Would you like the opportunity to receive top market price on any given day when you sell your cattle? Or how about getting $5 per head above the board for cattle? How does an $80 per head premium sound? ¶ Think it’s too good to be true? Well there are some in this industry already seeing those premium benefits. The keys to capturing those opportunities include identification, source and age verification, and traceability. For additional premiums, some calf producers are stepping into natural and other specialty USDA-certification programs that expand marketing opportunities for buyers of the calves.
The volume seller
For the last two years, Pitchfork Ranch in Texas has participated in Merial’s Surehealth program, a veterinarian-verified preconditioning program. Participation in that program, along with providing age and source verification, and certification under Non-Hormone Treated Cattle, has netted the ranch on an average of $80 per head on the 850-pound calves sold this past year.
“That whole package, along with volume, quality and reputation, made that premium possible,” says Ron Lane, the new manager at Pitchfork. This past year they put 3,000 head through the pre-conditioning program, which also provides verification and traceability through IMI Global.
The genetic base of the calves consists of Hereford, Angus, black baldy and south Texas cross-bred cows bred to Angus bulls. The idea is to use proven genetics that show good performance on wheat and in the feedlot. “We work hard to fit a carcass and performance target, and find the genetics to achieve those targets,” Lane says.
“The Pitchfork has a reputation for being proactive and not reactive to the market,” Lane says. “Our goal is to remove as much variability for our buyers as possible.” And that means repeat buyers year after year. Some years, when market conditions are favorable, they will choose to retain ownership. The past few years, however, selling the cattle off wheat has been a better option.
While Pitchfork stands out with above-average premiums, other participants in the Surehealth program report premiums of $3 to $5 per head above the cash market.
The niche opportunists
For those that may not have the volume to sell thousands of calves at a time, there are programs that provide premiums if you’re willing to do some basic identification and source verification on your calf crop. In addition, there are programs that provide niche marketing opportunities if you’re willing to follow their protocols. Often time, those protocols have to be documented.
Meyer Natural Angus Beef is one example of a niche program that provides market access based on traceability and verification. Producers raising cattle that are at least one-half Red or Black Angus can be chosen to go under the Meyer Natural Angus Beef brand. Once a producer commits to Meyer Foods, he/she signs an affidavit guaranteeing to “raise the animals in the most humane manner possible; provide a diet of fresh water, pure grains and adequate natural forage with absolutely no animal byproducts, growth hormones or antibiotics.”
“Because our program is quality based, knowing source information is critical since we need that predictability to meet our clients’ needs,” says Blake Angell, director of feeder-cattle procurement at Meyer Natural Angus Beef. “We have to have traceability to know we’re in compliance, so animals must be individually identified.”
Another help to source cattle is their support of feeder programs like the Red Angus Feeder Calf Certification and Angus America programs. “That work with breed programs also gives us third-party verification,” he says.
For those with the certified Red Angus feeder tags, Meyer Natural Angus typically pays $5 per head premium. For other cattle that meet the specifications, Meyer buyers bid very aggressively to purchase those cattle.
A matter of age
Source- and age-verified cattle are currently seeing premiums up to $25 per head just because there aren’t enough cattle to meet that demand. The opening of some export markets that require age verification has led to aggressive competition for those cattle.
For cow-calf producers, it may be a little more difficult to realize that premium, since you may not have the volume to create buyer demand. Feedyards play a role in bringing those age-verified cattle together and creating the volume for buyers. Since they take on more of the risk, the premiums that trickle to producers may be limited.
Dale Moore, owner and general manager of Cattleman’s Choice Feedyard near Gage, Okla., says that he aggressively searches for cattle that have some sort of verifiable age certification to meet demand from his cattle buyers, like National Beef and Certified Angus Beef.
To help find those cattle, he’s started a program to encourage producers to at least verify the age of the first calf born in that calf crop, which is all that’s required to meet export verification requirements. For those producers who can provide that, he will pay top of the market for those calves and then provide back performance and carcass information free of charge to cow-calf producers. As the program grows and he finds reliable sources, premiums for those sources may be available or producers may choose to retain ownership to realize the full premiums paid for age-verified fed cattle.
The top-dollar club
A number of opportunities exist for producers willing to provide traceability and source verification to buyers; it just requires some investigation and inquiry to find out which programs best fit your goals.
“Try to differentiate yourself,” Lane advises. “There has to be a reason for buyers to bid on cattle and then come back again.”