Commercial cattle producers may jump into the seedstock business because the notion of selling a bull or heifer for big bucks is appealing. However, this approach often leads to problems. In fact, new seedstock producers have a high rate of failure; the average operation folds in five years or less. Common mistakes include not having or following a business plan, not grasping the complex issue of genetics or simply the inability to prioritize chores.
Matt Spangler, Ph.D., University of Nebraska – Lincoln, says new seedstock producers may not understand their unit cost of production will likely increase.
Additional labor requirements, such as the additional routine handling of animals to measure and record traits such as birth, weaning and yearling weights, yearly ultrasound scan data and DNA sampling and testing are a few of the tasks that add expenses to an operation. There are also breed organization membership expenses and animal registration.
“Detailed record-keeping and interfacing with the breed organizations in reporting data represent a change in management and a change in labor requirements that accompany moving from commercial production to seedstock production,” Spangler explains.
New seedstock producers can utilize several strategies to be successful. One is a change in philosophy. The revenue stream for commercial cattle producers is beef production based on phenotype, while seedstock producers should focus on the accumulation of genetic merit. Plus, seedstock producers make rapid genetic changes, with faster generation turnover, using younger sires and dams.
“A lot of people who enter this business make the broad assumption that every bull calf born will be merchandised as a bull,” Spangler reports.
“The reality is: The good seedstock producers who understand how to make genetic progress realize they’re only going to market half of the bull calves, but they still have to collect all the data on each one, including the ones they don’t merchandise as a bull. [It’s] another source of added expense. Culled bull calves usually enter feedyards after accumulating expenses that are more than the average weaned calf or yearling steer.”
Bringing in new seedstock
New seedstock producers may buy animals from another successful seedstock operation, hoping the breeder’s success will transfer with newly purchased animals. This rarely works. For long-term success, producers must have a plan that includes developing a breeding goal which matches an identified set of commercial bull buyers. Producers need to work the plan and stick with it.
Spangler says people who try short-term trends and fads, constantly changing their breeding goals, often strike out.
“Seedstock producers have to be willing to fail, and they have to quickly adapt to changes,” Spangler advises. “Not everyone is good at every task. Clearly identify what you’re good at. Put a team together that can work together to accomplish tasks. Being aware of what you’re good at and what you’re not is very important.”
Robert Weaber, Ph.D., Kansas State University, says taking a tactical, pragmatic approach to building a seedstock business promotes success. Instead of using an expensive heifer as a donor, which rarely works, new producers may purchase a package of 3-, 4- or 5-year-old cows that are similar to the desired pedigree and genetic potential they want to develop.
To attract modest-sized producers who buy two to four bulls at a time, providing a choice of more than a dozen animals is necessary.
“A financial plan is key,” Weaber explains. “[A new entrant] may have a relatively good commercial beef production and management background. If you hire a herdsman to run a couple 100 cows for you, [get the right person]. Employees in charge of the day-to-day will drive your success or failure in the coming months.”
Compiling genetic data
Weaber recommends developing a strategy for performance data collection and performance testing. Folks often underestimate the complexity of the data side of the business. It also takes time to report gathered information to respective breed associations and to incorporate this data into decision-making.
Year-round customer service separates successful seedstock producers from the competition. They visit with a commercial bull buyer to determine his or her needs and match each bull to the consumer’s production environment and breeding objectives. They quickly respond to a customer’s questions that may deal with herd health issues, feeding or marketing calves.
“[Customers] want problem-free bulls,” Spangler advises. “If they buy a bull, they don’t want to worry about temperament issues. They bought him based on some criteria, and they want to make sure when calves hit the ground, that bull met those criteria. If they have problems with the bull, they want to be compensated without any questions asked. They want a problem-free buying experience.”
Weaber reports online sales and private treaty open house events are becoming more common. These win-win events allow commercial customers to receive quality customer service, while seedstock producers attract and retain new customers. Often the seedstock business is more about the people and relationships than it is about the genetics customers buy.
“I don’t want to discourage people who want to get into the seedstock business,” Weaber advises. “I want them to be successful in the business, [understanding] that planning goes a long way. There are plenty of pitfalls in seedstock production. Make sure you’re prepared to withstand the storm.”
New seedstock entrants may learn more about the business from breed association field services staff. A first-time breeder can develop, explore and build relationships through breeder association contacts. Breed associations also provide tours and educational programs.
Consider visiting other seedstock producers in the area. Subscribe to several breed journals to learn about association services, data collection and new marketing ideas. Hire a consultant for advice about breeding, nutrition or building a bull development ration.
Join the seedstock community
Weaber believes it is vital to be engaged in the community, attending local county cattlemen’s meetings, extension programs or even drinking coffee in the local coffee shop on Friday mornings. Community activities keep producers involved and connected to potential customers. After all, 90 percent of all bulls sold are to buyers who live within a 100-mile radius of the seedstock producer’s operation.
Seedstock producer Gordon Jamison raises Hereford cattle on the Jamison Ranch in western Kansas. This family operation breeds L1 Herefords for efficiency, soundness and muscling with emphasis on maternal traits for commercial producers. In business for 40 years, Jamison’s customers rely on outstanding genetics and customer service.
“Customer service goes a long way toward providing long-term generational customers,” Jamison explains. “Our goal is to have buyers that come back year after year. There are a lot of seedstock suppliers. ... [Buying bulls] is almost as easy as going to Walmart. Customer service is tremendously important.”
Jamison offers his customers free delivery for all bulls purchased, including those sold by video or over the phone. He also provides a first-breeding-season guarantee and a soundness guarantee that covers bulls up to three years. Jamison assists buyers as they market cattle, especially heifers. And he helps them gain access to branded beef programs.
“Examine that desire [to be a seedstock producer] carefully because being a seedstock supplier isn’t for everyone,” Jamison advises. “If you don’t enjoy working with the public, if you’re not willing to deal with issues that are going to arise, you don’t belong in the seedstock business. It’s as much about customer service as it is providing quality. You have to have a passion for it.”
ILLUSTRATION: Illustration by Corey Lewis.
