Study examines decline of Texas livestock auction markets

Writer: Blair Fannin, 979-845-2259, b-fannin@tamu.edu

COLLEGE STATION – Declining cow numbers have led to consolidation in Texas livestock auction markets following devastating droughts the past decade, according to a Texas A&M AgriLife Extension Service study.

Dr. David Anderson, AgriLife Extension Service livestock marketing economist, provided an overview recently at the Texas A&M Beef Cattle Short Course in College Station.

“Things change over time, but we were interested in the changes in the beef industry’s infrastructure, particularly livestock auction markets,” Anderson said. “Obviously we’ve experienced changes in cattle cycles, inventory numbers and how we trade. We have the Internet, video auctions and direct sales. All of that has played a part in how we trade and market cattle.”

Other authors on the study were Dr. Andy Herring, associate professor in the department of animal science at Texas A&M University, and graduate student Trent Hester and assistant professor Ariun Ishdorj – all based in College Station.

Data was collected using sources such as the Texas Animal Health Commission, Texas Agricultural Statistics Service and other U.S. Department of Agriculture data. Anderson noted during the mid-1970s Texas beef cow numbers peaked at about 7 million head. Currently, Texas has approximately 4.2 million cows. Anderson said before starting the study, there was an expectation that there were fewer auction markets than when data first began being compiled in 1969.

The study proved their hypothesis correct, he said. Texas had 167 auction markets in 1969 and only 92 auction markets were left in the state by 2013. The study indicated that the decline could be attributed to a number of factors, such as producers using other means to market their cattle, “or overall, there being fewer cattle to market in the state, requiring fewer markets to sell fewer cattle.”

“That’s exactly what we saw,” Anderson said. “Then we wanted to know if these fewer auction markets are handling more volume. Overall, the markets haven’t declined as fast as the number of animals. Drought will do that as producers sell cattle at an incredibly fast rate. Over time, the auction markets adjust to that at a much slower pace.”

“The implied animal revenue keeps going up as drought occurs,” Anderson said. “The more animals are sold, the higher that revenue is. But that doesn’t account for inflation. Overall, we found there are fewer markets and declining real implied value when you factor inflation into the equation.”

Anderson noted the study did not account for video or Internet auctions or other marketing services. Also, sheep, goats and hogs were not part of the study.