Drought Master Beef Cattle Breed Trait

R. Curt Lacy, Extension Economist-Livestock
Carole Hicks Knight, UGA Cooperative Extension
John C. Mckissick, Professor Emeritus-Livestock Economics & Marketing

• Selling Versus Marketing
• Know Your Price
• Program for the Marketplace
• Feeder Calf Marketing Alternatives
• Which Cattle to Produce
• Where to Market
• Choose the Right Marketing Method
• When to Market
• Keeping Up with the Market
• References

Most cattle produced in Georgia come up from cow-dogie farms and ranches. With cow-calf operations, as with other farm enterprises, making a profit is the merely thing that will go on y'all in business. How much profit you brand depends largely on your ability to market your calves.

Selling Versus Marketing

Profitable cattle marketing involves more than just getting the highest price. Information technology involves producing the type of dogie the market desires, marketing that calf through the all-time outlet and at the best time. Unfortunately, most moo-cow-calf producers just sell their calves. They produce calves that are the easiest to raise, sell at the nigh convenient market outlet and sell at the about convenient fourth dimension. As a outcome, they are price-takers.

Marketing ways making choices virtually how or what production to produce, where to market it and when to toll. Equally a result, marketers have some command over the toll they receive.

The first step in becoming an effective cattle marketer is to recognize all your alternatives and evaluate each in light of potential cost and returns, selecting the nigh profitable rather than the most convenient alternative.

This publication addresses several bug associated with marketing calves -- most notably, cost considerations, market place structure, the type of calf to produce, market outlets and seasonal price considerations.

Know Your Cost

The first step in whatsoever successful marketing plan is to know the unit cost of production (UCOP). In fact, for many small-scale or medium-size cow herds, the cost of production is a larger turn a profit determinant than the marketing method. Regardless of the size of the herd, for cow-calf producers this means knowing the cost per pound of calf sold. The best way to brand this decision is to begin with a upkeep similar to the one shown in Table 1.

Table 1. Example summary budget for a cow-calf enterprise in Georgia.
Item	$/Cwt.	$/Cow
Variable Price	$137.fourteen	$609.06
Less: Value of choose cows, bulls and heifers	($26.88)	$119.twoscore
Net VARIABLE COST	$110.25	$489.66
Annual Livestock Fixed Costs	$eleven.43	$50.76
Almanac Buildings & Facilities Fixed Costs	$7.sixteen	$31.82
Annual Equipment Stock-still Costs	$21.02	$93.37
Annual Land Fixed Costs Excluding Taxes	$0.00	$0.00
Annual Real Estate Taxes	$1.37	$6.11
Total COSTS	$149.87	$665.61
Source: 2012 UGA beef cow-dogie budgets

Note that while the price per cow is shown, the emphasis is placed on $/Cwt. The cost per hundredweight sold is used because information technology captures not only total herd costs but likewise dogie crop percent and weaning weights.

In the case budgets shown, there are ii numbers highlighted -- the first i being variable cost in $/Cwt. Variable costs (VC) are besides called Direct, "Out of Pocket" or Operating Costs and include items such as feed, seed fertilizer, fuel and labor. These are the costs that must be covered each year because they are the measure of profitability. Information technology is also critical to cover variable costs considering any returns higher up variable costs (ROVC) get toward paying overhead or fixed costs.

Returns higher up total costs (ROTC) is the measure of the long-term economic sustainability of an enterprise. Total costs (TC) include not only VC but also stock-still costs (FC) such as depreciation, cost of capital letter, management, taxes, etc. FC are those costs that occur regardless of the number of head produced. Some people also refer to FC equally overhead or indirect costs. Regardless of the terms used, the total cost (TC) per hundredweight is the price a cow-dogie producer must average in the long run if they want to remain in business.

Knowing the VC and TC per hundredweight allows producers to set target prices and evaluate their costs in relation to the market. While weather and input costs can be volatile in the curt term, which volition impact price per hundredweight year-to-year, producers who consistently take interruption-even prices to a higher place market prices will need to find ways to lower their costs in social club to stay in the business.

Plan for the Market

The onetime saying goes that if you don't know where you're going, any road will take you at that place. But if marketing your cattle at a profit is where yous desire to go, then planning for the market will aid get y'all there. Planning requires information. A skillful way to start becoming a better cattle marketer is being sure y'all understand the cattle marketing organization and how your cattle prices are adamant. Then you demand to recognize all the market alternatives bachelor to yous. Finally, you need to know where to get the information to help y'all decide on a marketing programme.

The Georgia Feeder Cattle Market

Effigy ane. Seasonal prices of feeder steers and bulls in Georgia auction markets. 2007-2011. Data source: USDA-AMS, Weekly Auction Study, TV_LS145 (various weeks).

In Georgia, as in the Southeast, feeder calves are produced and sold as feeder calves later on weaning. Virtually seventy percent of all Southeastern calves are weaned and sold during the autumn. This is the major reason behind the normal seasonal toll swings shown in Effigy 1: prices are unremarkably lower during the fall and college during the late wintertime and early bound.

In that location are effectually 17,000 cattle producers in Georgia with an average herd size of fewer than 50 head. With so many small producers, information technology is natural that most Georgia feeder calves are sold through local auction markets.

Calves weighing betwixt 300 and 500 pounds will usually move into some blazon of forage-based stockering programs, where another 300 to 400 pounds volition be added. Equally heavyweight feeders, between 600 and 800 pounds, they and then will typically movement directly into feedlots.

Figure 2. Cattle on feed in yards with more 1,000 head (January 1, 2012). Source: Information provided by USDA-NASS, "Cattle" Report. Chart adult past the Livestock Marketing Information Eye (LMIC).

Normally, 70 to 75 percent of all U.S. beef comes from cattle fed in feedlots. Feedlots take become fewer just larger in size. The pinnacle 3 feedlot states (Texas, Nebraska and Kansas) at present market virtually 60 per centum of the cattle fed in the The states. Figure 2 illustrates the concentration of the cattle feeding industry in the Us as of Jan 1, 2012.

While there are definite segments to the beef product organisation, the important point to remember is that the consumer eventually makes the final pricing conclusion. The retailer wants a certain type of production because the consumer wants information technology. This is relayed back to the packer, who relays it to the feedlot, who relays it to the feeder cattle producer. The "relay" for all these messages is the price. Unfortunately, because of all the messengers in the market, the signals sometimes get mixed or muted. However, if we pay close plenty attending, we tin recognize them. By understanding how the beef cattle markets work, feeder cattle producers volition be better able to recognize changes that may make a higher turn a profit.

Feeder cattle prices are derived from their next market. The calves' value is based on what they are expected to be sold for, either out of the feedlot or out of a backgrounding functioning, less the price of gain. Equally the expected price of finished animals goes up or the cost of gain goes down, feeder calf prices will increase. The weight to be added is factored in with the expected price of finished cattle. A i,200-pound finished steer weighs 2.40 times as much as a 500-pound feeder dogie and one.sixty times as much as a 750-pound yearling. Therefore, a $ane-per-hundredweight increment in the expected selling price of a finished steer would cause a buyer to bid $2.forty per hundredweight more for a 500-pound feeder dogie or $1.60 more for a 750-pound steer.

The price of finishing the dogie volition as well touch on the price of the feeder. The cost of putting a pound of gain on a calf depends on feed cost, non-feed costs such every bit interest, and the efficiency of the calf itself.

A feeder ownership a 500-pound dogie and finishing it to one,200 pounds is putting on 700 pounds of gain, or ane.forty times the original weight. Finishers buying 750-pound yearlings and finishing to 1,200 pounds are putting on 0.64 times the original weight. Each $one alter in the cost of gain volition enhance or lower the price finishers can pay by $1.twoscore for a 500-pound calf and $0.64 for a 750-pound feeder. Table 2 shows the intermission-even purchase prices that could be paid for a 550-pound steer given alternative fed-cattle prices and cost of proceeds. Of course, feeder calves produced in Georgia are likely to be transported to the feedlot states. Thus, a feedlot will also have to discount the feeder cost in Georgia by the toll of transporting the calves to the feedlot.

Tabular array ii. Prices that can be paid for a 550-pound feeder steer at culling fed-cattle selling prices and cost of gain.
	Sales Toll of Finished Cattle ($/Cwt.)
Cost of Gain ($/Cwt.)	$ 105.00	$ 115.00	$ 125.00	$ 135.00
$ 70.00	$ 149.55	$ 172.27	$ 195.00	$ 217.73
$ lxxx.00	$ 136.82	$ 159.55	$ 182.27	$ 205.00
$ xc.00	$ 124.09	$ 146.82	$ 169.55	$ 192.27
$ 100.00	$ 111.36	$ 134.09	$ 156.82	$ 179.55
$ 110.00	$ 98.64	$ 121.36	$ 144.09	$ 166.82
$ 120.00	$ 85.91	$ 108.64	$ 131.36	$ 154.09

CHANGES IN BEEF AND LIVE CATTLE MARKETING
For years most live cattle (also called slaughter or fatty cattle) were marketed on a pen-average footing. That is, feed yards were paid one cost for all of the cattle in the pen. However, over time that has changed. Now close to 60% of all slaughter cattle are sold on a carcass basis where each carcass is individually weighed and graded for quality (marbling) and yield (percent of retail meat). Since there are different prices for different yield and quality grades, each carcass ends upwardly with an individual or customized price. The net effect is that price transmissions from the packer back to the cow-calf producer are much clearer now than in the past.

Figure 3. Factors that affect feeder cattle prices.

While it is the cost and return from finished cattle that give feeders their value, information technology is the overall supply and demand for beef that determines fed-cattle prices. Figure 3 illustrates the factors that affect fed-cattle prices. It is of import to note that at that place are many things that affect the price of cattle and beef that moo-cow-calf producers cannot command. Nonetheless, by being aware of these factors, cattlemen can have some idea of expected prices and plan accordingly.

The variables are shown by different size squares depicting the relative importance of each. For example, fed steer and heifer slaughter contributes the most to beef supplies, followed past commercial moo-cow slaughter, non-fed steer and heifer slaughter, beef imports and exports, and bull and stag slaughter.

On the demand side, per capita disposable income, full population and competing meats (poultry and pork) are all of import factors. Other factors, such equally the value of by-products and the cost of slaughter, processing and marketing (farm-to-retail margin), will also affect farm prices.

Feeder Calf Marketing Alternatives

Webster?south Dictionary defines "marketing" as the procedure or technique of promoting, selling and distributing a product or service. It is important to keep in mind what your product is. Ultimately, a feeder calf producer'due south product is beef. Georgia feeder calf producers take three major marketing decisions: what to produce, where to market place their production and when to price their calves. While some or perhaps all of these decisions are set for the producer, alternatives most likely exist. The selection of these alternatives will have a dramatic impact on the profitability of the cattle operation.

Which Cattle to Produce

The cow-calf producer influences the marketability of his cattle the day he selects his breeding stock. While it is truthful that almost any type of cattle can be sold at a price, the Georgia cattle producer should exist raising the most profitable cattle. There are many factors that make up one's mind the value of a feeder calf. Some of these factors can be influenced through an performance?due south breeding and genetics program and others through good direction practices. These factors include:

• Breed
• Color
• Frame
• Muscling
• Condition/Flesh
• Weight
• Sex
• Groundwork
• Horns
• Fill
• Personal Preference
• Vaccinations

Brood

The brood of the calf tin can influence prices independent of grade. Sure breeds or breed-types bring a higher price because of perceptions by the order buyer as to how these breeds will perform in the feedlot. While these perceptions may or may not exist right, they exercise exist. One way to get around breed perceptions is to take advantage of brood association-sponsored marketing programs. Crossbred calves have traditionally been in higher need than purebred calves because of the reward of hybrid vigor. However, in contempo years, that trend has been challenged. Calves with a high percentage of dairy or Brahman influence are typically discounted through the sale befouled.

Color

Calf color can also bear on the conclusion of value because it tin be a clue into the dogie's breeding. According to a study done in Arkansas in 2005, at that place was a $13.07/Cwt. spread between selling prices of calves of various colors.

Table 3. Price adjustments for diverse breeds.
Calf Colour	Average Selling Toll (Value/Cwt.)	Deviation From Overall Boilerplate (Value/Cwt.)
yellowish-white face	$120.44	$2.34
yellow	$120.29	$2.19
blackness-white face	$120.03	$1.93
black	$119.24	$1.fourteen
grey	$117.66	-$0.44
gray-white face	$116.79	-$ane.31
white	$116.01	-$two.09
red-white face	$114.58	-$three.52
red	$113.92	-$4.xviii
spotted or striped	$107.37	-$10.73
Source: Improving the Value of Feeder Cattle, FSA 3056. Arkansas Cooperative Extension.

Frame

The Us Section of Agriculture has official grades for feeder cattle based on frame size, thickness and thriftiness (overall health). Frame size refers to the animal's skeletal size ? its height and body length ? in relation to its age. Frame size is related to the weight at which, under normal feeding and management, an animal will produce a carcass of a given class. Large-frame animals crave a longer time in the feedlot to reach a given grade and will weigh more than a modest-frame fauna would weigh at the same grade. Animals are assigned to iii frame sizes - Large, Medium and Small. Table 4 describes the expected minimum alive weights at which these calves would produce U.S. Choice carcasses.

Table four. Correlation betwixt frame size and finished slaughter weight.
Frame Size	Steers	Heifers
Large	1250	1150
Medium	1100-1250	one thousand-1150
Small	< 1100	< chiliad
Source: USDA Agronomical Marketing Service, Livestock and Seed Program. U.s.a. Grades of Feeder Cattle. Effective appointment Oct one, 2000.

Muscling

Muscling is evaluated past looking at the thickness of the beast. Thickness in feeder cattle refers to development of the muscle arrangement in relation to skeletal size and is the amount of muscling nowadays in proportion to bone and fatty. Thicker-muscled animals will have more lean meat. The iv thickness or muscling grades are No. 1, No. 2, No. three and No. 4.

Muscling No. 1

No. ane. Feeder cattle that possess minimum qualifications for this form usually brandish predominate beef breeding. They must exist thrifty and moderately thick throughout. They are moderately thick and full in the forearm and gaskin, showing a rounded appearance through the back and loin with moderate width between the legs, both forepart and rear. Cattle show this thickness with a slightly thin covering of fatty; however, cattle eligible for this grade may carry varying degrees of fat.

Muscling No. ii

No. ii. Feeder cattle that possess minimum qualifications for this grade unremarkably prove a high proportion for beef breeding and slight dairy convenance may be detected. They must be thrifty and tend to be slightly thick throughout. They tend to be slightly thick and full in the forearm and gaskin, showing a rounded appearance through the back and loin with slight width betwixt the legs, both front and rear. Cattle show this thickness with a slightly sparse roofing of fat; yet, cattle eligible for this form may carry varying degrees of fat.

Muscling No. 3

No. 3. Feeder cattle that possess minimum qualifications for this grade are thrifty and thin through the forequarter and the middle office of the rounds. The forearm and gaskin are thin and the back and loin have a sunken appearance. The legs are set close together, both front and rear. Cattle prove this narrowness with a lightly thin covering of fat; even so, cattle eligible for this grade may carry varying degrees of fatty.

No. 4. Feeder cattle included in this form are thrifty animals that have less thickness than the minimum requirements specified for the No. 3 grade.

Inferior. This grade includes those feeder cattle that are not expected to perform ordinarily in their present land and those that are "double-muscled." Cattle in this grade may have whatever combination of thickness and frame size.

Thriftiness refers to the credible wellness of an fauna and its ability to grow and fatten commonly. In these standards, unthrifty animals are those that are not expected to perform ordinarily in their present country due to such factors as disease, parasitism, severe emaciation or whatsoever status that must be corrected before they could be expected to perform normally. Unthrifty feeder cattle may take any combination of thickness and frame size.

Several marketplace studies have been conducted in the mid-Due south and Plains regions since 2000. While the exact numbers for each of these studies varies, the clear message is that that smaller-frame, lighter muscled calves are discounted compared to medium-big frame, heavily muscled animals. An example from a study conducted in Arkansas is shown beneath in Table 5.

Table v. Impacts of selected feeder cattle traits on sales price in Arkansas, 2010.
Trait	Discount ($/Cwt.)
No. 1 Muscling	Base of operations
No. 2 Muscling	-$viii.94
No. 3 Muscling	-$32.41
No. 4 Muscling	-$57.eighteen
Large Frame	Base of operations
Medium Frame	0.14
Small Frame	-$22.10
Source: Improving the Value of Feeder Cattle, FSA 3056. Arkansas Cooperative Extension.

Preconditioning

Preconditioning programs involve a series of direction practices on the subcontract to improve the health and diet of calves. Preconditioning adds value to calves for buyers. When preconditioned calves are marketed in a system that recognizes the value that has been added, cow-calf producers benefit from the college prices.

Preconditioning is not a new idea, but has received considerable attention in contempo years with interest in value-added programs for cow-dogie producers, beef quality assurance programs and strategic alliances in the beef industry. There are various preconditioning programs with different names and management requirements. Most programs require a 45-solar day post-weaning phase with a sound nutritional program, specified beast wellness procedures, dehorning, castration of bull calves and bunk feeding. The purpose of preconditioning programs is to reduce stress from aircraft calves at weaning, improve the immune system, and heave performance in postweaning production phases (i.due east., stocker production and cattle feeding) and in carcass performance (i.e., higher grading carcasses with fewer defects).

One mutual question is whether or not preconditioning programs add sufficient value to feeder calves to offset the added toll. Common preconditioning programs cost moo-cow-calf owners well-nigh $60/head, depending on the cost of the ration, health of calves and length of the preconditioning program. As a result, cattlemen will need to receive in backlog of $60 (or their cost) per head to brand pre-conditioning pay. It is of import to recollect that the additional revenue can come from reduced shrink and/or a higher cost. The main point is that those producers because preconditioning should not focus just on receiving a higher price.

No thing the type of cattle produced, dehorned, well-managed, clean, healthy-looking calves will always bring top-dollar prices. A Kansas Land University study of more than 140,000 head of feeder calves sold at auctions showed that cattle that were not in good health, had physical impairments or were muddied received large discounts. Dirty calves or calves with dead pilus typically were discounted 2 percent, dried animals 7 to 9 percent and ill animals more 25 percent. Castrated calves may not bring premiums at auction markets since buyers don't accept time to confirm each dogie equally he comes through the ring, just they volition bring premiums through other marketplace methods that allow for seller identification. Specific health practices may also bring premium prices when the market allows for the recognition of such practices.

The improver of these management practices to a producer's operation ways in that location is a demand for acceptable facilities to perform them. The ability to safely and efficiently pen and restrain calves to perform preconditioning tasks is vital to achieving their maximum value.

Where to Market place

Figure four. Upshot of lot size on sales cost. Source: "Factors Affecting Feeder Cattle Prices in Kansas and Missouri." Kansas State University Extension 2010.

Georgia cattle producers have several marketplace outlets. No ane system fits every producer?south needs, and so at that place volition go on to be many alternatives. The market outlets bachelor to you will depend on the number and uniformity of cattle you have to sell at one fourth dimension. This mostly is the central ingredient in gaining college prices through different marketing methods. Effigy 4 shows the price premiums that larger uniform groups of similar cattle could be expected to bring. This chart is based on survey information collected from Kansas auction markets.

The correct style to interpret this nautical chart would be to compare the values reflected past the line to a base of operations price for a single-head sale. For case, if a single-head lot were expected to bring $125/Cwt., a semi-trailer load would be expected to bring five percentage, or $6.25, more. As the number of head in the lot increases to more 100 head, the increase begins to decline, but it is notwithstanding larger than the base of operations.

Essentially, the ability to course truckload lots (around 48,000 pounds) of uniform cattle will generally outcome in even higher prices and open up marketing methods across the single-caput auction.

No matter your size herd, you can capture some of these benefits past having a defined, brusque breeding flavour so your calves volition exist compatible in weight. Uniformity in cattle color and grade will exist a product of your breeding herd. Lack of uniformity in cattle color can become a trouble if non properly planned in the crossbreeding arrangement.

Choose the Right Marketing Method

Some of Georgia's cattle marketplace alternatives, along with their advantages and disadvantages, are described in this section.

Auction Markets

Auctions are the traditional way of selling livestock. Well-nigh sale markets concord their sales on a particular day of the calendar week.

Auction Market Advantages:

• The auction marketplace tin provide competitive bidding.
• Most markets are open 48-50 weeks out of the yr.
• It is convenient.
• It is open to all sellers and buyers.
• There is prompt cash payment.
• All types of livestock can exist marketed.
• It provides a place where cattle prices are determined and known to all.
• It is supervised by the federal government.
• Information technology requires absolutely no market place noesis by the producer.
• It requires no minimum number of cattle.

Auction Market Disadvantages:

• The seller has little control of prices.
• It encourages multi-handling, speculative-blazon trading.
• Overhead cost is high.
• Excessive stress and shrinkage of livestock may occur.
• In that location is a lack of book and uniformity of animals at many markets.
• No permanent arrangement exists for identifying livestock and producers after a auction.
• Producers may discover it hard to establish a reputation for selling high-quality, well-performing livestock.
• The class and price information can be hard to interpret.
• Prices are uncertain.
• Disease spread is more likely.
• The number of buyers may be small, reducing competitiveness of bidding.

Fifty-fifty when marketing through auctions, prices for cattle are not uniform. Nonetheless, yous tin have some influence on the toll you get by communicating with your sale operator. Find out before you deliver your cattle what the operator expects in buyers and cattle numbers to be sold during various marketing times. Permit the operator know ahead of time what you will be bringing to market. If yous have a group of uniform calves to sell, ask about the possibility of selling equally a group.

Graded and Pooled Sales

Graded and pooled selling is the combination of pocket-sized lots of livestock into larger, uniform lots of animals. This can be washed informally by people "pooling" their animals earlier selling or through more formal arrangements. For example, expanse livestock producers may organize to develop a graded and pooled sale.

Pooled Sale Advantages:

• Can put large, economic lots of livestock together.
• Cost savings for buyers are passed along to sellers.
• Big numbers of livestock attract more than buying contest.

Pooled Sale Disadvantages:

• Grading, sorting, weighing and penning before sale can exist time-consuming and expensive.
• Individual producers lose their identity.
• Many marketing facilities may non exist designed for efficient processing for this system.
• It's hard to go a large number of producers to agree on all terms of auction.

Tele-Auctions

A tele-auction is the use of a telephone conference call to allow separation of livestock, buyers and the auction procedure. Producers with truckload lots of cattle can be sold directly from the farm. Producers with partial truckloads can be matched with other producers "on paper" and sold together. The tele-sale could also be used with a pooled organization for smaller producers.

Georgia producers have a long history of using feeder cattle tele-auctions. In fact, Georgia cattlemen have been using tele-auctions since 1977. Since that time, advances in technology take made information technology possible to utilize videos in the marketing of cattle. Fifty-fifty so, many marketing agencies still utilise the telephone when taking bids for cattle.

Tele-Auction Advantages:

• Potentially increases competition.
• Directly buyer-to-seller transportation reduces stress, shrinkage and death loss.
• Reduces heir-apparent and marketing cost.

Tele-Auction Disadvantages:

• Requires prior producer delivery.
• Reduces marketing flexibility.
• Requires partial or full truckload lots.

Video Auctions

Video auctions are very similar to tele-auctions except that videos of the cattle are made for accelerate viewing or for viewing by satellite telecast while the cattle are sold. Other than that bespeak, many of the considerations for tele-auctions also employ to video auctions.

Digital recordings are oft used in combination with tele-auctions. Video auctions were in one case exclusively sponsored by national companies; nonetheless, in contempo years many local auction markets too every bit some regional marketing agencies have gone to marketing load-lots of cattle using video auctions. Regardless of the size of the marketing agency, video or tele-auctions allow buyers to select from hundreds or thousands of cattle coming from a wide geographic surface area in a brusque period of time, which reduces transportation costs and wellness risks.

Video Auction Advantages:

• Largest number of potential buyers of all market methods.
• Potential for reduced buyer cost passed along to seller.
• Straight buyer-to-seller transportation.
• Delivery schedules are very flexible. For instance, cattle can exist sold in July for commitment in October.

Video Auction Disadvantages:

• Marketing toll can exist generally higher than tele-auction.
• Requires producer to accept on-farm truckload (and preferably more) of uniform cattle.

Private Treaty

DIRECT SELLING TO CONSUMERS:
Many producers look to ameliorate their bottom line by marketing
directly to consumers. Straight-marketing can be a style to add
value and increase profits. It as well involves boosted production
risk, expense and direction.

While a total discussion of direct marketing is beyond the telescopic of
this publication, producers interested in this possibility should
consider not merely the current value of the animals, merely also
the boosted product costs and chances for death loss. They
should also take a very practiced handle on their target market place
and know what this market will pay and compare that price to
the overall breakeven toll.

Private treaty selling of livestock was widely used in the early 1920s when many land buyers operated throughout the country. As auctions became more prevalent, producers shifted to auction selling. Private treaty selling is a airtight-auction method; it is a private negotiation between seller and buyer. The toll and terms of sale are normally known only by the seller and buyer.

Sellers and producers of convenance stock have used this method for centuries and continue to apply it. Producers with large herds often use this method. Private treaty selling of cattle is increasing because many buyers prefer to have their calves conditioned to their specifications and prefer to buy from sellers whose production practices meet their needs and demands.

Private Treaty Advantages:

• Seller controls the marketing process.
• Costs less than other marketing methods.
• Producer can establish a reputation.
• Animals are subcontract fresh with no stress.
• Disease spread is minimal.
• Producer can condition animals to heir-apparent specifications.

Private Treaty Disadvantages:

• Requires excellent marketing knowledge by seller.
• There is no supervision by the federal government.
• Producer assumes risk of payment collection.
• May be fiddling or no buyer competition.

Retained Ownership

Retained ownership involves holding cattle longer than would normally exist the example or to the next one or two stages of product. In other words, if you are a cow-calf producer, you retain ownership of your cattle through the stocker phase, and if you are a stocker operator, yous retain ownership in the feedlot phase of production. There is also the option to retain ownership all the way from birth to harvest. There are many factors that should be considered before retaining ownership of calves. Each factor should be evaluated by each producer for each situation. Calculation of break-fifty-fifty costs under different retained ownership alternatives will assist the producer gauge turn a profit potential.

Retained Ownership Advantages:

• Receive a return for value-added direction and use of superior genetics.
• Receive data (carcass and feeding operation) back to be utilized.

Retained Buying Disadvantages:

• Increased risk associated with market conditions, cattle functioning and production.
• Postponement of revenue.
• Additional time, labor and interest costs.
• Requires some knowledge of performance capabilities of calves.

Branded Beef Programs

Branded beefiness programs guarantee a consumer a set of standards (e.chiliad., lean, natural, organic, brood-specific, grain-fed, grass-fed, tender, etc.). In general, branded beef programs can exist broken into three categories: brood-specific branded programs choose cattle from a specific breed or breed blazon; visitor-specific programs choose beef from all breeds only include other criteria in terms of course, marbling, size, types of feed used and/or restrictions on the use of pesticides, antibiotics and hormones; and shop-branded beef, which is exactly as the name describes. Some grocery store chains are at present branding their ain beefiness products. Most programs tin exist farther classified into one of three groups: calorie-free/lean beef, organic and/or natural beef, and high-palatability beef.

Branded Beef Advantages:

• Branded beef companies volition pay premium for specific cattle.
• Producers are rewarded for direction practices and/or herd genetics.
• Increased ability for the producer to establish a reputation.

Branded Beef Disadvantages:

• Requires producer to switch from "selling" to "marketing" cattle.
• Good record keeping system must be established.
• May require additional input costs to meet programme requirements.
• Potential performance and morbidity (losses from health problems) from producing natural/organic cattle.

When to Market

In addition to providing the correct product at the right place, profitable marketers also market at the right time. Prices for cattle are influenced past supply and need, which fluctuate throughout the twelvemonth. These fluctuations are usually somewhat predictable; therefore, astute stockmen can apply these tendencies to develop a profitable marketing plan.

Figure 5. Seasonal price indices for steers and bulls in Georgia sale markets.

Figure v shows the relative prices for 500-600 and 700-800 pound steers and bulls in Georgia auction markets. The lines on the chart reverberate price indices or relative prices throughout the year. By using 100 percentage as the average for the year, interested cattlemen can make some inferences about the manner prices typically behave. For example, from 2007-2011, prices for 500-600 pound steers and bulls sold in March were 6 percent college than the yearly average. On the other hand, prices for the aforementioned calves in November were 8 per centum below the annual boilerplate.

It is important to annotation that the indices change for unlike weight classes. For case, prices for 500-600 pound calves tend to peak in the leap and and so decline the remainder of the year. Conversely, prices for 700-800 pound feeders tend to gradually increase throughout the yr and peak in July and August. In both instances, prices tend to be lowest in the autumn.

Consider non just the highest (or everyman) prices, just as well the price of production. For instance, even though 500- 600 pound calf prices peak in the spring, it may exist more cost effective to actually sell the calves afterward in the summer. The implication is that cattlemen should do their homework on not but when prices are the highest and lowest, but also on what the associated cost of product is.

The actual price received past well-nigh calf producers for their calves will be determined when they sell their cattle at a specific market. This need not be the case for producers who have most-truckload lots of cattle to sell at i time. These producers can set a price before they will really sell their cattle by using the feeder cattle futures market. By using the feeder cattle options market, producers as well can set up a minimum price they volition take for their cattle earlier the bodily sell date. Both the feeder cattle futures and option contracts are traded on the Chicago Mercantile exchange. By trading a l,000-pound contract, a cattle producer in Georgia tin ready the toll for every bit much equally a year in advance of the time he or she actually sells cattle.

Producers who will be selling shut to the l,000-pound contract size at in one case may want to investigate these pricing alternatives if they need to reduce the risk of unfavorable price changes. Producers keeping cattle through stockering, and peculiarly those feeding cattle, are encouraged to consider forward pricing alternatives as they are most susceptible to brusk-term price changes.

Feeder Cattle Market Alternatives Summary

Most Georgia cattle producers accept several alternatives for when, where and how they market place their cattle. Consider each of these alternatives separately in light of its advantages and disadvantages.

No one combination of alternatives tin be considered a superior cattle marketing program for all farms. What works for one producer may not necessarily work for another. However, in that location can be no incertitude that proper attention to a marketing program can pay great dividends.

Keeping Up with the Market

Successfully implementing a cattle marketing plan volition require the producer to continue tabs on the market, particularly when a market determination is at hand.

The following is a list of price and important supply reports that may be useful.

Price Reports by Phone

Georgia and national cattle market prices, updated daily, Federal State Market place News, Thomasville, Ga. 229-226-1641.

Published Price Reports

Most toll reports are now available online or via e-mail subscription. However, the Georgia Department of Agriculture'south Livestock Market place News office in Thomasville, Ga., withal delivers the daily and weekly sale reports via a recorded message. This data is available by calling 229-226-1641.

Many reports can be accessed through the Southeast Cattle Advisor website at world wide web.secattleadvisor.com. Specific market reports tin can be obtained via e-mail subscription through USDA's Agriculture Market News at http://usda.mannlib.cornell.edu/MannUsda/homepage.do

Weekly, monthly or annual production information such equally cattle inventory numbers, cattle slaughter and beef production can be obtained at the USDA National Agricultural Statistics Service (NASS) website at www.nass.usda.gov

References

Schulz, Lee, D. Dhuyvetter, K. Harborth, and Waggoneer. "Factors Affecting Feeder Cattle Prices in Kansas and Missouri." Kansas State University Department of Agricultural Economic science, 2010. Available online at world wide web.agmanager.info.

Troxel, Tom, et al. "Improving the Value of Feeder Cattle." Arkansas Cooperative Extension, FSA 3056 (2011). University of Georgia. "2012 Beef Cow-calf Budgets." Agricultural and Applied Economics Section. Bachelor online at world wide web.secattleadvisor.com.

U.Southward. Department of Agriculture-Agricultural Market Service (AMS). "Georgia Weekly Sale Written report, TV_ LS145" (various weeks).

U.S. Section of Agriculture, Livestock and Seed Programme. "United States Grades of Feeder Cattle." Effective date Oct 1, 2000.

U.Due south. Department of Agriculture, National Agronomical Statistics Service (USDA-NASS). "Cattle Report 2012." Washington DC, January 2012.

For more than data on beef cattle marketing and economics, visit the Southeast Cattle Advisor website at world wide web.secattleadvisor.com

---

Status and Revision History
Published on Jun 01, 2001
In Review for Major Revisions on May xv, 2009
Published on Dec 08, 2010
Published with Major Revisions on Jul 30, 2012
Published with Full Review on January thirty, 2017

turnerlils1943.blogspot.com

Source: https://extension.uga.edu/publications/detail.html?number=B1078

Share this post