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TAKE STEPS TO MAKE SURE PRIVATE TREATY SALES ARE SUCCESSFUL

by: Eric Grant

Part 5 in a series

Perhaps selling your cattle through an annual or semi-annual production day isn't for you. If this is the case, then your other option is to sell your seedstock cattle on a private treaty basis.

Keep in mind, however, that it's not any easier to do so. In fact, selling cattle private treaty can take up more time than selling your cattle at auction, although your actual cash outlays may be lower.

The most difficult aspect of selling private treaty is determining the price of your bulls. Many producers who have sold private treaty successfully for years use a simplistic, three-tier price classification system called the “good, better and best” system.

Normally, the mid-range bulls determine the average price that you receive for your bulls. That price is usually calculated by using a multiple of fed-cattle price – usually 29 times the fed cattle price. For instance, if the fed cattle price is 70 cents, then the “better” bulls would sell for $2,030 (29 × 70). Prices for the “good” bulls would be $250 to $300 lower, and for the “best” $250 to $300 higher. Animals of exceptional performance and quality can be set at a much higher price if needed.

A second method employed by many seedstock producers is a silent auction. While still a private-treaty technique, it can help you receive a premium price for the better calves in your offering. For example, you can announce through your advertising that you will begin selling your bulls on a certain date. For the first two days, your customers will have the opportunity to bid, albeit silently, on the bulls they want. Producers submit to you in writing the amount they will pay for a particular bull. The bids are then posted for all to see. Bulls that receive just one bid sell to the buyer. Bulls with multiple bids sell to the highest bidder at the end of the bidding deadline.

While private-treaty sales require fewer, large-scale advertisements, they are more advertising intensive, requiring that you advertise, in some manner, during most of the year. Some producers place “business card” ads located in the back of magazines. These advertising sections normally are segmented out by breed or state, and offer an excellent opportunity to reach prospective customers.

Keep in mind; producers who sell private treaty must be available at all times to sell cattle. When bull-buying season is in full swing, you can't afford to leave your operation for a couple of days, because customers may be calling and wanting to look at bulls…today!

Another key is having your cattle sorted into pens based on price and quality. These pens should be conveniently located, with easy access viewing and out-loading. By improving access to your cattle, and by sorting them into pens, you make your customers' buying decisions much easier.

While you probably won't need a high-priced sales catalog, you will want to keep performance sheets available for your customers. The sheet should include such basic information on your sale cattle as date of birth, sire and dam, and birth, weaning and yearling weights. If they've been on feed, show their average daily gains and how they ratioed against their contemporaries. In addition, present the most accurate and up-to-date EPDs from your association.

It's also more difficult to keep your cattle looking good over the longer period that you'll be attempting to sell them. Make sure that bedding is fresh and dry, and that you work hard to eliminate excessive mud and manure problems. Cattle that look good demonstrate that you're a good manager, and that you're committed to producing quality products for your customers.

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