Commercial producers may have to take what the market gives, but they can make the market give more with extra commitment and creativity. In fact, a growing number of partnerships are paving the way to extra cash, even without retained ownership.
"Whether you want to call it partnerships, networks or coordinated systems, I think these connections are the wave of the future. I think there is economic power in that," says Harlan Ritchie of Michigan State University (MSU).
A number of alliances offer producers the chance to retain ownership and aim specific products at consumers. But, Ritchie is referring to the power of putting load lots of similar cattle together, born in the same time frame, similar genetics, managed the same way; and putting enough of those cattle together to attract buyers.
Producers in Michigan, for instance, were discouraged about local buyers shopping out of state, believing homegrown calves came at a higher health risk. So, MSU and the state cattlemen's association hosted its first pre-conditioned sale last fall.
"The steers were 3-5 cents over the Western feeder market for the week, and heifer calves were about 10 cents ahead," Ritchie says.
Does that mean the calves were profitable? Nope. It means on 6-weight calves, producers took home $18-60 more per head (well over the added cost) than they would have by doing the same old thing on their own.
Likewise, Galen and Lori Fink started one of the first calf sales in the nation aimed at giving their commercial bull customers a chance to market their calves as a group. Customers of Fink Beef Genetics in Manhattan, KS, can also sell replacement females through another Fink sale.
Open to calves sired by Finks' Angus bulls, Galen explains, "Through our calf and commercial female sales, we've been able to achieve, in every case, a premium over and above the current market."
Customers have marketed over 4,000 head through the sales, with steers commanding $3-10/cwt. over market, and replacement-quality females netting $8-17/cwt. over the market. The Finks are tied to a number of retained ownership alliances they can steer interested customers toward, as well.
Ken Stielow of Bar S Ranch in Paradise, KS, takes a similar approach with the three feeder calf sales he hosts for customers each year. The top sort of replacement prospects can bring as much as $20/cwt. over market.
Across the board, heifers are bringing $2-3/cwt. and steers $2-5/cwt. over market price. If buyers of his Angus bulls are interested in retained ownership, he can help them accomplish that, too. He helps find buyers for customers who want to sell direct off the ranch, as well.
In both of these examples, producers aren't spending a dime more than they would ordinarily. They're just squeezing more value from their management and the genetics they already purchased. What's more, these seedstock producers are honing their competitive edge by offering more than genetics.
"The stronger the bond we can form between us and our customers, the greater the advantage. We don't want to be the guy where customers are only important to us the day they come to buy our bulls," says Steve Munger.
Munger, who breeds Angus and Gelbvieh bulls at his Eagle Pass Ranch in Highmore, SD, offers to buy back calves from customers who don't already retain ownership; many of them do. And, he buys them through the standard auction market where some customers feel the most comfortable selling. "I've not been to a single sale barn yet where the cattle I bought didn't bring the top in their weight class," says Munger.
Don Schiefelbein, commercial marketing director of the American Gelbvieh Association says, "Nothing could be healthier for the industry than having seedstock producers more involved in the other end ... What could be a better relationship than if someone is buying back a product built with the raw materials they're selling?"
Indeed, it forces everyone in the process to be more aware of the economic realities that exist up and down the production chain. Speaking from his own experience with his family's operation, Schiefelbein says, "When you start to buy back customer calves, feed them out and get back carcass information, you get a huge dose of reality.
"I can believe a single breed holds all of the answers or I can get the information and see the reality," he says.
Of course, there's no free lunch. Taking advantage of any of these added value opportunities - be it selling back to the genetic supplier, a preconditioned sale, or even pooling calves with neighbors - requires commitment to the process built upon belief in the product.
Munger explains, "We're trying to get the message to customers that if the person who sold the cow and the person who sold them the bull don't want to feed them, why should we expect anyone else to want to feed them. There is value there, and if we don't work to capture it, someone else will get it."