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Cow-calf producers don’t buy bulls, they buy calf crops.Read more from Seedstock 100 owners:Seedstock 100 ListingImproving efficiency is lynchpin to successManage bull costs with these producer tipxBalance tops bull buyers' list
December 28, 2015
Savvy commercial producers are buying lots more than bulls from their seedstock suppliers these days. They’re investing in genetic programs, expecting increased genetic dependability and selection accuracy. And that’s just for starters.
“These commercial producers understand there are tools to help them be more successful than ever before. If a seedstock producers isn’t using those tools, commercial buyers will go somewhere else,” explains Don Schiefelbein of Schiefelbein Farms at Kimball, Minn., which offers Angus and Sim-Angus.
In terms of tools, think of things like genomic-enhanced expected progeny differences (GE EPDs), selection indices and genomic tools as complex as profiling specific traits and as straightforward as parentage verification.
“Customer and potential buyers have zero tolerance for subpar animals,” Schiefelbein emphasizes. Which means, if a seedstock producer wants to keep his or her customers around to buy bulls next year, using all the tools available to increase genetic selection accuracy is simply a ticket of admission to the genetics business.
Part of that growing expectation may be generational.
“For the last few years, the average age of our customers has gotten dramatically younger,” says Dave Nichols of Nichols Farms at Bridgewater, Iowa, which offers Angus, Simmental and South Devon genetics and composites. “They don’t have a problem working with ultrasound, EPDs and genomics. They probably wouldn’t do business with someone who does.”
“As the tools become more sophisticated, it gets down to customers saying, ‘I have to rely on who’s providing the bulls,” Schiefelbein says.
Consider R.A. Brown Ranch at Throckmorton, Texas. Donnell and Kelly Brown and their family offer Angus, Red Angus, Sim-Angus and the Hotlander composite they developed. Multiply that selection by the number of EPDs available, the amount of phenotypic data backing each bull or female sold, add genomic data and then throw in the pedigrees; you’re talking a mountain of information for customers to sift.
Rather than offer potential buyers more and more data, Brown explains they continue to offer more decision-friendly information.
Specifically, the Browns have calculated, shared and used selection indices for 25 years. A decade ago they took that a step further, developing a system of ranking bulls with one to five stars—five being the highest rated.
“We rate every bull for the economically relevant traits of calving ease, growth, carcass and now maternal,” Brown explains. “Each bull gets from no stars to five stars. I use a spreadsheet that that is over 300 columns wide to calculate our star ratings. Our customers love it. They don’t want the fine print, they just want to simply and accurately find bulls that fit their needs.”
Ben Eggers, manager of Sydenstricker Genetics at Mexico, Mo., says it boils down to customers relying on their seedstock suppliers to take care of the details.
For example, Eggers explains, “Most of our customers are selling calves sometime after weaning. They don’t select for carcass traits as much as knowing that we have taken care of it.”
So, commercial producers are buying the total program of seedstock providers, rather than simply bulls.
Spin that notion around and Eggers explains, “I’ve always thought that customers aren’t buying a bull from us as much as they’re buying a calf crop. We have to help them make as good a calf crop and as large a calf crop as possible.”
These days, more customers also expect help making the most of the genetics they purchase.
“It’s nothing like I’ve seen before,” Schiefelbein says. “Customers today expect their seedstock providers to help them with service year-round.”
Before, there might have been a couple of conversations with customers during the year. Now, Schiefelbein explains the conversation is continuous as many seek information that extends beyond genetics to management and especially marketing.
“The desire of customers for help in marketing is more pronounced than anytime I’ve ever seen it,” Schiefelbein says. “They want a resource to help them lessen some of the volatility in the market.
Schiefelbein Farms has long purchased a slug of calves from customers to feed. Now customers want help marketing heifers and cull cows, too.
Sydenstricker Genetics, which offers Angus genetics, hosts a special commercial female sale for its customers where they can market heifers sired by or bred to Sydenstricker sires. They also offer a program by which smaller breeders can use Sydenstricker genetics to build and market bulls as part of the Sydenstricker program.
Along with the marketing help Brown and his crew have always provided, R.A. Brown Ranch also employs a marketing specialist to help their customers market cattle.
“The more you work with customers, the more they see how you work and what you can provide,” Schiefelbein says.
For those who can satisfy customer needs, Schiefelbein says, “The loyalty between seedstock producers and their commercial customers has never been stronger.”
As margins tighten, the value and strength of these relationships has the opportunity to grow.
Moreover, Nichols adds, “When things get tough, we all tend to want to deal with people we’ve dealt with before, someone we know puts out a solid product. I know that’s how I am. I want to buy from someone where I know there won’t be any surprises.
The summer and fall swoon in cattle markets serves as a prime example. Folks tend to favor the reliable even more when margins tighten.
Margins will likely tighten for seedstock producers, too, as bull prices ultimately track the value of commercial calves.
But it’s unrealistic to think top commercial producers will sacrifice genetic progress and expectations in any particular market. “Someone who has spent a lifetime building a cowherd isn’t going to risk buying an inferior bull,” Eggers says.
Plus, added-value management and marketing systems have matured to the point that genetics that fit their narrower specifications can be worth significantly more to commercial producers.
“So far, I’ve been pleasantly surprised at the interest we’re receiving for our bull sale. No doubt, though, prices will come off a little from where they were this past year,” Eggers adds.
“Top-shelf commercial producers need to have everything right to do business with you,” Schiefelbein says. “They’ll pay as much or more for bulls than purebred breeders, but they expect more, too.”
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