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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer.

Value-added doesn't always work

Here are some market-based tips for marketing calves this fall.

With Labor Day behind us we will soon be into my favorite time of year, fall run. During fall run we get to see tons of good cattle, and there are always some awesome buying opportunities.

That made me think I should probably discuss value-added marketing since it is a greatly misused term. When most people use the term "value-added marketing," it usually brings to mind a wean-and-vac program, or some kind of specialty program such as all natural.

Those deals don’t always pay. If you wean and vaccinate your calves and they bring about the same price as non-weaned, non-vaccinated calves then that means there was no added value.

I have a buddy who has spent his whole life selecting the right genetics to break grids to pieces. He sold a group of home-raised cattle that were in an all-natural program and the cattle graded 80% prime. That’s legendary. He didn’t receive any premium. Decades of planning and selection was all for nothing. In his frustration he made the comment to me that I probably make more money with sale barn calves.

So what is value-added marketing? To me it only creates value if you capture the added value. Pretty simple, yet so many miss the mark.

If you wean and vac your cattle and then just sell them on a regular weekly auction it's not likely you will get a premium. Now if those same cattle are sold on an auction that is full of cattle handled the same way, you have much better odds of getting a premium.

If you have cattle in an age and source, or a NHTC program you must make sure to get them on a sale geared toward that. Those sales attract buyers who are looking for those types of cattle. That’s where the premiums will be paid.

Pay attention to the sale barn’s auction calendar. Some barns will have a monthly special for program cattle. Some will have a breed influence sale. In my area there is a barn that will have a Hereford influence sale. On that auction whiteface cattle sell a bit stronger. Any other week they sell at a discount. Another local barn has a monthly dairy influence sale. That week buyers who only want beef breeds will skip that sale, causing a slump in prices paid for beef breeds. Pay attention to these things.

Some people buy discounted cattle. They may be small packages, have horns, be intact males, not weaned and the like. These people will get a hard wean on them, precondition them, and sort them into more desirable packages -- like-load lots. While there may not be a premium paid for these cattle when resold, there is a lot of added value for the work and packaging that was done. These guys are really good at value-added marketing.

This week the market favored heifers once again. The girls are posting the highest values of gain. At sales in Missouri, Kansas and Nebraska the value of gain on heifers 700 pounds and lighter was over $1.10. Steers weighing 800 pounds and lighter had high enough values of gain to execute profitable trades as well. At many sales the value of gain falls off hard when they get around that 800-pound range. At one sale the value of gain was below $20, between 800 and 900 pounds. It cost more to put that weight on than it was worth. Beware of what the market is telling you.

The market also told us that unweaned cattle were worth $7-$12 less than weaned cattle. Feeder bulls were $7-$30 less than steers. It's telling us there is some opportunity to add some value to those calves.

On the female side of things I didn’t see much in the offerings as far as breds and pairs. The only thing I noticed is replacement-quality females fetched a value-added premium of $4.

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