I ^,^^^ i^o^ Division of Agricultural Sciences — \v... UNIVERSITY OF CALIFORNIA A study of structural aspects: BEEF CATTLE FEEDING AND SLAUGHTERING IN CALIFORNIA S. H. LOGAN AJING l^^fcfc 9'' m mm California beef moves from producer to consumer through three areas: the produc- tion of feeder cattle and use of range land; the feeding of cattle to slaughter weight, primarily in feedlots; and the slaughtering of fed cattle and cull animals and the distribution of carcass beef. This bulletin describes structural aspects of two of these important "subindustries" — cattle feeding and slaughtering. The California cattle feeding industry provides the major source of cattle for slaughter in the state. The large feeding operations are located primarily in the San Joaquin Valley, Imperial and other southern California counties. California's slaughtering activity centers in the major population areas. Los Angeles County has consistently accounted for nearly 50 per cent of the state's total cattle and calf slaughter, and the San Francisco Bay area for 10 to 15 per cent. The California cattle industry is affected by many economic and technological forces. Changes in transportation rates for meat, live animals, and grain can alter the relative position of California feeders and/or slaughterers with respect to their competitors in other parts of the country. Similarly, technological progress in slaugh- tering can change the profits for new and modern plants as compared with older ones. This bulletin discusses such characteristics as the number and size of firms, condi- tions of entry, degree of product differentiation, degree of integration, and geograph- ical boundaries of markets and supply areas. These factors can affect competition within an industry by restricting the number of market alternatives facing buying and selling firms, or by limiting possible competition from new or potential firms. Cover: Cattle in feedlots, ready for slaughter CONTENTS Cattle Feeding 5 Characteristics and Trends in Feeding 5 Feedlot Operating Characteristics 12 Cattle Slaughtering 23 Characteristics and Trends in Cattle Slaughtering ... 24 Slaughter Plant Operating Characteristics 30 Raw Product Trade Areas 38 Dressed Beef Sales 41 Appendix 43 Literature Cited 46 AUGUST, 1966 THE AUTHORS: S. H. Logan is Assistant Professor of Agricultural Economics and Assistant Agricultural Economist in the Experiment Station and on the Giannini Foundation, Davis. G. A. King is Professor of Agricultural Economics and Agricultural Economist in the Exper- iment Station and on the Giannini Foundation, Davis. A study of structural aspects: BEEF CATTLE FEEDING AND SLAUGHTERING IN CALIFORNIA^ C^alifornia is an important beef market. In 1964, the year of this study, supply was estimated at 2.4 biUion pounds and per capita consumption was 130 pounds — 30 per cent above the United States average. As table 1 shows, California slaughter plants provided 75 per cent of this supply; the remainder came from truck inshipments (21 per cent) and im- ports (4 per cent). The major source of animals for slaughter are the California feedlots which accounted for 62 per cent of the cattle and calf slaughter, followed in importance by animals inshipped for immediate slaughter and by other animals such as cull dairy and beef animals. Rising income levels and population growth seem to assure a growing beef market in California. The California feed- ing and slaughter industries are interested in knowing how their future growth will compare with the inshipments of meat from other regions of the country in meet- ing the increasing demand for beef. The growth in both industries prompts inquiry into factors contributing to and associated with that growth during past years and whether these or other factors may modify trends in the future. This study considers the basic struc- tural components of the feeding and slaughtering industries in California. These structural aspects, dealing with number, size, location of firms, integra- tion, etc., do not by themselves determine the nature of competition within the industry; however, they do describe the setting in which decisions are made which ultimately determine the performance of the industry. Major findings for the feeding industry: • Feedlots with 10,000-head capacity and more increased from 20 in 1958 to 57 in 1964, and basically account for the growth in California cattle feeding. Existing lots have enlarged their capacity and new big lots have been constructed. In 1964, 69 per cent of the cattle on feed in October were TABLE 1. Sources of California 1964 Beef Supply Source Beef supply in dressed weight Percentage of total California feedlots million pounds 1,233* 218t 325t 52 Other California sources Inshipments for immediate slaughter 9 14 Total California slaughter Meat inshipments, truck 1,776 4801 98 75 21 4 2,354 100 1 Submitted for publication December 14, 1965. * Feedlot marketings (2,061,000 head) times aver- age dressed weight (598.2 pounds) for California com- mercial cattle slaughter. t Includes slaughter of cattle other than from feed- lots and farm slaughter of 7 million pounds. t Inshipments for immediate slaughter (544,000 head) times average dressed weight (598.2 pounds) for CaUfornia commercial cattle slaughter. \ Number of trucks entering California in 1964 carrying meat and meat products (28,447) and sample data on average weight and load composition of trucks (.see Appendix A). Sources: Slaughter: U. S. Department of Agriculture, Sta- tistical Reporting Service, 1965A,B. Meat inshipments: California Crop and Livestock Reporting Service, 1965. Meat imports: Federal-State Market News Service, 1964. [3 in feedlots with a capacity of 10,000 or more head. The number of cattle in lots with capacity of less than 10,- 000 head has remained fairly constant from 1958 to 1964. • Custom feeding of cattle for others, particularly in the large feedlots, ac- counted for most of the increase in the numbers fed from 1957 to 1964. An estimated 60 per cent of the market- ings were custom fed in 1963. • Feedlot operations range from special- ized units to integrated ranching, farming, and feedlots. Slaughter plants also are operated in conjunction with feedlots. Specialized operations pre- dominate for large feedlots (capacity of 5,000 head and more); feedlot and farming operations for the medium- sized lots (capacity of 1,000 to 5,000 head); and feedlot, farming, and ranching operations for the small feed- lots (capacity of less than 1,000 head). • The growth of cattle feeding in Cah- fomia is associated with increased levels of inshipments of feeder cattle and feed grains, rather than increased California production. State produc- tion of feeder cattle has not grown as rapidly as the feeding operations. The number of beef cows during the 1957- 1964 period increased by about 90,000 head; inshipments of stocker and feeder animals by 661,000 head. In 1960- 1964, stocker and feeder inshipments equalled 88 per cent of feedlot mar- ketings. Also, inshipments of the major feed grains have increased to a level of 2 million tons in 1962 as compared to production of 2.5 million tons. An explanation of the growth of large- scale feedlots and of custom feeding would appear to be the key to past growth in California feeding. Economies of scale is a factor contributing to the development of large feedlots. Custom feeding undoubtedly contributes to keep- ing the lots full, and thus achieving lower per-head nonfeed costs when feed- lot facilities are fully utihzed (King, 1962). Specialists, such as nutritionists and veterinarians, are employed by large feedlots, and the reputation of the custom feeders depends on ability to obtain eflS- cient gains. Another attribute of the large feedlot is its market feature. Ranchers and others j, appear to have found it advantageous to feed out cattle in the commercial feed- lots in areas where packer-buyers are readily available. The fact that larger numbers of potential buyers are reported for larger lots may possibly have price advantages also, but no data are avail- able on this point. Purchase of cattle both for customers and for the operator may also be more efficient for large operators especially * with the increased importance of direct buying from ranchers. The ability to spread risk of price change in purchase and sale through contracts and by trans- actions throughout the year should favor the large operator. The future growth of the cattle feeding industry in California will be influenced by the considerations discussed plus vital factors, such as population and market demand, not included in our study. (See Hopkin and Kramer, 1965, for a more detailed discussion). Similarly, the fact that the CaHfomia feeding industry is ^ based to a large extent on inshipped feeder cattle and feed raises the question of development of similar large-scale feeding operations in other regions. Trans- portation rate changes with respect to feed, cattle, and meat would be of con- cern in a broader study of changing location patterns for the industry. Major findings for the slaughtering industry: • The average size of the slaughtering . plant has increased. Although small plants, kilHng less than 20,000 head per year, account for 50.0 per cent of the total number of plants, their larger counterparts slaughter 88.8 per cent of the total output in the state. • Inshipments of animals for immediate slaughter are still an important com- ponent of the slaughtering industry despite the growth of feeding. In 1964, inshipments of animals accounted for j_^ 16 per cent of the total slaughter. • Integration has become an important aspect of meat packing operations. Firms sampled indicated that 7.6 per cent of their slaughter animals were supplied from their owni feeding opera- tions. Ranching and retailing were ob- served in the smaller plants, while rendering, sausage-making, boning and breaking, and hide-curing were done more by larger-scale operations which would supply sufficient quantities of by-products to permit capacity opera- tion of such departments. Although the total number of CaH- fornia slaughtering plants has decreased, the number of large plants has markedly increased. Nine plants killed more than 75,000 head in 1964 compared with four plants in 1962. Plants killing more than 75,000 head accounted for 25.8 per cent of the total cattle and calf slaughter in 1964, as contrasted with 14.5 per cent in 1962. The growth in demand for dressed beef plus the shift from medium-sized to larger plants have held relatively un- changed the share of the market produc- tion controlled by the largest four plants (13.6 per cent), the largest eight plants (23.4 per cent), and the largest 20 plants (47.1 per cent). Because of the economies of scale in larger sizes of plants (Logan and King, 1962) and the increased effi- ciency available in on-the-rail dressing for higher output rates, a continued shift of plants to the larger size categories can be expected. CATTLE FEEDING Marketings of cattle and calves from feed- lots have increased rapidly in recent years, reaching a level of 2.1 million head in 1964. These marketings represent 62 per cent of commercial calf and cattle slaughter in California (3.3 million); the remaining 38 per cent come from animals inshipped for immediate slaughter and from animals culled from beef and dairy herds (Cahfomia Crop and Livestock Reporting Service, 1965). The California feeding industry de- pends on other regions of the country for feed and feeder animals. California's inshipments of the four major feed grains average about 2 million tons per year, and are added to California's own annual production of 2.5 million tons. Com and grain sorghum are the principal inship- ments, with com originating predomin- ately in Nebraska, Kansas, and Iowa, and grain sorghum mainly in Texas, Kansas, and Oklahoma. Stocker and feeder inship- ments, which averaged 1.6 million head during 1960-1964, are the primary source of feeder animals for California feedlots and have equalled 88 per cent of feedlot marketings in recent years. The major sources of these animals are Texas, Ari- zona, Oregon, and Nevada, but ship- ments come from all the western and several southern states. This section of the bulletin presents the broad trends and characteristics of feedlots in the state, and studies in detail the characteristics of feedlots obtained from sample data. The sample data pro- vide information as to the type of inte- gration found in feedlot operations, the importance of custom feeding by size and type of feedlot, rations and feed use, problems of excess capacity, and the markets for feeder and fed cattle. Characteristics and Trends in Feeding Number and size of feedlots A striking feature of cattle feeding in California is the relative importance of large feedlots. Of the 981,000 cattle and calves on feed on October 1, 1964, 69 per cent were in 57 feedlots each with capacity of 10,000 head and more (table 2).' On the other hand, the 280 small 2 "Cattle feeding," as used in this bulletin, includes calves unless stated otherwise. [5 TABLE 2. Number of Feedlots, Cattle on Feed, and Total Capacity for California Feedlots by Size, October 1, 1964 Feedlot size Number of lots Percent- age of total Number of cattle on feed Percent- age of total Total capacity Percent- age of total Av.number of cattle on feed per feedlot Av. total capacity per feedlot head of cattle 280 150 75 41 57 603 46 25 12 7 10 100 thousand 17 52 102 138 672 2 5 10 14 69 thousand 96 213 253 257 1,002 5 12 14 14 55 head of cattle 0- 999 1,000-2,499 61 347 1,360 3,366 11,789 343 1,420 2,500-4,999 3,360 5,000-9,999. 6,268 10,000 and over 17,579 Total 981 100 1,821 100 1,627 3,020 Source: California Crop and Livestock Reporting Service, 1964 B. feedlots, with capacity of less than 1,000 head, accounted for about 2 per cent of the cattle on feed. The operating charac- teristics of these two extremes in feedlot size differ markedly: the small feedlots are typically integrated with a ranching and farming operation, while the large feedlots are highly specialized, with all feeders and feed purchased, and the cattle most often custom fed for others. The total number of feedlots increased sharply the past ten years — from 507 in 1954 to 603 in 1964. Associated with this increase has been a marked shift in the size distribution of lots — those with capacity of less than 1,000 head decreased by 88 and those with capacity of 1,000 or more increased by 184 during this period. Feedlots of 10,000-head capacity and more increased from 20 in 1958 to 57 in 1964. Published data are not available to indicate whether this increase comes from new lots or increases in capacity of existing lots, but information obtained from a sample of feedlots indicated that both causes contributed to the change. More important than numbers of lots is the number of cattle on feed in these large lots during the 1958-1964 period, (table 3). The increase in feeding from 1958 to 1964, for example, is associated with lots having capacity of 10,000 head and more. The number of cattle in lots TABLE 3. Trends in Number of Cattle on Feed and Numbers of Feedlots with Capacity of 10,000 and More, 1958-1964 Year Cattle on feed October 1 in lots with capacity of Feedlots with capacity of 10,000 head or more Less than 10,000 10,000 or more Number of feedlots Av. number on feed October 1 Av. feedlot capacity thousand head 20 23 34 39 45 54 57 head 1958 290 359 331 312 323 328 309 184 277 430 442 626 747 672 9,200 12,043 12,647 11,333 13,911 13 ,833 11,782 15,700 15,478 15,824 15,872 16,644 17,222 17,579 1959 1960 1961 1962 1963 1964 Soubcb: California Crop and Livestock Reporting Service. 1964 B. [6] with capacity less than 10,000 head has remained about constant for this period, but within this aggregate there have been changes in the relative importance of feedlots by size as may be seen in data presented in table 3. For the feedlots with capacity of 10,000 head and more, the average number of head per feedlot on October 1 increased from a level of 9,200 in 1958 to 11,782 in 1964. Further TABLE 4. Cattle on Feed in California and Other States, January 1, 1964 and Rate of Growth, 1955-1964 Area Cattle on feed January 1, 1964 Annual rate of growth 1955-1964 West: California thotisand 946 510 324 230 212 122 94 24 per cent 9 5 Colorado . . . 7 8 Arizona 8 5 Idaho, Utah Washington, Oregon Montana, Wyoming New Mexico 2.4 10.0 3.7 14 3 Nevada - 2.8 Total 2,462 1,190 485 7 4 Northern Plains states: Nebraska, Kansas 6.3 South Dakota, North Dakota 6 1 Total 1,675 593 2,707 622 619 6 2 Southern Plains states: Texas, Oklahoma Corn Belt and Lake states: Iowa, Illinois, Missouri Indiana, Ohio, Michigan . . . Minnesota, Wisconsin 14.1 3.4 1.1 4.5 Total 3,948 80 3 2 Pennsylvania — 1 26 State total 8,758 429 9 5 3 Other areas: Southern states* New York 39 State total . . . 9.196 * Includes Georgia (70), Florida (62), Kentucky (60), Tennessee (45), North Carolina (38), Alabama (37), Mary- land (25), Mississippi (23), South Carolina (18), Virginia (21), Arkansas (21), and Louisiana (9). Source: U. S. Department of Agriculture, Statis- tical Reporting Service 1964. understanding of the growth of the large- scale feedlot in California appears impor- tant in projecting future developments of the industry. Numbers of cattle on feed California ranked third among states as to number of cattle on feed January 1, 1964 and for feedlot marketings. Iowa was the leading state and Nebraska ranked second. The growth in cattle feeding is fairly well represented by changes in numbers on feed January 1, although the ratio of feedlot marketings during the calendar year to cattle on feed on January 1 varies somewhat by state. For example, the ratio of 1964 marketings to January 1, 1964 numbers on feed averaged 1.8 for the 32 states reporting such data. This ratio for eight major feeding states is as follows: Nebraska (2.4), California (2.2), Texas (2.0), Colorado (1.9), Arizona (1.8), Iowa (1.7), Illinois (1.7), and Minnesota (1.4). The trend in cattle on feed reflects favorable feed supplies, a general upward trend in beef cattle herds, and a favor- able consumer acceptance of feedlot fin- ished beef. Data presented in table 4 focus on the differential rates of growth in cattle feeding in the various regions of the country, and are not to be con- sidered as necessarily good indicators of future growth. For the major feeding states, the growth rate was highest for Texas (14 per cent per year), followed by California (9.5 per cent), Arizona (8.5 per cent), Colorado (7.8 per cent), and the Northern Plains states (6.2 per cent). In terms of absolute increases in numbers fed, the 3.2 per cent growth rate for the Corn Belt and Lake states is currently equivalent to a rate of 10 per cent for California. Marketings, placements, and feeder inshipments The seasonal pattern of placements of cattle on feed and subsequent marketings for eight major feeding states is shown in figure 1. In California placements reach a seasonal peak in the second quarter of the year, whereas in all other states a sea- [7] 4. U u • OQ — a — • «/» <-=; II o / o / < / q: / o \ -J / \ o u 1 i < \ \ i 1 1 \ —J — 1 — 1 — u J/^ u « OO ^ J. i ^ -» */» Q^ CD . . LU 11 J I I L J__l I L OQ 7 94 30 32 24 15 70 63 18 29 16 23 36 33 10 30 8 22 54 54 25 46 20 37 613 Sample questionnaire Total sent 415 Total returned Percentage returned Usable returned* 129 31 97 16 * Usable return contained, at a minimum, data on number of cattle on feed January 1, 1963 and number market- ed in 1963. Source: California Crop and Livestock Reporting Service, 1964. ing, and feedlots. Slaughter plants also are operated in conjunction with feedlots. The relative importance of integrated op- erations for each feedlot size group is given in table 9. Specialized operations predominate in the large feedlots (capac- ity of 5,000 head and more); feedlot and farming operations for the medium-sized lots (capacity of 1,000 to 5,000 head); and feedlot, farming, and ranching operations for the small feedlots (capacity of to 999 head). The sample included five feedlots that are integrated with slaughter plants, and there is no apparent relationship be- tween this type of integration and feedlot size. Of the 89 feedlots, 58 produced some feed in conjunction with the feedlot operation. The smaller feedlots, on the average, produced 60 per cent of feed requirements of concentrates and rough- age as compared with 55 per cent for medium-sized feedlots (capacity of 1,000 to 5,000 head) and 24 per cent for the large feedlots (capacity of 5,000 head and more). In addition, most of the small feed- lots utilized pasture land for cattle, whereas the large units typically did not own pasture land. About 20 per cent of the medium-sized feedlots utilized pas- ture for cattle feeding. Ranching units were operated in con- junction with 26 of the 89 feedlots. This is most typical for the small feedlot opera- tion in which feeder cattle produced on the ranch are fed out to market weight in the feedlot. Of 21 feedlots with capacitv of to 999 head, 13 fed out their own TABLE 9. Relative Importance of Integration of Feed and Feeder Cattle Production and Slaughter Plants with Feedlot Operations* Feedlot capacity in number of head Type of operation 0-999 1,000- 2,499 2,500- 4,999 5,000- 9.999 10,000 and more per cent Feedlot only . . . 19 5 14 62 100 'I 4 67 8 8 100 6 6 63 19 6 100 50 12 12 26 100 50 Feedlot, slaughter plant 10 Feedlot, slaughter plant, farming Feedlot, farming 30 Feedlot, farming, ranching 5 Feedlot, ranching Total 5 100 Based on 89 records of feedlot capacity as follows: to 999 (21), 1.000 to 2.499 (24), 2,500 to 4.999 (16), 5.000 to ' (8). and 10.000 and over (20). [13] TABLE 10. Importance of Custom Feeding as to Number of Feedlots, 1963 Marketings and Average Marketings for Feedlots, by Size Group Unit Feedlot capacity in number of head Item 0-999 1,000- 2,499 2,500- 4,999 5,000- 9,999 10,000 and more Total Number of feedlots: Custom feeding Noncustom feeding number number number thousand head thousand head thousand head thousand head per cent thousand head thousand head thousand head thousand head 26 6 16 4 10 5 2 19 1 34 55 Total 1963 marketings: Custom feedlots Number custom fed Total marketings 26 14.3 14.3 0.6 0.6 22 10.5 16.6 22.5 39.1 27 1.7 2.8 1.4 1.8 14 7.9 24.0 35 7 59.7 13 2.0 6.0 3.6 4.3 7 439.2* 611.8* 40.5* 58.2 67* 16,3* 22.7* 13.5* 8.3 20 594.0 29.7 89 457.6 652.3 Noncustom feedlots Total marketings Total marketings 113.0 765.3 Percentage custom fed Average marketings per feedlot: Custom feedlots Custom fed 60t Total fed Noncustom feedlots .... All feedlots. * Combined data for feedlot size groups 5,000 to 9,999 and 10,000 and more, to avoid disclosure of data for individ- ual feedlot operation, t Simple average may slightly overstate amount of custom feeding. Source: 1964 feedlot questionnaire. cattle. The cattle from their own ranch accounted for 69 per cent of cattle on feed on January 1, 1964, for the average of these 13 operators. This compares with eight such operators in the medium-sized feedlots, with feeder production averag- ing 42 per cent of cattle on feed. There were four operators of the large feedlots integrated with feeder cattle production, and the ranch was the source of 9 per cent of cattle on feed on January 1, 1964. Custom feeding Custom feeding is an important aspect of California feedlot operations, especially for the large-scale units. Approximately 60 per cent of 1963 marketings were cus- tom-fed cattle based on a simple average of data. This may have a shght upward bias because of overproportioned weight- ing of the large feedlots (table 10). The importance of custom feeding increases directly with feedlot size both as to num- bers of feedlots that custom feed and the percentage of cattle marketings that are custom fed. For the custom feedlots, cus- tom-fed cattle accounted for about 70 per cent of 1963 marketings from these lots. The ownership of custom-fed cattle in California is primarily by ranchers (47 per cent) and packers (24 per cent), fol- lowed in importance by livestock dealers (13 per cent), other feedlots (7 per cent), and other owners (9 per cent). This dis- tribution of ownership approximates that for the lots with capacity of 10,000 and more that account for the majority of custom-fed animals (table 11). The distri- bution for other size groups is not con- sidered highly reliable because the num- ber of observations was limited. Custom feedlots frequently offer serv- ices in addition to the feeding and veterin- ary services, such as the purchase and sale of cattle, financing, and in some cases ar- ranging for feeder animals to be placed on range or pasture before full feeding in the feedlot. The most common service offered was in the sale of cattle. For the feedlots with 10,000-head capacity, 90 per cent aided in the sale of cattle custom fed. Cattle in the remaining 10 per cent of the lots were mainly packer-owned cattle where selling of cattle was not re- quired. Purchase of feeder cattle was of- fered as a service in 60 per cent of these [14] TABLE 11. Ownership of Custom-Fed Cattle, January 1, 1964 by Feedlot Size Group* Feedlot capacity in number of head Owner 1,000- 2,499 2,500- 4,999 5,000- 9,999 10,000 and more Total ■per cent Ranchers other feedlots 100 16 45 16 23 22 3 66 7 2 47 7 23 14 9 47 7 Packers 24 Livestock dealers 13 others 9 Total 100 100 100 100 100 * Based on 34 feedlots offering custom feeding distributed by size group as shown in table 10. Source: 1964 feedlot auestionnaire. lots, financing in 10 per cent, and arrang- ing for placement of feeders on pasture or range in 25 per cent of the lots with capacity of 10,000 head or more. In smaller lots, these services were ofiFered by a lower proportion of the feedlots. Recent changes in feedlot operations California feedlot operations have changed in two ways; size of feeding units has increased, and custom feeding of cattle has become more widespread. The previous analysis of aggregate state data indicates that feeding from 1958 to 1963 increased because the lots with capacity of 10,000 head and more (table 3) in- creased from 20 in 1958 to 54 in 1963. How much of this increase was due to new feedlots, and how much was due to feedlots being reclassified from one ca- pacity size group to a higher one is not known. However, the sample data pro- vide some information about changes in feedlots in two periods: 1962 to 1963 and 1957 to 1963, and also, about the in- creased importance of custom feeding. Change from 1962 to 1963.— Califor- nia cattle marketings increased by 72,000 head between 1962 and 1963 — by 4 per cent. Sample data for 87 feedlots indicate an increase of 113,900 head or 19 per cent (table 12). Thus, the production re- sponse of sample feedlots exceeds that for the total population. For the sample feed- lots, marketings increased for each size group. For the feedlots of 10,000 head and more capacity, marketings increased by 87,300, or 20 per cent. But of this in- crease, 72,200 head were custom-fed animals. Similar increase in the relative importance of custom feeding is shown for all size groups except for the small feedlots. The number of small feedlots in California has decreased in recent years, as is reflected also in the percentage of usable returns from this size group. Those remaining in business, however, appear to have increased the size of business during this period. These data do not offer defi- nite conclusions as to supply responses by size group and type of operation, but they indicate the importance of custom feeding as a factor affecting marketings in this period. Prices of slaughter cattle were in- creasing during the years. Prices started to decline, however, in the fall of 1963. This is one factor affecting the decrease in cattle on feed on January 1, 1964, as compared with a year earHer. The sample data shown in table 12 indicate, however, that for the large custom-feeding opera- tions, numbers increased by 13 per cent whereas numbers decreased for all other size groups, except the smallest which remained unchanged. These data raise questions as to supply response by type of feedlot and ownership pattern that cannot be answered at this time. Change from 1957 to 1963.— Feedlot marketings for California increased by 50 [15] TABLE 12. Marketings and Custom Feeding, 1962 and 1963, Cattle on Feed January 1, 1963 and 1964 (Based on sample data from 87 feedlots)* and Unit Re- ported state data Feedlot capacity in number of head Item 0-999 1,000- 2,499 2,500- 4,999 5,000- 9,999 10,000 and more Total t Feedlot marketings: 1963 thousand head thousand head thousand head per cent thousand head thousand head thousand head per cent per cent percentage points thousand head thousand head per cent 1,886 1,814 14.3 12.4 45.4 42,0 59.6 46.0 65.2 57.4 521.0 433.7 705.5 1962 591.6 Difference Percentage increase Custom-fed cattle: Absolute numbers 1963 72 4 n.a.t n.a. n.a. n.a. n.a. 1.9 16 3.4 8 16.8 11.1 13.6 30 7.9 4.0 7.8 14 11.2 9.1 87.3 20 369 2 297.0 113.9 19 405.0 1962 321.1 5.7 37 26 3.9 13 9 2.1 17 16 72.2 71 68 83.9 Percentage of marketings : 1963 57 1962 54 Difference n.a. 946 1,000 -5 5.4 5 4 +11 16.7 18.9 -12 +4 26.0 28.3 -8 +1 26.2 33.6 -22 +3 213.0 188.6 + 13 +3 Cattle on feed January 1 : 1964 1963 Percentage increase and decrease 287.3 274.8 +5 * Distribution of feedlots as to capacity: to 999 (26). 1,000 to 2,499 (23), 2,500 to 4,999 (14), 5.000 to 9,999 (7), and 10,000 and more (17). f Unweighted. t Not available. Source: 1964 feedlot questionnaire. ' TABLE 13. Marketings and Custom Feeding for 1957, 1962, and 1963 (Based on sample data from 56 feedlots)** Unit Re- ported state data Feedlot capacity in number of head Item 0-999 1.000- 2,499 2,500- 4,999 5,000- 9,999 10,000 and more Total t Feedlot marketings: Absolute number 1963 thousand head thousand head thousand head per cent per cent thousand head thousand head thousand head per cent per cent per cent 1,886 1,814 1,259 +4 +50 n.a.t n.a. n.a. n.a. n.a. n.a. 5.4 4.7 3.9 + 15 +38 27.9 29.9 17.8 -6 +57 2.8 2.2 1.8 10.0 7.0 10.0 44.2 35.4 21.7 +25 +104 7.9 4.0 1.6 17.9 11.3 7.4 52.5 43.5 33.5 +21 +57 5.1 2.1 0.5 9.7 4.8 1.5 309.0 263.5 157.7 +17 +96 225.6 185.3 67.9 73.0 70.3 43.1 439.0 1962 377 1957 234 6 Percentage increase and decrease : 1962 to 1963 + 16 +87 1957 to 1963 Custom-fed cattle: Absolute number 1963 241 4 1962.. . 193 6 1957 71 8 Percentage of marketings: 1963 55 1962 51 3 1957... 30 6 * Distribution of feedlots as to capacity: to 999 (15), 1,000 to 2,499 (17), 2,500 to 4,999 (10), 5,000 to 9,999 (5), and 10,000 and more (9). f Unweighted. t Not available. [16] per cent between 1957 and 1963 (table 13). Sample data were obtained as to marketings for these periods and compar- able data for 56 feedlots are shown in table 13. Records for 31 feedlots were not included because 13 of them started busi- ness after 1957 and 18, for various rea- sons, gave no data. The comparison of feedlot marketings by size groups for 1962 to 1963 is generally comparable for the 87 and 56 feedlot records. The increase in cattle feeding is asso- ciated with increased custom feeding which is most important in feedlots with 10,000 head and more capacity. For this size group, marketings increased by 151,- 300 head whereas numbers of custom-fed cattle increased by 157,700 head. For the 56 feedlots, custom-fed cattle accounted for practically all of the increase in mar- ketings from 1957 to 1963. Feed mill size and nonfeed costs Feed mills were operated by 81 of the 97 feedlots studied, with output ranging from 1 ton to 40 and more tons per hour (table 14). The mill size varied with feed- lot capacity. However, it appears that mills were built to allow for future expan- sion in feedlot capacity since mill size exceeded that required for present pen capacity. If mill capacity is defined as output of a typical ration that can be processed in a ten-hour day, the following feed mills would be adequate for the re- spective feedlot capacities:^ eedlot capacity in Feed mill size in number of head tons per hour 1,000 1.3 2,500 3.3 5,000 6.7 10,000 13.3 30,000 40.0 The excess capacity in feed mills is thus evident from a comparison of required feed mill size and actual size shown in table 14. A more detailed analysis of ex- cess capacity for 65 feedlots indicated utilization of mill as a function of size of feedlot. The total number of head days on feed was calculated for each lot and compared with the potential number of head days if the mill were operated at capacity for a ten-hour day and 360 days per year." The actual number of head days expressed as a percentage of potential head days is as follows for various feedlot size groups: 8 per cent (0 to 999), 18 per cent (1,000 to 2,499), 20 per cent (2,500 TABLE 14. Number and Size of Feed Mill, by Feedlot Capacity Feedlot capacity in number of head Feed mill size 0-999 1,000- 2,499 2,500- 4,999 5.000- 9,999 10,000 and more Tota Output in tons per hour No mill 13 6 9 1 29 3 5 10 4 1 1 24 1 4 2 5 4 16 2 4 1 1 8 4 2 4 1 5 4 20 16 1-4 12 5-9 23 10-14 12 15-19 12 20-24 10 25-29 2 30-39 5 5 Total 97 Source: 1964 feedlot questionnaire. Based on the relationship C rh — - — where C maximum number of head on feed at a given time. r = mill output per hour, in tons, of a specified ration, h = hours of mill operation per day. and f = feed fed per head per day in pounds (which is taken at 26.6 pounds for this calculation) * Total head days are the number of cattle marketed multiplied by the number of days on feed. 17 TABLE 15. Nonf eed Costs in Cents per Head per Day for Model Feedlots Operated at Various Percentages of Maximum Annual Output, Three Lots per Year Fed 120 Days Capacity Percentage of maximum output* Feedlot Feed mill 100 80 60 40 20 number of head tons per hour 5 10 15 20 30 cents per head per day 3,760 7.19 6.18 5.92 5.75 5.57 7.99 6.77 6.46 6.25 6.03 9.33 7.75 7.35 7.08 6.79 11.99 9.70 9.13 8.73 8.32 19.99 7,520 15.56 11,280 15 040 14.46 13.70 22,560 12.91 * The number of cattle fed per year for the respective feedlots is as follows: Percentage of maximum output Mill output 100 80 60 40 20 tons per hour number of head 5 11,280 22,560 33,840 45,120 67,680 9,024 18,048 27,072 36,096 54,144 6,768 13,536 20,304 27,072 40,608 4,512 9,024 13,536 18,048 27,072 2 256 10 4,512 15 6,768 20 9 024 30 13,536 Source: King, 1962. to 4,999), 33 per cent (5,000 to 9,999), and 69 per cent (10,000 and over). This comparison indicates utilization of feed mills for the entire year. The mill may be utilized at a higher percentage of capacity for the peak number of cattle on feed at a given time. Unfortunately, such data are not available. Even with allowance for this fact, larger lots utilize feed mill facilities to a greater extent than the small feedlots. The cost of underutilization of feed mill and feedlot facilities is an important con- sideration in feedlot operations, although the purchase and sale price for cattle, feed purchases, and feed conversion efficiency are of primary importance. An analysis of economies of scale in feedlots with mill capacity ranging from 5 to 30 tons per hour (King, 1962) provides estimates of nonfeed costs with feedlots operated at varying levels of capacity (table 15). For example, the nonfeed costs for a feedlot operation with a 30-ton-per-hour mill and feed pens with 22,560-head capacity vary from about 13 cents per head per day if utilized at 20 per cent of capacity to 5.6 cents at 100 per cent of capacity. The sample feedlot data for 17 lots with capa- city of 10,000 or more head ranged from 27 to 100 per cent utilization of mill capa- city. This range in nonfeed costs may well exist in feeding operations. This repre- sents non-feed costs ranging from about $12.00 to $6.68 per head for animals fed 120 days. The cost of excess mill capacity alone — as opposed to excess mill, pens, and re- lated equipment — is lower than those fig- ures would indicate. For example, the in- vestment cost for a 10-ton-per-hour mill is about $84,000 as compared with $71,- 000 for a 5-ton-ton mill, or a difference of $13,000, as given by King (1962). Total investment costs, however, are about $110,000 higher for the 10-ton mill and related corrals and storage facilities. Thus, if a feedlot operator planned ex- pansion in the future, it might be a sound investment to build a larger mill and add 18 TABLE 16. Feed Mill Construction by Year Year built Feed mill capacity in tons per hour: th^n'lO 10-19 20 and over number of mills 1963 2 4 5 2 2 15 20 35 1 3 1 5 19 24 2 1962 1961 I960 2 1 2 1959 Totall959-1963*.... 1958 and before 7 15 Total 22 * Construction of new mills by present feedlot capac- ity is as follows: Less than 10 tons: 8 (0 to 999), 5 (1,000 to 2,499), 2 (2,500 to 4,999); 10 to 19 tons: 1 (1,000 to 2,499), 2 (2,500 to 4,999), 2 (10,000 and more) ; W tons and more: 1 (0 to 999), 1 (2,500 to 4,999), 1 (5,000 to 9,999), and 4(10,000 and more). Source: 1964 feedlot questionnaire. corrals as conditions warranted. New mill construction by years is shown in table 16. Rations and feed use This study provides some rough indica- tions for 1963 as to aggregate feed use in California and related data on feeder cat- tle placements by weight group, average number of days on feed, daily weight gains, and ration composition. Cattle placements on feed were pre- dominantly at the 600- to 799-pound weight level (59 per cent), with 33 per cent of the animals placed on feed at 400 to 599 pounds, and 8 per cent at 800 pounds and more (table 17). Cattle were on feed for an estimated 152 days in 1963, based on sample data. The average daily gain is a function of various factors such as type of animal, weather, health, feed quality, and ration composition. Data obtained from a ques- tionnaire are subject to obvious limita- tions but do give an indication of present feeding practices. The information pre- sented here is based on only those records for which it was possible to check re- ported feed purchases for 1963 with esti- mated feed use. This estimate was devel- oped for each feedlot and is based on cattle placements, days on feed in each weight group, and feed fed per head per day. For animals put on feed weighing 600 to 799 pounds, daily gains averaged 2.68 pounds; daily gain was lower for 400- to 599-pound feeders (2.39 pounds) and for 800-pound or heavier feeders (2.64 pounds). The daily gain and feed per head per day for nonsilage rations given in table 17 compare favorably with levels from experimental trials reported by the University's Animal Husbandry Depart- ment (1966) and by the National Acad- emy of Sciences-National Research Coun- cil (1963). The NAS-NRC figures show that for 400-pound calves finished as 1,000-pound short yearhngs, the average daily gain ranged from 2.2 to 2.4 pounds per day depending upon the particular TABLE 17. Cattle Placements, Days on Feed, Daily Gain, and Rations by Weight Group, 1963 Item Unit Weight of feeder cattle 400-599 600-799 800 and more Total Placements on feed by weight group*. . . Average number of days on feedf Average daily gainf Nonsilage rations t Feed per head per day Percentage of concentrate in the ration| per cent days pounds pounds per cent 33 181 2.39 18.2 59 141 22.0 110 2.64 26.0 85 100 152 * Based on 75 feedlot records representing 864,000 cattle. t Based on records from 45 feedlots. i Based on records from 37 feedlots. For the 45 feedlots analyzed, 90 per cent of the cattle were on nonsilage rations. ^ Includes all feed except roughages. Source: 1964 feedlot questionnaire. [19] weight level during the feeding period. Daily gains for animals put on finishing rations at 600 pounds varied from 2.6 to 2.7 pounds per day between starting weight and 1,000 pounds, while similar data for two-year-old cattle weighing 800 pounds upon entering the feedlot showed a range of 2.8 to 2.9 pounds when fed to 1,000 pounds. The sample data have the limitation for the larger weight category that some of these animals may have first been fed in warm-up lots with the result that aver- age daily gains in the finishing operation would likely be less than for animals weighing 800 pounds which were placed in the lot directly from the range. Daily gains for animals fed silage ra- tions tended to be lower than for those fed nonsilage rations, and the length of feed- ing period tended to be longer. Silage operations varied from lots in which the ration consisted of hay and silage only to lots in which a small amount of silage or greenchop was added to a basically grain ration. Of the 97 feedlots, 20 fed silage which was produced on the ranch in all cases. And of the 51 feedlots that pro- duced feed in farming operations 40 per cent produced some silage as well as other feeds. The silage feeding is relatively more important for cattle at lower weights, and in most cases the proportion of silage in the ration was decreased as cattle weight was increased to 600 and again to 800 pounds. The nonsilage rations, accounting for about 90 per cent of the number of head days on feed, showed an average daily gain of 2.68 for the 600- to 799-pound group, when fed a 22-pound ration with 78 per cent concentrate composition. Analysis of these data indicates that lower rates of daily gain go with lower absolute and relative quantities of concentrate in the ration, and higher rates of gain with higher concentrates. Total gain for non- silage- and silage-fed animals was ap- proximately equal; the difference de- pended on the length of time on feed. Total California cattle on feed received about 3.5 milhon tons of feed (table 18) based on total marketings of 1,899,000 head fed, for 152 days, a ration of 24.2 TABLE 18. Estimated Consumption of Feed by Cattle on Feed, 1963 Ingredient Total feed use Concentrates : Grain By-products and supplement Roughage : Hay and other million tons 2.06 .74 .56 .14 per cent 59 21 16 Silage 4 Total 3.50 100 Source: Estimate based on data from 1964 feedlot questionnaire. pounds per head per day. The ration is based on information from 39 feedlots with marketings of 447,000 head for which reported feed purchases checked with estimated feed use based on indi- vidual feedlot data on placements, days on feed in each weight group, and the as- sociated feed per head per day. A more detailed breakdown of feeds used in finishing rations for 1963 is given by Hopkin and Kramer (1965). For major categories, the percentages of ration are given as follows: feed grains, 57.6 per cent; other high-energy feeds, mainly by- products, 14.5 per cent; protein supple- ment, 3.7 per cent; molasses, 5.7 per cent; fat, 2.1 per cent; minerals, 1.1 per cent; and roughages, 15.3 per cent. Purchase of feeder Animals The direct movement of cattle from ranch to feedlot rather than through term- inals and auctions is a well-recognized trend. Based on sample data, 40 per cent of the cattle owned by feedlots were from their own ranches or from other ranchers, and 14 per cent were purchased from order buyers who may or may not have purchased directly from the ranch (table 19). We assume that for feedlot-owned cattle, 45 per cent do not go through auc- tions or terminals. Of the custom-fed animals, 54 per cent were owned by ranchers or other feedlots, based on ownership information January 1, 1964 (table 11). Livestock dealers owned an additional 13 per cent. Al- though no information is available as to [20] TABLE 19. Source of Cattle Owned by Feedlot, January 1964* Source Owned by feedlot Ranches: Own ranch Other ranchers . . per cent 11 29 Total ranches Order buyers 40 14 41 Teriuinals 5 Total 100 * See table 20. Source: 1964 feedlot questionnaire. the amount of direct movement of cus- tom-fed cattle, a minimum of 54 per cent would appear reasonable in view of ex- pected direct shipments from ranchers. Thus, about 50 per cent of cattle fed move directly from ranch to feedlot.^ However, this average percentage may be biased downward since other custom-fed animals may be shipped directly from the ranch although they are owned by packers, live- stock dealers, and others. An added dimension is the source of feeders by size of feedlot (table 20). For the two low-capacity groups (0 to 999 and 1,000 to 2,499), California sources ac- counted for more than 90 per cent of feeders; out-of-state sources were rela- tively more important for the large feeders. The number of purchase transactions, as with sales transactions, is a direct func- tion of feedlot size. The median number of purchases is a more meaningful meas- ure for small sample size with a few ex- treme values. Contracts for purchase of feeders were used by more than half of the feedlots. The modal length of purchase contract was one month although contracts up to six months were reported. The proportion of cattle purchased under contract would be more meaningful than feedlot num- bers, but such data are not available. Sale of fed cattle Feedlots in California serve as the pri- mary point of sale for fed cattle. Sample data for 88 feedlots reflect this in the rela- tive importance of sales outlets for 1963 marketings: Percentages of total sales Packer-buyers 93.5 Own slaughter plant 4.9 Auction sales 0.3 Other 1.3 ^ That is, custom-fed cattle (60 per cent of total) cattle (40 per cent of total) with 45 per cent direct 100.0 Sales to auctions were relatively more im- portant for the smaller feedlots than for the sample total given above. There are at least as many packer-buy- ers in California as there are slaughter plants, which number about 113. How- ever, an individual feedlot appears to make a high proportion of sales to a limited number of buyers. The buyers vary from one feedlot to the next. The proportion of sales to meat packers which go to the largest single buyer is much lower for the large lots (capacity of 10,- 000 and more) than for other feedlot size groups (table 21). For all size groups, the two largest buyers for a particular feedlot account for more than half of total sales to packers varying from 51 per cent for the 10,000-head capacity lots to 90 per cent for feedlots with 0- to 999-head ca- pacity. Feedlot operators were asked to esti- mate the number of "potential" buyers for their cattle as contrasted with "actual" (table 21). The number of potential buy- ers appears to be directly related to feed- lot size, although feedlot location may be a related variable (figure 3). A statistical test of the effect of location and size was not possible because observations were limited. Number of sales transactions per year varied from 1 to more than 1,000 in sam- ple data. Vulnerability to price variation thus differs among feedlots, with the larger lots having more opportiinitv for averaging favorable and uiifa\orable with 54 per cent direct purchase and feedlot-owned purchase. [21] TABLE 20. Characteristics of Feedlot Cattle Purchases, 1963 Unit Feedlot capacity in number of head Item 0-999 1,000- 2,499 2,500- 4,999 5,000- 9.999 10.000 and more Total Feedlots number thousand thousand thousand per cent per cent per cent per cent per cent per cent per cent per cent per cent number number number number number number number number number number 28 5.4 0.0 23 15.3 1.8 16 23.7 4.3 7 12.4 7.8 19 79.4 170.6 93 ( 'attJe on feed January 1, 1964: Owned 136.2 184.5 Total 5.4 44 23 30 1 I 17.1 29 33 19 8 11 28.0 20 15 11 3 35 10 6 20.2 15 28 9 44 4 250.0 2 19 10 14 28 22 3 2 320.7 Sources of cattle owned on January 1, 1963: Own ranch 11 Other ranches 21 Out of state . . . 8 Auctions California 13 Out of state 28 14 Terminal 3 Out of state 2 Total 100 17 6 16t 1 2 4 1 100 24 17 n 3 2 6 1 1 100 34 25 4 2 2 2 2 1 100 107 55 1 2 2 100 194 100 8t 1 5 1 3 100 Number of purchase transactions : Average Median Feedlot use of contracts for pur- chase of feeder cattle:* 38 7 days 6 14 days 6 30 days . . 15 31-60 days 9 61-90 days More than 90 days 4 6 Total 24 22 13 6 19 84 * Data available for 84 of 93 lots. t Seven of these operators raised their own feeder cattle and purchased no cattle. X Two of feedlot operators custom feed all cattle and do not arrange for purchase of feeder cattle. Source: 1964 feedlot questionnaire. price conditions. The large feedlot opera- tors generally custom feed a large propor- tion of cattle fed and also generally assist in the sale of the cattle for the owner if other than a packer-owner. Thus, the large feedlot operator may not always benefit as such from the indicated larger number of sales transactions. Number of head per sales transaction ranged from 1 to 2,000 cattle for sample returns. Data as to the median number of head per sale are considered to be a more accurate representation of these data than the arithmetic mean. For example, the average of 76 head for 0- to 999-head capacity feedlots reflects two cases in which all cattle on feed were sold at one time. Data for sales reflect that sales are frequently made for one or more truck- loads of cattle, with resulting sales of 40, 80, and 120 head. Advance contracts for sales of cattle were used by 35 of 67 feedlots providing data, or 52 per cent. However, this sample contains relatively few of the small feed- lots (compare tables 21 and 7). Of these lots, contracts were used for 72 per cent of cattle marketed. Advance contracts were used more frequently by the larger feedlots (table 21). An estimated [22] TABLE 21. Characteristics of Feedlot Cattle Sales, 1963 Item Sales to packer-buyers by relative importance of volume to:* Largest single buyer Secor d largest buyer Third largest buyer Fourth largest buyer All other buyers Total Average number of potential buyersf. . Sales transactions in 1963 :t Average number per feedlot Number head per sale: Average Median Feedlot use of advance contracts for sale of cattle:! No contract 7-14 days 15-30 days 31-60 days 61-90 days Total Unit per cent per cent per cent per cent per cent per cent number number number number number number number number number number Feedlot capacity in number of head 0-999 100 5 14 76 40 1,000- 2,499 100 8 25 65 60 2,500- 4.999 100 10 54 102 5,000- 9,999 100 15 106 90 10,000 and more 100 19 387 104 91 Total 38 19 12 9 22 100 * Based on 69 feedlot records. t Based on 67 feedlot records. Source: 1964 feedlot questionnaire. weighted average length of advance con- tract was 35 days. The market for slaughter cattle thus does not exactly correspond with that depicted in pure competition. Packers owned about 15 per cent of the cattle fed in sample feedlots.® Advance contracts for sale of cattle were used for 73 per cent of cattle marketed. Custom feeding probably has changed the decision-process on the sale of cattle. The purchase of cattle by packer-buyers at feedlot locations, some- times a limited number of buyers, has changed from the terminal markets and auctions as the primary sources. Whether these changes have affected the perform- ance of the market is a more difficult ques- tion. The description of the cattle slaugh- ter industry develops the marketing as- pects for slaughter weight animals. CATTLE SLAUGHTERING California's growth in cattle feeding has been accompanied by a continual increase in the slaughtering phase of the industry. The 3,305,000 cattle and calves slaugh- tered in 1964 represent an increase of 70 per cent over the 1,945,000 head killed in 1950. This increase in output was achieved by a reduced number of slaugh- tering plants, resulting in higher output per plant. But while the number of plants 8 See table 11. This figure is for 1963 and compares to 17.3 per cent of the total marketings fed by packers in 1962 and 14.1 per cent in 1961 (U.S.D.A., Packers and Stockyards, 1964). [23] dropped, those specializing in the kilHng of only cattle and calves increased, as op- posed to plants handling more than one species of animals. Our analysis deals with (1) statewide structural aspects and trends in slaughter- ing and (2) operating characteristics at the plant level. The first topic discusses num- ber and size of plants, location of slaugh- tering activity, and sources of slaughter animals. At the plant level, the study is concerned with types of slaughtering op- erations, excess capacity in plants, degree of integration, market sources of cattle, and final product distribution. As described later, in detail, the data for this part of the study were obtained from state and federal governmental sources, brand inspection forms, and a questionnaire sui-vey of the state's slaugh- tering plants for the year 1962. Unless defined otherwise, the term "meat packing" in this bulletin refers only to the slaughtering of cattle as opposed to additional inte- grated operations such as process- ing, sausage making, and the slaughtering of other species of livestock. Characteristics and Trends in Cattle Slaughtering Number and size of slaughter plants The decHne in number of California slaughter plants and the increased aver- age output per plant are apparent in data obtained from brand inspection forms. The California Bureau of Livestock Iden- tification inspects the brands of all cattle and calves received at slaughtering plants. Brand data are not necessarily equivalent to slaughter levels; they do indicate the size distribution of plants."^ In some cases, more than one meat packing company may slaughter at the same plant. Our study has been con- cerned with the output of a given plant rather than the output of individual pack- ing companies, several of which may sup- ply cattle to the one plant. Except for one national packer v^^ho operates three plants in the state, multiple plant firms are not important in California. (These three plants, which are located in different areas of the state, were treated indi- vidually in the study.) In 1964, cattle slaughtering operations were performed by 113 plants (excluding slaughtering performed at educational in- stitutions). This number represents a net decrease of 18 plants from the 131 cattle slaughterers in 1959.^ During the five- year period, 27 plants went out of busi- ness while 9 new plants came into being^ Of the 27 plants which went out of busi- ness between 1959 and 1964, 15 slaugh- tered less than 5,000 head per year, four killed from 5,000 to 10,000 head, three from 10,000 to 20,000 head, three from 20,000 to 30,000 head, and one each from 50,000 to 60,000 head and more than 75,- 000 head. Six of the nine new plants in 1964 killed less than 5,000 head, and three killed between 10,000 and 20,000 head. The 113 plants slaughtering in 1964 were arrayed by magnitude of production (in terms of number of head of cattle and calves) and then divided into nine size categories (table 22). '''The brand data obtained for 1964 showed total receipts of 3,221,984 cattle and calves compared with reported slaughter of 3,305,000 head. The difference of 83,000 head represents about 2 per cent of total slaughter. In addition to possible error in measurement, not all cattle are inspected before slaughter. For example, plants may slaughter some animals of their own production retaining some of the beef for their own consumption and selling the remainder. In other cases, the hides of animals are inspected after slaughter, and these records were not included in our tabulation. s The number of plants is based on brand inspection data and a record of licensed cattle slaughterers for 1959 and 1964 obtained from the Bureau of Livestock Identification. These figures are consistent with the number of plants reported by the U. S. Department of Agriculture, Statistical Reporting Service (1965c) which shows 110 plants having slaughtered 300,000 pounds or more liveweight in 1965. The figures in the text include all plants with any output. ® The exit from and entry of plants into the cattle slaughtering business do not include plants which merely change names or ownership. Rather, these are plants which slaughtered in 1959 and not in 1964, and vice versa. [24 1 TABLE 22. Size Categories, Number of Plants, and Number of Head Killed for California, 1964 Category by head slaughtered per year Number of plants Number of animals slaughtered* Percent- age of total head 1. Less than 5,000 31 38,393 1.2 2. 5,000- 10,000 10 72,693 2.3 3. 10,000- 20,000 16 249,600 7.7 4.20,000-30,000 10 250,971 7.8 5.30,000- 40,000 12 413,461 12.8 6.40,000-50,000 9 415,547 12.9 7.50,000- 60,000 9 484,664 15.1 8.60,000- 75,000 7 465,068 14.4 9. 75,000-125,000 9 831,587 25.8 Total 113 3,221,984 100.0 * Slaughter figures and percentages are based only on data obtained from brand inspection data. Source: Brand inspection data obtained from the Bureau of Livestock Identification, California State Department of Agriculture, Sacramento. Traditionally, the degree of concentra- tion in an industry is measured by the pro- portion of the sales or output controlled by certain numbers of firms, e.g., the larg- est four, eight, and so on. (See Bain, 1959, chapter 4). In this case, the four largest slaughtering firms in the state in 1964 accounted for 13.6 per cent of the total slaughter, while the eight largest slaugh- tered 23.4 per cent of the animals. The 16 largest packers accounted for 40.2 per cent of the slaughter, and the 20 largest plants registered 47.1 per cent. The industry's fringe of 57 smaller plants killing less than 20,000 head per year (about half the total number of plants in the state) accounted for only about 12 per cent of the total production. Aggregation into size categories in some cases may lead to distortion of the actual situation. In most of the above categories, plants were generally dispersed over the entire size range rather than being bunched at either extreme. In the smallest size grouping, however, a further break- down might be useful. Of the 31 plan-s kiUing less than 5,000 head in 1964, all but 5 slaughtered less than 2,500 head. Many of these plants are associated with retail outlets or food lockers in small towns and perform slaughtering opera- tions intermittently — once a week for ex- ample — as opposed to the continuous five-day week slaughter in the larger com- mercial plants. While the degree of production con- centrated in the largest slaughter plants is not high relative to some industries cited by Bain, (e.g., automobiles, cigar- ettes, and rubber tires), spatial aspects of the relevant market structure must be considered. For example, plants operating in isolated geographic areas may be small when compared to other plants in the state, but still may possess a monopoly with respect to local production and /or purchases of local slaughter animals be- cause of distance factors. In trade areas where both inputs and outputs are free to move among markets without institutional (e.g., legal) con- straints, the level of monopoly power available to such isolated plants is lim- ited by the nature of the transportation costs. Thus, prices in one area cannot diff^er from those in other areas by more than the cost of shipping the goods be- tween these regions, or else trade flows of inputs or outputs will occur and eventu- ally through forces of supply and demand, prices will return to an equilibrium point and will differ only bv an amount equal to transportation charges. Barring collusion in marketing deci- sions, the number and size of plants in the major population and slaughtering cen- ters of California would indicate that the slaughtering industiy in the state operates on a competitive basis. The 23 plants in the Los Angeles area are among the larg- est in California, but no single plant or small group of plants controls a major portion of the slaughter either in that area or in the state. In addition to the com- petitive conditions among plants, still another restraint is imposed on possible monopoly power of California slaughter- ers. Inshipments of both meat and slaugh- ter animals from other states provide a regulating force on prices. (See Appendix A for a discussion of meat inshipments.) The market structure of an industrv alone is not a sufficient device b>' which to determine the competitive nature of that industry. The manner in which marketing 25] p f •WMiveu MOOOC Ihuwml LAM.N* 2 ^. "T K TCMAM* ^ K \ ■ aLtNN 1 ^ \jf (ItRHA • *No slaughter plants reported for 1964. 11 vintukaX lM anocli* 14 12 13 Fig. 4. Designated slaughtering regions in California, 1964. decisions are made — either independently or jointly — among firms and the ultimate performance of the market with respect to consumer wants and needs must also be evaluated. However, the concentration of firms in the industry indicates whether or not the business environment is conducive to a competitive nature, given the conduct and performance aspects. Location of slaughtering Brand inspection data were used as a basis for determining the location and magnitude of California slaughter for 1964. To prevent disclosure of production levels for particular plants, counties with very few plants were combined into slaughtering regions (figure 4). In all, the state was divided into 14 slaughtering regions. The cattle and calf slaughter per region for 1964 in number of head and as a per- centage of the state's total and the num- ber of plants in each region are listed here. Slaughter figures were derived from brand inspection data for 107 plants. The [26] six plants not included are very small plants killing less than 600 head per year and would not significantly affect the per- centage distribution. These plants were located in regions 2,3,4,6, and 12. Per- XT I. 'D.—;^— Slaughtered centage Numb tiegion animals of state total Ot plan< 1 11,404 .3 5 2 12,716 .4 5 3 102,654 3.2 8 4 189,120 5.9 6 5 406,436 12.6 19 6 182,646 5.7 10 7 164,699 5.1 4 8 65,758 2.0 3 9 136,226 4.2 5 10 70,575 2.2 5 11 128,789 4.0 4 12 44,527 1.4 7 13 160,109 5.0 6 14 1,546,325 48.0 26 3,221,984 100.0 113 Cattle and calf slaughter is dispersed over most of the state, but two regions — the Los Angeles area (14) and the San Francisco Bay area (5) — are the two major slaughter points in California. Some 1,546,325 head were slaughtered in Los Angeles, Orange, and Ventura counties (region 14) in 1964 — 48.0 per cent of the state's total. Twenty-six plants (23.0 per cent of California plants) were located in this area, with 23 of these in Los Angeles County. Region 5, the San Francisco Bay area, accounted for 12.6 per cent of the state's slaughter, with 406,436 head killed in 19 plants. Average cattle and calf kill per plant in the 14 regions varied from a low of about 2,300 in region 1 to a high of 61,900 head per year in region 14. The average kill per plant for the entire state was 30,400 head annually. The brand inspection data indicated a range of slaughter among plants in the state of from less than 100 head per year to more than 100,000 head. The authors have estimated, by the use of mathematical programming, that the slaughter pattern which would minimize the combined costs of assembling live animals, slaughtering, and distributing carcass beef would include 16 plants at 12 locations (Logan and King, 1964). Fig- ure 5 shows the 32 producing and con- suming regions into which the state was divided for that study which was based on 1960 data. Eleven of the plants designated by the least-cost solution were on-the-rail plants, and all plants varied in size from a one- bed plant killing 17 head hourly (32,000 yearly) to on-the-rail plants slaughtering 120 head hourly (226,800 head per year). The quantity of slaughter for the regions were (from Logan and King, 1964): Region 6 14 15 18 21 22 25 26 27 28 32 12 Total Indicated slaughter 59,100 54,300 455,300 44,700 178,900 199,700 231,600 31,900 38,300 690,096 385,000 108,600 2,477,496 Although the location study was based on cattle slaughter only (excluding calves), some comparison is possible with the actual slaughtering level shown for 1964. Actual cattle slaughter in the two ma- jor slaughtering points (the Los Angeles and San Francisco Bay areas) in 1960 differed significantly from that indicated by the least-cost solution. Los Angeles County slaughtered 1,292,000 head in 1960, equal to 187 per cent of the level in the least-cost solution. The Bay area (which includes Alameda, Contra Costa, Santa Clara, San Mateo, and San Fran- cisco counties, a smaller area than that used in the least-cost problem) killed 244,000 head, equal to 46 per cent of the level indicated as being least cost. In comparing the least-cost solution to actual plant location, the major indica- [27] /"ot^" V A MODOC 3 / m^J Y*^t.vtk 1 LAttIN IxUMBOLC ^ 1 r±. 4 n Vr PI.UMA* . 9 N lo- ^Regions in which slaughtering would occur under a least-cost solution. 17 £AN rKANCIBCOl 15 19. 21 23 18 22 kSAN I.UI* OSISPOl 24 25 tANTA •AHaAMA 26 LOt ANOCLM 28 •AN ■IMNANOINO 29 30 31 32 Fig. 5. Supply and demand regions used in study of optimum location of cattle slaughter plants. tions would seem to be additional faci:i- ties for Imperial County where many feedlots are located, and less plants in the remainder of the state. The cattle and calf slaughter for the multicounty region in- cluding Imperial County in 1964 (44,527) was far less than the cattle slaughter indi- cated for Imperial County alone under a least-cost basis (385,000). However, such a growth would also necessitate develop- ment of outlets for inedible by-products as well as trucking facilities for dressed beef. Availability of back-haul shipments for trucks returning to plants from distant markets would then become an important factor. Source of slaughter cattle Cattle for slaughter in California origi- nate from several sources: feedlot market- ings, grass-fed cattle, cull dairy and beef animals, and inshipments of live animals. Feedlot marketings of cattle and calves in 1964 reached 2,061,000 head, equal to 62 per cent of the total cattle and calf slaugh- [28] ter of 3,305,000 head (California Crop and Livestock Reporting Service, 1965). With the growth of the feeding indus- try in the state, inshipments of hve ani- mals for immediate slaughter have dimin- ished in relative importance, although they accounted for 544,000 head in 1964, equal to 16.4 per cent of total slaughter. The record high was reached in 1954 when inshipments for immediate slaugh- ter reached 797,000 head, or 27.0 per cent of the total slaughter. Arizona has consistently been the major supplier of out-of-state slaughter animals, accounting for 71 per cent of total inship- ments for immediate slaughter in 1964. Other major states shipping cattle and calves for slaughter to California are Idaho, Nevada, Oregon, and Utah. Texas, which in past years has been an important source of slaughter animals, has decreased shipments of slaughter animals, but has increased shipments of feeders and stock- ers to California and is now the most im- portant source for these types of cattle. Destination of inshipments. — The brand inspection data used earlier to describe the concentration characteristics of the industry also show the origin of out-of- state cattle and calf shipments received at slaughter plants. Thus, the data afford a method whereby the flows of inship- ments of live animals for immediate slaughter can be determined. The nature of distribution of inship- ments of cattle and calves among the supplying states for 1964 as indicated by the brand inspection data is shown in table 23.^° Arizona accounted for 71.5 per cent of total inshipments of cattle and calves for slaughter, with Idaho second with 9.7 per cent, Oregon third with 5.3 per cent, and Nevada fourth with 4.2 per cent. Figure 6 shows the destinations (by regions) of inshipments of live animals from Arizona and Idaho. The following list shows the percentages of shipments from these two states to receiving regions in California: To From From region Arizona Idaho 1 0.0 tr 2 0.0 3 tr 4.6 4 34.4 5 tr 51.9 6 tr 1.2 7 0.0 3.0 8 0.0 0.0 9 tr 1.7 10 0.0 0.0 11 tr tr 12 tr 0.0 13 2.5 0.2 14 97.3 2.8 Total 99.8 99.8 As can be seen, most of Arizona's ship- ments to California find their way to the Los Angeles area, and much of the re- mainder goes to San Diego County. Idaho, on the other hand, ships the largest single portion of its live animals to the Bay Area, with other large shipments going to the Butte and Yuba counties area, and to the Sacramento and Yolo Counties area. Table 23 indicates the number of head shipped into the various regions from the different states of origin. Most of the inshipments of animals for immediate slaughter enter California dur- ing the first three months of the year, with the third quarter being the slack period. A moving seasonal index computed for the years 1953-1960 (Logan and King, 1962) shows the first quarter to be 113 per cent of the average quarter, the sec- ond quarter 103 per cent, the third quar- ter 88 per cent, and the fourth quarter 96 per cent. These levels are opposite in na- ture to the slaughtering index (table 24) which shows a higher activity in the third and fourth periods. However, the in- creased level of inshipments in the first period helps offset a decrease in available slaughter animals from culled animals ^^ For the most part, the brand inspection receipts indicate levels of inshipments by state which are con- sistent with the totals given by the California Crop and Livestock Reporting Ser\'ice. Tlie major discrepancy is with respect to Arizona; however, since more than 97 per cent of these animals are shipped to one region, the effect of any measurement error in looking at trade flows is minimal. [29 TABLE 23. Sources of Region and counties Calif. Ariz. Ore. Idaho Utah Nev. Colo. Mont. 1. Siskiyou, Modoc, Shasta, Lassen . , 8,279 12,560 85,880 159,628 350,588 178,764 155,362 65,404 133,595 70,006 128,026 44,394 149,687 1,125,675 240 109 219 50 77 133 9,820 385,465 2,969 156 9,768 5,385 5,448 357 1,240 222 53 29 3,870 29,497 74 2,490 18,443 27,848 635 1,599 924 37 132 1,485 53,667 82 1,382 361 6,744 100 637 354 523 371 123 6,813 17,490 1,630 3,424 9,445 2,288 4,150 645 122 1,775 1,111 239 3,108 155 198 4,933 2. Del Norte, Humboldt, Trinity, Mendocino 3. Tehama, Plumas, Butte, Glenn, Colusa, Lake, Yuba, Sutter, Sierra, Nevada, Placer, EI Dorado 82 4. Sacramento, Yolo, Amador. . . 5. Sonoma, Napa, Marin, Contra Costa, Solano, Alameda, San Mateo, 422 260 6. San Joaquin. Alpine, Mono, Tuolumne, Calaveras, 140 7. Santa Clara, Santa Cruz 8. Merced, Madera, Mariposa. . . . 9. Fresno 58 10. Monterey, San Benito, San Luis Obispo, Santa Barbara 11. Kings, Kern, Tulare 12. Inyo, Riverside, Imperial, 530 13. San Diego... 14. Los Angeles, Orange, Ventura 887 State Total 2,667,848 396,113 23,479 9,744 2,379 Source: Brand inspection data obtained from the Bureau of Livestock Identification, California State Department from beef and dairy herds plus grass-fed cattle, while the above-average second quarter helps fill the gap from a drop in quarterly marketings from feedlots. Slaughter Plant Operating Characteristics Questionnaire data In 1963, questionnaires were sent to all meat packing plants in California request- ing information on such items as produc- tion, organizational characteristics, de- gree of integration, source of cattle, and source of sales of dressed beef. Completed questionnaires from 35 plants were re- turned but not all questionnaires were usable for each question. The total slaughter accounted for by the 35 plants was 971,850 head of cattle, equal to 33.2 per cent of California's total production in 1962. The number of plants in each category and the percentage of the total sample slaughter represented by each size group are shown in table 25. If the percentage of sample slaughter is compared to the distribution according to 1962 brand inspection data, some differ- ence is found in the large size categories (6 to 9).^ None of the sample plants fell in the largest size grouping, whereas 14.5 per cent of the slaughter in California was done by such plants, according to the 1962 brand inspection data. Size groups 6 and 7 in the sample registered a larger proportion (22.9 and 27.8 per cent respec- tively) of the total slaughter than was evident from the state brand data (18.4 and 11.1 per cent respectively), while size group 8 was lower in the sample than in the brand data (18.5 per cent). Because of the small number of plants in size group 2 (5,000 to 10,000 head per year), it was frequently necessary to com- 11 The 1962 brand inspection forms showed total receipts at slaughter plants of 2,907,295 head, which lies within 1 per cent of actual reported slaughter. [30] Slaughter Cattle, by Region, 1964 Nebr. N. M. Kans. Tex. Okla. Mo. Miss. Iowa Wash. Wyo. Total 11,404 ... ... ... ... 12,716 71 1,200 18 102,654 189,120 2,886 406,436 118 206 267 143 942 200 32 182,646 164,699 65,758 136,226 39 27 ... 70,575 128,789 911 196 6,086 600 6,175 493 ... 99 352 352 706 ... 44,527 160,109 1,546,325 5,225 6,755 627 7,260 693 99 706 32 18 3,221.984 of Agriculture, Sacramento. bine the first two groups into a size cate- gory of less than 10,000 head per year. With increased combined cattle and calf slaughter during recent years and a simultaneous decrease in the number of plants, the net result has been higher out- put per plant. As mentioned before, the largest net decrease in plants between TABLE 24. Seasonal Patterns of Slaughtering in Various Areas of California, 1950-1960 Commercial slaughter as a percentage of mean quarterly kill in Quarter Los Angeles County San Francisco Bay Area* State First . 100 97 101 102 95 98 105 102 98 Second Third 98 104 Fourth 100 * Includes Alameda, Contra Costa, Santa Clara, San Mateo, and San Francisco counties. Source : Logan and King, 1962. 1959 and 1964 was in the smallest cate- gories (slaughtering less than 10,000 head per year). Similar trends are apparent in the sample data. Table 26 indicates the TABLE 25. Characteristics of the Sample of 35 California Meat Packing Plants, 1962 Animals slaughtered Size group by head Num- ber of plants slaughtered per year Percentage of total sample Number 1. Less than 5, 000 8 1.4 13,599 2. 5,000- 10,000 2 1.2 11,785 3. 10,000- 20,000 5 8.3 80,789 4.20,000- 30,000 5 13.4 130,019 5.30,000- 40,000 3 11.7 114,163 6.40,000-50,000 5 22.9 222,533 7.50,000- 60,000 5 27.8 270,508 8.60,000- 75,000 2 13.2 128,454 9. 75,000-125,000 0.0 Total 35 100.0 971.850 Source: Sample of California cattle slaughtering plants. 1962. [31] Idaho Fig. 6. Destinations of inshipments of slaughter cattle and calves from Arizona and Idaho, 1964. change in size categories between 1957 and 1962 of the 23 firms which reported slaughter figures for both years. For ex- ample, in 1957 six plants slaughtered 5,000 or less (see last column of table) whereas in 1962 only five plants slaugh- tered 5,000 or less and one plant moved up into the 5,000-10,000 category. For six of the size categories at least one plant moved to a higher level of slaughter cate- gory between 1957 and 1962. The excep- tion to this trend is found in the 60,000- 75,000 category where one of two plants shifted to the next-lower group in 1962. The tendency toward increased size is also apparent from a survey of state in- spected plants. Inspection of meat pack- ing plants and operations is maintained by both the state and federal governments to protect consumers from meat unfit for [32] TABLE 26. Shifts in Slaughter Categories Reported by Sample Firms from 1957 to 1962* Slaughter category in 1962 in head per year Total Slaughter category 5,000 or less 5,000- 10,000 10,000- 20,000 20,000- 30,000 30,000- 40,000 40,000- 50,000 50.000- 60,000 60.000- 75,000 plants in 1957 head per year number of plants 5,000 or less 5,000-10,000 5 5 1 1 2 2 1 2 3 1 1 3 1 1 5 3 1 4 1 2 6 10,000-20,000 3 20,000-30 000 6 30,000-40,000 1 40,000-50,000 4 50 000-60 000 1 60,000-75,000 2 Total plants in 1962 23 * None of the plants reporting were in the 75,000 to 125,000 head slaughter categorj' Source: Sample of California cattle slaughtering plants, 1963. human consumption. Animals are in- spected before slaughter and the carcass and internal organs are checked after slaughter for disease. In 1942, the state inspected 122 plants; by 1962, the num- ber had dropped to 56. Most of this de- cline (from 44 to 21 plants) occurred in plants slaughtering an average of from one to 10 head of cattle and calves daily. Plants killing an average of 120 head per day or more increased from one in 1942 to seven in 1962. It must be kept in mind, hov^ever, that the exit of larger plants from the state inspected list is frequently merely the result of such plants moving from state to federal inspection because of expansion of trade areas to include interstate mar- kets. Nature of operations Meat packing operations in California take many forms with respect to such factors as technology, ownership, age, specialization of slaughtering, and so on. Although definite statements about rela- tionships of such items to size of produc- tion or location of plant would be hazard- ous, some interesting tendencies in the questionnaire data were noted. Of the 35 plants returning the ques- tionnaires, 13 were one-owner plants. Four of these plants slaughtered less than 5,000 head per year, three killed 10,000 to 20,000 head annually, two plants 20,000 to 30,000 and two 30,000 to 40,000 head per year. The remaining two one-owner plants were found in the higher-slaughtering categories. Plants with more than one owner were concentrated in the larger size groups. Ten of the 12 plants killing more than 40,000 head annually had more than one owner. As plant size increases and capital in- vestment requirements are expanded, one might expect to find more owners associ- ated with the slaughtering firm. The same pattern, however, might exist in a plant which slaughters a relatively small num- ber of animals but has a more diversified operation including such functions as feeding, retailing, etc. Specialization of slaughter and tech- nology. — Of the 110 slaughtering estab- lishments listed by the federal govern- ment in March 1965, 39 slaughtered cat- tle and calves only; one was a specialized hog slaughterer; 45 killed cattle, calves, hogs, sheep, and lambs; one slaughtered hogs, cattle, and calves; and 24 processed cattle, calves, sheep, and lamb (U.S. De- partment of Agriculture, Statistical Re- porting Service, 1965C). Although the diversified plants outnumber the special- ized plants, the decrease in total plants between 1955 and 1965 (from 131 to 110 plants) occurred in plants slaughtering all [33 TABLE 27. Number and Size of Sample Plants by Type of Animals Killed, 1962 Type of animals slaughtered Size group by head slaughtered per year Cattle, sheep, hogs Cattle, sheep Cattle, hogs Cattle only Total number of plants 1 Less than 10 000 9 1 1 2 1 2 1 1 1 1 2 3 2 3 3 2 10 2 10 000-20 000 5 3. 20 000-30 000 5 4 30 000-40 000 3 5. 40 000-50, 000 5 6 50 000-60 000 5 7. 60 000-75 000 2 Total 13 6 1 15 35 Souhcb: 1963 questionnaire to California meat packers. Species (from 83 to 45) and in those kill- ing cattle, calves, and hogs (from 5 to 1). The other type of plants (both specialized and diversified) increased, with the spe- cialized plants adding 18 new plants in the ten-year span. Lamb and sheep slaughter is the pri- mary type of slaughter diversification for California plants. Based on the sample of 35 plants, the smaller plants tend to diver- sify into more than one species, while the larger plants specialize in cattle and calf slaughter only. None of the 15 plants slaughtering only cattle and calves, for example, killed less than 10,000 head. Ten of the 20 plants which slaughtered multiple species, however, killed less than 10,000 head. Table 27 gives the number of plants by size category and nature of specialization. About 50 per cent of the plants slaugh- tering cattle killed both dairy and beef animals whereas the remainder limited their kill to only beef animals. Some plants specialize principally in the proc- essing of dairy animals while some plants deal predominantly in calf slaughter. Table 28 indicates the relative import- ance of dairy animals in the total slaugh- ter of the plants surveyed. Federal grading. — The U.S. Depart- ment of Agriculture has estabhshed qual- ity grades for beef carcasses and will sup- ply, for a cost, their grading service to meat packers. The grading, which gives purchasers some basis for evaluating the diff^erences among carcasses, is based on conformation and on certain quality char- acteristics of the carcass such as color, marbling, texture, and firmness of the lean in relation to maturity (Cole, 1962). In 1965 the grading requirements for beef were altered by the U.S. Department of Agriculture to include optional cutability standards which are directed at deter- mining variations in the proportion of TABLE 28. Plants Slaughtering Both Dairy and Beef Cattle, Only Beef Cattle and Relative Importance of Dairy Animals, by Size Group, 1962 Size group by head slaughtered per year Number of plants slaughtering Dairy cattle Percentage of total slaughter Dairy and beef Beef only 1. 10,000 or less 2. 10,000-20,000 3.20,000-30,000 4.30,000-40,000 5.40,000-50,000 6.50,000-60,000 7. 60,000-75,000 7 2 2 1 3 3 1 3 3 3 2 2 2 1 12.9 19.3* 7.3 1.5 1.3 22. 9t 13.5 Total 19 16 * Excluding one plant specializing in dairy slaugh- ter, the percentage is 4.0 rather than 19.3. t Excluding one plant speciahzing in dairy slaugh- ter, the percentage is 9.6 rather than 22.9. Source: 1963 questionnaire to California meat packers. [34] trimmed retail cuts of beef which can be obtained from different carcasses. These latter standards, optional to packers uti- lizing federal grading, depend upon such factors as fat thickness over the ribeye muscle, the size of the ribeye, amount of internal carcass fat, and the carcass weight. The use of federal grading is voluntary; however, because of its usefulness in des- ignating carcasses of uniform quality characteristics, it has become more and more an aid — almost a necessary tool — for packers in the marketing of their prod- uct. The large retail outlets who buy from several packers, for instance may require that their beef be of a certain grade. Thus, in order for packers to compete in such markets, they must have federal grading. On the other hand, federal grading is of less importance to firms having their own retail outlets or slaughtering small quan- tities primarily for the food locker trade. Of the 35 firms who returned question- naires, 26 reported federal grading of beef, 10 of sheep and lamb, and one of hogs. If a plant had federal grading of cattle and also slaughtered sheep, then with only one exception, the plant had federal grading of the sheep. All but three of the 25 plants slaughtering 10,000 head of cattle or more a year utilized federal grading on the beef, but only four of the 10 plants slaughtering less than 10,000 head had federal grading. Technology. — A major shift in the tech- nology of slaughtering cattle has become evident in California in recent years. This shift, which started in the midwestern and eastern sections of the United States, has been from the conventional bed-type slaughtering system to a more automated on-the-rail system. In conventional sys- tems, the animal is lowered to the floor from a bleeding rail after being killed and having the head removed. While on the floor, the hooves are removed and the hide cut back from the sides. The carcass is then hoisted off the floor for removal of the hide from the back and rump and is then placed on the dressing rail for evis- ceration, splitting, washing, and shroud- ing before being moved to the cooler. The on-the-rail system eliminates the lowering of the carcass to the floor, having all operations performed while the car- cass is on the rail. Slightly inclined rails may use gravity to help move the carcass along the rail, or conveyorized systems (either continuous or with intermittent stops) may push the carcass along the dressing rail with moving chains. By em- ploying platforms, the workers are able to perform their operations on the carcass at an optimum height. This eliminates stooping, a major factor in the flooring operations under the bed-type system. The on-the-rail systems often also use a hide-skinning device which removes the hide either partially from the sides or completely from the carcass after some preliminary skinning is done by hand. Scale of plant. — A study of economies of scale of cattle slaughtering plants in California (Logan and King, 1962), found that the cost per head of slaughtering decreases significantly as the size of plant increases. For a one-bed plant killing 17 head per hour, the cost per head (exclud- ing cost of the animal) was estimated at $9.48 compared to $8.41 per head for a three-bed plant kiUing 50 head hourly and $7.28 per head for a continuous on- the-rail system killing 120 head per hour. Much of this reduction comes from in- creased labor productivity in larger plants. Considering the cost differentials in slaughtering among various regions of California plus the costs of transporting slaughter animals and dressed beef, it has been estimated that the minimum cost of assembling and processing live animals and distributing the dressed beef to final consumption points in the state could be accomplished with 16 plants slaughtering at 12 locations (Logan and King, 1964). However, as pointed out in table 22, there are some 113 plants in the state, and 67 of them slaughter less per year than a one-bed plant killing full time at 17 head per hour (32,000 head). It would also appear that there is con- siderable excess capacity with respect to slaughtering facilities as well as number of plants in Cahfornia. Many plants regis- tered an actual average daily kill less than that which could be attained in 7.5 hours [35] slaughter figures for 1950 through 1960, output for the entire state and for the Los Angeles and San Francisco areas is lowest in the first two quarters of the year and highest during the third quarter (table 24). Thus, a plant which operated at capacity during the third quarter would have excess capacity the remaining three periods. Of course, use of overtime work during the high quarter might permit fuller use of the kill floor during the other periods, but in this case the cooler facil- ities would have to be expanded to con- tain the maximum output of the high pro- duction period and would generate ex- cess capacity during the other periods. Also, the increased labor cost of overtime wages might more than offset the reduc- tion in cost resulting from excess capacity of the kill floor.'" With the apparent economies of scale found in larger plants, the question arises as to how the large fringe of small plants in the state can compete with larger plants. Many of the plants in California are old. Of the 32 plants reporting the date of their construction, all but 3 were built before 1950. Because of the age of most of these plants, the capital invest- ment in building and equipment has been entirely depreciated. Without this cost item the total annual costs of these plants would be lower than their newer counter- parts. Therefore, many of these plants can remain in business and compete fa- vorably with newer and perhaps more efficient plants. Also, smaller plants may exist in more or less isolated centers where the demand for dressed beef is sufficient to allow a small plant to operate profit- ably, but neither the demand nor the sup- ply warrants the establishment of a large plant. Integration of operations Vertical integration, the performance of more than one of the functions or stages of operations in getting the prod- uct to consumers from the producer, has become an important factor in meat pack- 12 Another manner of viewing excess capacity is to compare actual slaughter rates with possible output for similar sizes of plants with optimum efficiency. Based on maximum hourly kill rates estimated by Logan and King (1962), only one plant out of 28 reporting was operating at a full capacity rate. Older plants may not be designed to handle as many head per hour as newer, more efficient plants. Similarly, expansion of existing plants by additional beds may haA'e resulted in crowding together various parts of the dressing operation, thus reducing possible capacity. [36] under their stated kill rate. For example, a plant with a stated slaughter rate of 30 head per hour could, on the average, kill 225 head of cattle per day. If their total reported slaughter, however, averaged only 215 head per day, based on 252 working days, then the plant would have been operating at only about 95 per cent of stated capacity. Of the 32 plants reporting an hourly slaughter rate and annual production, all but six slaughtered less than their stated capacity. There was a marked difference among size groupings of plants. Plants slaughtering less than 10,000 head per year only killed on the average 20 per cent of what their stated hourly kill rate would have permitted them to process. Plants in the size groupings from 10,000 head through 40,000 head utilized 82 per cent of their stated capacity, and those slaughtering between 40,000 and 75,000 head utilized 99 per cent of their stated capacity. Several reasons account for the exis- tence of such excess killing floor capacity. Differences of actual kill from stated capacity may result from the killing of more than one species if such diversifica- tion means shutting down one kill line while utilizing the other. Some of the plants spend part of the day slaughtering sheep and lambs or hogs, and then switch for the remainder of the time to slaughter- ing cattle. In this case, neither the sheep and lamb line nor the cattle kill line real- izes its full capacity for the entire day. Another reason for excess capacity in the killing operation is often found in a lower output capacity for supporting op- erations, generally in the cooler. Many plants may not have the capacity in their coolers which permits them to slaughter at full capacity rate on the kill floor. Thus, the output on the kill floor must be re- duced to "harmonize" with the storage capacity of the cooler. Seasonal variations in the supply of live animals also result in excess capacity in slaughter plants. Based on quarterly ing and feeding operations just as it has in many other agricultural industries. Not only do firms integrate vertically such as ranching, feeding, slaughtering, and re- taihng, but many also integrate into oper- ations involving associated products in addition to their main product, dressed beef. Thus, some plants may not only slaughter but also may do boning and breaking of dressed beef, rendering by- products, manufacturing of sausage and meat products, and hide curing. The various integrated activities en- gaged in by 34 of the 35 plants surveyed are shown in table 29 along with the num- ber of plants in each activity by size grouping. The feeding operations, per- formed by about 29 per cent of the plants surveyed, included only operations con- ducted as part of the packing firm itself or as subsidiary to the packing firm. Most of the various forms of integration were spread throughout all sizes of plants, although the boning and breaking func- tion (cutting the carcass into various por- tions and primary cuts and/or removing the bone) — reported by 56 per cent of the plants — was more predominant in plants killing more than 10,000 head per year. Retailing operations and rendering opera- tions were both reported by 38 per cent of the plants, while hide curing occurred in 26 per cent. Rendering was a more im- portant function to plants killing more than 20,000 head annually. The greater importance of rendering. boning, and breaking, and even sausage- making operations in larger plants might be expected because larger volumes of raw products would enable capacity usage of equipment and labor in these areas. Hide curing, on the other hand, may be done with a minimum of equip- ment in a cellar room by using salt, a factor which would not result in under- capacity utilization of equipment for small plants. Ten of the plants reported feedlot oper- ations; two of these operated the feedloi as a subsidiary to the packing plant, while seven organized the feeding operation ai part of the packing firm. One plant did not report its organization. Many of the plants (including those with their own feedlots) also obtained cattle through a closely allied feeding operation by either contracting for the production of certain feedlots or by con- tracting with feedlots to custom feed cattle owned by the packers. Ten plants (31 per cent of the 32 plants reporting on this question) contracted with feedlots for their production. These plants in- cluded only one operating its own feed- lot. Such contracting for feedlot produc- tion appeared to be more important in the larger sizes of plants. None of the plants killing less than 10,000 head a year con- tracted for feedlot production. Fifty per cent of the 32 plants respond- ing utilized custom feeding of packer- owned cattle by feedlots. Again these TABLE 29. Number of Sample Plants Performing Various Integrated Operations Number of plants performing Number of plants in group respond- ing Size group by head slaughtered per year Ranching Feeding Retailing Boning and breaking Sausage- making Hide- curing Render- ing 1. Less than 5, 000 2. 5,000-10,000 3. 10.000-20,000 4.20,000-30,000 5.30,000-40,000 6.40,000-50,000 7.50,000-60,000 8.60,000-75,000 Total 2 1 1 4 4 1 1 2 2 10 6 1 1 1 2 2 13 1 1 3 3 3 2 4 2 19 2 1 1 1 5 4 2 2 1 9 2 1 3 2 2 2 1 13 8 2 5 4 3 5 5 2 34 Source: 1963 questionnaire to California meat packers. [37 plants were scattered primarily in the larger size groups, where an assured sup- ply of live animals to maintain plant oper- ations near capacity is more of a problem than in the smaller plants. The size grouping breakdown on plants contracting for production and/or custom feeding of their own cattle was as fol- lows: Plants Plants Respond- Size group by contracting contracting ing head slaughtered f^r feedlot for custom plants per year ^^^p^^ feeding Less than 5,000 8 5,000-10,000 1 2 10,000-20,000 1 2 4 20,000-30,000 2 4 4 30,000-40,000 2 2 3 40,000-50,000 2 2 5 50,000-60,000 3 4 5 60,000-75,000 1 1 Total 10 16 32 While the distribution of dressed beef is generally considered one phase of the meat packers' operations, not all packers perform the assembly of live animals as part of their company's operation. Again some plants organize the assembly func- tion as part of the packing firm, while others set up a transporting subsidiary. The former practice was prevalent among firms which performed their own trans- portation. Fifteen of 30 responding plants reported hauling the slaughter animals as part of the plant operation, while only four used a subsidiary — all of them slaughtering more than 30,000 head per year. The 15 plants transporting cattle as a company operation were distributed throughout all size groups. Twenty-four of the 30 plants hired private tnacking concerns to haul at least some, if not all, of the live animals. Of this number, 12 used private truckers completely for bringing in the live ani- mals, nine used private truckers in con- junction with their own hauling practices, and three were among the four plants having their own transporting subsidiary as well as using private haulers. Of the plants reporting, more of the plants slaughtering more than 10,000 head annually used private transport con- cerns to haul live animals (91 per cent) than did those with kills of less than 10,000 head (50 per cent). On the other hand, 75 per cent of the smaller plants (less than 10,000 head) included hauling as part of the plant operation compared to 41 per cent of the larger plants. Raw Product Trade Areas In the questionnaire sent to the state's meat packing plants, firms were asked what proportions of their supply of live animals came from varying distances from the plants. Two definite categories with respect to trade territories emerged from the 24 plants answering this ques- tion: meti'opolitan and nonmetropolitan plants. Metropolitan areas were the Los Angeles and San Francisco Bay areas. Other areas were nonmetropolitan. In the Los Angeles area, 34 per cent of the ani- mals came from within an area of 100 miles from the plants, while 66 per cent originated beyond this distance. For the San Francisco Bay area, the respective percentages were 30 and 70. In both cases, the largest single area supplying plants was between 100 and 200 miles from the plant. Combining shipments for the two metropolitan areas indicates that 33 per cent of the animals come from within 100 miles of the plant, and 67 per cent from outside that area. The nonmetropolitan plants, as might be expected, found more of their supply closer at hand. These 12 plants obtained 51 per cent of their supplies within 100 miles of their establishments and 49 per cent beyond that distance. The relative importance of the various distances as sources of animals is shown in table 30. Nearly all of the incoming slaughter animals are hauled by truck. Among the 28 firms reporting on the question, no railroad usage was reported for distances under 100 miles. Two firms reported using railroads to ship animals for dis- tances between 100 and 200 miles from the plants, but such shipments amounted only to about 2 per cent of the ainmals shipped from that distance. Six firms em- ployed rail shipments for distances of more than 200 miles, with the modal 38] TABLE 30. Proportion of Animals for Slaughter Originating from Varying Distances from the Slaughter Plant Percentage of animals originating within: Area 20 miles 20-50 miles 50-100 miles 100-200 miles More than 200 miles Metropolitan (12 plants) : 7 4 6 7 11 5 9 20 16 21 18 24 37 65 44 37 29 San Francisco 5 Combined 23 Nonmetropolitan (12 plants) 12 Source* 1963 questionnaire to California meat packers. percentage of hauls by railroad equaling 2 per cent of the cattle from that distance. One firm, however, noted that 50 per cent of its shipments in that distance range came by railroad. Market source of slaughter cattle Whether from in-state or out-of-state sources, cattle slaughtered by California meat packers can have five market sources. Cattle may be: 1. purchased from feedlots (including the packers' own feedlot production), 2. purchased from auctions, 3. purchased from terminal mar- kets, 4. purchased from sources other than the previous three (direct from farmers and ranchers), and 5. nonpur- chased, but slaughtered by consignment or on a custom-kill basis. Twenty-eight of the 35 plants return- ing questionnaires about their 1962 pro- duction indicated the number of head coming from these various sources. Total slaughter for the 28 plants was 771,410 head, equal to 26.3 per cent of the state's total cattle and calf kill. Feedlot marketings. — In 1964, feedlot marketings in California equalled 62 per cent of the total number of cattle and calves slaughtered in the state, compared to 54 per cent in 1954 (California Crop and Livestock Reporting Service, 1965). For the 28 plants reporting in the ques- tionnaire survey, 75 per cent of the cattle for slaughter originated either as direct marketings from feedlots or as production from the packers' own feeding programs. (Some inshipments may be direct from out-of-state feedlots which under state statistical procedures would be classed as inshipments, whereas packers in the ques- tionnaire would have included these as supplies from feedlots.) The marketings direct from feedlots to packers for all 28 plants in the ques- tionnaire sample accounted for 67.0 per cent of the slaughter, while the packers supplied 7.6 per cent from their own feedlot production. Plants slaughtering less than 10,000 head annually reported the smallest percentage, 47.5, of their slaughter originating directly in feedlots, while those slaughtering 40,000 to 50,000 head received a high of 85.3 per cent of their animals directly from feedlots (ex- cluding their own feeding programs). Per- centages for the other size categories were as follows: 10,000 to 20,000 head, 61.4 per cent; 20,000 to 30,000 head, 77.4 per cent; 30,000 to 40,000 head, 58.5 per cent; and 50,000 to 75,000 head, 57.3 per cent.'' None of the plants slaughtering less than 20,000 head annually reported ob- taining slaughter supplies from their own feeding program. However, tliis source accounted for a high of 11.1 per cent of the cattle slaughtered for plants killing 30,000 to 40,000 head. The smallest pro- portion (excluding the t\vo categories of less than 20,000 head which had no feeding program) was 7.2 per cent from 13 The usual categories of 50,000 to 60,000 head and 60,000 to 75,000 head were combined because of the small number of plants reporting in the latter group. The categories of less than 5,000 head and 5,000 to 10,000 head were combined for similar reasons. [39 Plants Percentage 3 14.7 3 11.1 2 16.5 3 11.3 11 12.8 the larger plants killing from 50,000 to 75,000 head a year. Plants killing be- tween 20,000 and 30,000 head obtained 10.8 per cent of their animals from their own feeding programs, while those kill- ing between 40,000 and 50,000 head received 8.1 per cent Considering the percentage of slaugh- ter accounted for by packers' own feedlot production for just those firms engaged in feeding (11 plants), 12.8 per cent (58,- 593 head out of 456,602 head slaugh- tered) was obtained through integrated feeding operations. The percentage break- down by size grouping was as follows: Size group by head slaughtered per year 20,000 to 30,000 30,000 to 40,000 40,000 to 50,000 50,000 to 75,000 All plants All California meat packers in 1962 fed or had fed 313,000 head of cattle and calves, equal to 17.3 per cent of the total feedlot marketings of 1,814,000 head and 10.6 per cent of total commercial slaugh- ter (USDA, Packers and Stockyards, 1964). This represented the most cattle and calves fed by or for packers of any major feeding area in the country, and was an increase of 73,000 head from 1961. Nationally, in 1962 some 207 meat packing firms fed 936,300 head of catde (for at least 30 days) which equalled 3.6 per cent of commercial slaughter. Calves fed by 49 firms nationally totaled 45,000 head, or 0.6 per cent of commercial slaughter (USDA, Packers and Stock- yards, 1963). Marketings from feedlots show seasonal patterns in California. First quarter mar- ketings are highest with a seasonal index of 111 per cent while the second quarter is lowest with 80 per cent. The third and fourth periods register 104 and 105 per cent, respectively, based on data from 1953-1960 (Logan and King, 1962). Auctions, terminals, and other sources. A percentage breakdown by size group of plant is shown for the various sources of California slaughter cattle in table 31, based on information given by 28 of the 35 plants surveyed. Inconsistencies or incomplete information prevented use of data from the other seven plants. The U.S. Department of Agriculture (Packers and Stockyards, 1963) reports the source of purchase of cattle and calves for 1,441 packers (who purchased more than 1,000 head of cattle or 2,000 head of small stock). For combined cattle and calf purchases in 1962, the national percentages are as follows: direct, country dealers, etc., 37.0 per cent; terminal markets, 38.6 per cent; and auction mar- kets, 24.4 per cent. The respective per- centages for cattle only are 38.6, 42.6, and 18.8 per cent. From the sample of 28 California plants, it appears that California meat packers depend upon feedlot buying much more than do packers elsewhere in the countrv. With only one terminal mar- ket in the state (at Stockton), reduced usage of such facilities compared with other firms in the country might be ex- pected. The data in table 31 include plants specializing primarily in dairy animals as well as those killing mostly beef cattle. The former plants obtained a much high- er percentage of their slaughter animals through auctions than indicated by the overall average percentages. If plants whose production was composed of more than 25 per cent dairy animals are con- sidered, the percentage of animals ob- tained through auctions increases to 36.9 per cent compared with the overall aver- age of 10.5. Plants whose kill included at least 40 per cent dairy animals obtained 69 per cent of their animals from auc- tions. The inclusion of these plants in the group averages is a major reason for the high auction percentage in size groups 1-2 (combined), 3, and 7-8 (combined). Other sources and nonpurchased cattle. Other sources of cattle — country dealers, farmers, order buyers — accounted for the remainder of the animals, about 5 per cent. Nonpurchased cattle — custom killing, the slaughter of cattle or calves by the packer for other owners generally for a certain charge per animal — is of greater [40] TABLE 31. Percentage of Slaughter Cattle and Calves Originating from Various Market Sources, 1962 Size group bj' head slaughtered per year Auctions Packer feeding Direct from feedlots Termi- nal Other Custom killing Consign- ment Total head slaughtered per cent Land 2. Less than 10,000... 3. 10,000-20,000 4. 20,000-30,000 5. 30,000-40,000 6. 40,000-50,000 7. and 8. 50,000-75,000 All groups 12.6 23.7 7.4 0.2 0.6 18.4 10.5 0.0 0.0 10 8 11.1 8.1 7.2 7.6 47.5 61.4 77.4 58.5 85.3 57.3 67.0 4.1 1.3 0.0 0.3 4.2 2.2 4 1 2.0 1.1 3.3 0.0 12.0 5.3 4.3 0.4 1 0.0 0.0 0.0 0.1 31.5 8.4 1.9 26.9 5.7 9 7.3 13,072 80,799 105,432 114,163 179,045 278,899 771,410 Source: 1963 questionnaire to California meat packers. relative importance in the smaller plants than for the larger firms. Title to the animal and carcass is retained by the producer or other owner who may or may not assume the responsibility of market- ing the carcass. This type of operation is more important on the West Coast than in most other areas of the country (Wil- liams and Stout, 1964). Such slaughtering contracts offer companies either at the producer or retail level the possibility of integrating operations without the invest- ment in slaughtering facilities while offer- ing the packer an opportunity to avoid losses (and possible gains) from sudden fluctuations in the market prices of ani- mals and dressed beef.^* Consignment killing, however, accounts for more percentage of total slaughter. In this case, animals are owned by persons other than the slaughtering firm, but the latter markets the dressed beef for the owner. Carcasses of custom-killed animals are marketed by their owners. Again the packer charges the owner a set price per head for slaughter. The packer generally also retains ownership of the hide and offal. Of the 35 plants returning question- naires, 12 reported some level of custom- killing operations, while 18 performed some consignment killing. Half of the plants reporting custom killing were in the smallest size categories — killing less than 10,000 head annually — and as evi- denced in table 31, the percentage of animals supplied by this avenue was high- est for the smallest size group, 4.3 per cent of total kill. Only two plants killing more than 40,000 head annually reported doing any custom kilhng. Consignment killing was spread uniformly throughout all size groups. Dressed Beef Sales Dressed beef from meat packers is sold to three primary types of customers: 1. retail outlets such as groceries; 2. whole- salers and jobbers who may make pro- cessed meats or have separate boning and breaking operations; and 3. institutions such as hotels and restaurants. Sales to retail outlets are the most important of the three classifications to California meat packers, according to results from the questionnaire survey. Reports from 32 plants indicate that 61.6 per cent of the dressed beef sales are to retail outlets, 36.3 per cent to wholesalers and jobbers, and 2.1 per cent to the hotels, restaurants, and other institutions. The relative importance of sales to retail outlets tends to decrease as size of plant increases (table 32). The retail sales percentage is highest in the smallest tvvo groupings (73.0 and 77.3 per cent) and drops to the lowest level (50.1 and 53.3 per cent) for the largest two size groups. On the other hand, sales to wholesalers become relatively more important for larger plants than for smaller ones, reach- ing their highest level of 47.4 per cent " For a more detailed description of custom and consignment killing, see Williams and Stout, 1964, pp. 677-79. [41 TABLE 32. Relative Proportion of Sales of Dressed Beef Going to Major Outlets Size group by head slaughtered per year Percentage of sales going to: Plants reporting Retail outlets Wholesale outlets Institutional outlets 1. Less than 5,000 73.0 77.3 61.1 63.2 71.5 70.0 50.1 53.3 61.6 27.0 22.7 32.2 36.4 21.8 30.0 47.4 46.7 36.3 0.0 6.7 0.4 6.7 0.0 2 5 0.0 2.1 6 2 5 000-10 000 2 3. 10 000-20,000 5 4 20 000-30 000 5 5. 30 000-40 000 3 6. 40,000-50,000 5 7. 50 000-60, 000 4 8. 60,000-75,000 2 All groups 32 Source: 1963 questionnaire to California meat packers. for the group slaughtering 50,000 to 60,- 000 head annually. Firms were also asked what percent- age of their sales to retail grocers were to chain stores (more than one retail out- let operated by the same company) as opposed to independents. Fourteen of the 29 responding firms reported none of their sales were to chain stores. None of the plants in the smallest size grouping (less than 5,000 head) registered sales to chain stores. Of the plants selling to chain stores, the percentage of grocery sales going to the chains varied from 5 to 100 per cent. The overall percentage of grocery sales going to chains from the 29 firms reporting (includes firms with no sales to chains) was 36.2 per cent (equal to 184,500 head). For only the 15 firms who reported sales to chains, some 56.4 per cent of sales to grocery stores were made to chains. No clear size-group pattern was evi- dent with respect to sales to chains. The 29 firms reporting on this question re- corded a slaughter of 775,428 head, equal to 26.5 per cent of California's total cat- tle and calf slaughter for 1964. Advertising of final product is a very small cost item to most packing houses. Only 11 firms of 29 reporting had any advertising expenditure, and in no case did the outlay for such promotion exceed 1 per cent of total costs. Because dressed beef is a homogeneous product and gen- erally is not differentiated in retail out- lets such as groceries with respect to packing houses, there would seem to be little inducement for packers to advertise in popular media directed to household consumers. Dispersion of sales Just as metropolitan packers must go farther from the home plant to find sup- plies of live animals for slaughter, so must the nonmetropolitan packer go farther to find markets for their dressed beef. Pack- ers were asked to allocate their sales of dressed beef to areas with expanding ra- diuses. Fourteen nonmetropolitan plants (located in cities with less than 500,000 population) sold 36.9 per cent of their beef within 50 miles of their plant and 63.1 per cent beyond that distance. Their metropolitan counterparts, however, reg- istered 86.5 per cent of their sales within 50 miles and only 13.5 per cent beyond that distance. The largest portion of the metropolitan sales (33.5 per cent) was made within 20 to 50 miles from the plant, while the non- metropolitan plants' largest single share of sales, 39.1 per cent, was from 50 to 100 miles of the plant. A more detailed break- down is shown in table 33. No trend was apparent with respect to sales territories as size of plant increases. There was, however, a division between the smallest size category (less than 5,000 head a year) and the remainder of the [42] TABLE 33. Distances of Sales of Dressed Beef from California Slaughter Plants, 1962 Percentage of sales of dressed beef within: Plants 5 miles 5-10 miles 10-20 miles 20-50 miles 50-100 miles 100-200 miles More than 200 miles Metropolitan (14 plants) 11.2 3.0 14.6 2.2 27.2 12.1 33.5 19.6 7.4 39.1 4.7 18.8 1.4 Nonmetropolitan (15 plants) 4.8 Source : 1963 questionnaire to California meat packers. plants for sales taking place within 5 miles of the plant. Many of these plants are located in small towns and service either their own retail outlet (such as a locker plant) or groceries in that imme- diate area. Some 34.9 per cent of the sales of the five plants reporting in this size category occurred within 5 miles of the plant, a level which was 15 percent- age points higher than the next nearest size group and about 30 percentage points above most other groups. APPENDIX TABLE A-1. Total Truck Inshipments and Composition of Inshipments Based on Sample Data from Six Border Stations, 1964 Total number of trucks Sample data from six stations Border station Number of trucks Percentage of shipments Beef Pork Meat products Northern California Benton 783 113 9,922 1,811 19 4 203 226 27 77 55 159 385 85.5 81.7 39.6 43. 4t 69.1 30.4 42.7 40. 4t 41. 7t 3.6 54.9 50. 6t 29.3 61.3 48.5 52. 2t 51. 5t 10 9 Dorris 18 3 Truckee 5 5 Other* Total 12,629 1,057 3,476 2,073 9,212 6.0t 1 6 Southern California Blythe Daggett Winterhaven 8.3 8 8 Othert Total 15,818 7.4t Total California. . . 28,447 6.8t * Includes truck inshipments through Hornbrook (887), Long Valley (373), Topaz (167), Meyers (216), Redwood (87), Alturas (73), Tulelake (5), and Smith River (3). No trucks entered Woodfords. t Weighted by total number of trucks entering respective stations. X Includes truck inshipments through Yermo (8.009), Vidal (1,197), and Twenty-Nine Palms (6). Source: Based on sample data provided by E. A. Breech, Chief, Bureau of Plant Quarantine,California Depart- ment of Agriculture. Sacramento. [43] Truck Meat Inshipments into California The number of trucks entering Cali- fornia through border stations is avail- able from the Bureau of Plant Quaran- tine of the California Department of Agriculture. For the period, July 1961 through December 1964, more detailed information was obtained from a one-day- a-month sample from six of the 18 border stations. Data related to the average weight of the shipment of meat, the load composition (beef, pork, and meat prod- ucts), and the origin of the shipment. This information provided the basis for estimating beef inshipments into Cali- fornia. In 1964, for example, a total of 28,447 trucks carrying meat entered California. The average weight load of these trucks is estimated at 39,250 pounds, which is the weighted average of truckloads enter- ing northern California through the TABLE A-2. Percentage Distribution of Inshipments by State of Origin for Six Border Stations, 1964 Northern stations Southern stations Area Benton Dorris Truckee Weighted average* Blythe Daggett Winter- haven Western states Arizona 52 37 11 27 50 1 11 26 49 3 10 1 43 14 53 26 1 Colorado g Idaho Montana Nevada New Mexico Utah Washington 100 Total Northern Plains states Kansas (100) (100) (89) 1 2 1 (4) 2 4 1 ( 7) 100 (90) 1 2 1 ( 4) 2 3 1 ( 6) 100 (57) 8 9 4 (21) 1 ( 1) 6 10 5 (21) 100 (79) 2 9 (11) 4 ( 4) 6 ( 6) 100 (9) 5 Nebraska North Dakota ' * South Dakota Total ( 5) 4 20 (24) 4 5 3 9 4 24 5 4 4 (62) Southern Plains states Oklahoma Texas Total Other states Illinois Iowa Missouri Minnesota Wisconsin Mexico Florida Georgia Virginia Total inn inn Total 100 * Weighted by total truck inshi pments through inspection stations of Benton (783), Dorris (113), and Truckee [44] REDWOOD HIGHWAY SMITH i RIVER // "^ ...P... y lamalh Fall •-L (Crescent City \ DORRIST^^TULELAKE l>QRNBR05(k Vr 3„ \j*.ed y 71 ALTURAS yC ( (Eureka >Otedaing \ \ \\ tRed Bluff \ LOHG VALLEY .395 >Reno 10l\ 1 \ 99W \ TRUCKS^ s\car.on City \> \/ MEYER^ kSocranwnto %\ WOODFORDS TOPAzK<«— '^''' 1 X22 fe \n;i> 1 "^'V <^ i Stockton \ fSjENTOH STATION San Franc i •^ r^ v_ V"i.N\\ Bishop San Luis Obispo »80 WINTERHAVEM Fig. A-1. Location of California border stations (names in large type). Truckee station (39,820 pounds) and truckloads entering southern California through Daggett (38,791 pounds). Mul- tiplying the average weight by the num- ber of trucks, the estimated total meat inshipments is 1,116 million pounds for 1964. Using the information on load com- position shown in table A-1, inshipments of beef are estimated as 465 million pounds, pork as 575 million pounds, and meat products as 76 million pounds. Assuming that 20 per cent of the meat products are composed of beef, total beef inshipments equal 480 million pounds. Comparable estimates for previous years are as follows: 1963, 339 milHon pounds; 1962, 334 milUon pounds; and 1961, 349 million pounds of beef. The source of inshipments of beef for 1964 is given for the six sample border stations in table A-2. As table A-1 shows, tiTicks entering through the three sample stations in northern California represent 86 per cent of all trucks (10,818 out of 12,629), in soutliem California only 42 per cent (6,606 out of 15,818). Thus, it was not possible to calculate a meaning- ful estimate of the source of shipments [45 for the total of California inshipments. sample stations would undoubtedly give For northern California, 90 per cent insufBcient weighting to the type of of inshipments of beef originate in the source pattern reflected in the Daggett western region, mainly Idaho, Colorado station data due to the exclusion of Yermo and Utah. This shipment pattern reflects data. trucks entering through the Truckee sta- Monthly data on number of trucks tion which accounted for a large part of carrying meat and meat products are the trucks entering northern border sta- reported by the Federal-State Market tions (table A-1). [Figure A-1 shows the News Service (1965). For 1964, 7,154 location of these border stations.] trucks entered during the first quarter of For Southern California, the major the year, 7,371 during the second quar- station of Yermo, with 8,009 trucks, was ter, 6,775 during the third quarter, and excluded. A weighted average of the 7,147 during the fourth quarter. LITERATURE CITED American Meat Institute 1963. Federally inspected slaughtering estabhshments changed 1947 and 1963. Processed, Chicago. Animal Husbandry Department 1966. California Feeder's Day. Program, Dept. of Animal Husbandry, University of California, Davis. Bain, Joe S. 1959. Industrial organization. New York: John Wiley and Sons, Inc. California Crop and Livestock Reporting Service 1960 and 1962. Cahfomia livestock monthly slaughter. Selected monthly issues. Processed, Sacramento. 1964a. California annual livestock report for 1963. Processed, Sacramento. 1964b. California livestock, cattle on feed — October 1, 1964. Processed, Sacra- mento. 1965. California annual livestock report for 1964. Processed, Sacramento. California Department of Agriculture 1957. Licensed cattle slaughterers — 1957. Bureau of Livestock Identification. Processed, Sacramento. 1963. Licensed cattle slaughterers — 1963. Bureau of Livestock Identification. Processed, Sacramento. Carter, Harold O., Cerald W. Dean, and Phillip H. Maxwell 1965. Economics of cattle feeding on Imperial Valley field crop farms. University of California Agr. Exp. Sta. Bui. 813. Berkeley.' Cole, H. H. 1962. Introduction to livestock production. San Francisco: W. H. Freeman and Co. Federal-State Market News Service 1964. Livestock and meat prices and receipts at certain Cahfomia markets, 1963. Processed, Sacramento. 1965. Livestock and meat prices and receipts at certain California and western area markets, 1964. Processed, Sacramento. HoPKiN, John A. and Robert C. Kramer 1965. Cattle feeding in California. Econ. Dept., Bank of America, N. T. & S. A., San Francisco. King, Cordon A. 1962a. Economies of scale in large commercial feedlots. University of Cahfomia Giannini Fdn. Res. Rept. 251, Berkeley. 1962b. Tmck inshipment of meat into California. Special report. Dept. of Agr. Econ., University of Cahfomia, Davis. [46] King, Gordon A. and L. F. Schrader 1963. Regional location of cattle feeding — a spatial equilibrium analysis. Hilgardia 34 ( 10) . University of California, Berkeley. Logan, S. H. and G. A. King 1962. Economics of scale in cattle slaughtering plants. University of California Giannini Fdn. Res. Rept. 260, Berkeley. 1964. Size and location factors aflFecting California beef cattle slaughtering plants. Hilgardia 36 (4), University of California, Berkeley. National Academy of Sciences — National Research Council 1963. Nutrient requirements of domestic animals. IV: Nutrient requirements of beef cattle. Publ. 1137, Washington, D.C. Petit, James A., Jr. and Gerald W. Dean 1964. Economics of farm feedlots in the rice area of the Sacramento VaUey. Uni- versity of California Agr. Exp. Sta. Bui. 800, Berkeley. U.S. Department of Agriculture, Agricultural Marketing Service 1955. Number of livestock slaughter estabUshments, March 1, 1955. Washing- ton, D.C. 1960. Number of livestock slaughter plants, March 1, 1960. MtAn 1-2-2 (60), Washington, D.C. U.S. Department of Agriculture, Economic Research Service 1964. Livestock and meat situation, LMS-136, Washington, D.C. U.S. Department of Agriculture, Packers and Stockyard Division 1963. Packers and stockyards resume, 1(7), Washington, D.C. 1964. Packers and stockyards resume, 1(16), Washington, D.C. U.S. Department of Agriculture, Statistical Reporting Service 1964. Cattle on feed. MtAn 2-1 (1-64). Processed, Washington, D.C. 1965a. Supplement for 1964 livestock and meat statistics to Stat. Bui. 333. Wash- ington, D.C. 1965b. Meat animals, farm production, disposition and income, by states, 1963- 1964. MtAn 1-1 (65), Washington, D.C. 1965c. Number of livestock slaughter plants, March 1, 1965. SRS-8, Washing- ton, D.C. Williams, Willard F., and Edward Uvacek 1960. Pricing and competition on beef in Los Angeles. USD A Agr. Mktg. Serv., Res. Rept. 413. Williams, Willard F., and Thomas T. Stout 1964. Economics of the livestock-meat industry. New York: The Macmillan Com- pany. ACKNOWLEDGMENTS This study is a contributing project to Western Regional Research WM-48, "Live- stock Marketing Efficiency and Pricing in the West." The authors would like to express their appreciation to Horace T. Strong and Reuben Albaugh of the Department of Animal Husbandry, University of California, Davis; David A. Clarke, Jr., of the Giannini Foundation and Mrs. Miriam Revzan of the California Agricultural Experi- ment Station, Berkeley, for comments and suggestions in reviewing this manuscript. 7Jm-8,'66(G2583)J.F. [47 ^-^'^^^^T^^^^^^^^*^- !"'■■" ■■;'■'*< THE GOOD EARTH ... is the abundant earth. To achieve it, vast knowledge is needed now — and more will be required as expanding populations continue to make even greater demands upon the earth's resources. How are scientists, researchers, and agriculturists developing and implementing knowledge which will make the good earth flourish for future generations? In part, the answer will be found in the many pub- lications put out by the University of California's Division of Agricul- tural Sciences. Among these publications are: the BULLETIN series . . . designed for an audience of scientists, and for informed lay- men interested in new research. the CIRCULAR series . . . intended for ak popular audience, and offering extensive dis- m cussions of some phase of an agricultural^ operation iCALIFORNIA AGRICULTURE ... a ^monthly magazine describing latest research ^in the Division of Agricultural Science, and designed for researchers, informed farmers, and agri-businessmen LEAFLETS . . . these are short circulars de- w signed to answer one or a few questions iorW the home-grower or farmer without giving^ detailed background information c^rci»- For a catalog of publications, write Agricultural Publications, 207 University Hall, University of California, Berkeley, Calif. 94720