DARLINGTON — Attendees to a recent beef cow-calf workshop had to maneuver around rising flood waters as the Pecatonica River overflowed into downtown Darlington, closing Main Street in early October, but those who made it had the opportunity to learn more about beef marketing and the overall beef outlook for the remainder of 2019.
Josh Kamps, Lafayette County Extension agriculture educator, began his presentation with the numbers, which can often give beef producers an idea on how to market their animals.
Eighty-two percent of U.S. farms in the cow-calf industry are working with a herd size of 49 head or less, with 14% with a herd size of 50-199 and 4% with a herd size over 200. In Wisconsin, the picture is a little different, with 91.2% of cow-calf farms working with less than 50 head in their herd. Just over 8% have more than 50 head, with just 10 farms total in Wisconsin working with over 500 head.
Of the 91.2% with less than 50 head, 41.5% of those are at less than 10 head on their farm. This majority of farms also account for 14.2% of total sales, while their bigger counterparts command 85.8% of total sales.
But for the smaller producer, there are still ways to turn a profit, especially if their beef cattle are marketed correctly.
“Begin with the end in mind when marketing cattle,” Kamps said. “And start with some market planning — it’s something we can all spend a little more time doing.”
A lot of factors go into market planning, including setting goals and evaluating the process, but also the cost of production goes into a plan as well, with the types of costs, the timing of the sale and the available farm resources one may have all going into the plan.
“It’s more than just putting a product up for sale,” Kamps said. “Selling is just one small piece.”
There are four main steps of marketing: research, advertisement, promotion and selling the product or service. By coming up with a plan, beef farmers can strive to become price-controllers instead of price-takers, something that is often difficult in the world of agriculture.
The marketing plan should be “a strategic process,” one that is put on paper and written with intention. It should set goals that keep the farm and the consumer in mind; targeted goals for the farmer may include uniformity of animals, quality of animals and performance of animals, all while keeping “the end in mind.”
A farmer may also want to consider the timing of the sale as he may get a better price during a different time of year. Different sale barns and facilities may draw different customers as well, so a change of venue may also be an appropriate consideration.
There are many factors affecting cattle prices right now, but Kamps worked with Brenda Boetel, UW-River Falls, to share insights on where the market is heading. According to Boetel, there is large production of the three big proteins right now: beef, pork and poultry. There is also a weaker global demand for beef, which means there is more available beef in the U.S. currently. There has been a decrease in producer leverage and declining margins for profit, all of which are feeding into the market outlook.
“However, where there is risk there is opportunity,” Kamps said.
Farmers need to focus on costs — direct and overhead — and look at their farm’s profitability. After selling an animal or animals, they should return to the marketing plan and evaluate, asking themselves “were we successful?”
Beef production has been coming down, Kamps said. Production is projected to decrease during 2020, with the U.S. cattle herd at 103 million head, the same as recorded in 2018. Calf numbers have decreased in 2019, with 100,000 fewer than in 2018.
Kamps encouraged farmers interested in futures and fund trading to introduce themselves to a local commodity trader to learn more and keep up on the markets. Staying current on external market factors in the world and cattle on feed reports are also good ways to remain up-to-date.
He also told attendees to be open to new techniques or processes of marketing as there may be opportunities there as well.