You Get What You Pay For, Until You Don’t

Garth Ruff, Beef Cattle Field Specialist, OSU Extension

Are you getting what you pay for?

There are many things I could write about for the Expo issue of the Ohio Cattleman, buying bulls (more on that later), mud (it’s been everywhere), cost of raising replacement heifers (not cheap if done right). Instead let’s talk about a topic that’s been on my mind and the minds of others recently given the economy and other issues: Value.

Meriam Webster defines Value in several different ways 1) the monetary worth of something: MARKET PRICE, 2) a fair return or equivalent in goods, services, or money for something exchanged, 3) relative worth, utility, or importance.

To determine Market Value, I subscribe that it’s up to a buyer and the seller/provider to determine value themselves for a good or service and it’s up to the buyer to know where their cost threshold is. I would also propose in many instances that you get what you pay for, until you don’t. Let me provide some examples.

A colleague of mine just sent me a screen shot of a fellow cattlemen advertising and selling beef on social media. If you’re on social media, these kinds of posts have been routine over the past couple of years. What was striking about this post in particular, was the price of the beef and what was being sold for that price. In this instance the producers was selling 1/8th of a beef for $525.

Now take a minute and do that math, $525 x 8 = $4,200! Accounting for what was in that package roughly 45 pounds of beef at $11.66 a pound, keeping in mind half of that was ground beef. If this producer can sell beef at that price, good on them. In my position I’m getting ever more curious as to what the direct to consumer, local beef market can withstand.

I’m never going to tell someone what they should sell their beef for as I get asked that question frequently. I can help them figure out a few ways to price product. What price per pound provides value or a fair return to the consumer?

For the consumer the eating experience of that beef had better be exceptional and even then, does the cost justify the value of the product? When fat cattle are selling for around $1.50 a pound, multiplied by 1,400 pounds that’s only $2,100 a head, half of the previous example. We know consumers value locally produced product but at what rate? The last thing we want to do as producers is price ourselves out of the market.

I would argue that the same conditions apply to buying bulls or bred heifers, in that the buyer often gets what they pay for, and there is a premium for having a relationship with the seedstock producer. As someone who attends several production sales annually I have also seen several cattle undervalued by potential buyers, especially when it comes to bulls.

One could make the argument that most of the quality bulls sold by reputable seedstock producers in Ohio are affordable in comparison to buying yearling bulls in the west or even in Kentucky. Many bulls sold in Ohio are 16-24 months old versus yearlings and on average sell for less money.

Reputable and quality are the key words. Where I’ve seen things go wrong as an Extension employee is when a farmer buys a bull just because he was cheap. There are probably reasons as to why he sold for what he did. Is the rate on return of that bull comparable to his contemporaries?

Not every producer in Ohio needs an “high dollar” bull due to cow numbers, but I’d recommend that everyone have a bull with quality genetics and EPD’s. Genetic data can help determine value and make informed purchasing decisions. If you need help understanding that data, let me know. Hope to see several of you at the 2023 Ohio Beef Expo.