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Friday, May 28, 2021

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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.


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