By Mark Mauldin and Chris Prevatt
After six articles rambling about revenues, it’s time to wrap up this discussion. We’ve been through a variety of topics all with the intent of maximizing the revenue generated by your cow/calf operation. Today I have some closing comments relating to the actual marketing of your calves.
Through this series I’ve tried to present concepts that are fairly universal, that generally apply to operations of all sizes, and that don’t have to be prefaced with multiple qualifiers. When it comes to concepts directly relating to selling calves, every operation’s situation is so different that organizing my thoughts has been quite a challenge. So much so that I called in some assistance. The following points of consideration are the product of some lengthy discussions between myself and Chris Prevatt, UF/IFAS Livestock and Forage Economist. The concepts are general (by design); hopefully they will help you think more critically about your marketing situation and any changes that could be made to help you maximize your revenue potential.
Effective marketing requires a plan
If you want to maximize revenues, you need to have a marketing plan in place. There must be a goal to drive your management decisions. What that goal, and the specific plan to achieve it, look like will be different for each operation. But, you must be headed in the right direction. Please, don’t fall into the classic agricultural producers’ pitfall of producing a product and then trying to figure out how to market it. Compared to other operational concerns like, fertilizer prices or winter-feeding options for example, how much time do you spend thinking about how to market your calves most effectively? Invest the time to fully explore your options, develop a plan, and proceed with the confidence that you are doing everything you can to maximize revenue and not just hoping it turns out ok.
… But be ready to adjust
The marketing plan discussed above sets the course for the operation. However, while traveling along that course you may (and probably will) encounter circumstances in the market, which are entirely beyond your control, that may necessitate a slight deviation from the set course. Cattle markets can be erratic, they move up and down and this movement must be factored into the marketing plan. Generally, this means tweaking the timing of the transaction. Having a known price objective for your calves is essential to effectively evaluate the merit of any fine tuning of your marketing plan.
Sell a product that somebody wants
The previous articles in this series have largely focused on this concept. Do what you can to produce uniformed groups (a large as possible) of healthy, low risk calves with good genetic potential for growth. These are the type of calves that appeal to most buyers, and the more buyers that are interested in your in calves, the more valuable they become. Assuming you are producing the kind of calves that most buyers want, the next step in maximizing revenues involves finding market outlets where buyers can be made aware of the positive characteristics of your calves (genetics, vaccination history, preconditioning status, etc.). The larger the group(s) of calves you are marketing the easier this is to accomplish via direct/private treaty sales, value added/board sales, and other similar opportunities. For small operations, this frequently comes down to communicating with the folks at your local sale barn about how they can help you market your calves. As previously stated, there is no one-size-fits-all answer here. Options vary greatly based on where you are, what time of year you want to sell calves, and the size of the group(s) being marketed. It takes time and probably quite a few phone calls to make the right contacts and find the best option for your operation.
There are many other marketing options, besides selling weaned calves into the mainstream beef market, that can be considered. There are opportunities to differentiate your cattle, to market them into more specialty/niche markets. While these markets frequently bring premium prices there are also extra costs and/or production limiting factors associated with these markets. Additionally, these markets have fewer ready-and-waiting buyers and success in these markets is largely based on the producer’s ability to market their products. When weighing options these alternatives deserve a look, but careful planning and analysis are needed before deciding which, if any, alternative marketing option is right for your operation.
I will not attempt an exhaustive list of these alternatives, but for conversation’s sake they can be viewed as two broad categories.
1) Special marketing claims/production practices that can be applied to groups of cattle (organic, all natural, antibiotic free, etc.). While there can be premiums associated with these practices, they will only be realized through very specific marketing agreements that must be made well in advance allowing time for the parameters of the agreement to be set, carried out, and verified.
2) Market outlets where cattle are marketed individually or in very small groups (freezer beef, purebred seedstock, commercial replacement heifers, etc.). These options all relate to selling older animals, not calves, meaning the investment in each animal is much larger. Additionally, since these animals are retained past calfhood, the producer needs a broader skill set to be successful. Sufficient local demand for the product and marketing/people skills are necessities for success with these endeavors.
The cattle business is not easy, but when you produce a quality product and market it effectively the results can be very rewarding both emotionally and financially. As you wade through the myriad of management decisions involved with running a beef operation don’t forget the revenue side of the equation. Saving money on the operation is great, but you’ve got to generate revenue before you have anything to save. I hope you have enjoyed the Ramblings on Revenues series of articles.
Source : ufl.edu