Four panelists offered tips on how to help make every dollar count when it comes to taking calves to market during the recent Stockmanship & Stewardship virtual event.
Mike VanMaanen, Eastern Missouri Commission Company; Trey Patterson, Padlock Ranch Company; Doug Stanton, IMI Global, a division of Where Food Comes From, Inc.; and John Hutcheson, Merck Animal Health, were on the panel moderated by Don Schiefelbein, current National Cattlemen’s Beef Association president.
The cattle industry has changed over the years, and Schiefelbein tasked each panelist to detail what has stuck out to them when it comes to change.
For Stanton it was the “cow who stole Christmas” in 2003 when a bovine spongiform encephalopathy- infected animal was found in Washington state. Market access to Japan was halted after the discovery. At the time, the Japanese market was very profitable and the only way back in was a source verification program.
“And we basically had to make sure that all product that was going there was verified that it was under 20 months of age,” Stanton said. “We were one of the first programs in the U.S. to do source and age verification under a process verified program with [U.S. Department of Agriculture].”
Patterson said from the changes in the systems, producers became more aware of all the value-added programs and realized it’s about filling the demand for consumers. On the Padlock Ranch being in the cow-calf business can be a tough way to make a living. Costs of production, market volatility and other events pushing pricing around make ranchers find ways to tighten their belt.
“I can’t tell you how important managing risks through marketing really is to profitability in a business. It’s just really, really important,” he said. “If you think about many of our operations, and we’re no different even though we have this backgrounding program where we’re carrying calves over. Most of us in this business produce calves and they’re ready to be sold at a particular time of year.”
He said cattle producers were able to navigate market crashes and shutdowns, but still manage those changes with diversification in the markets they produce calves for. Padlock has a Wagyu program and he can market to a certain segment compared to conventional feeder steers and heifers.
“That also creates a diversification in the timing because we’re hitting that fall market with them and also gives you the opportunity to evaluate retained ownership,” Patterson said. “And that’s something that we do all of the time. If we feel like there is value in retaining ownership to finish rather than selling we’re gonna look at that.”
“There are cash flow considerations, but it also allows for flexibility down the road. And the additional tools available to producers—futures and options, forward contracts, basis contracts, and long-term relationships with our customers to help manage risk on these cattle.”
“That sounds pretty complicated, right?” Patterson said. “But is there anything more important than finding the right channels and working on this revenue side of the business?”
Patterson and his crew work on marketing all year long, and don’t just wake up one day and decide they need a plan.
“We’re very intentional about developing these and creating diversification,” he said.
When it comes to the role of livestock markets, all sizes of operators are important. But so are relationships with producers in the area of the sale barn.
VanMaanen said for those customers who want to sell in those markets, they need to understand the care and handling of their livestock once they reach the market. Employees know how to sort and weigh for marketing purposes.
“We are good marketing people. We have lots of contacts for buyers that we will call and get them to either bid online as well as buyers in the seats,” he said. “So it’s very competitive.”
Take homes
Patterson said cattle producers of any size need to develop a marketing plan and be very intentional about their program.
“You can do that and you can leave flexibility in your system to respond to drought and those type of things,” he said. “We produce some great cattle in this country, and consumers desire it. So let’s figure out what fits your systems and be very intentional about developing marketing programs that have an ROI in our businesses.”
VanMaanen said no matter what value- added program livestock are enrolled in or what phase you want to sell them or market them at, it’s important.
“I’m a firm believer that to keep our industry healthy you need to market as many segments of those as you can in a competitive auction market or a competitive bidding situation or a negotiated trade and to keep our industry healthy price wise,” he said.
For Stanton, if a producer isn’t happy with what they’re getting for their cattle or calves they need to do some extra legwork.
“If you feel like that you’ve heard about some other pricing out there. You heard about a neighbor that got better pricing on their cattle and you feel like your cattle are just as good or better than theirs, then, do a little bit of market planning,” he said. “Do a little bit of research and figure out if you fit into some of those programs, and then take that initiative to move forward.”
Hutcheson agreed. Producers who can develop a comprehensive health and nutrition program will have calves that are suited for whatever stage of life they’re headed to next.
“Take care of them on the ranch and don’t forget that taking care of them starts from when they’re bred all the way to the point that they’re taken off the ranch,” he said. “Again, that’s the comprehensive health program and know the impacts of that, and nutrition underpins all of it.”
Hutcheson stressed finding resources and people who can help improve your herd and operation.
“I always have the motto of continual improvement,” he said. “As an industry, I would continue to try to improve themselves, whether that’s to listen to seminars like this or panel discussions like this but find people you can talk to and bounce things off.”
Finding what works is the difficult part, but Hutcheson believes it’s a continual process to stay competitive.
He said, “Thinking holistically as a cattle raiser is the challenge to everybody out there so we can continually improve as this industry changes.”
Kylene Scott can be reached at 620- 227-1804 or [email protected].
