Cattle Economics: Holiday Steer for Holiday Cheer

By Dr. Andrew Griffith

How many people remember a time when their parents, grandparents or maybe even themselves sold some agricultural good in order to have enough money to purchase a child’s birthday gift or to fix the old farm truck? Growing up in Tennessee, a large percentage of farmers raised tobacco and beef cattle. In many cases, the year’s production of tobacco and calf crop were sold just prior to Christmas, which meant farmers had some money to purchase the Christmas meal and presents.

With the precipitous decline in tobacco production in the region, most of these folks are only in the cattle business. Thus, Christmas sometimes hinges on the holiday steer to bring holiday cheer for many families. Along that same line, there are still producers who sell a calf when “Momma’s” washing machine breaks so they can get a new washing machine for her. Or, they sell some calves to help buy the bicycle for “Little John’s” birthday. The list is endless it seems.

Though I digress, this thought process is a reminder of the importance of marketing cattle instead of selling cattle. It is not difficult to imagine and understand why a person would go to the pasture and collect the largest calf in the herd to sell, because there is an immediate need for cash. In fact, the ability to do this is an example of how liquid of an asset cattle have always been. In fact, there are not many commodities that can be turned into cash that quickly. Despite cattle being a liquid asset and being able to understand how some can justify selling a calf to fill up the bulk diesel fuel tank, it is probably not the method for the holiday steer to generate the most holiday cheer.

Marketing is an active endeavor while selling is more of a passive endeavor. For instance, a person can stick a bass boat in the front yard in Arizona, and someone may come across it and be willing to purchase it for some price. Alternatively, that same boat could be moved to the main highway leading to the lake, and it is more likely to move quicker and for a higher price. Furthermore, someone may spend a few dollars to advertise the boat and gain an even broader audience. The same can be done for cattle.

A person who owns cattle can put a sign in the front yard that says cattle for sale, or they can load them up and put them in front of buyers at a local sale barn. They may want to take it one step further and put them on video auction. These are not the only methods of marketing cattle as marketing animals via social media or other online venues have become more common. The main thought here is that marketing requires an active approach compared to a passive approach.

The other side of this thought of a cattle producer selling an animal for quick cash is the thought that most cattle producers can manage their money better than the market can. In other words, if a person knows Christmas is around the corner then it is perfectly acceptable to sell cattle in August and then set aside the money for Christmas instead of selling a random animal the first week of December for Christmas needs. This even holds for emergency spending such as replacing the washing machine.

This information is not earth shattering nor is it new to most readers, but it does lend itself to supporting the thought of becoming an active cattle marketer. An individual producer may not be able to eliminate market price risk, but it may be able to result in more satisfaction with the price received. A passive approach leaves the producer open to more risk due to poor preparation. A passive approach may result in the blind squirrel finding an acorn every now and then, but the passive approach will rarely result in the holiday steer bringing the maximum holiday cheer.

I hope each reader had a blessed Christmas season, and I hope all have started the new year with optimism. The cattle markets are certainly demonstrating optimism for many sectors of the cattle industry.