The removal of the transportation subsidy on western Canadian grain has resulted in a relative shift in competitiveness from grain to livestock production in Saskatchewan. Feedlot managers indicated that they fed cattle at a lower cost than their Alberta competitors. They suggested their feeding advantage is in the range of $45 to $75 per animal. Yet this supposed feeding advantage has not resulted in an increase in cattle being finished in the province. In fact statistics show that there has been a decrease in the number of cattle finished in Saskatchewan since the removal of the transportation subsidy. This thesis investigated potential hindrances to developing feedlots in Saskatchewan. Interviews with 17 Saskatchewan feedlot managers were conducted in 2001. These feedlot managers suggested that lack of financing was a hindrance to feedlot development in Saskatchewan. They sited provincial land and labour laws, a grain production bias and feeding risk as potential reasons for lack of investment in the feedlot sector. The interviews with these 17 feedlot managers led to an investigation of transaction costs in buying and selling cattle. A theoretical framework was developed in this thesis to measure transaction costs. Then some empirical evidence was calculated from transaction cost estimates provided by five finishing feedlots that indicated larger feedlots have lower transaction costs in buying and selling cattle than smaller feedlots.

The removal of the transportation subsidy on western Canadian grain has resulted in a relative shift in competitiveness from grain to livestock production in Saskatchewan. Feedlot managers indicated that they fed cattle at a lower cost than their Alberta competitors. They suggested their feeding advantage is in the range of $45 to $75 per animal. Yet this supposed feeding advantage has not resulted in an increase in cattle being finished in the province. In fact statistics show that there has been a decrease in the number of cattle finished in Saskatchewan since the removal of the transportation subsidy. This thesis investigated potential hindrances to developing feedlots in Saskatchewan. Interviews with 17 Saskatchewan feedlot managers were conducted in 2001. These feedlot managers suggested that lack of financing was a hindrance to feedlot development in Saskatchewan. They sited provincial land and labour laws, a grain production bias and feeding risk as potential reasons for lack of investment in the feedlot sector. The interviews with these 17 feedlot managers led to an investigation of transaction costs in buying and selling cattle. A theoretical framework was developed in this thesis to measure transaction costs. Then some empirical evidence was calculated from transaction cost estimates provided by five finishing feedlots that indicated larger feedlots have lower transaction costs in buying and selling cattle than smaller feedlots.