Private Treaty Versus Consignment Sales - Getting Started Buying Registered Cattle

 Private Treaty vs Consignment Sale - Getting Started Buying Right

One of the most common questions I get is how do I make money with Registered Cattle?

For the purpose of this blog, I’m going to focus on private treaty sales versus consignment sales. There are a lot of different ways to make money with registered cattle such as selling at local sale barns, creating a beef market either farm to market, farm to table, or farm to restaurant. For many breeds, there is a large market in cattle that can be sold for crossbreeding practices. However, most people that get into breeding registered cattle find it difficult to break into these markets and develop a consistent income. The majority of people that start their ranches with registered cattle start by buying from individual breeders or from a consignment sale. Therefore, they are already familiar with these marketing practices. 

Which option is better to buy cattle when getting started with registered cattle? 

Both are great options for different reasons. Private treaty sales are a great option for people who like developing personal relationships and knowing all the history behind the given cows or bulls they are purchasing. Visiting ranches to see the cattle and how they react in the pasture will give you a little peace of mind about what you can expect upon purchase. Depending on the ranch and your personal desire, you have all the experience and knowledge of the breeder at your disposal when selecting cattle from their pasture. Often, breeders will sell cattle with vaccination records, weights and measures, and calving records. Having all of this information can dramatically increase the speed and success you will have with the cattle you purchase. 

Things you should do to ensure you purchase the right cattle for your herd.

 First visually look through the cattle to see which cattle you are naturally drawn to. To make things easier, you should be prepared to take notes or at least pictures to reference. Be more concerned with identification instead of pedigrees. A great practice when viewing the cattle is to ask the breeder what it is that they are trying to achieve with their breeding program. Regardless of breed, ranchers always have a unique perspective of what they feel is the ideal animal. Most often you may hear, “this one has a great pedigree” or “this one has great genetics”. In general, you can just ignore those comments because you do not have a program yet to be concerned with the pedigrees. If you focus on the quality of the individuals, what responses you are listening for is “this cow raises a huge calf”, “this cow is an easy breeder”, “this cow has given us multiple heifers in a row”. Why is this more important when buying your first cattle? Simply put, you are looking for cattle that conform to your desires. By using the knowledge of the breeders you are purchasing from you can avoid traits that are undesirable. Perhaps this could be a flaw in conformation, bad udder, or something else that would create more work for you in the future. With your selections completed, now it is time to get down to price. Often breeders will give you group discounts and you should consider buying at least three at a time. Buying at least three at a time ensures that the odds are in your favor. As your herd grows you will naturally figure out that certain individuals just don’t work for you. 

What is a good budget price for buying cattle?

 Most breeders will tell you to buy quality over quantity and to get the best that you can to start with. The challenge is that you are new and you have no real way to determine which cattle are the best. As discussed before, buying cattle that conform to your desires is going to be much safer. From your selections, the prices should be roughly the same. If one is substantially cheaper or more expensive, just avoid those. The cheaper cattle most likely are cattle they just want to get rid of and the most expensive may just be cattle that they don’t want to sell. Obviously, the prices are going to be subjective to the breeder. Don’t feel obligated to purchase if you feel the prices are not reasonable for your budget. The one thing that you can be assured of is that there is always going to be more cattle to view and buy. If you take time to watch what the registered consignment sales are selling cattle for, you can start to develop an idea of what a good average price for your breed should be. 

How to pick the right cattle for your program from Consignment Sales

 

 Watching several consignment sales within your industry will give you a pretty good idea of what the average cost for cattle should be. Consignment sales should not be confused with Sale Barn Auctions. Sale Barn Auctions sell cattle by the pound, while consignment sales will sell cattle based on quality and pedigree. The difference is often thousands of dollars. Are all consignment sales the same? No, in fact, you can expect to see vast differences from sale to sale. This is often due to the quality of marketing, size of the sale, sale hosts, and location of the sale. For example, in my industry more than half of the sales will see an average sale price below $2000. The top 5 consignment sales have an average price in excess of $5000. With the top sale bringing home a $20,000 average per cow sold. This huge variance is often the reason many people prefer to buy cattle by private treaty. However, if you are a savvy shopper you can buy exactly what you want at a huge discount compared to the cost of a private treaty purchase. How do you do this? Virtually every consignment sale will have a sale catalog to show all of the cattle being sold. Most often you will see a picture, name, age, pedigree, and weights and measures. As I suggested in shopping for private treaty cattle, don’t worry about pedigrees at this point. Make your first selections by visual inspection. What is attractive to your eye. Try not to over complicate this process. You can sort your selections by age next and then weights and measures. Remember, there are going to be more sales with more opportunities to buy cattle that fit your needs. 

What are some of the drawbacks to buying cattle at consignment sales?

 The biggest drawback to buying at consignment sales is that you have to compete with all the other buyers. Though, this should be the least of your challenges. Buying at consignment sales means you may not know if you are going to get enough cattle at the prices you are budgeting to make hauling cost-effective. Compared to private treaty sales when you have negotiated prices and you know what will be involved in transportation. Secondly, you won’t be supplied with a lot of background information on the cattle you purchase. You always have the option of contacting the seller and asking for it, and in most industries the breeders are very helpful and appreciate getting to know the buyers of their cattle. What about those hidden flaws? Yes, it is possible you could be buying a ranch's problem cow, but often this is not the case. Even when it is, cows will sometimes adapt to your ranch and act differently than they did for their previous owners. 

 Is it worth taking some risks when buying cattle at consignment sales?

 Yes, the fact is that this is one of the benefits of buying at consignment sales. Depending on the time of year, cattle may come in skinny or underweight because of weather conditions that have affected the ranch they are coming from. While you are at a handicap of not knowing what that animal will look like in good condition and there is no guarantee that the animal will return to top body condition the risk is usually worth it. As a new rancher to the industry, you have a better ability to feed and pay attention to every animal on your ranch. If you have done things right and built your infrastructure correctly, which I’ll talk more about in an upcoming blog, you will have a cow that will blossom under your care. Your purchase price for that cow is likely to be thousands of dollars less. Within a few months to a year, that same cow under your care now in good to great condition will be worth thousands more than your purchase price. When buying cattle at public auction / consignment sales you should avoid cattle that seem aggressive. Regardless of comments from the auctioneer that “she isn’t like this at home”, the caution you take to avoid these cattle will save you potential hospital visits. While in many cases it is true that the cattle are not like that in the pasture or may not have ever acted in an aggressive manner prior, the result of being taken from a calm pasture, hauled for hours, rushed in and out of pens with a lot of loud banging gates often with yelling and sorting sticks pushing them in one direction or another, this can be more than a cow can take. However, if a cow can remain calm throughout all of that, there is nothing you will do to agitate that cow, giving you a sense of confidence that you will be able to learn how to work your cows with little fear of how they will react. 

Be patient when you start buying

 Buying cattle for the first time or while you are building your herd is an exciting time. You will learn a lot and meet wonderful people along the way. Enjoy the adventure and be patient. You don’t have to rush the process of building your herd and focus on the simple things like what you visually like and avoiding traits that will make your job harder. If you are more comfortable with private treaty sales, go to as many ranches as you can. The more ranches you visit, the more you will learn. Comparing cattle from a large variety of ranches will ensure you buy the best cattle for the best price within your budget. If you like the thrill of bidding and the excitement of auctions, keep in mind that this is like the stock market. In this livestock market, you want to buy low and eventually sell high. If you can watch the trends and wait for the bargains you can create a beautiful program that fits your needs and leaves you plenty of room in your budget. 

Do genetics and pedigrees matter when getting started?

 For all of you that are asking, what about genetics and pedigrees? Your job as a new breeder is to be mindful of your budget, build a herd that meets your visual criteria, and avoid traits that will make your job as a new breeder harder. As a new breeder, you will create the next generation of great pedigrees and genetics. Along the way, you will be making decisions that can change your industry or advance your unique vision of what makes your breed the best of all the other cattle breeds out there. Chances are the cows you buy based on your own personal visual desires will have genetics that are similar in one way or another. Those genetics are the baseline of what will become your own unique pedigrees. 

Making money with Registered Cattle when you get started is first and foremost about buying your cattle right. Meaning, buying cattle at a price that fits your budget while also fitting your visual criteria. Utilize the average market price to determine where you want to set the pace for your budget. Great cattle will always bring prices, however, you need expertise and experience to truly know which ones are the “Great Cows”. Which way you buy your cattle is based more on your comfort level and personality. Enjoy your time starting and remember the more fun you have and the more you like the cows that you start with, the longer you will continue ranching.

The Future Of The Registered Cattle Industry

The Future of the Registered Cattle Industry

By Craig Perez

Registered Texas Longhorn bull and heifer.
Courtesy of  Arrowhead Cattle Company
Photo by: Craig Perez

The questions you may be asking.

 If you are reading social media or just got your check from the latest consignment auction you might be asking yourself some tough questions about your cattle business. Just so you know you are not alone. Many of the breeders in various breeds across the nation are all asking the same questions. Why is the market so soft? How do we get more money for our cattle? Why does it seem like only the "big boys" make all of the money? How does a small breeder compete? Where do I sell my cattle to make the most money? Should I switch breeds? 

 These are all great questions and while each question can be a conversation in itself, some main points can be laid out for each one that may give you some insight on how to pilot your program through the next year.

Why is the cattle market so soft?

 If you raised unregistered stock you would find that the market is currently very much a buyers market. Meaning that if you wanted to get into the stock market or livestock market as it would be, now is the time. Buy now and buy with confidence. While this may not be a position you are in, it is certainly one that can apply to your registered livestock business. It would seem that the political atmosphere has played a role in our current circumstances. People who sit in positions to make deals on behalf of businesses and countries make unilateral decisions that impact everyone. In our case the cost of our livestock. Thus the amount of money we can make to support our families and ranches. 

 Dairy now pours in from the border between Canada and the United States, putting the average dairyman out of business on a daily basis. Between the cost of land, taxes, labor cost, and legislation that is imposed on the American dairyman the cost to produce a gallon of milk is more than the very same gallon of retail milk coming from Canada. 

 While on the southern border beef is being imported from Central & South America to crush the bottom line of the average meat producer. Just like in the north, the cost of land, taxes, labor cost, and legislation imposed on the American cattle rancher makes it very hard to compete. 

 Meanwhile, the inner politics of the United States play a tug of war over power, land, water, and rights. As cities expand into the countryside, the cost of land dramatically goes up as do the taxes to force owners to sell out to home builders and city projects. Water, once managed by rain and the capacity of tanks, ponds, and lakes will be stretched thin by the never-ending thirst of the cities. Rights and laws are dictated by the mass for the greater good. Cities pass laws with total disregard to the impact on the American farmer and rancher. In a perfect world, the cost of making a product would be directly passed up the chain all the way to the consumer. However, our system lacks some of the fundamental guidelines to keep this process in check. 

 The walls and streets seem to be closing in on the American rancher faster than ever before. Obstacles in every shape and form pivot to block our every move to try and find some profit by which to make a living. 

How do we get more money for our cattle?

If you are a commercial livestock producer, the first answer may make you turn your head. Converting your commercial herd over to registered stock may be the first step in getting a better bottom line. For years, every registered breed relied on the conversion to the commercial livestock producer. Breeding a registered bull to commercial cows seemed like the perfect way to add more pounds per animal with a faster growth period. It’s a new bright and beautiful digital world today. Everything you do, watch, and view is being tracked. The dairyman that are making the money, they have mechanized and computerized to make sure they are getting every ounce from each and every cow they own. The big cattle ranches are using sophisticated software to track everything from rate of gain to rainfall. Most registered breeds of cattle utilize the EPD system otherwise known as Estimated Progeny Differences. Which is more or less a fancy term for livestock statistics. Like a baseball or football player, each aspect of the individual is measured and tracked. The better the statistics, the more you move up. The worse the statistics, the more likely you end up cut. Quite literally if you are a cow. Knowing what your livestock is capable of doing and what it has done will become more vital with each passing month and year. 

Why does it seem like only the “big boys” make all the money?

 If you aren’t one of them, you have probably asked this question. Interestingly enough, there is always a bigger “big boy” out there. Every registered livestock industry has that record-breaking moment when an animal sells for a ridiculous price that leaves your friends in Califonia and New York lighting up your phone with messages asking, “did you see this?” It takes all your will power to not respond, “Duh, I was there when it happened.” So why do the “big boys” do it? The answer to this can be boiled down to two main answers. First, they can write it off! That’s right, where there is a savvy accountant there is a way to save money on your taxes. Turns out, when done properly, livestock can be one of the best ways to decrease the check you write to the government while building a business that can make you a nice living, or in there case a hobby that pays for itself. Second, they understand genetics! It’s a term thrown around registered livestock all the time. Horses, cattle, goats, pigs, and everything else that can be registered and have a pedigree is followed by genetics. When the big players buy six figured animals they do it knowing that the animal they are buying is well worth the money. How do they know? They know because it comes from great bloodlines, its own accomplishments, and the attention paid to creating a name that means something. For them, this may be a hobby or they may have built it from the ground up to be the best there is. They pay close attention to all the business aspects of their animals. They bought the best and they breed to the best. In return, they raise the best! It seems like that might be too simple of justification, at that level breeders can afford mistakes, but why chance it. They buy from other known producers of great quality stock, and in doing so pay a premium for the livestock. In many breeds, the best stock is bought and sold from one “big boy” to another. Leaving great up and coming stock to be heavily discounted and sold at insulting prices by lesser-known producers. 

How does a small livestock breeder compete?

 Have you ever heard the saying “necessity is the mother of invention”? For a small cattle breeder to compete, for a small horse breeder to compete, for a small goat producer to compete, and so on, it takes innovation. Look at your specific breed and figure out how to carve out a niche for yourself. You can either use the same genetics by breeding with the same sires, or you can create our own lines by keeping the very best of what you create. In either case, plan to build a program that offers something different. Start to gather your own data and figure out how you can use that to breed animals that look the way you want, perform the way you want, and feature a genetic package that only you have. Once you have completed this you can focus on the next step, which is selling your livestock for a profit.

Where do I sell my cattle to make the most money?

 If you aren’t able to sell your cattle for a profit, it doesn’t matter how good they are. Commercial producers traditionally sell at the local sale barn or livestock auction. This has been the time tested to be the easiest way to sell your living inventory. Caution, buyers in this market don’t care if you make any money. They would prefer you didn’t. In Texas, Farm to Market roads celebrates this long-standing form of commerce. For your friends that live in the city, they know to avoid these roads for fear of getting stuck behind a tractor. For once, you might follow there lead and avoid these or risk getting stuck behind. Thanks to technology and the wonderful digital age, both registered and commercial livestock producers can sell their animals online. 

 Websites are a must for any ranch these days. Each year the number of horses, cattle, goats, and every other farm and ranch creature being sold will increase. These virtual storefronts make it possible to sell well beyond your city, county, and even state lines. A well-presented site can make a small breeder look like the biggest and best breeder in the nation. 

 If websites aren’t your thing, or maybe your budget just doesn’t allow for it yet, then Social Media is your answer. Taking time to create your social media pages can give you an edge on the competition. Knowing how to target the right audience and market straight to them allows you the ability to ask the exact price you need and want for your livestock. 

 Thinking old school in a new school way is to list on Craigslist. While this is a market that brings out the most frugal of shoppers, having well-listed livestock can help you not only reach new customers but also welcome new breeders to your industry.

 The most commonly used resource is the registered consignment sale. This is by far one of the most hotly debated topics in any livestock industry today. Let’s just move past the argument of too many sales and quality of consignments to go straight into understanding each auction. Every auction has a unique attribute. Some are simply geographical. These are likely the least profitable, as they reward buyers at the cost of the local breeders’ willingness to support the sale based on its proximity to them. Instead, seek an auction that has a specific theme. Keep in mind if the theme is the best stock, you have to be able to pay to play. If you have great stock, but lack the pay to play option, then research to find one that promotes unique attributes much like what you raise. Searching based on color, size, age,  genetics, can be very rewarding especially if your animal is among the best there. 

 Finally, go back to the basics. Call, text, or message people to come and visit your farm or ranch. It may cost you breakfast or lunch to have people see what you’re doing in person, even if they don’t buy anything, chances are they will share their experience with others. That will eventually lead to the kind of sales you are looking for.

Should I switch breeds?

 If you feel me shaking my head, you would be right. If you failed or feel like you are failing in one breed, nothing will change by switching. All you will have succeeded in doing is taking a loss in one breed to eventually take a loss in two breeds. Of course, there are exceptions to this, and that might be you just don’t care for the breed you started with. Maybe it was more complicated than you thought, or maybe you need a bigger challenge. In these cases, it would be perfectly acceptable. 

 Remember what got you started. If you abandoned everything you started with, you probably threw out the reason that got you so passionate in the first place. Everyone has ideas of how to make money in cattle, horses, goats, and so on, but nothing will make you money faster than excitement. When you can walk out and love what you are doing, an icy windy frigid day fixing the fence, saving that newborn stuck in the mud or getting kicked in the knee will all be worth it.

Registered cattle are the future.

 Every breed has its best features. Cattle just have more of them. Horses are wonderful and everyone should own one at least once. However, the horse industry found a way to kill their future by abolishing their ability process for meat. Horror stories aside, when you have no way to remove your bottom end stock, your bottom end stock will become your end. 

 Goats are for the most part pretty cute, every petting zoo has them, and they can even comingle with other animals like cattle and horses. The meat hasn’t quite caught on in the United States yet, but time will tell as farms and ranches get smaller. They might be all we have room for years from now. Until then, never did anyone say, “Goat, it’s what’s for dinner!”

 Pigs (Bacon, ham, pulled pork, pork chop…), ya, I’ll give you that. Although, you don’t see a whole lot of kids lining up to become pig farmers. Takes a certain kind of person, and most people aren’t that kind of person.

 In a society that has tried to push for vegetarian diets, beef always finds a way. Going registered means that you as a breeder can stay on the cutting edge and not be priced out of the market. If you know what it costs to make your cattle, the market can be an open door to you. On the hoof, you can leverage your knowledge to sell your cattle for a fair to a ridiculous price. By the pound, “you can sell everything but the moo” (credit to DD). With the digital age at your fingertips, even the moo can now be sold for a profit. Depending on the needs, we can make our cattle bigger, smaller, leaner, and we can even make them faster. By utilizing the tools given by your cattle registry you can take your herd in whatever direction you desire and make money doing it.