So it has rained, the grass is growing and you are contemplating restocking or increasing livestock numbers.
- Do I buy breeding stock or
- Do I buy something I can sell shorter term
- How many should I buy
- What should I expect to pay for them
- Who should I talk to
- If I buy will the market hold up
These are all questions we can be asking ourselves when looking to buy animals.
So I am going to attempt to go through some steps to consider when you have grass growing and the urge to eat it with something.There is something in us when we see green grass that causes us to feel like we need to buy animals and eat that grass,if we so we will make money.
Let's pause take a deep breath and realise
- Too much grass will never hurt us
- Too many livestock and no grass can be very painful
So let's not plan to eat it all.Work out how many animals you can comfortably handle and still have grass left at the end of the grazing period.
- Your grass is the resource you will be turning into $$$
- We are just using animals to convert the grass into $$$
So we can either buy animals or take on agistment to create cashflow.Cashflow is important to maintain our business so maybe buying longer term breeders is not the answer for you.
So Step 1. Find out how much you can get for agistment per week.This can range from $2/week to $12 / week for cattle depending on where you are in Australia.I spoke to a client this week who is getting $8.50 / week for cows & calves in a long term arrangement - That is $442/yr - very hard to go past that if your ego will let you not own livestock.
Step 2. If you are buying consider the type of livestock you would run that suits your country,is it sheep or cattle,breeders or animals you can put weight on.
Step 3. Do your research to find out which animals are the best value in the market,for KLR Mastermind members this is a simple process using the KLR 30 Second market reports.
Step 4. Speak to your agent and see what opportunities may be around your area.When it rains and green grass is plentiful we quite often see the opportunities to buy undervalued animals dry up.Everyone is out there buying just to eat that grass,the intelligent livestock producer bides his time and waits for the opportunity.
Step 5. How do you know what is underpriced or overpriced in the market ? This is a simple process using your Cost of Gain to give you relative value in the market. Again KLR Marketing graduates have the benefit of simple KLR Spreadsheets to calculate cost of gain and the profit from any given trade opportunity.
Step 6. As livestock producers we like to buy all one type or one line of livestock - this may not be the most profitable.Consider buying and increasing numbers gradually picking off the underpriced animals like picking fruit when it is ripe.This has the added advantage of letting your country get away and not have too many animals.At the other end as the season tapers off you can start to reduce numbers as animals become overpriced in the market.
Step 7. Once you have decided the classes of livestock to buy and decided on the price you can pay to make a profit, it is time to go to the sale or communicate with your buyer or agent.You need to be clear in your instructions to the agent or buyer,they are trying to act in your best interest so if you are not clear on your instructions, you are leaving it up to them to make judgments that may no be in your best interest.
Step 8. This is a most important step I believe most people leave out, that is receiving the new animals and taking the stress off them.It is at this point we can have those new animals start to perform for us right away or get a setback for 3-4 weeks.
This will have been revision for KLR Marketing School graduates,however if you have not yet attended a KLR Marketing School you can find out more information at http://www.klrmarketing.com.au/