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Seedstock Producers Offer Alliance Opportunities

If a new bull is the only thing you have to show from your dealings with seedstock suppliers, then you’re probably leaving lots of potential on the table.

Wes Ishmael

July 30, 2010

5 Min Read
Seedstock Producers Offer Alliance Opportunities

If a new bull is the only thing you have to show from your dealings with seedstock suppliers, then you’re probably leaving lots of potential on the table.

More than ever, full-service seedstock suppliers are offering services that offer customers the opportunity to add value to calves and, more importantly, to retrieve the added value.

One end of the spectrum could be as simple as working through a seedstock supplier to pool calves with other customers to obtain potload prices.

On the other end, it could be working as a cooperator with the supplier, sharing costs and profits in raising and developing bulls and females.

In between, opportunities might include utilizing cows as recipients for an embryo transfer program. It could be developing and breeding heifers, then marketing them through the seedstock supplier. It could be selling calves through sales that have developed a market for specific genetics.

“Some fundamental things are still overlooked that can help commercial producers make more money,” says John Burbank, CEO of Seedstock Plus, a cooperative of seedstock producers who develop bulls and females regionally.

There’s the most rudimentary value of helping customers exploit heterosis through effective crossbreeding. “Another easy opportunity is for customers to let us know ahead of time when they plan to market their calves so that we can help find them additional bidders for those calves,” Burbank says.

Besides alerting a network of buyers about customer calves, Seedstock Plus offers feeder-calf sales featuring calves from customers, sired by Seedstock Plus genetics. Seedstock Plus members are also directly involved in Gelbvieh Profit Partners, an organization that buys or partners with producers to feed cattle sired by Gelbvieh and Balancer (Gelbvieh X Angus) bulls.

Fink Beef Genetics of Randolph, KS, offers similar opportunities. In addition to feeder-calf sales begun in 1995 and commercial female sales started in 1996 – featuring heifers developed by customers – Galen Fink explains, “We work hard to identify similar calves from customers in the same geographic area so feedlots can deal directly on large groups of calves.”

Dave Nichols of Nichols Farms Superior Beef Genetics at Bridgewater, IA, explains that putting together a potload of steers and a potload of heifers weighing within 100 lbs. of each other requires 400-500 cows. If you have too few calves to make a load, Nichols says, “hook up with your seedstock supplier. They can help you obtain potload price by getting you together with other customers also looking to pool calves.”

Beyond that, Nichols says the easiest way for his customers to add value is by weaning and preconditioning calves. The calves are worth more at sale time when marketed through sales utilizing preconditioning protocols recognized by the industry and in load-lot volume.

Plus, Nichols adds, “Even with $4 or $5 corn, those 100-150 lbs. you put on during preconditioning is some of the most profitable in a calf’s life.” He emphasizes achieving a cost of gain in the $50s means preconditioning at least 45 days and feeding calves to gain at least 2.5 lbs./day.

“If cow-calf producers would handle their calves as if they were going to feed them themselves and document what they do, I think they’d find that year after year they would make significantly more,” Nichols explains. He adds that includes making carcass and feedlot traits part of the bull-selection decision.

“If you think your calves just melt into the marketplace, that’s not true,” Nichols says. “If you don’t know how they feed and gain, or how healthy they are in the feedlot, you’re going to the sale with less information about your calves than buyers have. You’d just as well go to Las Vegas and play Texas Hold ’Em.”

Whether it’s finding or offering cows to lease or run on shares, chances to develop and market heifers, or most anything, full-service genetic providers like those cited here can match up commercial interest to added opportunity.

These opportunities are independent of herd size and geography, Nichols says. He points to one customer – a husband-and-wife team (both working professionals) with 25 cows – that develops and markets heifers through Nichols, rather than marketing calves.

“It’s not any one thing you do, it’s stacking up all of those little things you do on top of each other,” Nichols says. He explains things like weaning and preconditioning, potload marketing and documentation can add up to $50-$100/head, but it takes strategic planning and attention to accomplishing them on a least-cost basis.

Unfortunately, too few producers take advantage.

“So many commercial producers don’t do any risk management, and that’s scary enough, but they often do so little to market their calves,” Burbank says. If it’s only letting the sale barn know a month ahead of when you’ll market calves, or calling a feedlot for a breakeven price on what your calves are valued at for retained ownership, you can be surprised by the results.

Fink reckons about 10% of his customers exploit the marketing opportunities available to them. Time is part of it, he says, but it’s mostly tradition. Folks are used to doing what they know. Besides, it’s hard for some to count on someone besides themselves. The other limiting factor is often unrealistic expectations.

“Some of these opportunities, there might be an extra $10 or an extra $30/head. That doesn’t seem to be enough upside for some. In our own operation, I don’t want to leave even $10 lying on the table,” Burbank says. “There are no home runs unless it’s timing. You grind out added value.”

Nichols equates selecting seedstock suppliers to finding providers of other essential inputs and services, like equipment dealers. He identifies five or six suppliers with the equipment he needs at a fair price.

“If it’s Saturday night and raining, and I break down with five acres left, which one will be there to help me, which one has that kind of service? We must have a dealer who provides service at a fair price so we can take advantage of the technology available.”

Burbank believes the same criteria apply to value-added opportunities. “Consider all of the costs of value-added opportunities,” he says. “Opportunities have to be based on facts rather than wishful thinking.”

“It’s not a commercial producer’s job to find a seedstock supplier who will help him add value to the calves. It’s the seedstock supplier’s job to provide opportunities that help their commercial customers stay in business,” Nichols says.

It is the customer’s responsibility to exploit those opportunities, though.
-- Wes Ishmael, August BEEF

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