AGA begins this month selling open-market investment units of $500 each for Gelbvieh Profit Partners (GPP). The goal is to raise $1 million to bankroll the venture's first-year involvement in full or partnership purchases of Gelbvieh-influenced feeder cattle, as well as potentially partnering on some of those cattle all the way to the meat case.
"Through Gelbvieh Profit Partners we will purchase Gelbvieh-influenced calves through special feeder-calf sales or direct purchase," says Wayne Vanderwert, AGA executive director. "AGA wants to take an aggressive posture and be involved in a national scale of feeding Gelbvieh-influenced feeder cattle.
Vanderwert says GPP is a natural next step for AGA, and one that fits with the association's progressive history.
Lori Maude, AGA's director of communications, points out that the association was a seedstock-industry leader in offering such initiatives as commercial cattle marketing, grid marketing programs like the Gelbvieh Alliance in 1995, and crossbreeding programs like the Balancer hybrid program launched in 1998, and the SmartCross program in 2001.
"Now that we have people using our Gelbvieh and Balancer genetics in cross-breeding programs, we need to make sure those commercial producers are getting the extra value they deserve," Vanderwert says.
A mailing to prospective investors -- AGA's current membership, commercial bull buyers and feedlots that have participated in Gelbvieh Alliance and Gelbvieh grid programs -- will be sent this month. The goal is to raise the necessary funds to enable a Sept. 1 startup.
"That would mean having management in place, investment money in hand, and ready to start buying feeder cattle this fall," Vanderwert says.
In setting up the GPP, Vanderwert says AGA opted for a structure in which capitalization is limited to a total of $1 million per 12-month period. The lower structure, he adds, offers the program the most flexibility in acquiring investors. AGA hopes consecutive-year commitments by investors will enable GPP to grow quickly.
"One-million dollars doesn't sound like much, but if you can leverage that money by buying a 50% or a 25% interest in the cattle and partnering for the rest, you can generate some good buying power," Vanderwert says. "We've run the figures and we're comfortable with our ability to purchase cattle, and we feel the program will have an impact even in the first year."
A $500 investment will purchase a single open-market unit in the LLC, Vanderwert points out. There is no marketing obligation connected with the purchase.
"We'll be purchasing these calves through Gelbvieh-influenced, feeder-calf sales, which we'll set up anywhere and anytime we have a group of breeders and a sale barn in an area who want to cooperate," Vanderwert says. "In cases where commercial herds are smaller, we'll work with our breeders in arranging cooperative backgrounding programs in order to build uniform semi-load lots for movement to a feedlot.
"There again, it offers another opportunity for Gelbvieh breeders to help coordinate things in their area. All of this is very service-oriented toward commercial customers," Vanderwert says.
Vanderwert admits cattle feeding can be a risky business. "We hope that through some feed efficiencies we can pick up through Gelbvieh genetics, we can do a better job of feeding cattle. We also will seek to align ourselves with branded-product programs in order to help remove some of the valleys from the market," he adds.
Vanderwert says preliminary industry reception to the concept has been encouraging. Thus far, Rancher's Renaissance, a farm-to-fork beef marketing alliance, and two packing concerns have shown interest, though no public word on the startup had been made prior to this article and a similar one in the April issue of BEEF.
"Working with an outfit like Rancher's Renaissance would offer the program a very good partner, as well as a risk-management opportunity. Another bonus would be the collection of carcass and consumer attribute data that we can, in turn, use for breed improvement," he says.
AGA will hire a CEO and a staff person for the GPP program. Existing AGA staff will also be involved, Vanderwert says.
"Some AGA staff will certainly be involved in helping source cattle for the program. For instance, Dennis Fennewald, our commercial marketing person, will be setting up feeder-calf sales for the program. We'll also work with some reputable order buyers for cattle purchases in sales barns as well as direct off the ranch," he says.
For more information on the AGA and its programs, visit www.gelbvieh.org.