This week’s column is all about cows. The feeder run was light this week and the best way to describe it was things got out of whack which was great if you were buying. I also want to mention that I will be speaking at the Missouri Livestock Symposium in Kirksville, MO. On December 3rd.
I was pretty excited for this week as it started the momentum of the women’s seasonal sales. I took part in some of them. I think it’s important to share this with you because, in my opinion, true expert status isn’t achieved through bloodline or through a degree, but through doing.
This experience has provided me with unique perspectives which I have used to add my own original content to my sell/buy marketing schools. You see, math is a great thing because it’s fundamental and it never changes. Math keeps us out of trouble by showing us what we can and can’t do to succeed. One thing I learned about the cow business is that there are so many intangibles, most of which are perceived. The management of these intangibles separates average from excellent and I despise average and I hope you do too.
Before I get to the good stuff, I want to explain myself. I write these columns and teach marketing schools because the livestock business is really good for me. I’m especially blessed to be a part of it. By doing these things, I feel like I’m giving something back. If I can help other people succeed, the cattle business will thrive and prosper. Keep that in mind because some of the things I’m about to write may be off-putting to some. All I ask is that you think about it and then decide for yourself.
The cattle customer dynamics
From what I can see, most people who sell cows expect two people to want to buy their animal. I’ll make it simple: if you expect your pet to sell well, you need to sell something that other people will want to buy. I recently wrote about how to know who your customer is. I realize you won’t know her personally, so how do you achieve that?
If you are selling in a yard, your records will say that you are acting as an agent only. Let her do her job. Call them up and ask them what buyers are looking for and what they think the price might be.
Most of the time, people sell an animal to prevent a problem. An original recurring theme here was that the market will come along and help you, you just have to be patient. Farmers seem to understand that. There is a time to plant and a time to harvest, but there is the time in between that gets us from point A to point B. The marketing of cattle is no different, it takes time before an undervalued animal becomes overvalued. A real example showing this will follow.
Some people prefer to calve their cows in the summer as nature suggests. But the mainstream prefers to do it much earlier. So what do we do with those summer calving cows or those cows that fell out the window during winter calving? Mainstream farms will just dump them when the planter starts rolling. This fights the market by selling what you don’t want and the market senses this and penalizes you. Resell what others want to buy.
Real cattle marketing
I bought these breeding cows earlier this year. I calved them and sold some in pairs this week. They were curled up in an autumn herd (the calves were born in late summer and the cows were open). I bought what nobody wanted (undervalued), time passed and I sold what people wanted (overvalued). I had to wait for an opportunity and be ready to act on it. I’ve also made sure that I’m not just selling something to get rid of, I’ve made sure that they are shown off well. When we sell an animal, we need to include some value in the sale, especially when it comes to breeding animals.
This is a sell/buy marketing column, so what’s the buy? I bought some black cows of the same age that were bred to calve in the window. In order to make these trades, we need to be able to boil women down to their intrinsic core value (IV) for accurate comparisons or to use the math. The pairs I sold have an IV that was $280 higher than the cows I bought. That sounds silly to some, and I’ll address that below. There is, as I said, something of value to sell along with the animal. When we compare actual values (what the animals were really sold for), there was a big difference. I sold $280 value in the market and got $800 for it!
When it comes to marketing, there’s a huge systemic thinking problem in the cattle industry: we have no idea what we’re doing. In the real-world example above, I had two purchases from really undervalued cows, which proves the point. The law of polarity states that everything has an opposite. If someone loses money, someone has to make money. That’s why I teach marketing schools. I can provide people with the skills and knowledge to be on the right side of these transactions. I can help to solve the thinking problem. Because of this, the young people can step in on the ground floor, start from scratch and thrive, but they need the knowledge of the market to make it happen.
Another example from the week. First calf heifers over 1,050 pounds that were AI bred were the most overrated animals. But the bred heifers, which weighed only 9 something, brought only the equivalent of 5 cents over the scales. Sell what people want to buy. It will be easy to put some weight on them and sell them on before they calve. I can get some monetary value from the cattle and add value to my feed.
Let’s talk briefly about the costs. Several hundred people have come through my schools this year and some have opened their books to me. I’ve noticed a trend. In Canada overheads are much higher than in the States. It seems Canadians are more serious about the business that subsidizes the budget, or in other words, pays for itself. In the States the direct costs are much higher, we are happy to spend money on our animals.
Cost is like the fulcrum of a lever. If we can reduce these costs, we gain more influence and open up more possibilities. Changing the cost will change the relationships between cattle. I’ve seen the simple basic task baffle a marketer before. For this reason, experts must actually practice what they preach, and we must be careful who we listen to. There is an old quote: “Theory without practice is empty”. Here is my point of view. I caution my readers against this because I want them to succeed and not be led astray. Check your experts.
Maximize your opportunities
Some of you all have strict selection and culling criteria and you have spent a lot of money to buy the best bulls. You think you’re entitled to a premium for your genetics when you sell cows. First the bad news. When you wrap her up in a monthly women’s special, you have to realize that nobody cares. We all have things we like, and the other buyers out there probably haven’t heard of the program you’re buying bulls from. At best, you have a reputation as a sales barn. So if you roll them into a monthly sale, save yourself the hot air. A buyer’s first job is to be a valuer, and they like it in “as-sold” condition. Give them what they want and make them fat.
Now the good news. I’m not going to argue that these women deserve a premium. The thing is, value-added marketing is only value-added when you capture the value. For this reason the females should either be sold privately, you bring your own buyers to the monthly special, or some seed producers offer special influence sales. These influence sales are a great selling tool because buyers looking for what you have will shop there and everyone knows they are willing to pay a premium. That’s another thing to be aware of, people including yourself pay a premium for the things they want to buy. Resell them what they want, along with some value.
There’s a lot more I could write about about cows and I’m running a long one. There are many intangibles that need to be managed and addressed. Why keep an old cow around? How to offset the high cost of developing replacement heifers due to production delays? And where to sell?
Set yourself the standard of excellence and point the needle in the right direction and you will succeed.
Doug Ferguson’s opinions are not necessarily those of beefmagazine.com or Farm Progress.