CHEHALIS, Wash. —

Auction day at the Chehalis Livestock Market begins with a flurry of activity behind the scenes, as hundreds of cattle from area ranches arrive at the sale barn adjacent to Interstate 5 in southwest Washington.

Once at the loading dock, the animals are ushered into a hydraulic squeeze chute, where veterinarian Jason Humphrey pierces their ears with electronic identification tags and gives vaccinations, if needed. The cattle are then sorted and placed in holding pens.

Alongside the auction ring, longtime customers sit on reclining chairs and sofas, trading gossip and renewing friendships. Next door, the restaurant is open, serving cheeseburgers, fries and coffee.

“We have a strong connection to the community,” said Brenda Balmelli, whose husband, Dave, bought the Chehalis market in 1986 with business partner Joe Parypa. “Most of our customers are small farms, with five to 25 head they raise per year.”

That community connection, however, is becoming more difficult to sustain, Balmelli said. Fewer cattle, rising costs and the emergence of new technology are putting a strain on small sale barns.

When they first started, Balmelli said, it was common to sell 200-plus dairy cows, 100 feeder cattle and 300 slaughter animals at the weekly auction. Now, they typically sell 15 dairy cows, 150 feeder cattle and 150 slaughter animals.

At the same time, Balmelli said, they have kept their commissions the same to remain competitive, while costs such as labor, insurance and repairs have tripled over the last eight years. The internet has also made it easier for ranchers to sell their livestock direct to buyers online, foregoing the sale barn entirely.

Despite the difficulties, Balmelli and other market owners around the nation say they are optimistic about the future of livestock auctions. Balmelli said it remains the one venue where there is true price discovery, while providing a social gathering place unique to rural America.

“We feel this loyalty to our customers and our employees to stay in this business as long as we can,” Balmelli said. “We love what we do.”

Two auctions close

Already in 2021, two sale barns on the West Coast closed their doors within weeks of one another.

Woodburn Livestock Auction in Oregon and Shasta Livestock Auction Yard in Cottonwood, California, both announced their closures in February.

Brad Peek, general manager of the Shasta market, said the decision to halt regular Friday auctions was difficult but necessary. The sale barn was opened in 1961 by Peek’s father, Ellington Peek, and is a major part of his family’s legacy.

“Obviously, it’s sad,” Peek said. “We are friends with our customers, number one. It’s going to be some inconvenience for them.”

In 1989, Ellington Peek co-founded Western Video Market, getting into the business of video livestock auctions. Since then, Brad Peek said the company has grown steadily, marketing cattle and lambs.

Western Video Market now holds a dozen sales every year — six in Cottonwood, and six remotely in places such as Nevada, Wyoming and Nebraska. The company sells close to 350,000 head of cattle annually, Peek said.

“We need to focus on that part of our business,” Peek said. “It’s growing, and highly successful.”

Meanwhile, cattle numbers at the sale barn had been dwindling since the 1990s, dropping from 150,000 per year to between 60,000 and 80,000 per year.

The last in-person sale at Shasta Livestock Auction Yard was Feb. 12. The last sale at Woodburn Livestock Auction was Feb. 23. That property is now up for sale, according to owners Tom and Mary Elder.

In a statement, the Elders said they decided to shut down the livestock portion of their business “due to the continual declining head counts and rising costs of doing business.” They will continue to hold online-only machinery sales.

The rise of video

Forrest Mangan, region executive officer of the Livestock Marketing Association, said the rise of video auctions is one example of how times and technology have changed the industry. The association represents more than 800 local livestock auction markets and allied businesses.

Video auctions are another avenue for larger producers to market their livestock, Mangan said. Rather than transporting large lots of cattle to the sale barn, they are instead filmed on the ranch. The footage can then be broadcast virtually anywhere, as well as online, inviting buyers from across the country and around the world.

“It just gives people more choices,” said Mangan, who works with 100 member markets in 11 Western states and Canada. “Like I tell producers, it’s what works best for your operation.”

Trent Stewart, owner of the Central Oregon Livestock Auction in Madras, described video marketing as “the future.”

He also works part time as an auctioneer for Superior Livestock, based in Texas, supplementing his income by traveling for auctions in different states.

The Central Oregon Livestock Auction has averaged about 70 sales and 34,000 head of cattle per year over the last decade — a far cry from years ago when sale barns in both Madras and nearby Redmond sold 50,000 head each.

Video auctions and specialized sales, such as purebred or organically raised cattle, are one way local auctions can find new customers and charge premium rates, Stewart said.

“That’s the only way to try and stay alive in this game now, is a niche market, so to speak,” he said. “Just selling commodity cattle anymore doesn’t pay the bills.”

But, as Stewart points out, video auctions aren’t for everyone. Smaller ranchers with only a few cattle are better suited for the sale barn, meaning they will continue to play a vital role in the livestock industry.

“The worst thing in the world that could happen is have a lot of these sale yards shut down,” Stewart said. “If they don’t keep these auction yards in business across the U.S., it’s going to be ugly for all producers.”

Fewer cattle, rising costs

Data from the Livestock Marketing Association suggest some signs of stability for the sale barn, according to Mangan.

A survey conducted by the Livestock Marketing Association shows 89% of livestock producers use the local auctions to market at least some of their cattle.

The number of registered packers and stockyards, meanwhile, has remained stable since 2010, dropping by just one to 1,204 by 2019.

“Really in the Western U.S., yes we had those two (auctions) close, but we haven’t really seen a trend in the last 10-15 years of markets closing,” Mangan said.

Overall declining cattle numbers and rising costs, however, are putting sale barns to the test.

Derrell Peel, extension livestock marketing specialist for Oklahoma State University, said the number of cattle nationwide peaked in 1975 at 132 million head. That figure dipped to a low of 88.2 million head in 2014, and has since recovered modestly to 93.6 million head.

“In the broadest sense of the word, there are not as many animals that need to be sold,” Peel said. That is due partly to greater efficiency at beef processing plants, and larger animals being bred on the ranch.

“We produce as much beef today as we did back then, but we do it with many millions fewer cattle,” he said.

Others also point to urban sprawl in places such as Western Washington and Oregon, with property values increasing faster than the profits of ranches and new developments consuming farmland.

Kyle Cheney, an 82-year-old rancher in Centralia, Wash., operated a livestock auction, Twin City Sales, before he sold it 10 years ago.

“The value of the property and reduction in livestock … it was a combination of both (factors),” Cheney said.

What once was Twin City Sales has since been redeveloped as a plaza that includes a dental office and veterinary clinic.

Five miles to the south, Balmelli of the Chehalis Livestock Auction said their costs are rising. Labor is especially expensive, she said, as the state of Washington gradually increases its minimum wage to $15 per hour.

“All these little things, they’ve tripled in eight years and our commissions have stayed the same,” she said. “We just need more cattle here. We need expenses to go down.”

Packer concentration

Another lingering concern is consolidation among the largest beef packers, which producers say has contributed to lower prices for cattle.

Four businesses — Cargill, JBS, National Beef and Tyson Foods — now control 84% of the market. With less competition, Stewart, of the Central Oregon Livestock Auction, said these companies might pay just breakeven prices buying directly from ranchers.

“That’s where the real problem is,” Stewart said. “People are throwing their hands in the air and giving up.”

Ethan Lane, vice president of government affairs for the National Cattlemen’s Beef Association, said the industry is focused on increasing “negotiated cash trades,” like competitive bids at the sale barn, which in turn will drive up the base price in direct transactions.

“Everybody in the industry is trying to achieve the same thing,” Lane said. “The question is, how do we get it done?”

The Cattle Market Transparency Act, sponsored by Sens. Deb Fischer, R-Neb., and Ron Wyden, D-Ore., seeks a solution that, in part, would direct the U.S. Department of Agriculture to establish regional mandatory minimum percentages for negotiated cash trades, thus reintroducing competition to restore prices.

Lane said the association is “extremely supportive” of the bill’s objectives, but does not support mandatory provisions.

“We have a voluntary framework that we’re working in right now, trying to increase negotiated trade in these regions,” he said.

“What they’re selling matters, too,” Lane added. “That’s part of the business model, figuring out where to go and where to get the best price for your livestock.”

True price discoveryAcross the board, market owners and industry representatives say local sale barns are still vital as the one place where buyers and sellers can have true price discovery.

“You need both, because you can’t really do those formula transactions without out a base price,” Lane said.

Mangan, of the marketing association, said livestock auctions are the lifeblood of many small Western communities, and the only place producers can determine fair, competitive prices.

“Auction markets have always been a vital part of the livestock industry,” Mangan said. “In my opinion, they always will. It’s where the competition is.”

Peel, the extension livestock marketing specialist, said that while the role of livestock auctions has changed, he believes there will always be a need.

“It may be that, if you look at the total number, maybe we don’t need as many of those small auctions as we did,” he said. “That pressure has been there for a long time. And we probably in some sense have been through the worst of it, but I don’t think we’re entirely through it.”

Balmelli said the Chehalis market has been able to adapt by holding a handful of equipment sales per year, as well as some on-site and estate auctions, which she called a “godsend.”

Balmelli said they strongly believe in the process of live cattle auctions, and are fortunate to have a loyal customer base that realizes their importance.

“It comes back to true price discovery,” she said. “Our job is to sell your livestock where you get the most money. The competition of bidding is where the value is.”