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Cost of cattle transportation means thinner margins despite cheaper fuel

A livestock economist says the decline in diesel prices has provided relief to cattle transportation costs.

Elliot Dennis with the University of Nebraska-Lincoln says this has had a significant impact on margins.    “Interest rates are rising, cattle prices are rising and now we have an additional thing that we’re bringing to light. This decision about transportation in the past may not have mattered, it really is mattering going forward.”

Dennis says publicly available pricing for hauling has ranged from $2 to $4.50 per loaded mile, but that depends on type of livestock, length of trip, the load fill, length of trailer and weather conditions.  “There are times when producers are receiving a premium to deliver to cattle to the processing plant, and then other times of the year when they’re receiving a discount. These are not non-economical decisions.  What we show is that it’s almost valued at $75 per head.”

For example he says: A $5 per hundredweight premium to deliver on a 1,500-pound steer would imply worth of $75 per head for trucking costs. A pot belly trailer can hold approximately 50,000 pounds or 33 head of cattle (50,000/1,500). Thus, the hauling of fed cattle would be worth $2,475 ($75 x 33).

He tells Brownfield rates change by region and premiums are the highest in the summer and lowest in the winter months.