Marketing feeder cattle is a routine practice for cow-calf producers but one that also brings with it the challenge to find ways to elevate merchandising of the calf crop in efforts to increase returns.
“It’s the most common question I get,” Paul Dykstra, assistant director of supply management and analysis with Certified Angus Beef (CAB), told listeners on the recent virtual Feeding Quality Forum. Producers regularly seek out Dykstra’s expertise on merchandising their calf crop in effort to gain premiums or add value.
Dykstra tells those looking for advice that he believes the key or secret to successful marketing is to think about where the customer makes the most money. For example, think about how the cattle feeder can make money by purchasing your calves. What kind of animals do cattle feeders want to purchase to get a better return on their investment and optimize the value of their purchase?
“By understanding the demand drivers of your customers, you as the producer can and should aim for that target. Each customer (cattle feeder, cattle buyer, etc.,) will have different parameters,” says Dykstra. Cattle with attributes such as good health, above-average feed conversion, and the ability to hang a premium carcass are demand drivers’ producers should strive for.
Weaning prior to delivery is another positive attribute. “The demand in the marketplace for weaned calves has been very evident on the summer video auctions this year,” he says. “Fewer and fewer buyers are excited about feeding a freshly weaned calf.” Even though there is a cost associated with weaning and preconditioning calves for 45 days, the payoff is demonstrated in the market, he explains.
The cattle’s ability to achieve Choice or Prime quality will also influence demand. From 2000 – 2019, the percentage of carcasses grading Choice and Prime, as identified by USDA, has dramatically increased.
Today, the industry is harvesting 82% Choice and Prime, with Prime sometime making up 10% of that total. “Quality grades in cattle have improved and consequently the expectation of the packer is for cattle to reach the upper-quality grade levels.”
He reports the number of cattle meeting the 10 specifications required for cattle to qualify for CAB has also increased, currently, averaging around 35%. “Even with more CAB product to sell, the premium back to the brand continues.” Dykstra explains that more supply has not meant fewer dollars for the producer.
To achieve these quality standards and be eligible to qualify for CAB, the cattle must also carry the genetics. “Feeder calves with the genetics to perform and grade are providing the producer with a risk management tool.” The beef cattle marketing specialist has witnessed that the best cattle in an upmarket do well, and the best cattle in a down market keep your head above water.
Once producers have focused on the production parameters to excel, they may also want to consider added value options to allow them to access even greater premiums. This would include enrolling or certifying cattle in value added programs such as natural, non-hormone treated cattle (NHTC), breed programs like Angus Link, beef quality assurance (BQA), etc.
“Some of these programs can average an added premium of $10 per cwt.” He noted enrollment in these third-party process verification programs (PVP) further describing specific management practices, marketing eligibility, and/or genetics has proven to be effective for many that have chosen to do so. Enrollment in PVP programs verifies ranch practices to buyers.
Documentation, genetics, feeding and carcass history, health records and other management practices can all be used in building a resume on your cattle, notes Dykstra. But to take merchandising up a notch, he says take the time to explain the genetic superiority behind the cattle. For example, the sires of the offering are in the top percentile rank of the breed for carcass merit, etc., are talking points producers should emphasize to help further educate the customer about the cattle.
Although having all the production attributes possible on the cattle is important in marketing, Dykstra says the number one key to merchandising feeder cattle is networking. “You have to build relationships with potential feedyards, market representatives or other buyers. If you want to stand out across the thousands of head that are marketed every day and every year, they (buyers) need to know who you are, what your product is, and why they should buy it.”
B. Lynn Gordon is a freelance writer from Sioux Falls, S.D. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.