Ain't technology grand? Satellite dishes and the Internet are connecting an increasing number of farm and ranch households to the rest of the beef industry. Now, many of us who still cannot set the clocks on our VCR are able to watch as the numbers of head of livestock that are traded via video and Internet services continue to climb. While the concept of marketing cattle via the airwaves has been around since the 1970s, its use has seen tremendous growth in the last decade. Advances in technology, specifically satellite dishes and high speed Internet, have spawned new video and Internet auction companies, and fueled cyber-marketers to pioneer services which provide increased marketing options to additional segments of the beef supply chain.
While cow/calf producers are growing more comfortable selling feeder cattle this way, cattle feeders are perhaps even more dependent on these services to find cattle and fill bunk space. To fully understand these different services, Red Angus Marketing Programs went right to the source interviewing five auction companies who market via video and/or Internet and cow/calf producers who are their clients. We found differences in these companies in terms of tenure, technology utilized and number of cattle they marketed, but they all were similar in two principal areas. One, they all used technology to expose their customers' cattle to a potentially nationwide audience of buyers. Two, each of these systems allowed buyers access to numerous classes and types of cattle without having to leave the comfort of their home or office.
Superior Livestock Auction
Superior Livestock Auction broadcast their first video sale in January 1986, and it has grown into the world's largest video marketing company. The auctions they broadcast every other Friday and their seven larger multi-day auctions combine to market about 1.5 million head of cattle annually. Ted Odle, Superior Livestock Auction, feels there are several reasons for the growing popularity of this marketing tool. Like all auctions, Superior Livestock Auction encourages competitive bidding for producers' cattle.
However, Odle said it goes way beyond that, "...[the video auction] brings the right buyer to the right product while promoting your ranch to thousands of potential future buyers."
Superior Stampede is the Internet auction arm of Superior Livestock Auction, and it includes a "Country Page" where cattle are listed and sold on a daily basis, and it offers an Internet auction every other Wednesday.
Stephen and Meira Gault purchased Midbar Ranch in Animas, N.M., and immediately became aware of the challenges of marketing cattle from a location only eight miles from the Mexico border. They heard about Superior Livestock Auction's video sale format from a neighbor and decided to give it a try since the nearest sale barn was a few hours and "a lot of shrink" away. That was in 1992, and the Gaults have been selling on Superior Livestock Auction ever since.
During their time with Superior Livestock Auction, the Gaults implemented several value added processes. First, they offered genetic verification through the Red Angus Feeder Calf Certification Program.
"If you're already using Red Angus bulls, it is a 'big time' advantage to use the Certified Red Angus tagging program and remove any doubt buyers have about the genetic makeup of the calves," said Meira Gault.
Next they began using Superior Livestock Auction's Vac 34 program and feel it has paid big dividends as buyers have confidence they can truck the cattle and still have them arrive healthy. More recently, the Gaults have begun listing their calves as "Owner Certified Natural." Finally, Butch Mayfield, their Superior Livestock Auction rep, advised the Gaults on the importance of providing nutritional information to potential buyers. A little extra effort and a lot of value-added information paid off for the Gault's, whose consignment to Superior Livestock Auction's 2004 Labor Day Sale topped their weight bracket at $142.00/cwt.
Odle agrees with the Gaults on the importance of value added programs. His experience suggests uniform calves from reputation genetics, with documented vaccinations, Source Verified and/or Certified Natural will be worth upwards of an additional $10/cwt. The Superior Livestock Auction catalog makes a special note of calves entered in or calves that are eligible for the Red Angus Feeder Calf Certification Program in both the printed sale catalog and on the video screen.
John Delong, a rancher from Winnemucca, Nev., has taken full advantage of the video giant's aggressive promotion of genetic/source verification. First, in the 62,000 head, Cattleman's Winter Classic in early February where his 575 pound Red Angus steers added $8/cwt to the market for that weight class. Two months later, Delong's 560 pound Red Angus steers won the day with a bid of $142.00/cwt during Superior Livestock Auction's second video auction in April. In both cases, Delong offered to buy the Certified Red Angus feeder tags and put them in the calves prior to delivery, and both buyers accepted Delong's offer.
Like the Gaults, Delong believes his Superior Livestock Auction rep, Jim Davis, plays a "very important" role in adding value to the Delong Ranch, Inc., consignments. Davis also plays a role in helping DeLong locate bulls the two believe will produce the type of calves buyers will purchase for a premium. Delong also believes the catalog description of his cattle, and the uniformity with which he packages them makes them more attractive to potential buyers.
For more information about Superior Livestock Auction go to www.superiorlivestock.com or call (800) 422-2117 or (800) 523-6610.
Northern Livestock Auction
Although Northern Livestock Video Auction is only in their second year of selling northern feeder cattle via video and Internet, they have a history with hi-tech marketing.
"I started the video method of livestock selling back in the early 1970s, and despite many comments and ideas from those who said it wouldn't work, it has gone on to be one of the most viable ways for people to sell their livestock," said Pat Goggins, NLVA President.
"I've always felt people who sell their livestock at home under private treaty arrangements which does not create competitive bidding on their stock are simply missing out on a great opportunity." Roger Jacobs, NLVA auctioneer, expands upon the advantages that video marketing offers producers, citing increased exposure to a nationwide roster of buyers and less stress on cattle.
One producer who agrees is Dana Fitzhugh of the Fitzhugh Ranch in Douglas, Wyo. He used to sell his calves privately off the ranch. In the past, Dana often had as many as 12 field buyers, but over time that dropped off to only a couple. Six years ago he decided to switch to video auctions due to increased national exposure to a much larger group of buyers.
While Fitzhugh is the first to complement the efforts of his NLVA rep, he encourages other producers not to remove themselves from the marketing process.
"You [the producer] can't expect the rep to do all the work on selling your cattle," says Fitzhugh. "You have to do your part too. Every year, we contact past buyers and inquiries to let them know when the cattle will be for sale. We feel like this is a must."
The extra effort paid off at NLVA's August 27, 2004, sale broadcast from Billings, Mont. Jacobs, who sold that event remembers, Fitzhugh's Certified Red Angus sold for $3-5/cwt higher than any other cattle in their weight class, and he said they were the highlight of the day.
Common sense and character are foundations for Fitzhugh's successful video marketing. His operation has the advantage of being large enough to offer same sex loads. He also pulls off the bottom end - not giving his customers a chance to be disappointed with cattle that don't perform. Fitzhugh ranked vaccination programs and guaranteeing genetics very high in terms of their ability to add value.
"If a producer does not have pride enough in their cattle to give vaccination shots and use yellow [Certified Red Angus] tags, they probably will not bring top dollar," said Fitzhugh. "It's this that will result in premiums."
Jacobs said documenting genetics and vaccination programs can add as much as 5-10 percent to the selling price.
For more information about Northern Livestock Auction call (800) 635-7364.
Western Video Market
In 1989, California livestock dealers Ellington Peek and John Rodgers formed Western Video Market as a means to help western ranchers present their cattle to a national marketplace. Today, WVM has grown to sell nearly half a million cattle annually from 17 western states. WVM is a confederation of auction yards and bonded livestock dealers representing cattle producers from the Great Plains to the Pacific Coast. These participating sale barns serve as the sellers' reps. Auctioneers from participating sale barns actually sell the cattle represented by those barns. This is good news for sellers, since WVM's stable of marketing professionals includes eight World Champion Auctioneers.
Two of those World Champion auctioneers are brothers Lex and Shawn Madden who operate Torrington Livestock Markets in Torrington, Wyo., and they are also heavily involved in the two day auction held at Little America Hotel in Cheyenne, Wyo., in August. Lex Madden believes it is the rep structure that makes WVM unique among video auction companies.
"Over 95 percent of [WVM's] reps are sale barn owners. If a producer has a problem they are dealing with the sale barn reps one-on-one not the entire WVM organization," said Lex Madden.
Melvin Suchy who operates 4 Lazy S Cattle in Tryon, Neb., has sold cattle through WVM for the past four years. He agrees with Madden as to the value of WVM's reps.
"The reps are from our area sale barn [Ogallala, Neb.], and are familiar with the cattle from this area. They do a better job of marketing the cattle, because they know the product," said Suchy.
His main reason for selecting the video was the fact the cattle don't leave the ranch until final delivery, but still benefit from competitive bidding by a nationwide audience. Suchy also finds this method of selling cost effective when compared to transportation expenses incurred and shrink experienced when he actually hauled his calves to the sale barn. He works to accommodate buyers by building in added value through additional services and documented information. One of the first questions buyers ask is, "Do they have the Red Angus tag?" Melvin said. "Buyers are double checking on the tags, and that plays a role in determining their interest level."
As a WVM rep, Lex Madden supports Suchy's commitment to buyer satisfaction.
"The whole beef industry needs to shoot for high standards of quality consistency and uniformity of the product...people will pay for quality," said Lex Madden.
For more information about Western Video Market go to www.wvmcattle.com or call (503) 347-3793.
Frontier Stockyards is an Internet auction company based in Miles City, Mont., and it is headquartered in the offices of Miles City Livestock Commission both of which are owned in part by Rob Fraser. Frontier Stockyards has been helping producers market their cattle through both live and static auctions, both of which are accessed via the Frontier Stockyards Web site.
"Marketing cattle in this manner will only continue to grow, and it will be built on relationships," said Fraiser. One such relationship is Tom and Emily Knoll, who operate Lazy K Heart Ranch in Big Timber, Mont. In the past the Knolls sold their cattle through Fraser's Miles City barn with positive results, but they were willing to try Frontier Stockyard's Internet auction.
"We are firm believers in the auction environment, but our location hinders our ability to get our calves in front of bidders," said Tom Knoll. "The Internet auction allows buyers from all over to see our cattle. Also, we like to be able to show the calves with their dams in their natural environment with no stress."
The Knolls believe that it is crucial to represent the cattle as accurately as possible, since buyers see their cattle on a computer monitor rather than in person.
"Information is becoming one of the most important pieces of the marketing process. Buyers today are very knowledgeable about genetics, vaccinations and other management items, and they want this information (on cattle they are considering buying)," said Fraiser.
The Knolls echo this statement adding, "We provide vaccination programs, mineral programs, eligibility status for natural programs, birth dates, and Certified Red Angus tagging program information. We also offer the genetics of our calves' sires and dams if asked." Fraser cites information as one of the reasons buyers are comfortable purchasing through Frontier Stockyard's Internet auction.
Sellers need to remember there are plenty of other loads of cattle for sale, so the way cattle are packaged can go a long way to making them more appealing to prospective buyers.
"We gain consistency by keeping calving periods tight (40 days). Our cows are Red Angus based, and we use all registered Red Angus bulls. We market steers and heifers separately, and pull any calves that do not fit prior to shipping," said Tom Knoll. Fraser believes short calving intervals, weight variations of no more than 10-15 percent, single sex loads, and one iron loads are key ingredients when packaging loads.
For more information about Frontier Stockyards call (877) 343-9047.
Since 2001, DV Auction has taken a different approach to high tech marketing by choosing to supplement the efforts of sale barns throughout the country. This Internet auction service broadcasts the weekly sales and any specialty sales in 24 livestock auction barns throughout the country. DV Auction's participating sale barns feature enough geographic diversity to offer local cattle in sale barns from Okeechobee, Fla., to Dickinson, N.D. and from Lexington, Ky., to Portales, N.M.
This approach is unique on several fronts. On any given day, buyers will be able to watch and bid on cattle being sold in several different sale barns around the country. There is not the truck load lot size requirement, typical of most video/Internet auctions, since DV Auction is actually broadcasting the live auction that is occurring in a sale barn.
"Buyers must first register on the DV Auction to establish a user name and password," said Tami McIntosh, DV Auction. "Once buyers are registered with DV Auction, they must apply with the auction markets where they seek bidding privileges."
Larry Schell, president and general manager of Stockmen's Livestock Exchange, Dickinson, N.D., said the value to the producer comes through the much wider range of buyers his cattle are exposed to. The biggest benefit from the Internet might come in the smaller sales where there are good quality strings of cattle. Schnell recognizes buyers are going to go to auctions with larger numbers of cattle, but the Internet allows them to bid, even if they are not physically present at his barn. He said they definitely see more activity through DV Auction on the special sales, whether that is a breed sale, a vaccination sale or a replacement bred female sale.
"When we have a special sale, like our Certified Red Angus sale, it allows those cattle to be exposed to buyers that have interest in those cattle, but they might not be at our barn on a regular basis," said Schell.
He also said for every one buyer who is bidding over the Internet, there are 5-10 buyers who are watching the sale and either bidding over the phone or through an order buyer at the sale barn.
"Video/Internet marketing is on the threshold of becoming a standard rather than the exception in marketing feeder cattle as high speed Internet becomes more available to communities in rural America," said McIntosh.
"There are no additional costs to the producer for this service. Although it does cost the barn to offer this service, we feel that the additional exposure for the cattle selling is well worth the costs involved with having the sale broadcast over the Internet," said Schnell.
For more information about DV Auction go to www.dvauction.com or call (402) 474-5557.
As is the case in most industries, advances in technology are also having an impact on beef cattle marketing. Such advances have allowed producers and sale barns the opportunity to expose their cattle to a much larger potential buying audience, and through this, a stronger marketplace. Rob Frasier believes strongly the use of technology will only increase in the future.
"The Internet provides buyers instantaneous access to cattle," said Frasier. "Timing is everything in the market and the Internet allows us to sell cattle every day of the week."
Like Frasier, Dana Fitzhugh also feels that the use of technology will play a main role in the marketing of cattle in the future, and for good reason.
"The results we've seen from selling on the video have been very positive," said Fitzhugh. "We may have gained as much as $5 to $6 cwt on our calves due to the video."