Beef producers, if you don’t have a marketing plan — get one.
That’s the simple advice from Ryan Copithorne, who founded Cows In Control after his realizing “a proper marketing program was actually the best way to keep a year’s or a lifetime’s worth of hard work from going down the drain.”
Having previously managed his family’s ranch at Jumping Pound and worked as a cattle director for a multi-ranch operation with 8,500 head, Copithorne set up his marketing business in 2014.
“You can buy the right bulls, you can have a management plan on your grass — do everything right you might add 50 pounds to your calves,” said Copithorne, who also has a 1,200-head herd near his family’s historic ranch.
“If you add all those dollars up it doesn’t even come close to what you make or lose in the simple fluctuations in the market.”
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Timing is everything when it comes to marketing, but it may not be what you might think it is.
First, you can still sell at the usual time of year, but, with a marketing plan, you have a whole year to set pricing for those cattle, he said.
And you don’t have to constantly watch the market, but you do have to know your cost of production.
“Having a break-even is critical,” said Copithorne. “Once you know your break-evens, you want to see if you are profitable. If you are profitable, lock it in. If not, then you look for opportunities to lock it in (at a profit).”
Knowing your buyers is the second key thing.
“You need to understand what you are producing. Don’t try to sell lean product to someone looking for marbling, for example.”
Third, have a schedule — know when you would like to lock in a price and when you are going to sell.
That approach has proved profitable for Gerald Vandervalk.
“Traditionally, we have always finished our animals,” said the Claresholm-area rancher. “The routine is we background our calves over winter, pick our replacement heifers, everything we didn’t keep went to the Waldron Grazing Co-Op, and then in the fall we would retain ownership and have them custom feed. That was working for quite a while because the market didn’t move that much.
“One year the market was going down, and when that is your main cheque for the year it makes things tough. We decided we needed to do things differently at that point.”
Vandervalk still finishes his animals in a custom feedlot, but now works with the feedlot and a marketing expert.
“We have contracts for animals to go south (to the U.S.) in March. We have the whole year to lock our contracts in,” he said.
“Right now I’m looking at whether the price is going up or down. The thought is we are going to lock our contracts now so we can lock the price.
“But also since they are going south we can lock the dollar in, too. We have two variables — the price of cattle and the dollar — and when we are comfortable we can lock it in.”
There’s still risk, but it’s one Vandervalk is comfortable with.
“If you lock in the price when you are happy, you know what your costs are — it takes the variable out,” he said. “We think we have good animals so that’s why we retain ownership to the end. If they are good, you should be able to make money all the way through.”
The sale process
Once you have a marketing plan, you need to execute it and the best route may be to skip the auction mart in order to save on commissions and fees, said Copithorne.
“There are times, like when the market was running up in 2014 and 2015, the best place to sell was the auction market,” he said. “The market was jumping up to 10 cents a day, and it was the only thing that was current. The order buyers and everyone selling privately couldn’t keep up to how fast the price was jumping.”
But rather than loading up all your fat cattle in a liner destined for your local auction market, consider selling direct to a feedlot or via Internet.
“Shop around, use them all,” said Copithorne. “They are all tools available to us. We have a lot of marketing channels in the beef industry, it’s just a matter of picking and choosing what is best.”
Besides using contracts to sell his fat cattle, he deals with his local auction market to sell his open cows and, occasionally, bred cows. Having a good relationship with your auction market helps, he said.
“People in our area know our cattle, and we think we have good cattle, so the auction market helps us promote what we have.”
Size doesn’t matter when it comes to having a marketing plan, but with the average herd hovering around 65 animals, Copithorne suggests consolidating with other local producers with similar animals to make direct marketing a little easier.
Along with knowing your cost of production, Vandervalk recommends working with a marketer because that’s their area of expertise.
“It’s your income — your biggest cheque comes in one day,” he said.
When it comes time to sell, “be flexible because sometimes the market is fairly strong in October and other years it’s better in September,” he added.
“You never know with the market.”
But one thing is certain — not having a plan means leaving money on the table, said Copithorne.
“Whether you have one animal or 10,000 head, it all comes down to timing,” he said. “Last year there was a $400-a-head loss in less than four months’ time. That applies to everybody.
“I don’t think people are focusing enough attention on (marketing). That’s what I’m trying to do.”