Shrink

[sunnyblueskies]

Can somebody please explain shrink on cattle at sales? I understand what it means, but how is the end price calculated?
If I have a group of steers, let's say 5 mix steers at 527lb each (average) and the auction mart gives me 1% shrink. How does the shrink percentage come into play in the calculation of price/weight for my group of steers? I'm confused.

 

[bird dog]

They should pay your sales price x 527 x .99%. minus commission and other fees. Is this a sale barn that is deducting the shrink?

.

 

[BC]

As Bird dog said, your 5 steers avg wt was 527 - 5.27 (1%)= 522 lb pay weight

 

[sunnyblueskies]

They should pay your sales price x 527 x .99%. minus commission and other fees. Is this a sale barn that is deducting the shrink?

.

Yes they went to a auction/sales barn. I guess my next question is how they come up with the % of shrink. What circumstances make the sales barns deduct shrink.

 

[MurraysMutts]

Yes they went to a auction/sales barn. I guess my next question is how they come up with the % of shrink. What circumstances make the sales barns deduct shrink.

They dont do that here!
Never heard of a sale barn doing that.
Very interesting

 

[kenny thomas]

Yes they went to a auction/sales barn. I guess my next question is how they come up with the % of shrink. What circumstances make the sales barns deduct shrink.

Are your calves weighed when unloaded or when sold. If weighed when unloaded I might see a shrink but if weighed when sold your getting ripped off.

 

[greybeard]

They dont do that here!
Never heard of a sale barn doing that.
Very interesting

Same here. All you get deducted is commission and yardage.
It sounds like they are weighing them upon arrival and accessing a shrink fee for weight loss between arrival time and time they went thru the ring.

 

[bird dog]

What it boils down to is you are paying the buyers fee to the eventual owner. The buyer sits there all day and buys whats on his order list for a 1% fee. The buyer should pay this but for some reason, they are passing it on to the seller. A 1% shrink is nothing but a rip off to the seller. The calves will regain 2% of their wight as soon as they are comfortable at a water trough.
I would tell the sale barn owner that I was not going to pay it or I would take my business elsewhere but since you are in Alberta you may not have the choice of going elsewhere.

 

[Buck Randall]

I've only ever seen it applied to fat cattle. Overnight cattle were sold without shrink, but cattle brought in during the sale had a 2% dock.

 

[SBMF 2015]

When we sell fat cattle they are pencil shrank 2%. The % shrink is based on our farms location in relation to the packers.

 

[SBMF 2015]

I've only ever seen it applied to fat cattle. Overnight cattle were sold without shrink, but cattle brought in during the sale had a 2% dock.

I've never seen a set shrink at a barn. Around here they just announce that the cattle are overnight or morning. The buyers just bid less on morning cattle.

 

[greybeard]

BirdDog; what are your thoughts on this?

How livestock buyers calculate cattle shrink

“Actual shrink can be made up of two components,” said Sheldon Wilcox, manager at Direct Livestock Marketing in Edmonton.

www.albertafarmexpress.ca

What is shrink? And how is it calculated?

"Actual shrink can be made up of two components," said Sheldon Wilcox, manager at Direct Livestock Marketing in Edmonton. "One is gut fill (sometimes called excretory shrink) — which is the feed and water the animal consumes. The second one is tissue shrink."

• Read more: Think about shrink long before the transport truck arrives

When gut fill shrink is excessive — whether from handling or transportation — tissue shrink will begin.

"Tissue shrink is not something that recovers as soon as the animal takes a drink of water or begins to eat — it is a non-recoverable shrink," said Wilcox.

There is also "pencil shrink" — which uses a formula buyers use to calculate a net weight.

"It might be zero per cent, it might be four or even as high as five per cent," said Wilcox.

For example, a cull cow that is bought on offer at $90/cwt with a two per cent shrink will net the seller $88.20/cwt.

But pencil shrink isn't meant to ding producers, he said.

"All that pencil shrink is used for is to arrive at consistent weighing conditions," he said. "If you weigh cattle at 4 p.m. versus weighing them at 8 a.m. there's going to be a huge difference. The idea behind a pencil shrink is trying to get back to an average or mean weighing condition for everybody's cattle."

If pencil shrink wasn't used, you could have cattle weighed after a five-kilometre haul fetching a lower price than cattle weighed after a 500-kilometre haul.

"With pencil shrink you are evening out the prices and reflecting on that animal's body condition. We don't want to pay for hay and water."

But that doesn't mean buyers want cattle that are hungry or thirsty, he added.

"That's the misconception. Everyone thinks a cattle buyer wants to buy cattle that are grossly empty. No, that animal is compromised and stressed, and I'm worried about the health of that animal."

Another Alberta source talks about shrink:

Selling costs are a bit more complex to calculate. In Table 1, the projected sale price of ($1.75/lb.)is the producer's estimate for sale day. If the sale price does not reflect shrink, commission, check offs,transportation, transit insurance, and brand inspection, these factors should be deducted as selling costs. In this example, they add up to $100.75/ head. Table 3 includes a list of selling costs that should be considered in breakeven calculations. Some of these costs will vary between producers. Shrink is included as a deduction if the sale weight of the calf is the weight at the lot rather than the actual weight at time of sale. Transportation,handling, access to feed and water and other factors will affect shrink. If doubt exists about any of these costs, it is a good idea to estimate them on the high side.

Breakeven analysis for feeder cattle

www.alberta.ca

 

[bird dog]

"BirdDog; what are your thoughts on this?"

It seems correct as far as I know and what I have observed. Tissue shrink is hard to guestimate. I know the shrink slows way down after a certain percent (5%??) which is the gut fill. If I am selling with tissue shrink, something has gone wrong. And it has gone wrong. Just this year where a load I was hauling sat three hours in a truck stop while I tried to find a tire after blowing out two. My shrink was 5 1/2%.
Personally I think shrink is something always in favor of the buyer so I do whatever I can to reduce it. I darn sure am not going to give it to them with a pencil. If you want t figure in your shrink in the price you bid, thats fine, but I don't want any deductions other than the normal commission fees.
I drag my calves all the way to OKC just to recover the shrink from shippinmg and the sale process. If everything goes as planned they will have between 0 and 2% and sometimes you get a slight gain. But its different there. The calves are not commingled and are put in a pen sized to fit your load. That pen will have its own water source and a manual creep feeder. It is up to the commission man to feed them and they will if your calves are eating well.

 

[BC]

Yes they went to a auction/sales barn. I guess my next question is how they come up with the % of shrink. What circumstances make the sales barns deduct shrink.

Most country sales will have a pencil shrink figured in the deal. Typically, most auction sales do not take a pencil shrink because the calves stand several hours before they are sold and weighed. In August and September when it is hot that shrink can be 8 to 10% from what the calf weighed before they got on a trailer. The exception in our area are the pre-conditioned calf sales. Those calves are weighed and sorted off the trailer soon after arriving at the sale. A 2% pencil shrink is applied to determine pay weight.

 

[Lucky]

I've never heard of a sale barn deducting the either. Surely there's more to the story. I would call the barn and find out what's up and most likely go elsewhere next time.

 

[Dave]

I have never heard of a pencil shrink at the sale barn. The video sales like Superior will very often have it but that will depend on how far the cattle get moved to the scale. Weighed on a home scale 2 or 3 % is common. Loaded up and hauled to the scale the % drops depending on how far they are hauled.

 

[Brute 23]

I would not like that. Here the calf comes out and is bid on and then it goes on the scale for all to see. For better or worse I want to be paid off that number.

 

[Silver]

Around here if calves are to be sold in the "show alley" they will be weighed off the truck and shrink will be applied based on distance hauled. Ranches like ours that are quite a distance from the auction mart will often give up zero shrink. Guys that haul a few miles might give 3 percent. Calves that are weighed as they enter the ring have no shrink pencilled in.
Anyone that thinks they aren't paying shrink are fooling themselves. Buyers can tell a full calf from an empty one and pay accordingly.

 

[MurraysMutts]

Around here if calves are to be sold in the "show alley" they will be weighed off the truck and shrink will be applied based on distance hauled. Ranches like ours that are quite a distance from the auction mart will often give up zero shrink. Guys that haul a few miles might give 3 percent. Calves that are weighed as they enter the ring have no shrink pencilled in.
Anyone that thinks they aren't paying shrink are fooling themselves. Buyers can tell a full calf from an empty one and pay accordingly.

Exactly.
The shrink is figured in what the bid is!!

Just saying. The bid is the bid here.

 

[kenny thomas]

I would not like that. Here the calf comes out and is bid on and then it goes on the scale for all to see. For better or worse I want to be paid off that number.

I have been to sales in TX where they are weighed after they are sold but I will never understand why they aren't weighed going into the sale ring instead of going out.