Selling cattle can oftentimes be unpredictable and can leave many ranchers disappointed because of factors out of their control. Each year, cattlemen and women pour their blood, sweat, and tears into their livestock to ensure a healthy crop. With the right marketing tools, cattle ranchers can ensure they come out ahead at the sale barn.
Marketing is often the most challenging part of running any kind of operation but especially a beef operation. The beef market is one of the most volatile markets in the world and is constantly changing. Changes in rising feed costs, increased transportation and processing costs, and domestic demand concerns, just to name a few, help create that volatility. There is no set right or wrong way to market your calves, yearlings, or even cull cows and bulls. However, there are a few strategic ways that are often overlooked by ranchers when it comes down to sales time. There are also a lot of different avenues for you to be marketing your cattle through, each with certain benefits for your operation. Below are our suggestions to help you navigate the challenging task of marketing your animals.
THE GAP IN THE SUPPLY
Every sector of a production industry has a period when the supply for a certain product depletes a little. For example, most cow/calf producers wean and sell off their calves in the fall. Here in North Dakota, most ranchers will wean their calves around the middle of October. In the southeast region of the nation, meaning states like Georgia, Alabama, and Mississippi, where the warmer temperatures and sunny skies stick around year-round, almost 70% of all their calves are still weaned in the fall, typically around October (UGA Beef). That being said there seems to be a trend in the cattle market during this time. Flooding of a market always equates to the prices decreasing, commonly seen in the cattle market (ISU BEEF). Finding that time when the market begins to die back down is the ideal time to sell your calves. That period is typically late January or early February into April.
According to the North Dakota Weekly Cattle Auction Summary, the average 600-650 pound steer in November of 21' was selling for $162.55Cwt on 961 head. On February 1, 2022, that average price was up to $178.48Cwt on 1027 head. A sixteen-dollar difference may not seem like much to you but when you multiply 16 by 6, eighty times you will see a difference. A pot load in February would have grossed that rancher an extra seven thousand or the equivalent of about seven extra heads in comparison to the same load in October. Seems like a great reason to hold your calves back a couple of extra months right? The only deterring factor of that is being able to feed that many. Hay is not cheap by any means right now and no one could afford to feed an extra 150 head in the winter simply because of it. The market may be better off three months from now, but you cannot hold cattle if the grass is gone, and you cannot feed them. It takes a lot of planning to figure out when you are going to sell your calves but if you can sit on your calves until winter runs over, your profit margins will increase.
FOLLOW THE DEMAND
The beef market is not volatile because of limited supply, it is volatile because of consumer demand and macroeconomic conditions. As many different middlemen, there are in the process, the consumer ultimately holds the most power. A distributor is only going to sell products a customer is buying, if not they are going to drop the prices until they do. It is important to follow along with the market and see when the trends are happening. With an excess in supply the price is going to be lower for the consumer, which is going to lower the rancher's price, but when the supply starts to deplete the demand for more of the product begins to kick in (Beef Magazine).
Look at vegetables for instance. They are the most in-demand food products year in and year out. But unlike the beef industry where there is a semi-constant flow of products into the world market, vegetables fluctuate a lot. Certain vegetables like artichokes only grow a couple of months out of the year so the market period for them is merely a quarter of the calendar year. Demand is high in harvest and is especially high when their supply becomes short. Smart farmers will plan the year before for their crops to be late bloomers and will try to hit the depleted market and gain a premium price compared to those who sold their artichokes at the start. The same thing can be applied to the ranchers' efforts. When a rancher sells their cattle during the peak supply, they are going to get less money than a rancher who was able to sell his cattle when supply was short. If market prices are trending up, it typically means the supply is down, which is an ideal time to sell. Additionally, consumers are very swayed to buy beef when the economy is high or when they are making a little extra money. Researchers found that a 1 percent increase in total consumer expenditures will increase beef demand by 0.803 percent (Nebraska FB). Following along with the economy and understanding when certain sectors are profiting can allow the rancher to profit along with it.
LOOK FOR NICHES
Large companies with conventional sales can afford to sell their meat at much lower prices than most cow/calf producers. Therefore, you need to check out other ways to differentiate yourself from the competition. In a market as large as this market, you are bound to come across a lot of different preferences and desires. Figuring out a way to make your beef appeal to those different niches is a huge marketing bump.
Well, think of it this way, if I were to ask you which is better Coke or Pepsi, you would have a specific answer. Even though both products are essentially the same thing just in different packaging, you prefer one better than the other. So, if you can find a niche for which carbonated sugar water you like, indeed you have one for what kind of beef you prefer. Here are a couple of possible niches for beef that you might just have:
One of the most common on this list is Grass-Fed beef. Though it only equates to 4% of the total beef market at about 4 billion dollars, the industry is rapidly growing (SDSU Beef). Primary packers, like Tyson, Cargill, and JBS Foods, are now outsourcing the product to their consumers with it being the most in-demand niche meat in all of agriculture. Profits are significantly higher than that of conventional or grain-fed cattle at a premium of 70% plus. If you have a small-scale operation, this is a great avenue to explore. Just remember to do a little research and find out what niches your operation can fit and then plan out a strategy to market your cattle to the consumer. Direct marketing of your animals and beef to these markets will give you a one-up on those larger suppliers. Also, with a more prestigious and structured consumer basis, you can market your product for a larger sum. Most consumers will spend extra money on your products compared to others simply because of the labeling you used (USDA). With management costs on the rise and feed prices through the roof, any extra money you can get could be the difference between making money and culling your herd. But just because you hit the right market and held your calves back you still need someone to sell them to. That is where others become involved with your process.
CHOOSING THE RIGHT MARKETING METHOD
Selecting the correct method to market your cattle seems like an easy job but that is not the case for many producers. Back in the olden days, there were only a couple of ways to sell your cattle. Fast-forward a hundred years to enter the 21st century and that number has grown exponentially. A rancher now has what seems like endless opportunities for different market avenues and they must really focus their decision on which is the quickest and highest profiting one. A few of the most common methods are auction markets, private treaties, video auctions, and graded/pooled sales.
Auction Markets: A traditional way of selling cattle. A producer consigns his cattle to the auction yard typically in lots and they will be sold to the buyer in a live auction format to whoever holds the highest bid.
Pros: -Competitive bidding -Markets open around the clock -Requires little knowledge from the producer -No minimum requirement for the number of cattle -Convenient for most producers
Cons: -No control of prices -Number of buyers can fluctuate -High overhead costs -Excessive shrinking and stress can occur on cattle -No system for finding/identifying producers or cattle after the sale
Oklahoma National Stockyards Auction Oklahoma City, OK
Private Treaty: a selling method that is a closed sale; meaning it is a private negotiation between seller and buyer. Buyers will give potential sellers their list of specifications for the calves' condition and then will buy direct from the seller when those specifications are met.
-Control over the marketing process -Producer conditions animals to the market specs -Cheaper costs than other methods -Allows for a reputation to be established -Stress-free on the cattle
Cons: -Creates a smaller buyer core and less competition -Requires lots of marketing knowledge and strategy -Assume the risk of payment collection
Video Auctions: A marketing method in which cattle are video recorded on the farm, and the video is broadcast via satellite television, the internet, and/or smartphone. Buyers take part in the public auction by telephone or computer. These sales are hosted by a marketing agency at their place of business.
-Largest potential number of buyers -Direct transportation from the seller to buyer -Payment is guaranteed through the selling company -Creates a reputation for the seller -Keeps animals fresh and healthy
-High overhead costs and lots of time -Cattle need to be grouped into lots to sell -Buyers cannot evaluate animals in person which may lead to lower prices
Graded/Pooled Sales: A sale in which feeder calves are graded and grouped based on muscling, frame size, color, and weight, to form larger more uniformed lots for sale. Typically, these sales are formally arranged and sold in a private treaty arrangement.
Pros: -Allows for larger and more economical lots -Attracts a higher amount of potential buyers -Creates a more uniform set of cattle which drives prices up -Certifies your animals so buyers know what they are getting -Builds reputation with buyers for the producers
Cons: -The entire process is time-consuming and expensive -Individual producers' loose identity -Terms are often not agreed on between large amounts of producers -Requires substantial knowledge of what buyers want - Uniformity in lots can be hard to do
Each one of these methods appeals to a specific sector in the market. Not every single one, however, works for every producer. It takes a little research and lots of homework to plan out which way will work best for you. Compare your cattle and your operation to the different methods and the advantages and disadvantages they present to it. Then make a decision based on what you find and what will be the most profitable. There is no doubt that proper attention to a marketing program can pay great dividends.
HOW OUR APP CAN HELP:
How can the Autonomous Rancher® App and our smart ear tags help? There is a lot of time between an animal's calving day and its slaughter day. Our app and ear tags can be there throughout the production cycle to help guide that animal to its endpoint. The tags and the app track the animal's activity, ensuring the health of the calf and its location, ensuring its safety. The app also compiles all the information for you into reports to get a better understanding of which sires and dams are producing the highest-performing offspring. The tag features a setting that tracks the animal's grazing and movement patterns for the rancher to maintain a rotation pattern of their fields, keeping their cows full and the land replenished. It also allows the rancher to understand if they need to feed more supplemental feed judging by if the cattle are moving long distances searching for forage or if they are staying stagnant. As stated previously, the longer you can hold your animals into the winter the better. Our cattle management system helps keep track of your pastures to support those few extra months. Being able to have eyes on your cattle all day every day allows for a more successful operation.
The money spent to obtain and use 701x Autonomous Rancher technology will pay itself off ten times over in just your first calf crop thanks to the security and profitability it adds to your operation.
All in all, a cattle rancher's main goal when marketing their cattle is to produce the most profitable calf, sell through the most profitable market outlet, and price them at the most profitable time. The feasibility of that goal is not always possible for everyone in the industry. However, with these tips and information, you now know, you may be able to reach that end goal. Just remember no one combination of alternatives can be considered a superior cattle marketing program. Find what works for you and what profits your operation the most. Or maybe pioneer a new market, the choice is yours.
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