Direct Marketing Strategy
Economic Losses Due to Shrinkage
Many factors are responsible for the loss of weight - or shrinkage - of calves and feeders during the marketing process. The potential for stabilizing or improving net return decreases as shrinkage increases.
Shrinkage is a condition of sale, and the largest and most controllable component in marketing.
What is Shrinkage?
Shrinkage is the amount of weight an animal loses during sorting, transporting, standing, weighing or any other change in its environment that causes a degree of stress. It is the difference between the gross body weight before handling and the net sale weight. It is a measurement of bovine stress, and represents a loss in value.
There are two types of shrinkage. The first is excretory shrinkage. It is the loss of contents in the belly, digestive track and bladder. It occurs as soon as livestock experience any sort of change, and is quickly recovered once the animal is provided with food, water and rest.
The second type of shrinkage is tissue shrinkage. Although not as physically evident as excretory shrinkage, tissue shrinkage also starts to occur as soon as a stressor is applied. The animal starts to compensate for the loss of moisture in its internal organs by drawing moisture and nutrients from carcass tissue. Recovery from excessive tissue shrinkage takes 10 to 36 days. It is costly to the livestock owner in terms of nonperformance as well as increased sickness and mortality.
How Shrinkage Occurs
Shrinkage occurs when the primary needs of the animal are not met and a change takes place in the animal's environment. Young calves and light feeders will suffer a rapid rate of shrinkage. As calves become older, or are on feed longer, the rate of shrinkage moderates. Cattle need feed and water during the marketing process - over 65 per cent of shrinkage is a result of fasting.
Rest is equally important. Those animals that cannot rest will experience an increase in shrinkage of 15 to 20 per cent. Because of the social nature of cattle, they find it very disruptive to be mixed with unfamiliar animals. Expect shrinkage to double when mixing occurs during the marketing process.
The majority of shrinkage occurs within the first few hours of handling, sorting, loading and standing. When in transport, the degree of weight loss levels off, until it is triggered again by unloading, sorting, standing, mixing and fasting.
Cattle have a strong social structure, and react immediately when this is disrupted. Even when gathered and sorted in their own environment, the stress of the activity can be measured in the degree of shrinkage. Calves, for example, can lose more than three per cent of their body weight in the sorting and loading processes alone. For each half hour spent sorting calves, expect a half per cent reduction in body weight. Although all cattle naturally lose two per cent of their body weight at night, an overnight stand without food and water results in a six per cent loss of body weight.
Shrinkage, like stress, is cumulative. The more stressors to which cattle are exposed, the greater the degree of shrinkage. Because cattle are sensitive to light, movement and sound, the constant change of environment and people when marketing is detrimental to the sale-weight and the long-term health of the feeder.
Any advantage of compensatory gain is lost to the buyer after a nine per cent loss of body weight in terms of non-performance, increased morbidity and mortality. Sorting, loading, standing and fasting will result in a minimum loss of nine to 15 per cent of body weight for feeders, and 12 to 15 per cent of body weight for calves. This lost opportunity is not recovered in higher prices.
Shrinking Pounds, Shrinking Dollars
Figure #1 shows the effect of shrinkage on the saleable pounds of product from a 600-pound calf. Realistically, all cattle will shrink during the marketing process, but it is the goal of the owner to minimize shrinkage to a maximum of six per cent of original body weight. This ensures fair buying conditions and the health of the calf after arrival.
Figure #1 shows that the difference between six per cent shrinkage and 15 per cent shrinkage on a 600-pound animal is 54 pounds. At $100 per cwt., the calf weighing 564 pounds nets $564, whereas the calf weighing 510 pounds brings $510, a $54 difference.
To reflect the value of the 510-pound calf in the marketplace, the price per pound would slide up to bring the net return back to $564. To return $564 on the 510 pound calf, the price per pound would need to be $110.75, which equates to a $.20 slide based on the $100 market. (See Figure #2.)
A $.20 slide is most unusual, and does not reflect industry standards. The financial loss due to shrinkage cannot be recovered simply through higher prices. The costs of commission, freight and other expenses are not reflected in these returns.
Shrinkage can be controlled and minimized by focusing on a host of activities that are reflective of sound animal welfare practices. Avoid exposing calves and feeders to different environments during the market process. Sort cattle at home, with knowledgeable stock persons with whom the cattle are familiar. Poor temperament of cattle and/or people can be costly. Take care when loading and unloading, remembering that livestock are sensitive to light, movement and sound.
Avoid fasting and standing by supplying feed and water, and ensure that animals can rest.
Mixing disrupts the social structure of cattle and should not take place prior to arriving at a permanent home. Weather that is too hot or too cold can influence the degree of shrinkage, and extremes in weather are a consideration when working or loading cattle. Choose a marketing option in which you may weigh the cattle at home or directly off truck to reduce stress.
To optimize the market potential in calves and feeders, producers are encouraged to minimize shrinkage through the application of management methods that reflect an awareness of sound animal welfare practices.
This fact sheet is based on a document originally written by Brenda Schoepp, Livestock Marketing Consultant, Stony Plain, Alberta
For additional information, contact:
Saskatchewan Agriculture's Agriculture Knowledge Centre at 1-866-457-2377.