Costs of Marketing
Good marketing can bring more return on your calves.
Marketing cattle efficiently and at the proper time can make money. There are many costs involved in getting cattle to market, and it is important to minimize those costs. Many cattle producers do a good job of getting the calves born, keeping them healthy, and minimizing sickness and death loss; however, they do an average or poor job of marketing and thus reduce their potential profit.
C. Wilson Gray, Extension economist for the University of Idaho, says that for maximum return, stockmen need a good breeding program and calving season to fit with how they plan to market those calves.
C. Wilson Gray, Extension economist for the University of Idaho, says that for maximum return, stockmen need a good breeding program and calving season to fit with how they plan to market those calves — whether through an auction yard, order buyers, video sale or combination of markets.
Many producers precondition calves for several weeks to take advantage of premiums offered (or to avoid discount on calves sold right off the cows). “Some hold calves two or three months, or even later, to sell as yearlings. If they can put additional weight on, in an economic manner, they have a more suitable product to sell,” he says.
If light calves are worth a lot, however, and feed resources on the ranch are in short supply or costly, it pays to sell them at a younger age.
“With the high price of feed the past several years, feedlots were looking for heavier cattle that wouldn’t have to be on feed very long. Now that feed costs (corn) have come down somewhat, this has changed a bit,” says Gray.
Another factor is the kind of preconditioning program calves have been through.
“Once a feedlot gets to know the cattle from a particular operation (and those calves perform well), they are willing to pay more for those. These cattle get off to a better start, with fewer health problems,” he says. Some feedlots spell out the preconditioning program they’d like to see for those calves.
“Other marketing factors are administered by the Ag Marketing Service. They set up all the parameters, like source and age verification or selling into a grass-fed or natural-produced market. Ranchers need to know what they have to do to be able to use that kind of label.” This can take extra planning/effort and possibly more expense.
Typically, you’ll need records to show source, age and how the cattle have been managed health-wise, etc. There may be a fee to be part of one of these programs. The producer needs to weigh all the costs and benefits to see if the premiums involved in the program more than offset the costs and extra effort.
If you send cattle to an auction, trucking costs/commissions must be figured in. “With a pickup and gooseneck you are looking at at least $2 per loaded mile to haul cattle (one way). If a trucking company takes them to a feedyard in Colorado or Kansas you need at least 45,000 pounds on that truck because you can’t afford to send a part load. Today it costs between $4 and $5 per loaded mile to haul cattle on a semi,” says Gray. Sometimes a video auction will put together two or three small outfits to make a load. There are commissions and fees to market cattle, whether through a video auction or saleyard.
“Some ranchers raise certain types of cattle to fit a specific market like CAB® (Certified Angus Beef® brand). They’ve done a terrific job of marketing. If the animals meet the qualifications, they make those premiums. If an animal doesn’t perform, there will be discounts,” says Gray.
“Often, traditional marketing gives some kind of return, but there may be something you can do differently and make more money, or there may be a program that at least part of the animals might fit into to give a higher return. It may pay to try to optimize instead of just doing it the way you’ve always done. Not all your calves may fit the same market,” he says. It may pay to sort them and sell them more strategically in different groups.
Editor’s Note: Heather Smith Thomas is a freelance writer and cattlewoman from Salmon, Idaho.