Small operators always have to be prepared for the worst but must also position themselves for movement into viable new areas.

After the producer is comfortable with his/her production method and has proven the cattle sold are of good quality, they may want to branch out into retained ownership.

Retained ownership takes the commercial buyer totally out of the picture. Instead of the buyer taking the feeder cattle to the feedlot, the producer sends a group to the feedlot where they are finished out for a price per head per day. Then the cattle are sold directly to processors and packers. This method lends itself to higher quality animals that will add weight more efficiently on a prescribed ration of feed. This method also makes health more important for the reasons mentioned earlier: less stress, easier to sell, bigger, etc.

Another alternative is Internet auctions. Bluegrass Stockyards offers an Internet auction the last Friday of each month. Producers supply video of the cattle to be sold that is taken on their farm. The video along with a description (Appendix I) of the lot is then sent to the stockyards where the auction is broadcast over the internet. Buyers from all over the country participate and can bring higher than market prices.

The video showcases the cattle in their natural environment without the stress of being handled and transported. The weight loss due to this stress is also reduced and buyers are more apt to bid up cattle that look good as opposed to those at the stockyard that are wide-eyed and covered in manure.

Contingences also need to be addressed. These are the what-if scenarios of the worst that could happen. In reality, the worst thing is that cattle prices tank and it is unprofitable to continue or cattle prices rise to the point that feeder cattle are cost prohibitive for the small producer.

There are a couple of silver linings that can be ascertained. Remember all that pasture management and improvement that was undertaken? With no cattle grazing, there is an opportunity to supply feed to those producers that are still in business due to either reason formerly mentioned.

High moisture content haylage along with traditional baled (round, square) hay should be in good supply from former production land. It is not hard to switch to hay production and requires only limited equipment outlays. Also, with documentation on weight gains from former cattle production it would be relatively easy to build a case for another producer to buy your forage. This is a win/win in that the new producer can put more cattle on the same amount of land resulting in volume gains and more weight being put on the animals resulting in higher carcass yields. This also puts the hay producer in a position to leverage past pasture improvement.

There is also an opportunity to run a herd on your land for another producer. If the latter scenario (high prohibitive prices) happened the infrastructure is already there for use by another producer. A profit sharing scheme could be worked out that will pay the land owner for use of the land and also for any work done by the land owner in the production, handling, etc. of the cattle.

Cattle transportation may be a viable contingency. If a former producer had their own equipment to move cattle it would be possible to offer that service to others in the area. This is risky with low margin due to fluctuation in fuel prices as well as distance covered. The marketing slant needed would be to show that the price of the transportation costs less than the customers’ expense in time, fuel, wear, etc.

Tags: beef,land,marketing,ownership,prices,production,quality,retained,sales,stockyard
Categories: Farm and Field, Livestock