P&L with a cattle herd includes adding value

Livestock producers have to weigh many decisions that make the difference between a profit and loss, and experts say they need to explore opportunities to add value.

A livestock auction is a market outlet where cattle producers can reap the rewards from their work. Recently four experts served on a panel during High Plains Journal’s Cattle U and Trade Show in Dodge City, Kansas. Their goal is to get top dollar for sellers.

Generally producers should have their cattle weaned before marketing them, the panelists said.

John Campbell said in most cases that is the right strategy but adds, “It’s not a one size fits all.” Campbell has worked as a field representative, auctioneer, general manager and order buyer for Winter Livestock in La Junta, Colorado, for 41 years.

A producer has to know his bottom line costs so he can make a good decision.

Corbitt Wall believes that producers should consider weaning as a long-term strategy. Wall is the commercial cattle manager for DV Auction and host of the Feeder Flash daily cattle market summary.

“Do you want people to have good luck with your cattle when they take them and go on? They will remember them and they will tell their buyers to remember them. Buyers will remember which ones not to buy. Your calves are your reputation moving forward. Ideally you want to have your calves weaned but that is not always possible.”

Arlen “Bim” Nelson said a buyer will remember a set of sick calves and the buyer will remember the seller’s name. Nelson, of Bassett, Nebraska, is a former owner of the Bassett Livestock Auction and a self-employed cattle buyer who buys cattle for farmer-feeders in Iowa and feedyards in Nebraska.

He advises that while weaning is the right strategy, there is no perfect formula.

“As far as my philosophy in marketing, it is to sell what everybody wants and what the fewest of are at the time. From Oct. 10 to Dec. 10 is when there are thousands and thousands of calves headed to feedlot. It is the healthy ones that stand out as do the sick ones. All of that puts pressure on the market. Anything you can do to get your calves at least 45 days weaned is going to put money in your pockets.”

Jerry Nine suggests a producer have their calves weaned for 45 to 60 days. He also says it is good to check to see what feeders want.

“I’ve noticed in the past couple of years with the feedlots that 50 to 60 days used to be long enough in September and now what I see is they want them (weaned) 70 days. If you are going to keep them, don’t keep them 55 days and cheat yourself the last 15 days.”

He also added, “When the market is strong sell them.”

Since 1999, Nine has been writing a weekly article for HPJ and he has owned Woodward Livestock Auction since May 2000.

Vaccination strategy

Buyers seek vaccinations more now than ever before.

Nine said producers should write down all of the shots administered. The word “shot” is one of the most misused words in an auction barn, he quipped. “If you put down they had their shots it might mean nothing. It might mean blackleg or a whole bunch of stuff.”

Campbell said not all ranches are the same.

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“If you are looking at the buyer’s perspective, he wants to have them vaccinated three times—once when you brand them and then a pre-weaning shot and one after weaning.”

However, expansive ranches do not always have the manpower or logistics to do all the shots at the same time and they have to weigh that in their program.

“We get more and more people asking about shots. Ten to 15 years ago we didn’t get those calls. The masses are vaccinating their calves so if you want to cash in on the best value or sell the highest price calves you have to go with the flow. You’d better add as much of the most value you can.”

Today’s buyers are putting enough emphasis on shot protocol and that can leave some selling at a discount instead of getting a premium, Campbell said.

Producers who follow protocol are ones who do better in getting top value, Wall said.

“As long as you are giving the cattle what they need and making sure they get a full dose and in their neck,” he said.

Nelson said it is imperative producers make sure cattle have all their necessary shots.

Blackleg shots are imperative at an early age, he said. If a calf is only 2 to 4 weeks old, it is likely not old enough to have its immune system developed so his advice is to wait a little bit longer.

Sorting on the farm

Logistics play a part when a producer is looking at how extensive his sorting process should be, the panelists say, adding that separating by sex is a must. Also, developing and nurturing a relationship with cattle haulers and sale barn pays off.

Wall has seen examples where sellers try too hard to get perfection in sorting and it becomes counterproductive.

“Anytime your cattle are stressed or you are running them around you are shrinking those cattle,” he said. “Let your sale barn guys do the merchandising.”

The merchandisers also know who the buyers are and what they are looking for, he said.

If the truck driver understands what needs to be accomplished, that can make the sorting process go smoother, Wall said.

As far as matching them up by sizes Campbell recommends only sorting those that are obvious. “If your market people are doing their job, they will be able to accommodate you a little bit better on the sizing because they know their job better than you do when it comes to merchandising those cattle based off size. Sometimes the best way to sort the cattle is not necessarily the best way to sell them.”

Nine said if a producer has a small group of 15 to 20 cattle, sale barns will know how to handle them to get the seller top value.

“We do that every day of the year and we’ve done it for 20 or 30 years, and we should have a better idea of what can make you more money than you do if you come to the auction only once or twice a year,” Nine said. “If you have faith in the auctioneer I’d leave it up to him.”

The panelists emphasized that special sales can add income.

Special sales bring in extra buyers, he said. “Don’t ever pass up an opportunity to sell your cattle at a special sale.”

Special sales are important, Nelson said, because they establish and reinforce reputation.

Think like a cattle feeder

The look of your cattle works to establish your reputation at the sale barn as well. Nelson said reducing contrasts and keeping cattle similar in appearance helps sellers. He advocates thinking like a cattle feeder because that mindset can help the sellers to earn top dollar.

“We market our feeder cattle much better than our fat cattle,” he said.

Nine said to try to predict what buyers might specifically look for as several times they are looking for a value or have an affinity for breeds that might not always follow a predictable script.

Campbell said producers might consider thinking outside the box. A big calf in the fall can mean a bigger feeder weight producer in November when demand is still high and yet the supply is not as plentiful.

“Calve a little earlier, calve a little later, (just) be out of step.”

Mother Nature does dictate pastures and feed availability, Campbell said, and that has to be taken into account by the producer.

A pet peeve for Wall is the lack of number of fall calves. “Seventy-five percent of the beef calves born in these United States are born in the first half of the year. People like to eat beef year round. We don’t have the infrastructure in our cattle business to handle 75% of the calves all at one time.”

Nelson believes in the study of genetics but add the “E” in expected progeny differences could also mean estimate. If the size of the stock gets too large it can be problematic.

“Make sure you have structure,” he said. “Cattle have to be sound on their feet.”

Another common mistake is not culling cattle on a timely basis.

“Take advantage of the salvage value you have with your cull cattle before they go down too far,” Nelson said.

The panel was moderated by Nick Wells, a livestock marketing consultant with High Plains Journal, who had compiled questions based on feedback from growers and shared his insight.

Dave Bergmeier can be reached at 620-227-1822 or [email protected].