Cattle marketing options outlined

By MONETTE TAYLOR | South Central Texas Edition

Dr. Ernest Davis provided detail marketing options to cattle producers attending the 'Kollege of Knowledge' event. -- Staff photo by Taylor

June 3, 2004 -- With technology changing faster than most of us can keep up, producers have more choices in marketing their livestock than ever before.

At the recent Santa Gertrudis Kollege of Knowledge in Schulenburg, Dr. Ernest E. Davis, regents fellow, professor and Extension economist in livestock marketing at Texas A&M University, addressed the various types of marketing available, and the pros and cons of each.

Davis explained that each producer has alternatives and various strategies when marketing their cow/calf crops. He identified the types of cow/calf producers as those who are commercial, selling feeder calves and cattle; commercial who sell seedstock and feeder calves and cattle; and purebred producers who sell replacement cattle.

According to Davis, seedstock producers should be able to demand higher profits if they develop a reputation for exceptional genetics, diversify by selling semen and flushed embryos, and limit the number of "lesser quality calves that could not be sold as replacement cattle."

He said the major types of marketing for cow/calf operations include the auction market, direct sales, retained ownership, video/computer, group marketing, alliances and backgrounded/commingled sales. Each has its own advantages and disadvantages, according to Davis.

If a producer decides to use auction barns for marketing, Davis suggests letting the auctioneer know two weeks ahead of time, if you plan to bring in exceptional animals. Many times, the auction already has a customer ready to purchase such animals, or they can advertise the quality cattle coming in to a specific sale.

Another advantage of auctions is they will "market any type of animals you bring in there," said Davis. The producer has complete control of when and where he takes his animals to auction.

On the down side of auctions is the fact that sellers have little or no input in pricing, and selling cost may be higher. According to Davis, 92 percent of producers in Texas have less than 100 cows.

Any one who choose to have direct sales have more control over negotiating with buyers and can be more innovative in his marketing techniques, but he also has more responsibilities in competitively pricing his cattle, which means he must keep up with the latest marketing news.

Retained ownership is the "process of combining two or more stages of production or processing under the same management," and can eliminate some procurement, transportation and marketing costs. On the down side, this type of marketing assumes more market risks, money, management and decision skills.

Many producers have had success with group marketing because it can reduce costs and provide a larger choice of animals to the buyers. On the down side, it demands sales coordination and management, along with making sure the animals are grouped by similar ages, weights, sex, quality and breed.

Marketing alliances are similar to group marketing and are sometimes breed specific, although Davis said the "perception of buyers" is that there is less marbling in purebred cattle than mixed breed, and the consumer is looking for the best tasting, most tender beef.

Finally, the latest type of marketing is the electronic type. This allows buyers and sellers to view animals by computer, and can serve both large and small producers. According to Davis, it also improves the health conditions of the cattle, since they don't have to be moved around and come in contact with other animals.

Just one of the things to consider in electronical marketing is a larger, initial outlay of capital, said Davis. In spite of that, he believes it will challenge all other modes of marketing in the future.