One of the great ironies of the
cattle business remains that while the production Val Halla is
cookie-cutter uniformity, it’s the variation that offers
opportunity in the marketplace.
Spun differently, every producer
can make cattle worth more, simply by recognizing the physical,
management and marketing attributes that buyers covet the most,
year-in and year-out.
For instance, you can believe
there’s no need to cut bull calves because they brought just as
much as the steers at the sale. You can believe that until you
realize the bulls and steers brought the same money because
there were so few steers; the bulls set the market; the steers
were discounted to the level of the bulls rather than the bulls
being elevated to the status of their castrated peers.
If you ever doubt such reality,
take a look at any of the studies conducted by various Land
Grant Universities through the years. One of the most recent
comes from researchers at Kansas State University (K-State). In
that study, bulls were worth $5.91/cwt. less on average in the
fall (basis 550 lbs.) and $5.19/cwt. less in the spring. At
heavier weights, the bull discount increased to $7.06/cwt. in
the fall and $5.73/cwt. in the spring.
The K-State study comprises 8,200
lots of cattle (84,319 head) sold at auction in Dodge City, KS
and Joplin, MO in November and December of 2008 and in March and
April of 2009. The average weight across the cattle was 584 lbs.
The average sale price was $90.64/cwt., ranging from $60/cwt. to
$139/cwt. The cattle included 48% steers, 10% bulls and 42%
heifers. The average lot size was 10.3 head, ranging from 1 to
Fleshing out the gender
categories, heifers at 550 lbs. were worth $10.06/cwt. less in
the fall; $11.16/cwt. in the spring. At 650 lbs. the heifer
discount declines to $8.32/cwt. in the fall and $9.95/cwt. in
Short of using sexed semen,
producers have no control over how many bulls and heifers they
end up with; but they’re the only ones who control whether it’s
steers or bulls they’re selling and in what season of the year.
Cattle are not Equal
Both hide color and breed type come with additive rewards and
In the K-State study, relative to
the base (Hereford-influenced calves) buyers paid the most for
Angus (+$3.10/cwt.) and Angus X Hereford (+$2.72/cwt.) They paid
the least for dairy (-$12.22/cwt.) and Longhorn (-$10.86/cwt.).
Now, tack on or subtract color
preference. Compared to red calves, blacks (+$2.49/cwt.) were
worth the most. Mixed colors were worth $1.89.cwt. more than the
reds; whites $1.01/cwt. more than reds. Keep in mind, these
premiums and discounts are additive, according to K-State
researchers. So that black Angus calf was worth $5.59/cwt. more
than the red Hereford calf in the study.
Genetics can play a few tricks,
but producers control what genetics are used. If color matters
enough to them, they can control that, too, via genetic
Speaking of genetics, buyers pay
more and less for frame size and muscling, too. In the study,
compared to average muscling, heavy muscle was worth $6.62/cwt.
more and extremely heavy muscling was worth $5.25/cwt. more.
Small-framed cattle were discounted $5.98/cwt. and large-framed
cattle rewarded $0.75/cwt.
Similarly, buyers discount horns
(-$2.18/cwt), unhealthy appearance (-$6.31/cwt) excessive gut
fill (-$4.02/cwt.), excessive condition (-$4.87/cwt.) and too
little condition (-$10.83/cwt.). See Table 1 for more specifics.
Lots that buyers perceived as non-uniform from a weight
standpoint were discounted $2.11/cwt.
All of these cattle-related
characteristics are also under producer control, as are
Of course, load-lots have more
value to buyers than smaller lot sizes. “Premiums of $2-$10/cwt.
can be acquired if several small calf crops from similar genetic
and management backgrounds can be combined and sold together,
possibly even via video or private treaty,” says Brett Barham,
associate professor of breeding and genetics at the University
of Arkansas. He focused on marketing and adding value to calves
in the May UA Beef CHAMPS newsletter (http://www.aragriculture.org/News/beefchamps/2010/may2010.htm)
Information adds Value
Barham points to a number of opportunities producers have to
earn more money than otherwise by documenting management they’re
Consider age and
source-verification. If buyer’s have the records that make
cattle eligible for marketing to Japan or via other programs
that include an age specification, the calves are worth
$1-$3/cwt. more according to Barham.
Documentation verified by a third
party attesting to calf eligibility for Natural, Organic and
breed-based branded beef programs can also offer a premium.
Likewise verification of calves
complying with industry-recognized vaccination/preconditioning
and weaning programs continue to offer reliable premiums. Barham
also points out some buyers are willing to pay more for calves
tested to be free of persistent infection for Bovine Viral
Diarrhea (BVD). For other buyers, documentation of feedlot and
carcass data can make the difference in an extra bid.
Obviously, there are situations
where the net potential of any premiums mentioned in this column
cannot justify the cost of obtaining it. The point is that all
of these things are opportunities to add and retrieve value.
No one is big enough to make the
market, but everyone has the chance to break the average by
understanding what is worth the most to most buyers.
||Price Premium/Discount ($/cwt.)
*Indicates statistical significance of difference from base
Source: Factors Affecting Feeder Cattle Prices in Kansas and
Missouri, Kansas State University, Schulz L., Dhuyvetter K.,
Harborth K., Waggoner J.