SIC 5154 Livestock

SIC 5154

Establishments falling under this classification are primarily engaged in buying and/or marketing cattle, hogs, sheep, and goats. This industry also includes the operation of livestock auction markets. Establishments primarily engaged in the wholesale distribution of poultry are classified in SIC 5144: Poultry and Poultry Products; companies involved in the buying and selling of horses are in SIC 5159: Farm-Product Raw Materials, Not Elsewhere Classified.

NAICS CODE(S)

422520

Livestock Wholesalers

INDUSTRY SNAPSHOT

According to the United States Department of Agriculture, in conjunction with the National Agricultural Statistics Service there were 94.9 trillion cattle reported in the United States in January of 2004. The highest concentration was in Texas with 795 establishments that are engaged in this industry. Iowa followed with 386, and California with 260. The industry employed 32,953 workers and generated $5.7 billion in sales for 2003. The average sales per individual establishment was approximately $1 million.

Cattle represented the highest number of establishments with 2,459 and more than 41 percent of the market value. Livestock numbered 1,835 and accounted for more than 30 percent of the market. Auctioning of livestock had 1,382 establishments and more than 23 percent of the overall market. Combined, their sales totaled $5.3 billion. Hogs, goats, and sheep accounted for 258 establishments.

The marketing of livestock in the United States is conducted by a variety of businesses ranging from the order buyer who operates out of the front seat of his car to the video auction that sells cattle by beaming pictures of them to a satellite orbiting the earth. The livestock marketing business has evolved from the days when stockmen would send their livestock to a terminal market without any idea of the price they might receive. Terminal markets and commission agents still thrive in the ever-changing world of livestock marketing, but they have been joined by modern day merchants who use computers, video uplinks, fax machines, and cellular phones to market livestock.

Firms involved in the wholesale marketing of cattle, sheep, hogs, and goats include such diverse operations as stockyards, commission firms, order buyers, dealers, brokers, auction markets, and video auction companies.

Livestock are consigned to auctions by ranchers, hog operators, sheepherders, and other stockmen to be sold by the chant of an auctioneer. Because trucking is a costly expense, most often stockmen will send their livestock to the nearest auction market. This may be ten minutes or ten hours away by truck. These auction markets are usually individually owned—only a handful were owned by conglomerates. The owner of the auction receives a commission or a per head fee for selling the livestock in addition to charging for the feed consumed while the livestock are in the auction yard. Typical commissions range from 2 to 3 percent or about $7.50 per head.

One of the largest cattle auctions in the country where the cattle are actually herded through an auction ring was located in Oklahoma City, Oklahoma. Here cattle are sold nearly every day of the week. The auction in Norfolk, Nebraska was one of the largest auctions in terms of the number of species sold. There might be a hog auction taking place in one sale ring and a dairy cattle auction in another ring on the same premises on the same day. This is an exception, however, as most of the auction yards in the country conduct sales once a week. Sheep, dairy animals, goats, hogs, horses, and cattle are sometimes offered on the same day at the same location.

Commission agents are still used at some auctions around the country—the auction at Oklahoma City being the largest. This practice is a holdover from decades ago when ranchers would send their livestock to a commission agent located at any of the larger stockyards, such as those located in Chicago. These agents would then be responsible for the care and feeding of the livestock and the selling of them once they reached the yard, and would receive a commission based on how much the animals brought at market.

Livestock is usually sold by the pound except in the case of breeding animals, which are usually sold by the head. For example, a breeding bull may bring $2,000 to $3,000, whereas a steer destined for a feedlot may sell for $60 per hundredweight. Old cows being sold for slaughter are usually sold one at a time. When a rancher sells his yearly production in the form of calves or lambs, however, the drafts may be composed of several dozen or even hundreds of head. In the latter instance the livestock are weighed and priced per pound. Steer cattle and heifers are usually sold separately, whereas a group of lambs or hogs may include both sexes.

Sitting in the auction arena are a variety of buyers who make their living attending several auction sales each week. They may be order buyers working on a per head or per pound fee, or they may be employees of a feedlot or a packing house. Order buyers may have several orders at the same auction sale. A feedlot manager may have called and wanted steers for the feedlot or a rancher may have phoned with an order for heifers suitable for breeding. Order buyers often to represent several interests at the same sale, although they usually try to avoid having more than one order for the same classification of livestock. The order buyers keep careful track of both the number of livestock they buy and the...

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