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Value-Based Sales Pick Up Steam

The practice of preconditioning has faced its share of hurdles over the years. It was a hot topic three decades ago, then lost support because producers said they didn't get paid enough for their extra time, costs and trouble.Lately, interest has surged in these programs by progressive livestock market operators like Jackie Moore, co-owner of Joplin Regional Stockyards (JRS), Carthage, MO.Many market

The practice of preconditioning has faced its share of hurdles over the years. It was a hot topic three decades ago, then lost support because producers said they didn't get paid enough for their extra time, costs and trouble.

Lately, interest has surged in these programs by progressive livestock market operators like Jackie Moore, co-owner of Joplin Regional Stockyards (JRS), Carthage, MO.

Many market owners like Moore have felt almost left out as concentration and consolidation sweeps through the industry. Alliances, grid and formula pricing and direct buying by fewer and fewer packers have made it easy to by-pass these price discovery centers.

Some say these changes have reduced competitive markets and left fewer buyers. Yet, auctions still play a vital role in the beef industry, especially for smaller-volume operators who can't offer potloads of cattle.

Reversing The Trend Moore and other forward-thinking market operators are trying to change that trend. An example is the Value-Added Calf (VAC) and Yearling sales which began last November at the Joplin Regional Stockyards. Some 45,000 calves from a 150-mile radius were signed up in the program. Fifty buyers attending each sale bought 28,200 head offered in the four monthly sales. They represented large High Plains and Midwest feedlots, farmer feeders and graziers.

The sales are an outgrowth of a meeting last September between Moore and representatives of Pfizer Animal Health's Select VAC and the MFA Alliance Advantage program. Both are value-added health programs that have come on-line in recent months, all with the same goal - to offer buyers a large numbers of calves with the same health and production backgrounds.

Some 9,000 head of the more than 10,500 at Moore's January 23 sale were Wean VAC calves, preconditioned for at least 45 days after weaning. Another 900 were MFA Alliance Advantage calves. But calves from other programs were accepted as well, such as the Charolais Marketing Group for Four States, Purina's 4-Square effort and Missouri's Stocker/Feeder Quality Assurance program.

Moore's program is unique, however, suggests Pfizer's senior veterinarian Ken Odde. "He sensed the changing industry and decided he could do something for his producers to add value. Any successful business person finds out their customers' needs and figures out how to address them. Moore has done that," Odde says.

It seemed like a good relationship. Moore became the motivator using the value-added concept as a vehicle to provide facilities and contact producers and buyers. "We get these cattle together in larger quantities so buyers can get them at one spot rather than drive around the country to see producers with 10 to 15 head to sell," Moore says. "They'll give more for them if I can bring cattle of the same program together."

Select VAC provides the nationwide framework to achieve that goal, Odde says. "Plus, we have more buyer understanding and recognition in our program than many of these local ones," he says.

Pfizer's Select VAC Select VAC offers an Electronic Cattle Drive listing on DTN (Data Transmission Network) for producers with 50 or more calves. The $250 listing fee is waived if a producer uses Pfizer products. Each Friday, data is updated giving the owner's name, health treatment and how the cattle will be marketed, including the name of the stockyards selling the cattle. It does not, however, get involved in market transactions.

Wean VAC Here's how the Pfizer Wean VAC program works for Missouri cow-calf producer Cherry Warren. When joining the program he tagged each calf with the special JRS tag, then signed an affidavit verifying that health practices were completed and mailed the form to Pfizer. Pertinent information went on a card sent back to Moore who displayed it to buyers as calves came into the ring.

Warren calves twice a year - February and mid-August to September. The spring-born calves are from moderate-frame cows bred to Angus and Red Angus bulls. They are weaned at 270 days weighing 600-650 lbs., backgrounded on winter fescue pasture, hay and 4 lbs. of cubes per day. Gains range from 1.25-1.4 lbs./day.

The 191 steers and heifers were sold in the February 20 JRS sale. The heavy end weighed 741 lbs. and sold to a feedlot buyer at $79.75/cwt. The lighter end weighed 638 lbs. at the market top of $86.50/cwt.

"I try not to get my calves too fleshy so they appeal to a grazier to go on pasture rather than into a feedlot," says Warren. "That market's usually better than the feedlot market."

Warren says he got paid for the cost of the health program and eliminated sick calves during backgrounding.

Warren has emphasized vaccination programs for years. "It helped me sell calves in the spring," he says. "Before, you said your cattle had all the shots. But what does that really mean? Now it's in writing and your cattle are tagged back to their origin."

Warren plans to get carcass feedback on the cattle now, too. That should be easy since each calf carries a special JRS eartag. "That's how we track the cattle," says Moore. "We need to identify those cattle back to the original owner. That puts integrity into the program. Everyone is accountable for what they do. If a buyer gets a load of cattle that don't turn out right, it will show up."

As expected, the MFA Alliance Advantage program is more nutrition and beef quality assurance-oriented than Select VAC. "Ours is a total program with a network of sales people at our 150 stores who work with producers on a daily basis," says MFA official Jeff Windett.

MFA Alliance Advantage MFA certifies that cattle have been handled according to Beef Quality Assurance and Vac 45 guidelines. All cattle have been vaccinated and boostered including pasteurella and haemophilus, dewormed, implanted and weaned for 45 days. Members must feed MFA Cattle Charge, a high-fiber preconditioning supplement during the backgrounding period.

"These programs give producers the opportunity to move all the cattle they want to market in one day, regardless of weight range," says Windett. "From a buyer's standpoint, it gives more assurance that they're getting what they should be getting."

Windett says buyers are willing to pay $2-5/cwt. more for these special-handled calves worth $50-80/head more to the producer.

MFA Alliance Advantage members can retain ownership through their Carcass Quality Discovery Program at a service fee of $6/head. Calves wear green eartags.

The second option is to market direct. The third is to use auction sales within its trade territory. Cattle going through these sales wear a special MFA Alliance red tag. MFA has set up seven sales, one each month, in markets from Vienna to Columbia and Macon, MO.

Texas grazier Mike Schreiber likes the program. He bought 89 MFA Alliance Advantage calves at the January JRS sale. They were high-quality Limousin-cross steers and heifers weighing about 500 lbs. He'll graze them on native pastures and sell them in late summer through National Livestock Producers at the Oklahoma City Stockyards.

"I had all the information at home on the cattle before I got here," Schreiber tells BEEF. "Jeff Windett faxed me a list of MFA Alliance Advantage cattle on sale and read Pfizer's sellers' list on DTN. I had a good idea of the type of cattle that would be here."

Schreiber is shooting to cut his death losses and number of treatments in half. "If I can do that, my trip up here will be worth it," he says.

Marketing Vs. Selling Not only do these programs tie in well with the trend toward alliances, but they can also strengthen the price discovery system, which is the auction way of selling, Moore insists. "If we have no way of price discovery, how are we going to know what cattle are worth," he says.

Odde's philosophy, on the other hand, is that cow-calf producers ought to think more about marketing, not selling. "A key business concept is that to improve a product, you try to understand your customer and let him help you produce what the market wants. This has been difficult in the cow-calf industry because there hasn't been communication among segments," he says.

Much credit for the upsurge in value-added calf programs comes from Tex VAC, an outgrowth of the Texas A&M Ranch-to-Rail program, followed shortly by Superior Livestock Auction's satellite value-added program. More details are found in October 1997, BEEF.

The purpose of these programs is to raise the level of viruses and other pathogens before a disease challenge comes.

Veterinarians are important in these programs, but assume varying roles. One example is the veterinary-sponsored Vet Advantage Program sponsored by the Veterinary Ranch Marketing Association (VRMA) based in White Oak, TX.

The private, closely-held nationwide corporation started three years ago in East Texas. Only veterinarians actively involved in a bovine practice can become members. Each is involved in the complete program, from initial processing through weaning, then through the marketing phase. He certifies that all health requirements have been met.

Originally, all Vet Advantage cattle were sold private treaty or on the Internet ( This caused some opposition from auction market owners, particularly in the Southeast, according to VRMA president Grady Ellis. That may change, he says. "We're talking about opening up marketing so an Advantage Calf can be marketed in any way."

Documented benefits should give producers an incentive to use one of these value-added programs, suggests John Kirkpatrick, associate professor in the College of Veterinary Medicine at Oklahoma State University.

He cited the four-year study on the Texas A&M Ranch-to-Rail programs which noted an average net return of $44.59 advantage in healthy vs. sick calves during the feeding period.