How Does Shrink Affect the Selling Price?
Cattle sold direct to packers are often "pencil shrunk" 2 to 4% to compensate for fill the animals are carrying. Cattle feeders equipped with certified scales may sell on-farm weights with a 3 to 4% pencil shrink. Occasionally, packers will subtract a pencil shrink after cattle are delivered to the slaughter plant. Remember cattle normally shrink in the range of 2 to 3% from loading and hauling them for about 25 to 30 miles, so an additional pencil shrink of 3% would mean a total shrink of 5 to 6%. Cattle loaded early in the morning will be hit harder by pencil shrink than those loaded at night, since they have not taken on a fill.
Holding cattle off feed and water overnight is another method by which cattle are purchased. A University of Wyoming study showed feeder steers shrink 3.3% in an eight hour drylot stand, 6.2% in 16 hours, and 6.6% in 24 hours.
The following table outlines the effect on offered prices for cattle due to shrinkage.
Net Prices After Allowing for Shrinkage
Percentage of Shrinkage
|
| Offer |
2% |
3% |
4% |
6% |
| $84.00 |
$82.32 |
$81.48 |
$80.64 |
$78.96 |
| $82.00 |
$80.36 |
$79.54 |
$78.72 |
$77.08 |
| $80.00 |
$78.40 |
$77.60 |
$76.80 |
$75.20 |
| $78.00 |
$7.44 |
$75.66 |
$74.88 |
$73.32 |
| $76.00 |
$74.48 |
$73.72 |
$72.96 |
$71.44 |
| $74.00 |
$72.52
|
$71.78
|
$71.04
|
$69.56
|
$72.00
|
$70.56
|
$69.84
|
$69.12
|
$ 67.68
|
$70.00
|
$68.60
|
$67.90
|
$67.20
|
$65.80
|
$68.00
|
$66.64
|
$65.96
|
$65.28
|
$63.92
|
$66.00
|
$64.68
|
$64.02
|
$63.36
|
$62.04
|
$64.00
|
$62.72
|
$62.08
|
$61.44
|
$60.16
|
$62.00
|
$60.76
|
$60.14
|
$59.52
|
$58.28
|
$60.00
|
$58.80
|
$58.20
|
$57.60
|
$56.40
|
$58.00
|
$56.84
|
$56.26
|
$55.68
|
$54.52
|
$56.00
|
$54.88 |
$54.32
|
$ 53.76
|
$52.64
|
$54.00
|
$52.92
|
$52.38
|
$51.84
|
$50.76
|
Obviously, the seller should bargain shrewdly on shrinking terms.
Should the lot be topped out or sold at one time? Cattlemen continually argue about this point. Sorting cattle is bound to reduce their gain performance and the bottom end quality of cattle are normally, not good converters of feed to meat. Feeding them longer is likely to mean no additional feeding profit. However, topping out a lot that lacks uniformity may be advisable. Remember, sorting causes shrink.
How should cattle be fed before shipping? The way cattle are fed before shipping will depend somewhat on how they are sold. Some people have shown that cattle withdrawn from all feed 24 hours before slaughter, and sold on a grade and yield basis, will hand just as heavy a carcass as those fed up until slaughter. The saving of one day's feed may amount to an additional $1.00 per head profit.
Cattle sold on a live basis will, of course, be fed up until delivery; unless the selling contract requires an overnight stand without feed and water.
It is desirable to use dry roughage in the diet before slaughter since cattle will shrink less.
All drugs should be removed from the diet as required.