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Published December 12, 2009, 12:29 AM

As one area livestock auction closes, others adapt to changing markets

The lights are out, the pens are empty and the stove is cold at the Wagner Livestock Auction. Owner Dale Meyer, 83, said it wasn’t easy to make the decision to pull the plug on a business he built over a lifetime, but it had to be done.

By: Ross Dolan, The Daily Republic

WAGNER — The lights are out, the pens are empty and the stove is cold at the Wagner Livestock Auction.

Owner Dale Meyer, 83, said it wasn’t easy to make the decision to pull the plug on a business he built over a lifetime, but it had to be done.

In his best years, Meyer’s auction operation on the east side of Wagner sold 3,670 hogs in a day, and cattle topped 2,680 in a selling session.

“Now you have a hard time getting 150 to 200 cattle — and that’s after eight hours on the telephone,” he said.

“With those numbers, you can hardly pay the bills,” said son Jim Meyer, noting that fewer local farms are finishing their own cattle and sales competition has grown.

Dale Meyer made his mark as a dependable seller of fat cattle — cattle that are “finished,” or ready to be sold to meatpacking houses. Other auction houses specialize in selling feeder animals to be fattened in feedlots.

But some feeder auctions are making occasional forays into fat cattle sales, said Dustin Oedekoven, state veterinarian and executive secretary of the Animal Industry Board, which licenses and regulates the state’s livestock auction markets.

Oedekoven believes producers are being well served by South Dakota’s auction and sales network, though he acknowledges some attrition in the business.

“Over the years we’ve seen a move away from selling fat cattle at live auction market and a movement toward selling directly to packer buyers, and that’s definitely had an impact on auction markets in our state,” Oedekoven said.

Historically, South Dakota has had a strong auction marketing network for animal producers.

“And I think we still do,” he said. “With the recent closing, we still have 37 auction markets that are licensed and operated in our state, and that’s still quite a few, especially when compared with neighboring states, and for the most part, they’re healthy.”

Industry boards in some states have taken to licensing Internet sales, but such operations are not sanctioned in South Dakota, which requires auction operations to have a physical address, certified scales and verified financial security. But it’s not illegal to use such services, said Oedekoven, and some in-state producers avail themselves of that opportunity.

Meyer was in his mid-20s when he started the Wagner Livestock Auction.

“It was a hog-sale operation, and he bought and expanded it,” said son Jim Meyer. “At one time it was one of the largest hog sale auctions in the country,” he said.

In the mid 1960s, his father began specializing in the sale of fat cattle. The operation proved successful, drawing customers from a wide area.

Auctions were also social occasions, and the Wagner barn was noted for its free lunch.

It wasn’t originally planned that way, said Dale Meyer. A kitchen was installed to feed customers and the state Board of Health arrived with a list of special kitchen requirements. Meyer decided to skip the red tape and give the meals away.

“We fed ’em for 50 years and never charged ’em anything,” he said.

Meyer and his son both feel the number of auction operations — in Kimball, Winner, Chamberlain, Mitchell and Yankton drew away customers.

But there are some who believe that tighter markets are not so much a function of increased sales competition, but a matter of the existing auction operations chasing fewer livestock sellers.

Bryan Nagel, 2010 president of the South Dakota Cattlemen’s Association, said business goes in cycles for auction barns that sell fed cattle.

What appears to be a trend is a general decrease in the number of smaller cattle feeding operations. Many of the state’s numerous small farms have been absorbed by fewer large operations with more cattle.

“As far as outlets for fed (fat, finished) cattle, a lot of them now sell directly to meatpacking houses,” Nagel said. That means that when it comes time to market cattle that fewer producers will drive a filled stock trailer to their local auction barn, and will instead send a semi-trailer load of beef to the packing plant.

Ken Wintersteen, who operates the Menno Livestock Auction on the south end of town with wife Lynn, agrees that larger livestock operations may do more direct selling to packers than in the past, but smaller family-run auctions like his own still serve a solid niche market developed through long-term personal relationships.

While Wintersteen laments the ever-rising business costs and the constrictions of regulation, he’s nowhere close to throwing in the towel.

The high cost of land is also pinching livestock producers, and the tough economy affects sales barns as it much as it affects other businesses.

“It’s just a matter of how efficiently you can run your operation,” he said.

Wintersteen’s sales barn switched to evening auctions in the summer months to accommodate farmers and smaller hobby operators who work daytime jobs. The evening sales also provide entertainment for those who enjoy the excitement of an auction, he said.

“South Dakotans are pretty resilient and we’ll find ways to survive, and it’s the same with the livestock market,” he said.

It has not been an easy time for livestock producers, Nagel acknowledged. “In the last couple of years, high-dollar corn has probably taken a few of the farmer feeders out of the equation.”

Lower feed prices would help, he said. He finds it difficult to understand why corn prices remain high, considering the near-record crop.

“You drive around and every town you go through has a pile of corn sitting near the elevators,” said Nagel, who like many, believes it’s market speculation, not true demand, that’s maintaining corn prices.

“Fundamentals seem like they’re out the door any more,” he said.

Nagel, like many cattlemen, believe that what’s needed is a better economy. He and others are less worried about places to sell their product than they are about getting a fair price for their labors.

“The economy being what it is, it’s tough for producers to get a sufficient price to make a living,” he said. Cattle prices have been stuck at $80 to $81 per hundredweight range for the past six months, he added.

“If we could get thing up to $90 per hundredweight, it would sure make things a lot better,” he said.

Dale Meyer isn’t finished with the cattle business yet. He might run a bull sale or two in the spring, and he’s considering machinery sales and some other possibilities.

“I know a lot of people, you know,” he said. “I’ve got a lot of guys who have a lot of faith in me.”