Marketing Strategies for Cow-Calf Producers
As a cow-calf producer in North Carolina, you can choose to simply sell your calves, by raising calves that are easy to raise, and selling them at the most convenient outlet at the most convenient time. This sets you up as a price-taker, accepting the current market price, even when that price may be below what you need in order to break-even. But there is another option. You can choose to become a marketer. This means knowing what product to produce, where to market it, and when to sell, so the price is the best you can get. Simply taking the time to evaluate your options, your herd, and a few management decisions can set you up to be a marketer instead of a price-taker.
The first step is to know your cost of production. Without knowing your true cost to raise a calf, it is impossible to accurately determine your profitability. Additionally, understanding cost will help you determine what management practices and changes can give you the most return on your investment. The best way to determine your cost of production is by using a well calculated budget. NC State has several sample budgets available online for cow-calf producers through both the economics department and the farm school. Since each farm is different, it is critical to make adjustments sample budgets to fit your individual farm. All budgets should include variable operating cost, such as feed, labor, minerals, etc., as well as fixed cost, such as equipment and overhead. Work with your agent to help identify things on your farm that should be included in your budget.
The next step is to plan for the market and know when to sell. Although markets can be unpredictable at times, there are some trends that producers can take advantage of. In the southeast, about 70 percent of calves are sold in the fall. This is why we see a seasonal price swing, with higher prices in the spring and lower prices in the fall. With your completed budget in hand, determine which management changes you can make that will allow you to have more market ready calves in the spring, if those changes are cost effective and will allow you to increase your profitability. Keep an eye on resources like the NC Department of Agriculture and Consumer Services, which post daily prices at markets across North Carolina. These can help you determine the best time and location to sell, but don’t forget to include transportation cost in your budget. It is also important to consider lot size. A tractor trailer load will typically bring about 5% more than selling a single-head. Having a short, defined breeding season offers several advantages, one of which is having uniform calves that can be sold together, but it is not for everyone, so consider if it will work for your operation.
Finally, identify low-cost management decisions that can help you provide the calves the market is demanding, which will help you increase the value of your calves. If you are not already a BQA certified producer, determine if becoming one and selling at a value-added sale makes sense for your operation. Value-added sales can immediately increase the sale price of your calves. In the long term, consider the characteristics of your herd. Take note of what characteristics are bringing higher prices at your market. Things like breed, color, frame, etc. Does your herd have these desirable characteristics? If not, consider selecting for these traits when choosing replacement heifers or introducing new genetics.
Each farm is different, and as a result, no two farms will have the same marketing plan. However, every farm should have a marketing plan in order to maximize their profits. With a little record-keeping and some careful decision making, you can become a marketer and increase the profitability and sustainability of your farm.
Zack Taylor is Agriculture Agent, Field Crops and Livestock for North Carolina Cooperative Extension in Lee County.