Marketing Beef Cattle

       Out with the Old? Not so Fast!

     Significant differences exist in the use of new and traditional marketing outlets in the United States, and these differences can vary from state to state and, sometimes, county to county.

     New advances in technological marketing techniques, such as the Internet and video sales, have also fractioned off some ranchers, many larger scale, who are readily employing these new techniques to their benefit. But several ranchers, especially those in rural areas, do not have such ready access to modern communications, and, when they do, they involve methods and means that have been technologically exceeded, particularly in regards to hi-speed Internet connections and video transfer.

     Though economists and scientist admit there should be more study, there are known indirect benefits associated with these new marketing techniques that many are beginning to realize.

     But without documented evidence, Internet sales among smaller ranchers have not come close to the smaller ranchers propensity to hit the local auction, which is still the favored place to sell cattle. In fact, recent studies show the jury is still out on which methods return the most bang for your buck.

Internet Sales Slow to Catch On
One interesting observation, a recent study noted, is the small role played by Internet sales in the marketing of stocker cattle. "In order for Internet sales to grow, this channel must compete with video and private sales, given that producers with relatively smaller herds tend to market their cattle through public auctions. Internet sales are at a disadvantage to private sales and video auctions because a certain level of technological competency is required in order to participate in an Internet auction," the study indicated.

     For the more rural and isolated rancher, dial-up internet access is the norm, but makes the use of Internet auctions technologically infeasible. Interruptions in service, delays in data and bid transfer all hamper the smaller rancher when he or she jumps online to market their herd. Instead, the smaller rancher still enjoys the human-to-human contact at the local auction, not too mention the atmosphere, and will gladly move their herd to auction.

     Studies also indicated a rancher’s reputation impacts pricing. According to the study, a rancher with a positive reputation "will realize a higher price across all marketing channels," and does not have to pigeonhole themselves into one particular marketing channel.

Video Auctions

     Video auctions far surpass Internet auctions in usage among ranchers, and this may be attributed to the technology required, which is less expensive and has shown to be effective and reliable. Studies found that quality uncertainty remains an important issue in both formats due to the limited amount of information available in video in both. This may be one explanation for the relatively slow rate of adoption of these marketing channels when compared to the traditional live cattle auction.

     Nevertheless, a 1991 study found additional information, not readily accessible in the traditional auctions, may be available in video auctions (e.g., vaccination records, place of origin, and current feed regimen). This information could be used to improve animal health and feed lot efficiency, and, when well documented can be a strong factor when a buyer is weighing their purchasing options.

Other factors

     There are additional factors which explain the relatively low percentage of cattle sold through Internet auctions. These include several types of indirect transaction costs, such as:
     * Slow and unreliable Internet connections cause unacceptable delays between the time the producer submits a bid and the time the results are received;
     * Lower levels of computer literacy among cattle producers
     * The necessity for minimum herd size lots
     * Security concerns
     * Payment concerns
     * The quality and reputation of the cattle sold
     * Producers may receive a lower price than they would through other marketing channels

     Whatever the case, no study has definitively proven that the benefits of modern day sales and marketing techniques outweigh those of the traditional live auction. And, when auctions provide a means to network, increase reputation among the ranching community and information sharing, these intangible benefits seem to take precedent over, at least the smaller ranchers, need for new technology.

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