TLH - Newsletter (englisch)
Used courtesy of Dickinson Cattle Co. USA

Wholesale/Retail -- knowing the difference.

DCC Ranch e-News #196 - 12-3-19

by Darol Dickinson

A great registered Texas Longhorn cow can sell for $380,000. A great registered Holstein cow can sell for $380,000, that is retail value. The buyer knows, has a plan, thinks he knows, or may really have an insider-track to a way this investment will pay for itself, and fetch a return of equal, or more value. Most high dollar cattle make their return by semen sales, embryo sales, or resale. Only the very best genetics have this high value and are rightfully celebrated throughout their industry.

On the other hand, if these same animals are sold, without registration, at the local cattle auction, they are weighed and bring about sixty cents a pound -- that is wholesale. When sold over the scales there is no respect of show wins, pedigree, milk production, bloodline, DNA, true breed type, color, or conformation -- it is only about weight on that day.

In this example the difference in wholesale and retail is about 400 times more for retail. Is retail pie-in-the-sky? Absolutely not -- if they can yield a return on investment and be profitable. That is where good marketing comes in. In fact no one should buy above wholesale unless they are planning to do good marketing and promotion. One can own the greatest critter in the world and without some advertising to the world, the world will never know -- they then, sadly, remain forever wholesale.

Now, lets forget the $380,000 cow -- forget her completely. Think about a normal 1100 lb. cow. She can sell wholesale at the local cattle auction for 60 cents and fetch $660 minus sale fees, hauling, taxes, etc. which nets a wholesale of about $640. That is wholesale. Are we still in the buggy?

Now, take the 1100 lb cow again. Don't sell her wholesale, although if you are low energy, that is about all you have a desire to do. But, if you are aggressive and would like to become a retail marketer, process the cattle that are not genetically helpful to the herd. The 1100 lb cow will yield 34% lean grind --- that is 374 lbs, which can be sold for $6 per lb as grass fed grind, that is $2244, now we are back to retail again. The cost of inspected legal processing will run about $400. There is a lot of difference in wholesale $640 and retail $1844. Wholesale will not make ranch payments -- retail will buy the neighbors farm in a few years.

Understanding wholesale and retail is the most important part of any business.

Now, take the old herd sire. He is gentle, the kids like him, his calves are all over the pasture, but the old molester is breeding his own daughters and all agree that isn't good. I get phone calls to buy this old bull every week or so for $1500 to $2000. The owner doesn't want to sell at the wholesale auction, but don't want to process the old stud and sell lean grind -- this bull is the family friend. None of the kids want to "kill" old Ferdinand.

Perhaps it is time to come to reality, with the family: There are family animals like cats, dogs, hamsters, parakeets, Mongolian gerbils, monkeys, and lizards that most people agree are not good to eat. No one roasted a parakeet for Thanksgiving.

Then there are farm animals like chickens, turkeys, cattle, and hogs that are used world wide for human food. With few exceptions every one of these farm animals will be consumed some day, some time. (don't pardon your turkey.)

Now jump forward. Old Ferdinand is hanging on the cooler rail. He was a live weight of 1800 lbs and yielded 36% lean grind. This is 648 lbs of high omega 3 healthy beef worth $6 per lb. That is $3888, less the processing costs -- now you have entered the sweet, beautiful, profitable world of retail. The kids will recover when an even nicer young replacement bull arrives.

That is the black and white case for wholesale and retail. It is pretty simple. To understand and position the herd for retail is a wonderful thing -- it makes you smile. To relax and settle in, doze off a little, don't promote, sleep late, don't private market, and sell wholesale --- try to be happy with it, if-you-can? You are really going to hate wholesale, the more you know about it!

*The numbers or currency will be different in other countries than the USA, but wholesale and retail never change. DD

View this article Online: https://www.texaslonghorn.com/pr/index.cfm?year=2019&story=enews-196_Wholesale-Retail_20191203

 

 

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