I was reading an editorial the other day in a major beef magazine that got my attention. The author was telling livestock producers that they should feel pretty darn good about making $50 a head on their weaned calves.
How in the world do you make a farm payment, buy groceries, pay for insurance, taxes, fuel, repairs…and list goes on… with $50 calf profit per year? It has gotten so bad that some livestock producers truly are comfortable with not making any money on their herd. So if they make $50 bucks per calf they jump up and down with satisfaction.
Folks immediately get away from this line of thinking.
How many of you would rather make a $1000 profit per head on your calves?
Yes, I can hear many of you folks mumbling, “That dang Greg has lost his mind.”
That’s fine because everyone has the right to their own opinion, and you are not required to change anything that you are doing. But before I get started in detail about changes that you need to make on your operation to get away from the break-even crowd, or the $50 buck per calf profit crowd, I want to share a true story with you.
I was talking to a seasoned, older cattleman several months ago at a cattle sale. We got to talking about the current cattle cycle and the depressed prices that are being paid today at cattle sales around the mid-west. In 50 years of coming to this cattle sale every single week, he told me he saw his first blaring red flag that day.
When he walked into the sale barn’s restaurant that morning to have a quick bite to eat before the sale started, he was astonished. The old rancher said. “You could have heard a pin drop on the floor. It was ghostly silent. The fear on every livestock person’s face was real. Folks were scared to death that the low markets were going to take them off their farms.”
He continued, “Normally every sale day you could not hear yourself talk. The laughter and conversations were normally deafening. Not that day. These livestock folks see the end of the road for their animal operations. You can only lose money for so long. Then you have to quit. If you are in debt, the bank makes that decision for you. I just got up and left, it was depressing seeing the fear on everyone’s face.”
This is not a joke, commodity mainstream cattle operations are hemorrhaging at levels that we have never seen before. As another example, I went to a cattle sale the other day and watched 3,000 head of black calves sell through the arena. Every single calf brought the same price basically for their weight class. Every single calf that day lost money for the producer that raised them. This is a great example of how difficult it can be to make a good living from your farm today by depending on local sale barn prices to market your animals.
What Can We Do?
We can sit around all day finding reasons why we are not making any money in the cattle business. Some of the more common ones you hear are: the Packers are taking all the profit, fake meat is putting pressure on real meat prices, meat is bad for you, China is not buying our meat, Europe is not buying our meat, livestock are destroying the environment…the list goes on from there.
That is enough of that.
Let’s cover the bright road forward with highly profitable livestock operations: those that separate themselves from the commodity market, take ownership of their marketing and become Price Makers instead of a Price Takers.
This isn’t easy. It takes persistence, hard work, sacrifice and risks. It takes finding out who your ideal customer is, and learning to tell your farm story from your heart. It also means raising the right kind of animals. First, you want animals that can make you money. That means:
• 1,000 lb finished animals instead of 1600 lb finished animals
• Slick hided animals versus the hairy ones being marketed today
• Super docile livestock, easy to handle
• Electric fence broke animals
• Animals with big guts, minimal legs
• No giraffe legged animals or elephant size
• Animals that will breed every year without feeding supplements
Raising these kinds of animals might open another market for you too: Grass genetic seed stock sales of females and bulls.
This kind of operation also means differentiating your product from the calves at the sale barn or your neighbor’s. That could mean:
• 100% all natural, grass finished animals
• No growth implants
• Grain Free
• Chemical free animals – no wormers, no ionophores, no antibioics, no lasalocids, no monensin, etc.
• Only market animals that you would want, sell the culls.
• Stand behind your sales.
Folks we absolutely can do this if we look at how we market our livestock in new ways. Nobody else cares if you make a profit on your calf. So you need to take action now. Just remember the next load of calves you give away at the sale barn, make a promise to yourself that will be your last load.
Get started today!
For another perspective on beef marketing, check out John Marble’s article this week asking, “Are You Raising Cattle That Fit Your Market?”
And if one does all that, and buyers still use auction houses to gauge what they will pay for your cattle?
I sold 40 cows, and twice as many calves last year. All grass fed/finished, vaccinated, easy handlers, etc etc. Couldn’t get anyone to pay more than $1/lb for anything. Ended up moving the whole cow lot to the sale barn just to unload them all at once. Add in the costs of hay production, reduced yields, and buying in hay to make up for it… has proven a very hard few years for beef operators, even small ones.
You have to do the leg work to make your own markets. Start out by just trying to direct market a portion of your livestock sales to private customers. If you raise a product that is different, no hormones, no gmo grain, no pesticides, etc that is your neon sign that you need to get out to your potential customers.
When we started 20 years ago, we sold to our friends and expanded our sales each year from that. Sale barns will never pay you what your animals are truly worth.
I was exactly in the same boat that you described when I first started. I just figured that if i raised the best they would pay me accordingly. I found out the hard way, sale barns sell animals, that’s it.
We are 100% responsible for selling quality animals to folks that pay the price we set, not the sale barn. This price that we set allows us to pay our bills and make a good living on our farm.
Greg, can you give a breakdown of the markets you sell to?
a. Friends and Family: %
b. Farmers markets: %
c. Quarters and Halves through the newspaper: %
d. Quarters and Halves through other promotion methods: %
e. What other promotion methods: %
f. Steaks/ Roasts / Ground beef by the cut? %
g. Do you deliver to customers? What %
h. Do you have pickup locations? %
I would just like to get an actual breakdown of what you are doing.
i. It is fine to say start marketing, but exactly what actions are you doing?
j. If it is your wife doing the actions, that’s fine, what actions is she doing?
k. What actual methods are being used?
l. How do you take your orders?
m. Do you have someone who packs your orders for you?
n. Do you sell through a cooperative that takes your animals and processes them and sells them?
o. What percentage of your income comes from your hay un-rollers?
Not sure you will want to give out that data, but that is what I want to know.
Thanks a lot.
Steve we sell in a multitude of different channels. First you have to let people know your story of your farming methods.
Your customers that you are looking for need to be folks that are 100% supportive of the way your animals are raised.
Newspapers and magazines are not effective tools for marketing meat, that was our experience. We gave it a try though.
Quarters, halves and wholes are presold to customers. We deliver the live amimal to the locker, customer picks up their portion of their meat there.
We also sell 6-8 weight grass steers to other grassfinished meat producers that have trouble raising enough to meet their demand.
We also sell finished steers to other grassfinished meat companies. In many instances, they take them straight to their locker plant to be processed.
Not sure what your question on our bale unroller sales has to do with marketing our beef?
I will say this, you need to be diversified in your farming endeavors. Brainstorming other avenues of possible income on your farm is not a bad thing.
If you only have one source of income, that is putting all of your eggs in one basket.
Thanks a lot!
When you say $50 per calf profit, do you mean thats whats left after all farm expenses are paid or do you mean $50 is what that calfs margin has been for the year?
Whats the total per calf income?
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