The Livestock Auctioneers' Association Limited (LAA)

The Value of the Live Auction System

1st July 2011

Seasonal trends and increased numbers of lambs forward for sale are resulting in the usual slight downturn in lamb prices expected at this time of year, but there is a high level of optimism that the trade will settle and that realistic returns will be achieved throughout this season. Prices achieved at auction markets during the week ending 22nd June were 30p/kilo (19%) higher than the same period last year. Due to the prolonged dry weather some lambs presented for sale are more varied in size and finish, compared to a normal year, which is undoubtedly affecting national average prices achieved. Particular attention should be given to ensuring that sale lots are selected carefully for consistency of size, weight and particularly finish to ensure optimum returns can be achieved.

Prime cattle and cull cows are continuing a strong trade with the press and industry organisations repeatedly acknowledging that the demand for UK beef, from throughout Europe and the World, is steadily growing. Clearly the tight supplies in Ireland are helping the UK beef trade stability.

We continue to see pig prices well below the cost of production, and I noted recently an article in one of the farming tabloids suggesting that there was a growing feeling of unrest within the pig sector at the current direct marketing system as it does not offer the producer any degree of open, transparent and competitiveness when the bid price is set. As auctioneers we are heartened by the steady stream of vendors returning to the live ring selling system where there is an appreciation that the auctioneer is trying to get the best possible price from the prospective purchasers, and not simply accepting the price offered. In reality the auctioneer is working for the farmer.

As auctioneers we are price setters and not price takers, and we earn our commission through the price achieved; the greater the sale price the more we earn. We do not earn more money by selling as cheaply as we can! Therefore by selling through the live ring the greater the price achieved the happier the farmer is, and the happier the auctioneers are.

The "setting of prices" in the UK deadweight sector is underpinned by the prices achieved at livestock markets (except for the pig sector) and it is accepted by everyone that when supplies are tight any rise in live market prices is followed by an increase in the deadweight bid price. With nearly all abattoirs reviewing their bid price at the end of the week, for the following weeks kill, this means that the deadweight prices offered are always playing catch up to the live auction prices.

The live auction market is the only marketing system on offer in the UK that provides open, transparent and competitive bidding for your animals, and it is the only place where you can be assured of achieving a real market value for your livestock. If you have not recently experienced the benefits offered through using your local livestock market now has never been a better time to try.