifths of the total number were obtained from commission firms at ter- minals by a minor fraction of the pro- ducers (Appendix Tables 17 and 18). Many of the latter were feeders of gar- bage. It is believed that the purchases from dealers have increased materially in some sections since the 1949 data were obtained. B. Infermountain States Cattle. Auctions and other producers accounted for 75 to 90 per cent of all transactions involving beef animals in the Intermountain area. These two agen- cies also accounted for 80 to 90 per cent of the beef animal classes bought. Auc- tions were used more heavily for steers and heifers, other producers for cows and calves. Terminals furnished about an eighth of the steers and heifers, dealers and order buyers accounted for only half as many. In 1949, order buyers furnished more cows and calves than did terminal commission firms. Slightly over half of the transactions were made with other operators, and those involved a similar share of dairy cow purchases, the next largest share coming from dealers. Auc- tions and farmers furnished largest pro- portions of dairy heifers and calves. Sheep. Seventy per cent of the lambs came directly from producers, compared with 24 per cent that came from auctions. More than three fourths (77 per cent) of the ewes were procured in almost two thirds (65 per cent) of all agency opera- tions from other farmers. Other agencies attracted minor numbers of purchasers. Swine. Purchases of feeder pigs were considerably smaller than on the Coast, and procurement sources were very dif- ferent. More than 90 per cent of the transactions were with auctions and other producers, and together these brought 80 per cent of the needed ani- mals. Unlike the situation prevailing with so many livestock classes, the auc- tion share was large in proportion to the transactions involved. [35 PART V. FACTORS INFLUENCING PRODUCERS' CHOICE OF MARKET BUYING A. Type of Farm Beef Cattle. On the Pacific Coast, most specialists in beef cattle raising bought animals from other producers or at auctions. Probably about three fourths went through these channels. Minor numbers of purchasers bought animals from commission firms or dealers. The volume purchased presented a dif- ferent picture. About two thirds of the animals came directly from other farm- ers and ranchers — terminals, auctions and dealers furnished the remaining third. Nonspecialized beef cattle raisers tended to obtain fewer animals from other producers and more through auc- tions. In the Intermountain area specialized beef cattle raisers in larger numbers de- pended on other farmers and auctions to supply the largest shares of different beef cattle classes. The volume obtained from these two agencies did not differ greatly. As on the Coast, nonspecialists leaned more heavily on auctions and agencies other than producers. On the Coast between 80 and 90 per cent of the beef cattle classes required were bought by operators of cattle ranches. The latter made up from 50 to 60 per cent of the total number of farm- ers who obtained beef cattle. The non- specialized farmers on the Coast were largely diversified farmers who bought an average of 5 to 10 animals a year. Operators of cattle farms bought several times this average. Intermountain buyers of beef cattle classes were not as concentrated in the cattle ranch class as Coast buyers. More beef animals in the Intermountain sec- tion went to combination cattle and sheep range farms and especially to diversified farmers. As on the Coast, diversified farmers bought 5 to 10 beef animals during the year while the rangemen bought a much greater number. Dairy Cattle. Most dairymen on the Coast bought dairy cows from other dairymen, auctions, and dealers. The vol- ume bought by specialized dairymen presented a different picture from that bought by other types of farmers. Many of the specialized dairymen were large milk operators who obtained almost half their cows from dealers, with producers and auctions furnishing the rest. Other types of farmers tended to rely more strongly on purchases directly from farmers. As for milk heifers, dairymen bought them in about equal numbers from auc- tions and other producers. But in the number of farmer-agency transactions, other producers outnumbered auctions more than two to one. Nonspecialists were more inclined to obtain their heifers from auctions. In buying dairy cows, Intermountain dairymen relied mainly on direct pur- chases from farmers while less special- ized operators, although they also bought from farmers, purchased larger shares from auctions. For heifers, dairymen re- lied mainly on auctions and other farmers. Bulls. Approximately two thirds of the bulls were procured by range operators — cattle, sheep, and combination sheep and cattle raisers. In the Intermountain states, the proportions were approxi- mately eight or nine to one. In both areas, cattle rangemen pro- cured bulls from farmers and auctions at a ratio of two to one, a number being obtained at special auction sales. Dealers furnished some (11 per cent) to Inter- mountain rangemen while a similar share on the Coast was purchased through commission firms. [36] The chief disadvantage of buying at auctions, according to the majority of farmers, is fear of disease. Pens as the one shown above add weight to this criticism. However the pen below shows that cattle at auctions can be kept in clean, simply constructed pens. [37] Dairy farmers bought the largest pro- portion of their bulls directly from farmers. Diversified farmers took a mid- way position between the rangemen and the dairymen as they bought most of the animals from other farmers and at auc- tions. Sheep. Coast wool growers bought most lambs directly from farmers — with terminals and dealers following — while nonspecialists depended even more on direct purchases. Interior range sheepmen relied still more heavily than the Coast group upon other ranchers to furnish lambs. Only minor purchases were made from other agencies. Operators of combination cat- tle and sheep ranches relied more heavily on sources other than producers. Coast sheepmen obtained more than half (55 per cent) of the needed ewes from other producers, with commission firms and dealers furnishing most of the rest. Diversified farmers apparently pur- chased a similar share from producers but the remainder originated largely in auctions. Range sheepmen in the Intermountain states obtained an even greater share of their ewes from producers, while less specialized operators relied more on other agencies to furnish the needed animals. Swine. Most western farms produce hogs as complementary or supplemen- tary enterprises on diversified farms. Highly specialized operations of garbage feeders on the West Coast can scarcely be considered as "typical" hog-feeding operations. Yet, this latter operation colored the Coast data with reference to feeder procurements. The two main sources indicated that the larger propor- tion was obtained either from terminal markets (71 per cent) or directly from dealers (21 per cent). Those farmers who fed only a few hogs apparently de- pended largely upon auctions or other farmers to furnish the necessary pigs. Few of the Intermountain operators could be classed as specialized feeders of hogs. B. Size of Farm In buying, as in selling, definite rela- tionships existed in both sections be- tween the acreages operated by farmers and ranchers and the numbers of beef animals and sheep purchased. As the acreage increased, a larger proportion of the purchases was made. For example, in each section more than 56 per cent of all sheep bought went to farmers or ranchers operating more than 500 acres. More than 28 per cent in the Intermoun- tain states and more than 29 per cent on the Pacific Coast were bought by farm- ers operating between 220 and 500 acres. A comparable situation occurred in pur- chases and sales of beef cattle. For dairy animals and hogs, farm size did not bear specific relationships to either pur- chases or sales. If the purchases of beef cattle and/or sheep by individual oper- ators are considered, increases in num- bers of sheep or beef cattle either bought or sold rise rapidly with an increase in the acreage operated. Beef Cattle. On the Coast, operators of large ranches tended to buy far greater volumes of beef steers and heifers directly from producers and relatively fewer at auctions. As farms passed the median size group, the tendency was toward larger purchases directly from producers and dealers. The same tendency was found for the purchases of beef steers or heifers. In- creased numbers of operators bought relatively larger volumes from terminals and especially dealers. In the Intermountain states, the buy- ing of beef steers tended to be similar to that on the Coast except that neither the relative number of auction buyers nor their purchase volume decreased to the same extent as farm size increased. Trends in buying heifers were also simi- lar to those on the Coast; the chief dif- ference was in the greater dependence [38] of the Intermountain group on the auc- tion supply. Increased purchases of beef cows directly from farmers accompanied the larger Intermountain operators' quest for cows. In contrast to the case of the Coast operators, added purchases came largely from dealers rather than from commission firms. Purchases of beef calves directly from other farmers and ranchers increased with the increased holding size in both areas, while there was apparently an ac- companying trend from auctions and ter- minals. Forty per cent of the total producer-agency transactions in the group of farmers operating less than 220 acres involved the purchase of 36 per cent of all calves (in this size group of farms) from either farmers or dealers. Taking only those farms of over 220 acres, 49 per cent of the operators pur- chased 71 per cent of all calves (in this size group of farms) from either farm- ers or dealers. Coast auction purchases declined very rapidly with increasing size. Dairy Cattle. In many parts of the West, and especially on the Pacific Coast, area is not related to size of dairy op- erations. The southern California basin is one of the most intensive dairy sec- tions in the United States. Dairies with inventories of 300 dairy cows are not uncommon on less than 10 acres. Space occupied is often "standing room only," where cows as well as feed are brought in from outside the area. Under such condi- tions, numbers of dairy cows and spring- ers brought into the area are probably proportionately larger than elsewhere. For these reasons, and also because con- siderable parts of the dairy industries on the Coast are suppliers of market milk for rapidly growing urban and suburban areas, the Coast and the Intermountain states present very different pictures of buying. On the Coast, probably half of the farmers on small farms obtained about half the total cows from other farmers. With an increase in size of op- eration, dealer purchases played the lead- ing role. The evidence indicates that an increased proportion of the large opera- tors bought from dealers and that their shares of dairy cows purchased increased even more. Evidence points to the auc- tion as a purchase agency, particularly with average size groups. Unlike the pur- chases of most other livestock classes already discussed (pages 32-37), the auction was an important distributing center to large as well as small producers. Many of these auctions were devoted ex- clusively to dairy cow sales held at ir- regular intervals. Purchases of heifers directly from farmers and from auctions figured more prominently with the larger Coast oper- ators. Purchases of dairy stock in the Intermountain section were such that conclusions as to the influence of opera- tion size and the agencies from which animals were bought would likely be erroneous. Bulls. It is probable that more than half of the Coast operators bought less than a third of the bulls for dairy breed- ing. In the Mountain states an estimated three fourths of the ranchers bought al- most 90 per cent of the animals for beef breeding. From the evidence, it is ques- tionable whether size of operation was a deciding influence in the choosing of pur- chase agencies, although a few of the larger Intermountain operators tended to obtain proportionately more animals di- rectly from ranchers. Sheep. Coast producers of lambs who bought small numbers obtained them largely directly from farmers, although a few came from auctions and terminals. Producers who made larger purchases still obtained the bulk directly from farmers. The auction role became very minor, as its place was being taken by dealers and terminal markets. In the Intermountain states, most small operators bought lambs either from auctions or directly from farmers. These agencies were the chief sources of sup- [39] ply for large operators who. however, also bought from dealers and terminal markets. Small producers on the Coast — repre- sented mainly in California and Wash- ington — obtained the greatest proportion of ewes directly from farmers; a few bought minor numbers from dealers and terminal markets. Large operators caused the shares furnished by dealers and ter- minal markets to go up so that the great- est numbers were obtained through these two agencies. Direct purchase from ranchers domi- nated the Intermountain ewe picture re- gardless of operation size. As on the Coast, more large operators tended to buy from dealers and terminal markets, the pull being stronger toward the dealers. Swine. Large hog-feeding operators on the Coast obtained the greatest rela- tive number of required feeder hogs from terminals. But there were some large dealer purchases. Direct buying from farmers was also sizable in some in- stances. The auction played an important role only with those whose total pur- chases were small. It is probable that numerous purchases of feeder pigs were made at auctions by dealers who not only assembled the feeder pigs but fed them to a specific weight before selling to feeders. Intermountain farmers in all size groups obtained feeder pigs in small numbers either from auctions or other producers. C. Size of Lot Purchased Beef Cattle. Largest packages of beef steers and heifers on the Coast came di- rectly from other producers, while deal- ers furnished largest average numbers of beef cows and calves. With every class of beef animals, auctions were the sources of the smallest lots. Generally, terminals ranked between auctions, on the one hand, and producers and dealers on the other. In the Interior, the largest packages of beef animals were bought directly from farmers. Although the differences in sizes of packages bought directly from farm- ers and from auctions were not great, the latter were smaller. Terminals' averages of steers and heifers combined were larger than those that were purchased at auctions. Dairy Cattle. On the Coast, average numbers of dairy cows bought through dealers were larger than those coming through any other channel. This was so because many large market milk oper- ators bought most or all needed dairy cows through dealers. Average purchases through auctions or directly from farm- ers were smaller. Intermountain producers tended to buy even larger average numbers of dairy cows from dealers and smaller numbers from auctions. Sheep. Coast farmers and ranchers obtained largest average numbers of lambs from terminals, dealers, and farm- ers in the order named, while those com- ing from auctions were smallest. Intermountain purchasers bought higher averages from farmers than from any other agency. Largest packages of ewes on the Coast came from dealers or order buyers; those reaching the farmer via commis- sion firms or directly from other ranch- ers were considerably smaller. Such auc- tion purchases of ewes as were made were small. Pronounced differences did not appear in the Interior in the averages per agency except that the average takings from auc- tions were only a fifth as numerous as those from other agencies. Swine. With the data on hand, little information could be announced with reference to size of offerings obtained through separate agencies, with one ex- ception : the small number of specialized hog feeders on the Coast obtained by far the largest average from commission firms at terminals. [40] D. Quality of Livestock Conclusions as to quality of livestock and distance traveled for purchases can- not be supported as satisfactorily by the statistics collected as conclusions con- cerning the other factors discussed be- fore. However, the opinions expressed by producers in the questionnaires brought out the decisive influence of quality on the agency selected for live- stock purchase. Good as well as poor quality livestock passes through all the various marketing agencies. Quality is a factor that deter- mines the selling agency. Fifty-nine per cent of the auction patrons believed that one of the advantages of auction buying was an opportunity to have a wider choice. In some sections, especially on the Pacific slope, where dairying and beef production are intermingled to a great extent, many producers selected certain agencies because they believed that those agencies specialized in the handling of certain types, grades, and qualities of stock. In discussing disadvantages of auction buying, about a fourth of the producers mentioned either the low quality of live- stock for sale or the insufficient quantity of uniform grades available (Table 15). On closer examination, it was found that purchasing from auctions in a number of sections was looked upon as resorting to the purchase of low-quality livestock. A principal reason given for not pat- ronizing auctions was that better quality stock could be obtained from individuals (Table 16). This point was emphasized more by Coast operators. A number stressed the need to know the origin of the stock purchased, particularly when it was in the breeding category. Dairymen were highly critical of obtaining breed- ing stock through certain channels. Auction patrons especially believed that buyers or sellers could fare better by patronizing specialized sales. This specialization was evident in many of the Coast sales. Eighteen per cent of the patrons of Coast auctions did not trade at the nearest sales ring. A number di- vided auction purchases (as well as sales), and bought at one auction be- cause of its specialization in handling beef (from dairy as well as beef animals) and at another because of its dairy (for milk) reputation. In the Intermountain states, the percentage of buyers who by- passed the nearest sales ring dropped much lower. E. Distance As with quality, no direct statistical data were sought in order to indicate the effect of distance on the type of market selected for buying. By inference, it would seem fairly conclusive that dis- tance traveled decisively influenced pur- chasing. Auction patrons especially were unquestionably influenced by this factor. One of the main reasons that were of- fered by these patrons was convenience (Table 12). The suggestions most emphasized in the Intermountain area for improving livestock marketing were better trans- portation facilities and lower costs. This was particularly stressed by nonauction patrons (Table 21). Another suggestion, "more local markets," was strongly em- phasized by nonauction patrons on the Coast and by patrons as well as non- patrons in the Interior. During the writing of this report, the question was frequently raised as to the effect of uptrends and downtrends in livestock prices on the agency selected for buying and selling. Data are not available to support the views that have been advanced on this point. It may be recalled that in 1949 a slow but steady downturn in livestock prices took place in the area. [41] PART VI. PRODUCERS' APPRAISAL OF BUYING AND SELLING AT AUCTIONS Seventy per cent of the farmers and ranchers contributing to the study pat- ronized livestock auctions (Table 7). The proportion was slightly larger in the Intermountain states, especially among those with very small inventories. Ap- proximately half (49 per cent) of the patrons stated that they had either sold or bought through auctions for five years or more (Appendix Table 19). Auction patrons and nonpatrons were asked for appraisals of auction transac- tions. A majority opinion is often mis- interpreted. Many farmers and ranchers believed that one disadvantage of auction buying was danger from disease. This did not necessarily mean that such an ex- pression came from those who had bought, at an auction, diseased livestock or animals which had subsequently be- come diseased. It did indicate the think- ing of producers as to the risks of buy- ing. All producers were asked to set forth their opinions on both the advantages and disadvantages of selling and buying at auctions (Tables 12, 13, 14, and 15). Nonpatrons of auctions, representing 30 per cent of the producers, were asked why they did not patronize them. Their replies (Table 16) focus light on auc- tions' advantages and disadvantages from their angle. These replies are not complete; many had too little experience with auctions to express an opinion. A little more than a fourth (26 per cent) of the patrons of auctions did not transact business with the nearest auc- tion (Table 17). Added to the 30 per cent of nonpatrons, this indicates that between one half and three fifths of all producers did not patronize the auction nearest the farm. The patrons by-passing the nearest auction were asked for their reasons. Coast farmers were more in- Table 12. Specif! Selling c Advantages Cited by Producers for at Auctions, by Areas, 1949 Advantage given Pacific Coast Intermountain Two areas Patron Nonpatron Patron Nonpatron Patron Nonpatron More competition percentages of reasons 38 25 14 11 2 5 1 2 1 1 100 30 23 26 10 1 7 1 1 1 100 35 18 15 12 8 2 4 2 3 1 100 42 29 8 9 4 1 3 2 1 1 100 36 22 15 11 5 3 3 2 2 1 100 37 27 16 9 3 3 2 1 1 1 100 Higher prices Market for odd and small lots . . Convenience Less shrink and lower market- ing cost Fast settlement of sale All buyers have chance to bid . . Have chance for no sale See livestock sold Obtain ideas on market de- mands Total [42] Table 13. Specific Disadvantages Cited by Producers for Selling at Auctions, by Areas, 1949 Disadvantage given Pacific Coast Patron Nonpatron Intermountain Patron Nonpatron Two areas Patron Nonpatron percentages of reasons Lack of sufficient buyers Lower and too variable prices High selling charges Excessive shrink Buyer collusion Rough handling Inaccurate weights Operator or employees selling in own ring Scattering brands Source of disease By-bidding Total 27 23 21 12 5 3 4 1 1 1 2 100 13 39 43 34 30 22 27 22 30 8 10 13 15 10 3 11 3 4 2 4 2 4 3 4 4 4 3 3 2 2 6 2 2 3 3 2 5 1 2 100 100 100 100 33 28 17 7 2 3 2 4 2 2 100 Table 14. Specific Advantages Cited by Producers for Buying at Auctions, by Areas, 1949 Advantage given Pacific Coast Intermountain Two areas Patron Nonpatron Patron Nonpatron Patron Nonpatron percentages of reasons One can obtain what is wanted . 59 46 60 58 59 53 Convenience 19 15 21 10 20 12 Better prices 19 35 14 30 16 32 Less shrink, lower marketing cost 1 2 3 1 3 1 Opportunity to know origin of stock 1 2 1 1 1 Locally bought livestock does better 1 1 1 1 1 Total 100 100 100 100 100 100 clined to by-pass auctions nearest their farms, and one partial explanation of this is that rings in the area were gen- erally closer together. Attempts had been made to obtain ap- praisals of auctions from livestock deal- ers, but only a few were questioned and there was not necessarily any common interest between livestock dealers, as such, and livestock producers. [43] Each farmer could make as many as 10 appraisals of the advantages and dis- advantages of auction selling and buying. In most cases, however, producers were not inclined to suggest more than one or two advantages or disadvantages. Generally speaking, the answers given by the nonpatrons of auctions as to why they did not patronize auctions, and by those offering an explanation as to why they by-passed the nearest auction, were rather clear-cut and precise. Table 15. Specific Disadvantages Cited by Producers for Buying at Auctions, by Areas, 1949 Disadvantage given Pacific Coast Patron Nonpatron Intermountain Patron Nonpatron Two areas Patron Nonpatron percentages of reasons Source of disease Low quality of stock offered and insufficient quantity of uni- form grades Animals sold too fast Prices too high compared with those at terminals By-bidding High selling charges Too much fill Livestock varies too much Poor weights Total 40 27 16 11 3 1 1 1 100 33 43 33 41 30 20 24 23 16 17 15 17 11 3 4 7 3 9 9 6 6 3 7 2 2 2 2 1 2 6 1 1 1 100 100 100 100 33 27 16 7 6 7 1 3 100 Table 16. Per Cent of Farm Operators Reporting Specified Reasons for Not Being Auction Patrons, by Areas, 1949 Reason Pacific Coast Intermountain Two areas per cent 32 44 38 14 29 21 29 6 17 19 12 16 4 7 6 1 2 1 1 1 100 100 100 Prices better at terminal markets Like to sell at home Selling direct eliminates middleman Get better quality stock from individuals Commission men at terminal markets better posted Like to know source of stock bought High shrinkage Total [44] Table 17. Number and Per Cent of Farmers Reporting Specified Reason for Not Using Auction Nearest Farm Reason Pacific Coast Intermountain Two areas per cent Better prices at other markets 37 36 18 2 6 1 100 41 38 10 8 2 1 100 39 Lack of buying and selling competition. . Not a good market for sale or purchase of specialized stock 37 14 Seasonal market or closed part of year. . Dislike of operator Suspicion of weights 5 4 1 Total 100 a Number of farmers reporting was 505, Pacific Coast; 471, Intermountain; and two areas, 976. A. Advantages for Selling The advantage for sellers most fre- quently stressed was that auctions offered more competition than other methods of disposal (Table 12). This opinion was voiced by more than a third of all pro- ducers regardless of size of auction. In- creased competition was emphasized more by those who patronized the larger auctions. In the Intermountain area, these were auctions selling more than 40,000 head of cattle a year; on the Coast, more than 20,000 head. Regard- less of type of operation conducted, this reason stood out. The second advantage for sellers at auctions was "higher prices." This be- lief was expressed by nonpatrons even more than patrons. The reason for this may be the fact that there were more nonpatrons than patrons among small operators with less than 20 head (Ap- pendix Table 20) and it was among the small operators that the belief of better prices was widespread. Many small op- erators felt that they had been discrimi- nated against by many of the selling agencies, including auctions. Some who had offered small lots through agencies other than auctions believed that they had received less consideration than shippers of larger lots. Coast dairymen (auction patrons) em- phasized the "higher price" advantage. Diversified farmers placed more weight on this point than did operators of range cattle or sheep. The latter group empha- sized it least. Intermountain farmers who patronized very small and very large auctions be- lieved that they received higher prices. This was not stressed on the Coast. , si wwrn^r^: Sale of odd lots is one of the reasons why pro- ducers prefer auction sales. [45] A third advantage expressed was the marketability of small and odd lots. This was especially stressed among nonpa- trons by some operators with large in- ventories, and also by Coast patrons who frequented sales of less than 20,000 head annually. Among smaller dairymen in California's Central Valley, mention of this advantage was frequently made by sellers of dropped calves. From the stand- point of numbers, cattle and sheep ranch- ers stressed the advantages of "small- and odd-lots" two to four times more fre- quently than either dairymen or diversi- fied farmers. Many larger operators cut certain animals from larger shipments, and in many cases they were sent through auctions. A fourth advantage mentioned was convenience. This was stressed by diver- sified farmers with small inventories — often with more than one livestock spe- cies. Many farmers marketed only a very few animals at one time. Numerous pro- ducers in the group apparently did not know the quality of the stock they marketed. Convenience was especially stressed by patrons of smaller auctions. Less shrinkage and lower marketing costs called forth differences in emphasis between the two groups of farmers. Inter- mountain auction consignors generally shipped longer distances, and it is prob- able that they were more aware of shrink- age. Direct auction marketing charges appeared to have been lower in this sec- tion than on the Pacific Coast in 1949. Cattle and sheep rangemen placed more weight on shrinkage. Dairymen and di- versified farmers made few comments concerning it. On the Coast, especially in some relatively isolated sections, shrinkage was mentioned by dairymen who shipped cull cows as well as by cer- tain other farmers who claimed that a long wait in yards caused excessive shrinkage. Probably in most instances this loss of body weight was not a shrink- age of tissue. Fast settlement of sales was mentioned by numerous Coast diversified farmers and dairymen — especially those with smaller inventories. Mention was made of the possibility of obtaining needed cash by selling a few animals. B. Disadvantages for Selling Specific disadvantages of auction sell- ing were mentioned only half as fre- quently as advantages. Even nonpatrons stressed advantages more often. "Lack of sufficient buyers" and "lower and too variable prices" were the leading criticisms — almost the opposite of the most frequently expressed advantages "more competition" and "higher prices" (Table 13). "Lack of sufficient buyers" was voiced more often in the Interior states and this appraisal was not limited to any well-defined inventory group. All sizes of auctions except the largest seemed to be included within the criti- cism. It was voiced most strongly among cattlemen and sheepmen. Among producers the line of demar- cation between patrons and nonpatrons was not so decisive as might appear at first glance. A large number of operators did not patronize the nearest auction, and gave rather closely related reasons in both sections for by-passing: "better prices at other markets" and "lack of buying and selling competition" at the nearest auction (Table 17). These two reasons were given approximately the same weight by this group. Operators could not be expected to gauge auction turnover accurately, but there is little doubt that one of the under- lying reasons for the by-passing of the nearest auction was the small turnover. In 1948, over half (50.6 per cent) of the animals in western auctions were sold by auctions with a turnover of 30,000 head or more (12.8 per cent of the number of auctions). Among those offering specific disad- vantages of auction selling, cattle and sheep range operators, especially non- patrons, stressed "lower and more vari- 46] able prices received." Even though this criticism carried more weight with those having fewer than 50 animal units, fre- quent mention of the point was made by- larger farmers and ranchers. The latter stated that operators could never be sure of the number and extent of bids at auc- tions available to them, and that the re- sult was highly variable prices at times. The complaint was not limited to patrons of auctions of any special size. "High selling charges" brought forth varying weights of opinion, and was stressed regardless of operator's inven- tory or size of auction patronized. This criticism was decidedly more severe on the Coast. Although selling charges varied widely as between auctions in each of the areas in 1949, it would ap- pear that average selling charges on the Coast were higher. The question arises as to the situation which will prevail with lower livestock prices. In a general way, charges on the Coast were levied on a percentage basis while those in the In- terior were on a per-head basis. Some operators believed they were discrimi- nated against when selling high-quality anmals if a percentage charge were made. Among Coast operators, dairymen especially complained of the "high sell- ing charges." One in every ten criticisms was related to shrinkage. This was more often men- tioned by Coast operators who sold at the larger auctions. There is an apparent question mark in the minds of sellers of livestock on "shrink" — perhaps even a lack of understanding of the difference between the two types of shrinkage, that concerned with the excretion of feces and urine, on the one hand, and the more serious shrinkage concerned with tissue, on the other. Furthermore, apparently no standard basic data on shrinkage was readily available. Buyer collusion and rough handling were mentioned by patrons in some lo- calities. Inaccurate weighing was stressed only in rather limited sections. The in- accuracy of weighing should not be dis- missed lightly simply because of a gen- eral lack of emphasis imputed to it by farmers. "By-bidding" brought far stronger dis- approval in the Interior, but in both areas smaller producers were most criti- cal. Size of auction apparently did not influence this appraisal. By-bidding is an effort by the livestock consignor, auction owner, or operator to bid on his own stock so as to run up the price, to bid in the stock in case it does not bring what the owner wants, or otherwise to prevent the stock from selling at an un- acceptable price. "High selling charges," "too much fill," and "poor weights" were men- tioned infrequently throughout the area. But there were limited sections where these evaluations received considerable support. C. Advantages for Buying More farmers sold than bought live- stock at auctions, and more of all major species of livestock were sold than pur- chased through this agency. In 1949, less than 30 per cent as many farmers bought as sold livestock at auctions when the entire area is considered. In the Interior the figure was 25 per cent, and on the Coast a little more than 33 per cent. It might be anticipated that fewer advan- tages would be listed for auction buying than for selling. "One can get what is wanted" was the advantage most often expressed in auc- tion buying. This benefit was stressed regardless of section or auction patron- age (Table 14). Greatest weight to this advantage was given by smaller produc- ers, especially on the Coast. This can be explained partly by the greater diversity of operations carried on by the Coast operators, partly by the greater diversity of the offerings at auctions. No specific "size of auction" patron seemed to be in the majority. Special feeder sales held by certain [47 auctions in the Interior states were stressed by numerous large ranchers. Market-milk operators on the Coast — usually with large inventories — men- tioned advantages of special sales of dairy cows. Many farmers with different- sized operations mentioned purchases of purebred animals at auction sales, such as ram and bull sales. "Convenience" was one of the two other main advantages stressed. Size of inventory seemed to cause little differ- ence in emphasis, but patrons, especially those of medium-sized and small auc- tions, were most concerned. Patrons in the Intermountain section — where there were fewer auctions — were more em- phatic on this point than was the Coast group. Diversified farmers and special- ized cattle producers were more inclined to stress convenience than were others such as dairymen and sheepmen. "Better prices" seemed to impress non- patrons more strongly than patrons. Neither operation size nor type of farm- ing appeared to affect the appraisal. The size of auction patronized appeared to make no difference in the appraisals of groups patronizing them. Relatively small numbers mentioned less shrinkage, lower marketing costs, opportunity to know origin of stock, ad- vantages of buying local livestock. From observations of auctions, the latter two advantages would prevail at only few — probably the smaller — auction rings. D. Disadvantages of Buying Disadvantages of auction buying were mentioned relatively more frequently than advantages. Regardless of section or auction patronage, the "danger of dis- ease" was emphasized most (Table 15). More attention was given to this point by operators with small inventories. Little or no difference in emphasis was noted in appraisals of differing farm operator types, with the exception of dairymen, nor between patrons of different-sized auctions. Among dairymen there was a noticeable difference in types of auctions patronized. Greatest criticism apparently was directed at "community sales" at which all classes of stock were bought and sold. Little criticism was aimed at specialized dairy auction sales, at which animals were sold chiefly for breeding and milk rather than slaughter. Regardless of area, rapid selling was uniformly criticized by farmers and ranchers with varying inventories. There was a definite increase in criticism among patrons of larger auctions, for example, those with a volume of 40,000 or more cattle in the Intermountain area and with 20,000 on the Coast. Dairymen and diversified farmers were especially concerned. The speed with which animals are sold is important in the financial management of many large auctions. It would appear to be good policy for some to make facilities available for a better inspection of livestock prior to sale. It would also appear to be good policy to cut down as far as possible in sale inter- ruptions and to devote as much time as possible to the actual selling in the ring. This situation is often partly remedied by having a skilled judge of values start the bidding so that less time is wasted in arriving at the accepted bid — a system that must be administered carefully. The disadvantage mentioned second- most often was "low quality of stock offered and insufficient quantity of uni- form grades." On the Coast, the chief complaint related to the quality of the livestock. This complaint was also voiced as one of the reasons why a large num- ber of Coast nonpatrons did not go to auctions. Many of them said that knowl- edge of the stock's origin was the reason for buying from farmers. Besides, the at- tributes of the farmer with whom busi- ness was done were thought important. Coast dairymen were especially critical of the low quality and cull stock on sale at general livestock auctions. The disadvantages of low quality of stock offered weighted rather heavily 48] with those producers not patronizing the auction nearest the farm. Those Coast patrons who by-passed the nearest auc- tion felt that it was undesirable for trad- ing specific livestock types and classes. Attention is again called to the influence of dairying on the auction picture of the Coast. Numerous operators pointed out that they traded at two (or more) auc- tions, one of which specialized more or less in beef, the other in dairy animals. In some cases, the same breed of animal was involved, and the determining fac- tor was the use to which the animal would be put; for example, dairymen frequently said that, with cull cow sales, they used Class X auctions because of the specialization in beef, but for milking animals they went to Class Y auctions. In the Intermountain area the main emphasis was on lack of sufficient num- bers of uniform grade. Criticisms ap- parently were not directed at any spe- cific-sized auction. In the Interior, pa- trons at all but the largest auctions (with a turnover of 60,000 or more), com- plained about insufficient quantity of uniform grades obtainable. The com- plaint was stronger among nonauction patrons than among patrons. Many farmers and ranchers, especially in the Intermountain states, by-passed the nearest auction because another seemed to be preferable for trading in beef animals, feeders, or calves. Some Interior operators went to more distant auctions because of seasonality in trade as well as seasonal closing. Coast farmers especially complained that auction prices at which livestock could be bought were higher than at ter- minals. Operators with large inventories were most critical of the prices at which stock was bought. E. Reasons for Not Patronizing Auctions Nonpatrons in both sections said that they did not sell and buy at auctions because they preferred the agencies they actually used. From the data obtained (Table 16) it was clear that trading at terminal markets had convinced many nonpatrons that better deals could be made and that the commission firms at terminals were better posted — presum- ably more so than operators of auctions. An even more pronounced preference was given to terminals by farm operators in the Intermountain states. The preference for direct sales and purchases shows up strongly on the Coast. The large number of direct packer sales by Coast farmers makes the thought that "direct sale eliminates middleman" assume major importance for the non- patronage of auctions. In the Intermountain states studied, an equally large number of the operators who did not patronize auctions, said that they "like to sell at home" — mainly to dealers and order buyers. Sales of patrons and nonpatrons were separated, and partial confirmation of some of the reasons offered for using certain channels were obtained statis- tically (Table 18 and Appendix Tables 20,21,22,23). Psychological reasons — dislike of op- erator, suspicion of weights, alleged mal- practice, etc. — were mainly local and were minor for the two areas as a whole. This apparently was the case regardless of whether an examination is made of returns compiled from disadvantages given to buying and selling at auctions, producers' reasons for bypassing the nearest auction, or reasons stated by producers for not patronizing auctions. Beef Cattle. In the beef cattle classes of the Intermountain area, the place of auctions with the nonpatron was taken largely by the terminal. Sales to farmers and dealers also increased, but relatively much less than to terminals. On the Pacific Coast, the preference of the nonpatron of auctions is clearly shown. 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