Jan. 21, 2010 - Livestock producers have many options when it comes to selling cattle, but a Texas AgriLife Extension beef specialist suggests that producers start at the beginning, by producing a good animal.
"You don't have a lot of options if you don't first produce a quality animal," Texas AgriLife Extension Beef Cattle Specialist Jason Cleere said. "Once you get a good animal, then you can look at the next step."
That next step is marketing, and producers today are faced with an array of choices when it comes time to sell. The local auction barn is always an option, but producers can also sell their animals directly from their farm or ranch, or through video or Internet marketing. They can retain ownership all the way through the feedyard, or they can grow cattle for a specific consumer market -- such as natural, organic or grassfed beef.
Even with all the new options, the local livestock auction barn is the most convenient and popular way for producers to sell cattle, Cleere said.
"You get paid the same day you take the cattle to the auction," Cleere said. "The marketing is done right there. You will get paid for the cattle. The people at the auction barn work for you. There is a commission charge, but they are doing the marketing for you.
"One of the drawbacks might be that you don't get fully paid for the genetics of your cows, and you may not be utilizing the benefits you get from high-marbling bulls."
Cleere said that those producers might want to look at direct sales, which means the buyer buys the animals directly off the farm or ranch. That might mean a better price for higher-quality animals, but the producer has to handle the marketing aspect.
"You generally have to sell truckload lots," he said. "You have to be big enough to sell that many animals. Plus, you have to collect the money yourself. It might take longer than it would at the auction barn."
With co-mingled sales, producers sell their cattle along with other pre-sorted cattle in order to put together a bigger truckload of cattle.
"Most are tied to preconditioning calves," Cleere said. "They are brought in, evaluated, weighed and sold as part of a lot. You get paid for that, and you can get paid a premium. The main thing is to make sure you have somebody sorting the cattle that knows how to sort cattle. If you have good cattle and they get mixed in with bad cattle, you're going to lose money."
Cleere said the Northeast Texas Beef Improvement Organization (NETBIO) in Sulphur Springs has one of the state's top preconditioned programs.
"That's about as successful one as there is in Texas," he said.
Sellers who choose to retain ownership of the animal all the way through the feedyard process will get paid for the animal's genetics and meat quality, but the money will be tied up for a longer time, Cleere said.
"Of course, the most recent buzz you hear today is for natural or organic meat," Cleere said. "That's going to include natural or organic beef, grown with no antibiotics or artificial hormones. A part of the consumer market believes this kind of beef is better for you. Science says it's not, but there is that perception out there and people who believe it are willing to pay two or three times as much as they will for conventional beef."
Cleere said the flip side of the higher prices includes higher input costs and more paperwork in order to be certified organic, natural or grassfed.
"I get a lot of people who ask me for advice on growing organic or grassfed beef and the first thing I ask them is how they are going to market their beef," he said. "Most of them have never thought of that, but they need to have a marketing plan first.
"They need to figure the cost of production and marketing against the value in the marketplace. They may find that they're better off raising cattle in the conventional way. It may not be feasible for everyone who wants to do it."
Despite the new means of marketing that have opened, Cleere said most producers are selling cattle in the traditional manner, by taking them to local livestock barn.
"In the grand scheme of things, most people are going through the traditional channels of production and marketing," he said. "They are producing a good product. If you want to believe the beef that's marketed as organic, natural or grassfed is better, that's fine. But there's really no difference in the health benefits between the traditional and the natural or grassfed."
