Besides marketing, it takes knowing the soil, ruminate nutrition, animal husbandry and stockmanship to be successful.

Doug Ferguson

June 16, 2023

6 Min Read
Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer and BEEF magazineVECTORBOMB-THINKSTOCKPHOTOS

Soon I will be making two trips to the great cattle state of Oklahoma. First I will be speaking at the Crossroads Conference in Enid on July 19, and 20.  Crossroads Conference 2023 — Oklahoma Association of Conservation Districts (okconservation.org)  It is my understanding there will be a variety of speakers covering topics from genetics to virtual fencing to rethinking weeds.

My second trip to Oklahoma will be to teach a marketing school in Oklahoma City, August 8th and 9th. For more information go to my website Marketing Schools for 2023 – Mr Cattlemaster

More Marketing Schools

I am only doing two more schools the rest of 2023.  Space is limited and I realize the dates I chose may not work for some people.  There is another option to learn sell/buy marketing and that is to purchase a Cornerstone Cattle Marketing DVD set.  Ann Barnhardt’s Cattle Marketing DVD Set | Barnhardt  This is the only learn from home option I recommend.

Last week when I taught a marketing school, I recited a statistic I had read. The people in attendance had a strong reaction to what I recited and it got me wondering if I got it wrong. I took time to find the article I read it in. I stated that the average age of a cattle producer was 65-69 years old. The article I read went off 2017 census data where the average age of a producer was 58.  The author then just added 6 years to the average age from that data to get to today (58 + 6 = 64).

Valuable females

The point in bringing that up during the marketing school was to illustrate why first calf heifers seem to have lost their spot as the most valuable female. When this age group is purchasing breeding stock they want something a little more trouble free and proven.

Here is what really caught my eye in the census data. The average age of a beginning producer is 46. I just turned 46 last month so this stat really hit me. I can’t imagine starting new in the field of raising cattle at this age. When I reflect on all I have learned and experienced since buying my first animals when I was 20, I have learned a lot and it was a steep learning curve. 

Here are a couple more stats. The first one we are all aware of and that is we lose cow/calf operations every year and we have fewer independent cattle feeders. Couple that with the fact that fewer than 1 in 20 people had a college degree in 1940 to today where one in four people have a college degree. This industry has been around since Kane and Able and people managed to make a living doing it since that time. Here we are today with superior knowledge and for some reason we can’t make a living raising cattle anymore?

Systemic Thinking problem

This implies two things. First, we have a systemic thinking problem, which can be fixed. It begins with our self-image. If we think of this as a labor of love, or something we will struggle at forever that is our self-image and we will never outperform that. Second is we are in a skill vacuum, and just like the first issue, we can fix this. All the links I provided above are aimed at fixing the skill vacuum. Your number one advantage in the market is marketing skill. If you have it and your neighbor does not, you can run circles around him.

Sometimes I can explain my point better by using sports to illustrate. My 12-year-old daughter plays a lot of basketball. In some leagues it is easy for her because the competition is not skilled and she can get triple doubles in a game without trying hard.  When she plays with her other team, the competition is much tougher.  She has to rely on her coaching and the skills they gave her and couple that with game IQ , that only comes from experience, in order to compete. It is these skilled players that are going to go on and dominate the game in junior high and high school. The girls without skills will get left behind.

In this business there are many skills we need. Grazing and soil health, ruminate nutrition, animal husbandry and stockmanship to business and finances. The only way we are going to be sure we get our share and generate positive cash flow is to do a good job marketing.  Without marketing skills these other things won’t matter because without it we will be the one left behind.

Cattle Market Review

When I look at the markets from different auctions around the country this week I would call the Value of Gain (VOG) spotty.  Some markets had a strong VOG that clearly succeeded the Cost of Gain (COG). These sales held that VOG throughout the entire weight spectrum. Other sales looked like they almost failed to establish a market this week.

I was looking at the smoothed out data set from one sale that gave the appearance of failing to establish a market. I later got an email from a participant in the school I taught last week and he sold a load of feeders at that auction, and got his replacement calves at that auction as well, all while securing a $200 per head profit! His new sell/buy skills enabled him to see a hole open up in real time. While the weighted average gives us one way to look at the market, he was able to utilize the market very well. Each auction has a story to tell, this example shows that there can be one auction and two very different stories.

We also got to witness the value of rain in Nebraska this week, in a way. The parts of the state that have gotten abundant rainfall established a female market that was steadily $600 per head higher than the parts of the state that are declining due to ongoing drought. Areas that have gotten some good rains are the only areas that are establishing a market where females can consistently sell above their Intrinsic Value (IV). In dry areas everything sells below IV.

Consistency

The female market remained consistent in two ways. It refuses to give us a signal to retain and breed heifers. (Before anyone gets upset and emails me to let me know how production works, I realize we need heifers coming into production to keep things going.  I am just stating what the market is telling us). Most of this imbalance is due to the high value of feeder heifers. If we take their value on the scale and couple that with the expenses of getting them to the point of being 9 months bred we will have a lot more money wrapped up in them than they are worth. 

That leads me into my last point this week. If we have more money in them than they are worth and we are trying to do the 5 years and out strategy we will be going backwards. We will be selling value into the market but we will not be getting paid enough for that value to implement this strategy, if we are keeping or buying open heifers. The five year and out strategy shines if we are buying bred heifers. Again, we must have the skill to interpret what the market is telling us we can do to get ahead, or we will fall behind.

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