Selling primestock live or deadweight – which way is best? It’s a debate that splits many farmers. Jeremy Hunt takes a look at the arguments
Managing director of Blade Farming
Good and effective marketing of primestock is all about consistency – and that’s precisely what deadweight selling delivers.
Consistency of volume, consistency of supply, consistency of payment and consistency of pricing. That’s what the deadweight system does and that’s what farmers need to run their businesses as efficiently and as profitably as they can.
There are very few occasions in the year when returns to a farmer selling primestock on the deadweight system don’t match those that would have been achieved through the live market.
Deadweight selling gives business security, reliability and the most stable marketing system for moving stock from farm to slaughter.
But as well as the practicalities of efficient marketing, there are significant benefits to be gained from the communication links that develop between producer and buyer plus the advisory and livestock management support that ensures stock meets the necessary specifications and so leaves the best margin.
We believe engagement with the “end customer” is paramount for efficient livestock marketing. We know exactly who takes beef from our farms and can respond quickly to ensure we produce what’s wanted. That’s the key to achieving the best price for the producer.
Having the feedback from every stage of the supply chain – and even more importantly being able to react to it – is hugely important. But the 52-weeks-a-year relationship with the abattoir means we can plan our business accordingly.
We know when the abattoir is at full volume capacity or when throughput is restricted. We have that information and can make use of it to the benefit of our business and our producers.
Farmers considering deadweight selling should not underestimate the low-cost of marketing stock by this method. It’s a straightforward system. Transport costs are lower and the work we’ve done on meat quality has proved that the single movement from farm to slaughter has a significant and beneficial impact by reducing stress.
Some primestock producers prefer to take the highs and lows of the live market throughout the year. But deadweight selling provides a mechanism based on a fixed price and less business risk. Deadweight sellers are more focused on gross margin than pence per kilo.
However, there are certain times of the year when prices in the live market will exceed those being paid to deadweight sellers. But they are rare. Even in these times of high primestock values, the deadweight prices we are receiving for cattle are higher than the live market.
Deadweight selling isn’t just about how much an animal will sell for on the day that it’s marketed, it’s about monitoring the lifetime of the animal to produce the best margin for the farmer.
* Blade Farming sources 15,000 prime cattle a year from producers – all of which are marketed through ABP.
With 40-50 head of prime cattle to sell most weeks of the year, North Yorkshire beef finisher Tim Abel says there’s nothing to beat the deadweight system. “For the numbers we sell each week all year round, and the type of cattle we produce, selling deadweight provides us with the most efficient system of marketing and achieves us the best returns,” he says. Stores are on the farm for around 120 days and finished across a range of weights – up to 800kg – depending on the type of cattle. “So by the time the wagon has left the farm I can actually work out to within £20 a beast what that batch of cattle will pay,” says Mr Abel. He acknowledges that the live markets are still the preferred option of producers selling smaller numbers of cattle but says his large scale finishing system is best served by a deadweight buyer. “We aren’t producing the type of cattle that would find the right buyers in the auction ring. And on price the maximum paid per kilo has now been increased to cattle up to 460kg deadweight, so the heavier cattle we produce aren’t being penalised. “It costs us less than £2 a beast for transport and we’re paying a £13 slaughter charge. I’m convinced the stoppages I’d have to pay by selling in the live market would be far more than that.”
Case study – Tim Abel, Ripon, Yorkshire
With 40-50 head of prime cattle to sell most weeks of the year, North Yorkshire beef finisher Tim Abel says there’s nothing to beat the deadweight system.
“For the numbers we sell each week all year round, and the type of cattle we produce, selling deadweight provides us with the most efficient system of marketing and achieves us the best returns,” he says.
Stores are on the farm for around 120 days and finished across a range of weights – up to 800kg – depending on the type of cattle.“We are talking to our deadweight buyer at least three times a week so there’s a constant dialogue which is beneficial for both of us. We have our own weigh scales so we know what cattle weigh when they are loaded and we have a good idea of the killing out percentage.
“So by the time the wagon has left the farm I can actually work out to within £20 a beast what that batch of cattle will pay,” says Mr Abel.
He acknowledges that the live markets are still the preferred option of producers selling smaller numbers of cattle but says his large scale finishing system is best served by a deadweight buyer.
“We aren’t producing the type of cattle that would find the right buyers in the auction ring. And on price the maximum paid per kilo has now been increased to cattle up to 460kg deadweight, so the heavier cattle we produce aren’t being penalised.
“It costs us less than £2 a beast for transport and we’re paying a £13 slaughter charge. I’m convinced the stoppages I’d have to pay by selling in the live market would be far more than that.”
Executive secretary of Livestock Auctioneers Association
Competition is a vital element of establishing a fair and realistic trade for livestock and that’s what the auction system achieves.
You only have to look at what’s happened to the pig sector – and milk producers are facing similar marketing issues – to see the benefits of the live auction system.
Live selling of sheep and cattle over the last two years has become ever stronger as demand has outstripped supply. And the competition is a result of the supply and demand situation which is the essence of live selling. It ensures livestock sellers receive the true value of their stock.
About 60% of slaughter sheep on which levy has been paid are now being sold through the live auction system. It’s the biggest percentage of the national kill that has been sold “live” for 15 years which indicates a marked return of more sheep producers to auction marts.
Sheep producers clearly see the auction ring is where the fiercest competition exists for their stock and where the best returns will be generated. Over the last two years the tide has turned and the tightening supply situation affecting the slaughter trade is making competition stronger and underlining the important role of live selling in establishing the true market value.”
We are pleased to see more buyers from the big abattoirs returning to the sale rings to buy stock. And one of the principle benefits of that is being able to buy what you want and leave what you don’t want. We all know that not all of the stock sold on deadweight contracts actually meets the specification, but when sourcing stock from a market those buyers have the ability to take only what they want.
It’s the fairest method of trading and valuing livestock. Around 300,000 prime cattle are currently sold through the ring each year and that figure is beginning to creep up again – largely due to the increase in cull cow values.
The current high values of stock are making farmers realise that they cannot allow their marketing system to fall into the same situation that now dominates the pig sector. There will always be those who need to sell deadweight but the live markets must remain as the fairest and most open system of valuing stock.
Case study: Jason Craddock, Lancashire
Lancashire sheep producer Jason Craddock sells the entire lamb crop from his 350 Texel-cross ewes through Chelford Auction Mart and averaged just under £100 a lamb between July and Christmas last year.
“We have always sold liveweight and feel it gives a much better engagement between the producer and the buyer compared with selling lambs on the hook. Over the years we’ve built up a close working relationship with our regular buyers and that rapport works both ways.
“It means we get regular feedback on how the lambs are killing. We want to produce the best lambs we can and earn the best price for them and the live market enables buyers and sellers to work together.
“It’s the competitive element of the auction system that’s essential to create the trade,” says Mr Craddock.
He believes selling liveweight gives him the best financial return for his lamb crop as well being the most satisfying system of marketing his stock.
“Our aim is to produce top-end Texel-cross lambs for the premium trade and we have weekly discussions at the market with our butcher-buyers and wholesalers. Deadweight selling isn’t the only system that provides feedback on the stock it buys; as liveweight sellers, the interaction we have with our buyers at the market is an important part of the business and has a direct bearing on how we select and market our lambs to achieve the best returns.”
Mr Craddock says he values the market’s ability to pay for every kilo he produces: “Ideally we’re aiming to produce 45kg lambs but if we have any heavier lambs to sell the live market pays for every kilo. If they were sold deadweight I’d only be getting paid for the kilos up to my spec – say 21kg.”