Mess around and find out

This week we watched a local high school volleyball game. I fully expected to see a highly competitive performance since many of the girls play club ball almost year-round. What we witnessed was a game that was sloppy and lacking fundamentals. All that time in the gym and miles a parent drives a child to practice is something I know about, and it left me confused how these girls didn’t have the fundamentals down. Right away I began to wonder about the coaching they’d received.

The next day something happened that hasn’t happened to me in years. Someone called and told me what I should write about this week. A reader was upset with me for blowing holes in the cozener’s material. He told me he was selling females that day and he was going to show me that he was going to deflect depreciation and capture appreciation by selling a sort of his cows and replacing with younger ones, and after he pulled this off, I was going to write the story.

Never winning

I have never won anything gambling in my life. I have not even won a dollar back on a lotto ticket. The thing is, right there I knew I had an opportunity to make a bet I could not lose. I told him turn around was fair play and when he failed, I was going to write that story.

I quit what I was working on and went to the house to log on to the sale and just as I thought, he failed to accomplish what he said he was going to do. I am very familiar with the theories he recited and this time his real-world experience allows me to blow holes in it. I know where he learned it and just like the volleyball players, I can say like causes produce like results. He also told me the age and gestation period of the cows and I know what the relationships between breeding stock has been for the last couple of months. He had no chance of making this work.

It's about the relationships

First things first. When it comes to sell/buy marketing it is all about relationships. The instruction he received only offers lip service on this topic, then goes into silly things like selling based off age and seasons.

With legit sell/buy we do not let target dates or weights determine when we sell an animal. What people are really doing with that idea is deflecting responsibility onto a calendar or a scale. The thing that makes an animal over-valued is buyer desire. What animal are people bidding on the most aggressively?

Consider your marketing plan

Selling a cow based off how many trips she’s taken around the sun is a poor excuse for a marketing plan. This cattleman mentioned the seasonality of the market. This time of year, the summer slump is supposed to be over because people are done haying and then they come to town to buy cows. The recent drop in prices blew that theory to bits. The females that sold that day were much lower than what selling prices were in late July. The calendar really let him down this week. I have written on here repeatedly not to try to market cows this way. This is the mess around and find out lesson.

I did receive a text from him shortly after the sale was over that he’ll be seeing me this winter. I sent him a message back that there is going to be a sale down the road from him next week and he’ll get his buy back there and that he should look at a different age of female for that buy back.

If he had been taught to evaluate relationships, he would’ve noticed that he should’ve bought cows the same age and in a different gestation period. That trade would’ve paid him $850 for selling $425 value into the market. The younger females he was focused on buying have been blowing the doors off the age of female he was selling. That one trip around the sun to get to the target age he was hoping to deflect depreciation at has $600 depreciation attached to it. From that point until she is a short solid there is $500 depreciation, which is $125 per year. At least he wasn’t selling pairs with a cow that age because the depreciation slide was worse, coming in at $700.

Don’t emphasize the depreciation

Too much emphasis is being placed on a cow’s age and her depreciation. It makes no sense to try to deflect it by selling 5-year-old cows when over half of all the depreciation is attached to that one birthday.

A couple days later I was curious to see how the market report reflected that sale. The market reporter lumped 3 ^rd and 2 ^nd period cows together and also grouped them by heifer, 2–8-year-old, then over 8 years old. This was extremely misleading from the story that was told during the auction. There was a $1,400 difference between the market toppers and the bottom end (using large and medium framed #1).

This may lead some to believe that there was $200 depreciation per year of age. There was a $700 to $900 difference between a 3 ^rd period and 2 ^nd period cow of the same age, so grouping both periods together was not the right thing to do. It also doesn’t reflect that over half the depreciation in the spectrum was on that one age of female. If time does not allow to watch a sale to realize what is really taking place I would suggest calling the sale barn. All the paperwork says they act as agents only, so hold them to it, and they would be happy to visit about it.

When it comes to marketing don’t gamble or try to force things to happen based on dates.

Value of Gain

The holiday messed with the Value of Gain (VOG) in the feeder market a bit. It was like a compressed spring. It dropped between some weights and then let loose on others giving them a high VOG. The tricky part was that where it let loose was not consistent from one sale to another.

Fats took another dip this week making them under-valued to the heavy feeders. The profitable buy back against them is the mid-weight heifers.

Unweaned calves 500 pounds and lighter were $7 back, and heavier than that they were $25 back. To put it into dollars per head there was $145 per head difference between a weaned and unweaned six weight. This is not the same thing as VOG, this is monetary gain. If we couple VOG with monetary gain by making a bawling five weight into a weaned six weight the value realized is almost $300 per head. Value added marketing is only value added if we capture the added value. In this case no program enrollment fees or tags are required.

Future marketing schools

I have two schools coming up in November and December in Beatrice Nebraska. You too can come see me this winter and learn how to evaluate relationships. We are now also offering private schools for your group. With almost 1,000 people having attended one of our schools we are now offering a discount for returning participants.

The opinions of Doug Ferguson are not necessarily those of beefproducer.com , beefmagazine.com or Farm Progress .