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Value Added (Part I)
 

Posted on November 5, 2009 07:49 by Doug Ferguson

As a lot of people in my area are weaning cattle, or just loading up the calves and going to the sale barn with them, there is a lot of talk about “value added.”  I’ve had many conversations with ranchers and feedlot guys the last few weeks and I would like to share some of what I’ve heard and observed.

 Now when I used to hear the term “value added” I automatically assumed source and age verified.  I’ve been to a lot of auctions this past year and have seen more A & S cattle than ever before.  Now I don’t believe that means anything, but it leads to a topic of conversation.  I am not afraid to ask someone why they did something so I will ask the seller why he verified his cattle.  The most common answer I get “is to make more money on them.”  I have had company reps tell me how I can get twenty thirty dollars more for my cattle if I verify them.  On a five weight calf that is a premium of $5 ctw.  I personally have never seen this happen at a sale barn, so I am a skeptic.  I do have one friend who is a rancher in the sandhills who A & S his cattle every year.  He will background them and sell them as eight weights.  He tells me he gets $2 ctw over the market.  He tells me it only costs him a few dollars per head to enroll them.  So lets assume he nets $10/head.  With the number of cattle raises and sells, that’s a pretty good payday.

In my discussions with multiple feedlot owners, I hear repeatedly that they want cattle weaned at least 45 days and had one, preferably two rounds of shots and wormed.  I even know one guy who will not bid on cattle anymore unless they are weaned and vaccinated.  If you have the facilities to wean cattle this may be a real easy possibility to capture that value.  If you do this you are taking on managing high risk cattle and reducing that risk for the next guy.  The risk I am talking about is the shrink of weaning calves and the possibility of them getting sick. 

I have visited with a lot of cattle producers who feel like they have to A & S their calves and at least give one preconditioning shot.  They say they feel they have to do it because there are no real premiums, just discounts.  I have head that if you A & S your cattle and sell them at a sale barn they have to be tagged at the ranch of origin.  This is to be sure there is no accidental co-mingling of cattle at the sale barn.  Double check, and be sure you fully understand what you are getting into.

Then there is the possibility of retained ownership of your cattle.  I know some cow calf producers who started doing this for two reasons.  One, calf prices were low, and two, they spent some good money on a bull and wanted to see what his calves would do.  It seems that most of these cattle end up being sold on some type of grid.  I will just tell you from experience that doing this will either humble you quickly or make you swell up with so much pride that the buttons will pop off your shirt.  Assess your risk tolerance before doing this.  And out of the other side of my mouth, the greatest rewards come after the greatest risk.

Then there are the Natural, Organic, Grass Fed, and Non Hormone Treated Cattle.  I have no experience in Organic or Grass Fed.  I tried Natural once, and had real problems with coccidiosis.  I think I read somewhere that some Natural programs have now approved measures for coccidiosis control.  I have fed NHTC cattle and got along very well.  I sold these cattle on a grid and got real good premiums.  It seems to me, they had higher quality grades since they didn’t receive implants.  I did this before the days of four dollar diesel and seven dollar corn so the premiums made up for the extra days on feed required to finish them.

In part two I’ll discuss other less conventional avenues of value added marketing.

 

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Comments

November 5. 2009 21:19

Blair

Wouldn't that be something to get an extra $5cwt for A&S verification!  We sell our ranch born calves as natural and preconditioned with a minimum 45 day wean.  We get a $15cwt premium for this from the buyers.  I have yet to hear of any A&S verified cattle being sold at our closest auction, but that's not surprising since most of the cattle are off the range and gathered once after branding, and that's to truck them to the auction.

Blair United States

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