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Marketing Plan Ideas

A Few Beef Cattle Marketing Plan Ideas

     Very few beef cattle producers are trained in the study of economics but 100% make economic decisions and need a Marketing Plan. Every time we earn or spend money it involves economic decision making. Earning and spending or buying and selling will always influence the way our economy functions. It is this economic influence that makes the cattle market move each day by establishing prices for cattle.

     Economics is also thought to be a mathematical science by many people since economists are constantly working with numbers trying to predict the outcome of some economic event. Actually, economics is the study of human behavior and not hard to fit into your beef cattle marketing plan. Economists try to relate how people will react to changes in supply and demand, to higher or lower interest rates or to increases in the cost of production.

     Cattle prices are determined by how much beef people choose to buy and sell in the market place. If people want to buy more beef than is available in the marketing channel, then the price of beef is bid up rationing the beef among buyers. If producers need to sell more beef than people are willing to buy, then the price of beef will be forced downward to move the excess supply.  Understanding cattle pricing will help in developing your beef cattle marketing plan.

Beef Cattle Marketing More Than Price

     Cattle producers often say that to make money in this industry you must buy low and sell high, but the beef industry is more than just buying and selling cattle. Beef producers add value to their products at each stage in the marketing channel thus the need for a beef cattle marketing plan.

5 Parts of a Beef Cattle Marketing Plan

  1. Beef Cattle cow-calf producers sell a product called a calf. What they are really selling is not the calf but output from the cow and bull plus the grass, grain, labor, management and capital used to produce the calf.
  2. Stocker operators buy 300 to 500 pound calves from the cow calf segment of the industry and put an additional 300 to 400 pounds on them, hence, increasing their value to the market place.
  3. Feedlots buy the stocker cattle, feed grain to fatten and then sell them at about 1100 to 1300 pounds to the packer.
  4. The packer slaughters the animal and breaks the carcass into wholesale cuts for the retailer who in turn sells the beef cuts to the final consumer.
  5. Each level within the marketing channel takes the product from the preceding level, modifies it, hence, adding value to the product at each subsequent stage.

     A good beef cattle marketing plan enhances the cattle producers’ chance of obtaining maximum dollars for the value he adds to the product. After combining the resources he has available to produce the calf, he receives value for the animal by selling it. Failure to successfully market the animal is a waste of his time and the money that he invested in the production phase. Marketing, in essence, becomes the icing on the cake. It can improve the situation or it can ruin it.

     Cattlemen are noted for being good production people and most do not care for the hassle associated with marketing and may be prone to get lax about developing a good beef cattle marking plan. Marketing is usually second in dislikes, right behind keeping records. However the most successful producers understand that both record keeping and marketing lead to an improved profit. It is often the difficult things in business that make the most money. In beef cattle production, survival depends on a producer being above average in production, marketing, and financial management, they all are parts of a beef cattle marketing plan

     It takes a lot of time and continuous effort to learn and stay abreast of the cattle marketing system. You will need to know and understand cash prices, futures prices, price outlook, and the supply/demand situation. To remain profitable a producer must know what marketing alternatives are available to him. Know how to use each alternative, and how to interpret market signals.

     All Beef Cattle Production starts with the farmer or rancher that produces the calf, usually termed Cow Calf producer. The cow calf producer is the one who invests in land, animals, feed and other inputs required to raise the calf. Typically, the cow-calf producer will wean the calf at a weight near 400 pounds or higher.

     Some cow-calf producers retain ownership of the calves from birth through the stocker phase of the production process and even some maintain ownership through the feedlot. These producers evaluate the profit potential at each production level before deciding to keep their cattle through the next production phase. When their profit objective is reached they sell the cattle. Retained ownership allows the producer the flexibility to reject the market price today in hope of obtaining a better price at a later date. This market alternative can be successful if the cattleman can minimize the costs of growing the animals during the extended ownership period. Also implied in this retained ownership decision is the cattleman’s hope that the market does not turn against him.  These are the things that help to make it hard to develop that first beef cattle marketing plan.

Learn How The Cattle Market Determines Cattle Prices

     The driving force behind this price discovery process is profit. Every stage of the production marketing channel wants to provide the consumer with a safe, quality product that adds value to the consumer’s decision to buy beef. Each segment of the channel adds value to the calf produced to satisfy this consumer need, but each segment also must make a profit.

     It is this dichotomy within the industry needing to work together but also each separate segment forced to being profitable that muddies the signals. The poultry industry solved this problem with vertical integration.

     Is the market offering a reasonable price? When should cattleman price their cattle? Knowing how prices are determined may help producers, feeders and packers answer these questions and take advantage of the highest possible price.

     Most people get frustrated when economists say that “the forces of supply and demand” determine prices, and as you might suspect, these economists are only partially correct. If supply and demand were known, prices would be easily determined. The fact is that supply and demand are not known.

     In reality, expected supply and demand determines price. Economists refer to beef demand as the amount of beef that will be bought at various prices during a certain time period. As the price of beef increases, the amount bought normally declines. When the price of beef declines, consumers are willing to buy more. Thus demand is made up of various components, including quantity and time. Other factors that may affect price are consumer income levels, number of consumers in the market, and prices of related products such as poultry and pork.

     Supply also has the two components of quantity and time. Supply is the quantity supplied at various prices during a certain time period. As price increases, producers are willing to produce more and sell more beef. As the price declines, producers are reluctant to sell more beef and over time, will produce less.

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