February 28,  1957
Economic and Marketing Information
FOR INDIANA  FARMERS
Does Your
Area Need Another Livestock Market?
by PATRICK L.  LUBY and CLIFTON  B. COX
Agricultural  Economics
A NOT HER market outlet does not
-£*- necessarily mean more competition and higher prices for your livestock! More markets may mean a
less efficient livestock marketing system since many markets are too small
to gain the efficiencies resulting from
a large volume. With a small volume,
costs of handling each unit of livestock may be so high that it is not
a competitive market for your livestock. But neither do small markets
necessarily mean lower prices to the
farmers. Operators of small markets
may absorb part of their costs by-
accepting lower income for themselves.
A market is like your farm in
many respects. It is more efficient if
it handles enough livestock to keep
the manager and employees productively employed and buildings and
other facilities fully utilized. It
should handle enough livestock every
day for truck or car-lot shipments.
Research at Purdue indicates that
the per-animal cost of handling livestock at both dealer-packer and auction markets are very high for most
markets handling fewer than 30,000
marketing units per year. The average cost per unit continues to decline
at least until the market handles over
100,000 units per year.
This does not mean that all small
units are less efficient than large
°nes. But it does mean that usually
jne per-unit cost of handling your
'ivestock decreases as markets become larger.
Even though it appears that Indiana has enough total markets, an
enterprising firm may still make a
Recess of a new market. But it would
Jave to do an excellent job with
?ood prices and services to farmers
and have a low cost of operation.
5ucn a firm could force inefficient
or small markets to operate more efficiently or to go out of business.
This would actually improve the livestock marketing system.
The ideal situation would be for
you to have a choice among several
efficient and competitive markets
which have good outlets for livestock.
In judging how many markets can
best do the job, we must have a sufficient number of markets within a
reasonable distance from each livestock farm to assure a competitive
pricing system and yet not so many
that they are too small and therefore,
inefficient.
What's Happening to Livestock
Markets in  Indiana?
The number of livestock markets
in Indiana has continued to increase.
Two hundred thirty-three livestock
markets, handling about 9 million
head of livestock (Figure 1), were
serving  the  farmers  in   Indiana   in
1956. This is an increase of 19 markets since 1951, 45 more than in
1941. Four posted markets (Indianapolis, Evansville. Muncie and
Ft. Wayne), 159 dealer and packer
markets and 70 auctions or salebarns
made  up  the  total.
Dealer and Packer Markets Are
More Numerous, Smaller
Dealer and packer markets have
increased 23 percent during the last
5 years. But while the number increased the average size decreased 9
percent, from 28,400 marketing units
in 1951 to 25,800 in 1956.1
Auction Markets Fewer But
Larger
The number of auction markets
(salebarns) operating in Indiana increased  from  59 in  1941  to 81  in
1 The    different    kinds    of    livestock have    been
converted   into   marketing   units   as follows:    1
hog = l   unit;  1   cow   =3.375 units;   1 calf=1.875
units; 1  sheep or lamb = 0.750 units.