Economic and Marketing INFORMATION 
FOR INDIANA
FARMERS
Lafayette,   Indiana
March  26,  1953
Prepared  by members of the Agricultural Staff of Purdue University
Are Our Livestock Markets Efficient!
By
CLIFTON B. COX, Department of Agricultural Economics
INDIANA FARMERS have
I a large number and
wide variety of markets
available for the movement of livestock between
farms and the place of
slaughter. In 1951, there
were 130 dealer and packer markets, 79 auction
markets and four posted
markets operating in the
state. These markets are
located in 75 of the 92
counties leaving only 17
counties in the state without some licensed market
(Figure 1).
The total number of all livestock markets has increased from 169 in 1940 to 213 in 1951. The greatest change in type of market has been the increasing
popularity of the auction. There were 54 in the state
in 1940 and 79 in 1951. Dealer and packer markets
increased from 110 in 1940 to 130 in 1951, and posted markets decreased from five to four.
The question is often raised whether Indiana farmers have too few markets, the correct number or too
many for most efficient livestock marketing. Previous
studies have indicated that prices of hogs at the dealer and packer markets average lower than prices at
the Indianapolis posted market. Also, they have
shown that local markets, as a rule, use central markets as price basing points. If dealer and packer market prices are lower, the question immediately follows: "Are the local markets out in the state operat-
ln9 at the least cost to the farmer?"
Part of the answer to these questions is related to
volume of business. A recent study conducted by Purdue University indicated that substantial savings in
unit costs on a particular market could be effected by
'ncreasing volume. Volume is measured in terms of
marketing units. Market operators were consulted in
fne determination  of  equivalent  costs  of  marketing
hogs and other types of
livestock. Since hogs are
the predominate type of
livestock in Indiana, other
types of livestock were
converted to marketing
units with hogs equal to
1.000. The conversion factors were as follows:
hog
cow
calf
sheep
or  lamb
= 1.000
= 3.375
=   1.875
units
units
units
.750  units
Dealer and Packer Markets
Markets receiving about
1,000 marketing units per month had a cost of approximately 70 cents per unit handled. Costs could
be reduced to less than 35 cents per unit if volume
could be increased to 3,000 units per month. Costs
could still be further reduced, but at a much slower
rate, by increasing volume to more than 6,000 per
month (Figure 2).
The largest single expenditure made by the dealer
and packer markets was for wages and salaries. The
cost of one worker is approximately the same whether
he is busy part or full time. Hence, it is important to
have enough volume to keep each employee working
effectively.
Dealer and packer markets vary in size from less
than 100 to over 15,000 marketing units per month.
One-third of the dealer and packer markets operating in Indiana handle less than 1,000 marketing units
per month (Table 1). Nearly another third handle between one and two thousand per month. Thus, the
number of high cost, small volume markets is large.
Auction Markets
The cost of operating per marketing unit is somewhat greater for auctions than for dealer and packer
markets.   Auctions handle odd lots of hogs and many