From Our Side of the Fence

EMCC Owner/Partner

Things they are a changin’. Let’s have a hard look, and a frank discussion on the cattle business we have today. Specifically on the cattle we market today.

The first paragraph of any story article or book should be the most important paragraph. Being an advocate for cowboy individualism and genetic diversity of cattle, the first paragraph of this month’s article is one that I have resisted writing for years. Change in the cattle business starts slow, but then often accelerates, catching some of us flatfooted when that change takes hold and it seems like out of nowhere everything is different.

Change is inevitable.

As with anything, change does not necessarily make something better or worse, but change does make things different. I am talking about the cattle that the commercial industry sells well and the cattle that we do not sell well. As my brother Jon puts it, “the funnel is getting narrower”. What that means is the ultimate number of buyers is dwindling to a much smaller pool of buyers than people realize. The most influential buyers that are left are growing in volume and percentage share of the nation’s cattle inventory and from there into an even more constricted pool of cattle/beef processors. We aren’t the only ones seeing this.

Bill Bullard of R-Calf USA, and Jerry Nine, who runs the stockyard in Woodward, OK and pens a regular column in the High Plains Journal, have each in their own way shouted warnings of the change that has taken place in the cattle industry and how we market cattle.

In a recent article Jerry Nine said, “I’m not a negative person, but I’m not positive how many people can survive at the rate we’re going or whether all the small guys will be growing cattle for these two or three big corporations in the future. I’m afraid if we don’t tackle the area of packer and retailer manipulation and control that our business doesn’t have as big of a future as it has had in the past.”

Fortunately, the major buyers of feeder cattle at the top of the food chain with the most influence and market share of fed cattle are not trying to steal cattle from us. They do however have a specific product in mind that they want to buy. Luther, my ol’ pops, used to always say “you got to sell em when they want to buy em” which is very true, but to extend that line of thinking “you got to sell them what they want to buy”.

For those cattle that fall outside what they are specifically seeking to buy, the price discount has become excessive. The independent cattle feeders that would buy and feed the others have been bent or broken in recent years as they have little marketing leverage when negotiating with the major packers and few to no options other than to take the price offered when offered.

Years ago, independent cattle feeders such as Luther Angell, Fonzy Fennewald and others of their generation would support the market on these spotted, horned, dairy cross, odd and out cattle. They were confident that IBP or other mainstream packers would buy them as long as they were hard fed with no issue.
This is no longer the case.

This tough situation is reaching back and affecting feeder cattle markets. This is one of the biggest reasons that the spread from the top selling calves and feeders and the odd lot blemished or marginal cattle has been so historically wide. This is change we don’t see going away anytime soon, if ever.

The cattle that the best buyers with the best bids in the market are looking for is a true yearling or a calf that has been weaned over 60 days with at least one round and preferably two rounds of vaccines. Phenotypically the cattle need to be solid color whether that is black, red, mellow yellow, smokies, with some black baldies or red necks. These cattle when offered in sufficient quantities have performed well most weeks in the marketplace.

However, phenotypically the cattle that are becoming more difficult to sell include horned cattle, spotted cattle, dairy influence cattle, Boss Indicus influence cattle, hobby breeds, club calf rejects, purebred exotic breeds of any kind, extreme or purebred Continental breeding, straight Hereford, and Longhorn color patterns.

Genetically, cattle that are most difficult to sell include dairy, dairy crossbreds, and unweaned, unvaccinated, Hereford bull calves, while cattle that are becoming impossible to sell include full blood Longhorns, Corrientes and Holsteins.
The best actual recent example I can give you is 20 Longhorn steers sent to us by a commercial feedlot in Kansas. They could not sell them to any packer buyer there even though they had been on feed for over 200 days. The cattle were sent to us on a backhaul and we sold them in our regular Friday fat cattle sale. They weighed 750 to 1050 and only brought somewhere between $50 and $55 per hundred weight. Get out your calculator and assume it cost at least $2.50 per day to have them on feed. You will find every pound that they gained for over 200 days lost money. The cattle feeder that sent them west to feed likely knew he was taking a chance when he bought them. As it turns out he would’ve been financially better off if they would’ve been shot coming off the truck. Yes, if these Longhorns were free as 500 pound calves they still would’ve lost money. Holsteins are not quite as bad but pretty close. What are the chances of selling that cattle feeder more Longhorns? I’d say chances are near zero.

At this point some of you will be cussing me while others of you will think I’ve lost my mind. What sale barn guy tells people their cattle will be hard to sell? All that is a sure ticket to a different sale barn. I assure you shunning business is not my intention in any way, nor is it my intention to offend. Basically I believe you pay us a commission to sell your cattle as high as we can. With that in mind I feel obligated to inform all of my customers and probably customers of other barns because it is happening everywhere, that things are different and are becoming different-er fast.

We understand and support the idea that people just want to raise different kinds of cattle for a number of various reasons. We will continue and look forward to marketing them as best we can. As a producer, you need to understand outcomes on sale day are going to continue to be drastically different from top to bottom at our barn or any other. As the producer who has possession of those cattle for many months, you are easily in the best position to affect the outcome of sale day by the what, how and when decisions you have made.

The good news is our core group of customers is doing a fantastic job with genetics and processing. Our last special in Boonville, Missouri, although affected by poor weather, we still sold 900 feeder cattle. Of those 900 cattle, there were only maybe 9 or 10 “out” cattle. The progress the producers in that area have made in the last five years is truly remarkable. My hat is off to you.

More good news is the fact that we still have time to bring all our customers up to speed. We are willing to help with advice, but persistence, dedication and a financial commitment is crucial on producers’ part.

On our end, we have always enhanced the price of our customers cattle by having a reputation among all buyers all over the Midwest that we sell only healthy, backgrounded and farm fresh cattle. We are established as a source of cattle for our buyers that are not only healthy and processed correctly, but of higher-quality in many areas of the country.
In short we have a reputation for selling the good cattle.

I have many, many other things I could talk about, but I do not want it to delude the message this month. So that’s all I’ve got for now. Please send fan mail to me; hate mail to the editor. I’ll see you at the auction.