海角官方首页

R. Curt Lacy, Extension Economist-Livestock
Carole Hicks Knight, 海角官方首页 Cooperative Extension
John C. Mckissick, Professor Emeritus-Livestock Economics & Marketing

• Selling Versus Marketing
• Know Your Cost
• Plan for the Market
• Feeder Calf Marketing Alternatives
• Which Cattle to Produce
• Where to Market
• Choose the Right Marketing Method
• When to Market
• Keeping Up with the Market
• References

Most cattle produced in Georgia come from cow-calf farms and ranches. With cow-calf operations, as with other farm enterprises, making a profit is the only thing that will keep you in business. How much profit you make depends largely on your ability to market your calves.

Selling Versus Marketing

Profitable cattle marketing involves more than just getting the highest price. It involves producing the type of calf the market desires, marketing that calf through the best outlet and at the best time. Unfortunately, most cow-calf producers simply sell their calves. They produce calves that are the easiest to raise, sell at the most convenient market outlet and sell at the most convenient time. As a result, they are price-takers.

Marketing means making choices about how or what product to produce, where to market it and when to price. As a result, marketers have some control over the price they receive.

The first step in becoming an effective cattle marketer is to recognize all your alternatives and evaluate each in light of potential cost and returns, selecting the most profitable rather than the most convenient alternative.

This publication addresses several issues associated with marketing calves -- most notably, cost considerations, market structure, the type of calf to produce, market outlets and seasonal price considerations.

Know Your Cost

The first step in any successful marketing plan is to know the unit cost of production (UCOP). In fact, for many small or medium-size cow herds, the cost of production is a larger profit determinant than the marketing method. Regardless of the size of the herd, for cow-calf producers this means knowing the cost per pound of calf sold. The best way to make this determination is to begin with a budget similar to the one shown in Table 1.

Note that while the cost per cow is shown, the emphasis is placed on $/Cwt. The cost per hundredweight sold is used because it captures not only total herd costs but also calf crop percentage and weaning weights.

In the example budgets shown, there are two numbers highlighted -- the first one being variable cost in $/Cwt. Variable costs (VC) are also called Direct, "Out of Pocket" or Operating Costs and include items such as feed, seed fertilizer, fuel and labor. These are the costs that must be covered each year because they are the measure of profitability. It is also critical to cover variable costs because any returns above variable costs (ROVC) go toward paying overhead or fixed costs.

Returns above total costs (ROTC) is the measure of the long-term economic sustainability of an enterprise. Total costs (TC) include not only VC but also fixed costs (FC) such as depreciation, cost of capital, management, taxes, etc. FC are those costs that occur regardless of the number of head produced. Some people also refer to FC as overhead or indirect costs. Regardless of the terms used, the total cost (TC) per hundredweight is the price a cow-calf producer must average in the long run if they want to remain in business.

Knowing the VC and TC per hundredweight allows producers to set target prices and evaluate their costs in relation to the market. While weather and input costs can be volatile in the short term, which will impact cost per hundredweight year-to-year, producers who consistently have break-even prices above market prices will need to find ways to lower their costs in order to stay in the business.

Plan for the Market

The old saying goes that if you don't know where you're going, any road will take you there. But if marketing your cattle at a profit is where you want to go, then planning for the mark