Part one of a series
Troy Marshall knows the seedstock business. As editor and publisher of Seedstock Digest and Cow-Calf Weekly, each week his newsletters reach thousands of readers nationwide. He's been observing and reporting on the beef business for more than a decade, having served Cattle-Fax, a Denver-based markets research firm, North American Limousin Foundation and the American Maine Anjou Association. Today, he owns and operates a registered cow-calf operation near Burlington, Colo., and produces his weekly newsletters from his home-based office.
Cattle Today recently talked to Marshall about the seedstock business, where it's been and where it's headed. Here's what he had to say?
Q: What's been the biggest change in the seedstock business during the last decade?
"Successful seedstock producers are much more customer-focus than they used to be. They're becoming much more of a partner in the success of their commercial customers' businesses. No longer are genetics the primary product that seedstock producers are selling; rather, they're engaged in the marketing of intellect, knowledge and information. Nowadays, commercial producers are looking for reputation seedstock firms that are going to help them not only with their genetic selection, but also to help them leverage those genetics in the marketplace."
Q: What's the key component to succeeding in the seedstock business?
"Relative to determining which seedstock producers will succeed and which will fail, you have to look at customer service and marketing. Bar none, all of the top-notch, truly successful seedstock producers are all providing not only good genetics, but also good customer service. They've found ways to help their customers become better business people when it comes to production, marketing and genetic evaluation.
"When it comes to marketing, successful seedstock producers are providing their customers with marketing opportunities and avenues to leverage the genetics that they are producing. They've found creative ways of building value into their customers' cattle, either through helping them enter into alliances or grid-based pricing systems that pay better than commodity prices for their cattle."
Q: Most seedstock operations are small, family-owned businesses stretched thin on time and resources. Given this reality, how do they provide effective marketing services to their customers given this reality?
"Marketing usually gets put on the backburner because it's not a priority task on a day-to-day basis. So, there are two routes that a seedstock producer can go. The first choice to delegate better by bringing in somebody to do the small, clerical tasks that we always find ourselves doing. This frees us up to do the more important, higher-priority tasks such as marketing.
"Or, I think we're going to see more and more people farming out many of these marketing tasks. We've seen this in other industry segments, such as when feeding industry began turning to professionals such as consulting nutritionists or consulting veterinarians to help them address these specific areas of their operations.
"Marketing is very much a science in and of itself. A lot of those people in the seedstock business will turn to marketing professionals in the future to help them market their programs and stay competitive. This is much more than the services that traditional sales management firms have provided in the past: This will be ongoing work involving travel, correspondence, newsletter production and working with groups of customers to help put their cattle into alliances. It will also involve helping the seedstock producer develop goals and strategies, positioning statements and marketing plans. A professional firm can come in and really help bring all of this into focus."
Q: Most cattle producers receive dozens of cattle publications each month. They see hundreds of advertisements for everything from animal health products to bull sales. Given all the clutter, how does a seedstock operation get its message out?
"Reputation, repetition and consistency. These things are vital. I think the biggest part, however, is knowing what your message is, and staying focused on that message. There's such a clutter, and such a variety of messages out there, that you have to differentiate yourselves from everybody else. We all have a tendency to say our cattle do all things for all people, but when you take this approach, your message gets lost.
"I think the most successful operations have done a very effective job of tailoring their unique messages and then getting their messages out. They do an effective job of not just selling their genetics, but also their program. Everyone else, on the other hand, tries to provide all things to all people, and this simply results in their message getting lost in the shuffle."
Q: What are the expectations of today's commercial producer?
"Obviously, there's a total acceptance of EPDs and an understanding of them. If you don't provide them, at the very minimum, you won't stay in business for very long. Commercial producers are much more knowledgeable about the genetics they have in their cow herd than they used to be, and they know where they need to go from a genetics improvement standpoint.
"At the same time, they're also looking for simplicity. They're looking for a seedstock provider that can provide all their needs. And, they're looking for additional service when it comes to selecting appropriate genetics and marketing their calves. They're looking for someone to help them make good decisions. They're looking for ways to build value into their calf crops. And, they're looking for somebody who understands their operations, and for someone who can provide a vital role in improving their bottom lines."
Q: How do producers of continental cattle remain competitive in a marketplace that continues to favor Angus cattle?
"Heterosis and hybrid vigor remain the only free lunch that we have in this business. We need to communicate the message that the industry has much to gain by combining the red meat yield of continental cattle and the quality of Angus, especially as we move to more case-ready product and video imaging analysis of carcasses.
"There are also substantial advantages to producing crossbred cows that combine the both of best worlds. From a genetics standpoint, seedstock producers have to know what they've got to offer. They've got to continue to focus on improving their genetics. But most importantly, they've got to get out and sell the value of heterosis and hybrid vigor. The composite or F1 bull sales are the fastest-growing segment of the purebred industry, and I think that this is going to continue to play an even larger role in the future."
Q: What can a producer do right now to get better results from his bull sale in the coming year, and what should he be doing long term?
"From an immediate standpoint, I think the focus has to be on getting to know your customers. You must remember that this is a people business, and getting out and meeting your existing customers and meeting new ones on a one-on-one basis and building some new relationships will go a long way in positioning your operation for the future."
"Long term, you have to make sure that your breed association is doing all it can to provide you with adequate genetic evaluation to make sure you're moving forward in the right direction. Then you can place more emphasis on customer service and building relationships with the people who buy your cattle."