Capturing value: Experts discuss ways to capture value versus add value when marketing calves

“There are a lot of things we can do to add value to calves to really make a difference. From making some genetic improvements to implementing preconditioning programs, we can prepare calves for the next phase of their lives,” states Brad White, director of Kansas State University’s (KSU) Beef Cattle Institute (BCI), during an episode of KSU’s BCI Cattle Chat podcast.

            During the podcast, White sat down with KSU Veterinarians Dr. Bob Larson and Dr. Bob Weaber to discuss the difference between adding value and capturing value, as well as to provide several tips on how producers can capture value when marketing their calves. 

Telling the story

            “Many producers vaccinate, castrate, deworm and perform a number of tasks to prepare their calves for the next stage in their lives,” states Larson. “These are all things likely to make calves more healthy, perform better and ultimately, add value.” 

            “However, if a producer doesn’t inform consumers about all the things they have done to add value, they aren’t going to be able to capture this value,” Larson adds, noting the most important part of capturing value, in his opinion, is for producers to tell their stories.

            He points to recent research conducted by the KSU Agricultural Economics Department, which looked at predictors of ranch profitability and notes the results found average sale price is the largest driver for higher profitability on cattle operations.

            “In any given year, all cattle operations experience the same price environment, and no one gets to break completely out of this environment in a particular marketing window,” Larson says. “However, some producers find ways to add a little extra value to their calves and then capture those extra dollars.”

            “Spend time on marketing,” Weaber chimes in. “Telling prospective buyers about calves’ genetics and how they were cared for will increase the buyers’ confidence and raise the value of the calves.”

Retaining ownership

            While Weaber agrees transferring information to consumers is important, he believes the most critical way to capture value of calves is to retain ownership.

            “Genetics matter,” he states. “First, genetics matter in regards to performance – creating pounds of weaned calf, which benefits a producer’s paycheck formula.”

            “But, even more important, is figuring out how to optimize cows in a particular production environment so they are reproductively efficient and then finding bulls to mate with those cows to provide good calf performance and marketing value,” Weaber adds.

            He continues, “If a producer makes good breeding and marketing decisions after spending a little extra money on high-quality genetics, one of the best ways to capture value is to retain ownership and hold on to those genetics further down the supply chain.” 

            With this in mind, White notes it is important for producers to spend some time analyzing the added cost of retaining ownership versus the profit potential.

            “It is important to look at the costs versus the benefits to know when the right marketing endpoint will be for calves and what makes the most sense for a particular operation,” White states.

Other ways to capture value

            In addition to telling the story and retaining ownership, White notes there are a few other ways producers might capture value when marketing their calves.

            “Producers should ensure adequate documentation on procedures and processes they have done to add value to their calves. They should visit with other producers who use different methods,” White says.

 “Once they have selected a program and understand all of the procedures they need to do, they should calculate potential costs and benefits of they practices they plan to undertake,” he adds

            Additionally, White says producers need to understand the proper data they need to collect, and they need to determine the best practices when it comes to capturing value for their unique operation.

            Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.