Sit around the coffee shop long enough and a passerby can hear producers talk shop. Ranchers gather for their morning gossip and tall tales start to develop. So and so has the biggest calves, his neighbor got the highest prices at the sale barn, and the producer down the road has the tallest corn in the community.

With high input costs for feed, fuel and fertilizer, the pressure is on to increase efficiency, capture high prices and sustain the operation through difficult times. McCook County (SD) Extension Educator Heather Gessner shared marketing cattle basics for producers to consider as they develop strategies for their calves.

Pricing and marketing tools

Gessner covered the basic tools for producers use, and although it may be a simple review for many producers, she said it's important for producers to reanalyze their marketing strategies each year. There are several tools available including: contracts, futures prices, cash sales and minimum pricing tools.

“Producers need to compare marketing tools to using minimum pricing options in order to set a floor price on their livestock,” recommended Gessner. “Many of us grew up where grandpa and dad sold their cattle a certain day, every year, no matter what, so that's the way we sell them, and the price we get is the price we get. This probably isn't the best marketing tool we can do in today's highly volatile age.”

Gessner said that doing the same thing every year, even if producers are using some of the advanced marketing approaches, might not be the best choice for the operation.

“Producers need to reanalyze every year on what they are going to do and if its the best marketing tools based on the year and the markets of the day,” said Gessner. “I challenge all producers to map out what they are producing, how much of it they have and the amount of risk they are willing to take. Once those questions are answered, they can begin to develop a marketing strategy.”

Ranch marketing team

Gessner advised producers to develop a strong marketing team for the ranch, including an agriculture lender and a broker.

“Choose a lender and broker who are knowledgeable about the industry, and keep those two close as you're developing marketing strategies,” recommended Gessner. “As you put together a marketing team and you're working with a broker and lender that understand your business plan, it's also important to use the tools you are comfortable with. That's a good start, and then there is the opportunity to learn more about the tools that might challenge you a little bit. Combine some of the marketing strategies available to minimize the bleeding and make a profit. That way we can continue doing the things we love in production agriculture.”

Gessner said producers need to be constantly looking at the available options to make an educated plan for the future; however, she said sometimes these options can be intimidating for producers used to traditional cash market methods.

“Marketing plans are tricky for many producers because as soon as they pull the trigger, prices go up and they think they missed out,” explained Gessner. “We need to change our way of thinking and tell ourselves that we made the best decision at the time. Maybe the prices did go up, but it was still the right decision at the time, allowing us to go the banker and show how the marketing plan worked, so we can renew our operating loan for another year.”

Gessner's biggest message to producers is to take the mystery out of cattle marketing to make educated decisions down the road. By understanding the markets, considering all options and trying something new from the traditional methods that have been done for generations, producers can be successful in reducing risk and capturing higher prices. By doing this, the next time producers gather at the coffee shop, they will be able to discuss their successful marketing strategies with their colleagues.