Producers spend countless hours raising, breeding, and feeding cattle. The strategy used for selling these livestock remains equally important in the production process. For those individuals who do not have a clear direction and goals for marketing their cattle there may be lost income opportunities causing the livestock to be sold at a less than desirable pricing level.
To meet and achieve these goals every producer should develop and maintain a marketing plan. These plans can range from simple to complex, depending on your situation and level of detail. They need to be flexible and easily updated as things change. As you look at creating a marketing plan, you need to answer these five questions:
1) What are you going to sell?
If you have a current operation, this can be easy to come up with. For instance, you already know whether you are producing for a niche market (i.e., all natural, organic, etc.) or a commodity market. If you have a spring calving herd, you should already know the number and sex of the calves you plan to sell. You also need to determine the target weight you want them to reach at time of sale. If you are selling a replacement heifer or cow, you need to determine the target age, as well as whether she will be open or pregnant at time of sale.
2) Where are you going to sell?
Within the beef industry, there are several options. Auction barns have had a long tradition of selling cattle and calves. Market animals can also be sold through online forums or video auctions, as well as direct marketed to local feedyards. Some have even been known to post sales on Craigslist. It is important to identify your target market and explore all the options available to you to sell your product.
3) When are you going to price or sell that product?
When do you plan to physically market the animals? Establishing your price may occur at a different time than when you physically market the animal. You should feel comfortable with the methods of selling and pricing your cattle. Some producers may only use cash markets or cash forward contracts, while other producers may feel comfortable using the futures market or options market. Livestock Risk Protection (LRP) Insurance is another option to consider when pricing your cattle. More information on LRP for feeder cattle is in the Nebraska Extension NebGuide, Livestock Risk Protection Insurance for Fed Cattle (PDF 379KB). You should find an acceptable level of risk and a pricing method you can be happy with. The best pricing methods may change from year to year and what your neighbor did may not be the best choice for you.
4) What are your goals and objectives?
Given current market conditions and price expectations, what are the goals and objectives you seek to accomplish with your marketing plan? Keep in mind, seeking only to get the highest price can expose you to more risk than you can handle or feel comfortable with. Your goals should be a combination of getting a good price and controlling the risk associated with the market place.
5) How can you accomplish your marketing goals and objectives?
Identify specific strategies and tools that can help you reach your marketing goals and objectives. Specify actions you need to take and deadlines you need to meet in order to put yourself on a timeline that keeps you proactively implementing your plan and managing the market risk.
Planning is essential. Creating a marketing plan can help alleviate stress as well as emotion in implementing your marketing strategy. Understanding your cost of production will help establish your pricing objectives and the triggers that make the marketing plan more valuable. Make sure you continually evaluate your plan and establish contingency or backup plans you can implement if there are price or market changes that differ from your original expectations.
Kate Brooks, Agribusiness Economist
Jay Parsons, Biosystems Economist
University of Nebraska-Lincoln
Revised June 2017
Jim Jansen, Agricultural Economist
University of Nebraska-Lincoln
back to beef profit tips back to Marketing and Livestock Budgets