7:30 am – 9:15 am
MA 101 – Developing a Profitable Marketing Plan in Today’s Marketplace – Randy Blache, Mike Miller, Cattle-Fax

Developing a Profitable Marketing Plan in Today’s Marketplace

There was a time when cattle feeders might take a serious licking, in the market, then recover their losses and more in a relatively short time. However, Cattle-Fax analysts Randy Blach and Mike Miller say the days of boom and bust are probably over. They advise cattlemen to study the economic trends and position their operations for profitability.

"You can’t shoot for homeruns anymore. You have to look for singles and doubles to have consistency over time," said Blach. "Don’t be greedy. Too often, the greedy become needy."

According to Blach, the strategy of keeping feedyards full and turning cattle over, for profits of $10, $15, or $20 per head has worked. It is the same strategy that has driven consolidation of the feeding industry. And he believes it will continue to work.

Four major packers represent close to 80 percent of U.S. slaughter capacity, and according to Miller, economics suggest no significant change. The concentration of cattle feeding capacity, in the southern and central Plains, probably won’t change much either. He predicts the trend toward larger feedyards will continue too.

"One reason is more strict environmental regulations. They will hit smaller feeders very hard, and many won’t stay in business," added Miller.

Cattle-Fax surveys indicate that, from 1980 to 2000, the average cow-calf producer made a meager $3 per head annual profit. However, the difference between high-return producers and low-return producers is as much as $90 per head.

The move toward more branded beef products means increased value differentiation. Miller predicts greater differentiation at all levels – fed cattle, yearlings and calves. There are opportunities for producers to be involved in all phases of producing and marketing beef, but the challenge of sharing in added value will require producers to secure more data and information on which to base value differences.

"It doesn’t mean that you have to be part of captive supply or involved in a formal alliance, but there appears to be a real advantage to fostering relationships with people with common goals. Beneficial relationships facilitate working a plan to reach realistic market objectives," Blach added.

Producers were advised to used seasonal market patterns to their advantage, but be realistic about their profit objectives.

— by Troy Smith