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The harvest period for cattle producers has finally arrived with weaning that generally takes place from April to June in the case of spring-born calves. The vast majority of weaner calves in South Africa are sent directly to commercial feedlots. Although this practice has its advantages – for instance that producers do not have to run the risk of feeding their calves until they are slaughter ready – it has also led producers to fall into a rut.
Once the calves have been weaned, the replacement heifers selected and the bulls with potential retained, the rest of the calves have to be marketed. This is done mainly by selling them directly to a feedlot through a livestock agent or at auction.
In South Africa, all three these marketing options are well developed and easy to implement. Producers typically prefer one of the options, with the result that the same channel is chosen for marketing the calves year after year. Weaner calves are therefore deemed a generic commodity, and although there are different prices for male and female animals and for certain breeds, a Bonsmara bull calf is considered a Bonsmara bull calf, regardless of its origin.
However, this raises the question of value: Are you happy with the fact that your calves are seen simply as calves, despite all the effort you have put into producing superior animals? If you have weaned and treated your calves with the necessary treatments two weeks before moving them off the farm, your calves ought to fetch a premium above that of newly weaned calves.
The four Ps of marketing
Most of us are aware of the so-called four Ps of marketing, namely product, price, promotion and place. In order to market anything, it must meet these four Ps. In the case of weaner calves, the calf itself is the product; the market determines the price; the promotional activity takes place when you market your calves to a feedlot, agent or auction; and the place is where the physical transaction occurs.
Fulfilling these four key elements is easy, as it occurs almost automatically in a well-developed market. Then again, these are also the elements that result in weaner calves being deemed ‘generic’. Yet an ever-evolving market and changing products have given rise to three additional Ps that now form part and parcel of the marketing process, thereby supporting market diversification.
The other three Ps
These three Ps of marketing are people, process and physical evidence. The focus of these three elements is not so much on the minimum requirements to sell the product, as it is on the process of adding value to the product.
The first element – people – relates to customer service and the relationship you build with the buyers of your calves. While it makes sense to contact different agents and feedlots each year to ascertain which of them will pay the best price, it certainly does not help you in building lasting, beneficial business relationships.
If you produce top-quality calves, it is best to rather sell to the same buyer each year and to make sure your relationship with that buyer is such, that the potential of your calves is recognised.
The second factor is process. The manufacturing process of products is becoming more important as consumers insist on certain qualities. This also pertains to the buyers of your calves. The process followed before the calf is marketed adds value to the animal. According to research, calves that have already overcome their weaning shock and have developed excellent immunity by way of the necessary medication perform better in the feedlot.
The last factor – physical evidence – relates to how you will convince the buyer of the superiority of your calves when compared to the average calf. With traceability technology becoming more readily available, it is now easier than ever to provide evidence of the calf’s rearing, weaning and medical history.
Let your calves stand out
The time of deeming one calf to be the same as another has come and gone. Feedlots are subjected to the same cost squeeze that producers have to face, and feedlot owners should avoid buying poorly performing calves at all costs.
The last three Ps of marketing can assist the cattle producer in ensuring that the extra value he added to his calves will not go unnoticed by feedlots. – Prof Frikkie Maré, Department of Agricultural Economics, University of the Free State
For more information, send an email to Prof Frikkie Maré at MareFA@ufs.ac.za.