Education

Marketing Lambs and Slaughter Goats Through Livestock Market Auction

One of the nice things about auctions is that a producer expends little effort finding a buyer when dropping goats off at an auction. Another advantage of livestock auctions is that auctions usually have to be bonded, thus, guaranteeing a producer prompt and reliable payment.  The big downside is that there is no control over what price you will accept for your animals.  This can make for a financially risky exchange.  However, there are a few steps a producer can take to either 1) make the venture less potentially risky or 2) use it to make contact with future direct buyers.

My number one piece of advice is phone the auction manager in advance and let him/her know you are coming.  Auction managers are busy people so sometimes you need to phone the office staff first and ask them for a good time to call the manager.  When you get through to the manager, describe the type of animal you have for sale and the quantity you plan on bringing.  Solicit their opinion on the best week to bring them in. This allows them to work on locating buyers for your type of animal if they need to. In addition, some managers operate as order buyers for wholesalers and retailers.  Because of this, they may have direct knowledge on what orders they need to fill.  Even if they are not order buyers they usually have a good idea of how many buyers they expect certain weeks and what the demand is projected to be.  If you are bringing in a large number of desirable animals it is in their interest to try to insure you have a positive marketing experience so that you will continue to bring your animals.

If you have more than one auction in driving distance from you, phone several of the managers.  This way you can compare their projections on when market demand will be highest and also get a feel for who is most enthusiastic about getting your business.  It is not out of line to ask for an estimate on how many lamb and goat buyers they have lined up that week and what sort of price range they are expecting.  That does not mean their projections are going to be accurate. However, someone who has presented a glowing picture to you is usually going to try a little harder to sell your animals at a good price than someone who is pessimistic, acts as if they could care less if you bring them your business or is very vague about what buyers they have lined up.  For example, one Easter I phoned several NY auctions to ask if they were having an Easter auction.  Two auctions were very enthusiastic about their sales and volunteered that they had lined up several buyers and urged me to attend and tell other producers. Another auction said that they had sent out reminders to all their buyers urging them to attend and anticipated a good sale.  Several of the others responded in lukewarm tones that "yeah, we're having an Easter sale" and when I prompted them about buyers, said "well, you know, our regular buyers will probably attend".  Without fail, average Easter prices received for lamb and goat were higher at the three more aggressive markets than at the lukewarm respondents.  If you talk to several different auctions you can also compare fees, commission rates, arrival times, etc. Keep in mind that lower does not always mean better. The number of serious buyers that the sale draws in, how well your animals match buyer demands, the timing of the sale and the order in which your animals enter the ring are normally far bigger factors in how rewarding the experience is for you than the money lost in fees and commissions.   

If you have several local auctions on different days of the week that are likely to have the same group of buyers at them it is usually best (all things being equal) to attend the earlier auction. If the same group of buyers attends one auction on Monday and another on Tuesday, chances are some of them will fill their orders on Monday reducing the Tuesday competition and dropping the price.  Of course, the other side of the coin is that by the last auction buyers may be more desperate to fill orders if animals have been in short supply and will pay higher prices. It's all a gamble.

Check out whether the auction permits you to specify a floor price for your animals below which you will not accept a bid. Few auctions make provision for floor prices.  However, if they do, be sure to take them up on it. Almost all auctions sell lambs and sheep by the pound.  However, the same is not true of goats which are often sold by the head. The arguments used by auctions to justify selling goats by the head are that 1) goats are generally sold in small lots and 2) when the lots are large, they often include a wide variety of goats that fit the needs of a very diverse group of buyers. Selling by the pound would probably benefit consigners with Boer goats as buyers tend to underestimate their weight but might be a disadvantage for consigners with dairy or Spanish goats whose weights are more likely to be overestimated.  It is a good idea to find out if the auction is willing to sell your goats by the pound rather than by the head if you are able to organize them into uniform groups. During Easter, some auctions provide graders and group lambs from different farms into lots that are the similar in condition and weight for buyers to bid on. These graded sales tend to attract more buyers and better prices for animals that grade well. However, you need to make sure you are comfortable having your animals sold as part of a lot.   

Auctions require that animals be identified individually. For example, sheep and goats must have official scrapie ear tags or tattoos. In most cases the auction will provide your animal with a scrapie identification eartag if your animal shows up without one.  However, they generally charge you for this service and provide your name and contact information to the USDA Veterinary Services office for your state (call 866-873-2824 to find out how to order eartags in your state).

The order that animals enter the ring is at the manager's discretion.  Be sure to ask the manager what their policy is and if it is within your power do what is necessary to try to get your animals in the ring early. (Again, this strategy may fail you if animal supply is limited and buyers get more desperate and prices higher as the auction progresses).  However, keep in mind most buyers don't like to support an auction where there are not many animals to meet their orders. Thus, if you have picked an auction that solicits a lot of buyers your best bet is to get in the ring relatively early. At the New Holland Sales Barn in New Holland, PA, suckling kids and lambs that have come in the night before usually go through the sale first.  They are followed by the consignments by regular, weekly shippers. In general, animals that have arrived before 5:00 am are followed by those that arrived after 5:00 am.  However, if you have the bad luck of being in a pen that is sandwiched in by other pens, expediency dictates that those other pens are going to be sold before the handlers can reach you.      

If your animals have a long way to travel to a sale, find out if they can come in the night before.  If so, what is the cost and are hay and water available to them and how will their time of arrival affect their order of sale?  Suckling kids may look pretty gaunt after a night without their dam. However, if you are selling weaned kids or yearlings, bringing them in early (if food and water are available to combat shrinkage) may be to your advantage.  In many auctions it improves your chances of getting in the ring early. It also gives your animals a chance to recover from a long trip without looking tanked up.

You can also use auctions to sell to a buyer whose prices you like and whose credit rating stinks. In this case, it's advisable to phone the buyer and find out when they are going to have a high demand for the type of animal you are producing.  As the time of demand approaches, contact them to find out what local auctions they will be attending.  Ask them to look out for your animals.  You can then double-check with local auction markets to see which auctions are expecting that buyer to attend.  If a more lucrative auction than the one the buyer has suggested you attend says that they are expecting him/her there, call the buyer back and say that it turns out it's easiest for you to attend that auction instead.  In all this conversation, the hint that it's their credit that bothers you will probably come out without you having to be rude or offensive. In answer to questions on why you are going to the auction rather than selling to them directly you can say that unfortunately the farm policy is to sell animals on a cash basis. The buyer may respond with a willingness to pay you in cash. 

Auctions can also help you build up relationships with buyers.  If the auction manager is willing to give you buyer names in advance, you can locate their phone numbers and call them up to introduce yourself and to ask them to watch out for you and your animals at the sale. Some auction managers are proprietary about buyer names (especially if you also ask for their phone numbers!).  If so, it is worth your while to be present at the sale rather than just dropping off your animals. You can introduce yourself to buyers and hand them your business card when they are looking over animals or you can watch as they bid and either introduce yourself to them afterwards or ask whoever you are sitting next to if they know their name.  When you get the check from the livestock market, be sure to record the buyer's name if it is on there.  Otherwise you can try to call the auction to get more detailed information about which buyer corresponds to that name or number. However, not all auctions will share this information.  Follow up with a note or call to the buyer suggesting that they contact you the next time they need similar animals.  Either way, the next time you have animals for sale, you will have some buyer contacts to call prior to making a decision to auction your animals. Auctions are inherently risky, thus, it's a good idea to not restrict your business to this sole marketing opportunity.

To try and minimize risk, farmers can seek out large regional auctions that are supported by numerous buyers and have fairly robust prices. Several large auctions have their average prices publicized on the web or in various marketing publications making it easy to track price trends.  However, keep in mind that a single producer is a small fish at these auctions.  If you enter the ring late, your prices may be far below the average. The same rules of contacting the auction manager prior to attending the sale and trying to make buyer contacts hold true for regional as well as local auctions.  In addition, if the regional auction is near any large private treaty buyers, you may want to make arrangements to take your load of animal to the buyer for a bid first before going on to the auction if you can't agree on a price.

The Monday morning sale at New Holland Sale Stables, Inc., New Holland, Pennsylvania is probably the largest lamb and goat sale in the Northeast US. There are several other regional sales in the NE US such as the Tuesday morning sale at the Livestock Co-op Auction Mkt. Assoc. of NJ in Hackettstown, New Jersey. Information about these and other NE US auctions is available on the web at http://www.sheepgoatmarketing.info .

Regional sales make a lot of sense when a group of farmers can get a set of cull ewes or does together to sell as a group at a regional sale rather than individually at local sales where demand may be limited.  It can also be advantageous if wholesale buyers of market lambs and kids are few in your region. However, past estimates have been that only ~25% of the goats that pass through large regional sales at Easter are sold for the traditional suckling Italian and Greek market and that prices for these kids may not compete with those received through direct sales or through more localized special "Easter Lamb and Kid" sales. The same is probably true for lighter weight suckling lambs traditionally in demand for the Italian Easter market. Neither of these young milk dependent animals fare particularly well at large region auctions especially if they have had to travel far to get there. Many of the goats bought at Easter through the New Holland market are filling the demands of other ethnic groups for family festivities during the holiday. Fifty to 60 pound kids and lambs, weaned or not, tend to be in high demand at New Holland for the Easter holidays.  Of course, if Easter is early larger lambs and kids like these may be in very limited supply.

One hint that folks might take from this is that it is best to sell your top quality suckling "Easter" kids and lambs direct to the buyer or through highly promoted local sales rather than subjecting them to the rigors of a long distance trip to a regional sale.  Another hint is that if your larger sucklings have surpassed the maximum weight limit of your Easter kid buyer, it may be worthwhile to locate a buyer of larger kids and lambs for non-traditional sales or a large regional sale rather than taking the penalty your traditional Easter buyer may want to assign. The Easter season has opened up to include more ethnic groups than traditionally expected, thus leading to a demand for a larger kid or lamb by some buyers.    

Bob Herr, who runs both Nix Besser Livestock Company (order buyer at New Holland) and his own goat feedlot, likes to say that there is a person for every goat at New Holland. Some ethnic groups want small goats some want large, some want castrated males, some want bucks, some want lean goats, some want fat.  However, there are some goats that are harder to sell than others. Pygmy and angora goats have a reputation for having little meat on their carcasses. However, Pygmy kids command top prices because they make great "shoebox" kids for many ethnic groups to offer as a sacrifice upon the birth of a child. 

Extremely fat goats and sheep are penalized by most cultures because this fat is viewed as a waste that will drop out of their body cavity at slaughter. Your standard Boer buck in show condition would be considered fat as would many dairy does at the tail end of lactation. Does and ewes that look pouchy (i.e. possibly pregnant) are also penalized by most buyers. More moderate body conditions are harder to call. Suckling kids and lambs can be as fat as you want without any penalty.  However, some ethnic groups have absolutely no tolerance for fat on a weaned market kid/lamb or yearling, while other cultures feel the lean kid or lamb definitely needs a few months in a feedlot.

Goats or lambs for Muslim holidays are usually characterized as weaned animals that still have all their milk teeth (i.e. no adult teeth, so roughly ≤1 year old). However, larger sheep and goats are also very much in demand for the Muslim trade during the Festival of Sacrifice. These animals must be "unblemished".  Different Muslims have different interpretations for unblemished. For all, the animals must be sound with no open wounds, broken horns, deformities, and for others it must be uncastrated and not docked (in the case of lambs).  Disbudding and eartags are usually acceptable.

Order buyers are generally very observant of animal health and looking to buy meaty, well-fed lambs and kids. As a buyer, Bob Herr seconds this with the belief that goats with "smooth hair, a hair coat that shines, and a clear eye, trim and well-muscled are hard to beat for the price, all things being equal." Although auctions have the advantage of prompt reliable payment, their uncertainty when it comes to price makes them a risky venture especially if they are the only market that a farmer establishes for his or her slaughter animals.

Farmers should review past market reports for specific auctions and learn to read the prices listed. Although lambs and sheep are almost always sold by the pound, goats are commonly sold by the head. If a market report lists prices for goats for an "estimated weight range", these goats have actually been sold by the head.  

In the following example (Figure 1), you need to divide the average price reported by the average weight reported to actually find out the average price paid out per pound live weight for goats in each weight category, i.e. $115.26 divided by 45 pounds live weight = $2.56/lb. and $125.78 divided by 121 pounds live weight equals $1.04/lb. In contrast, the price per pound is much easier to determine on the lamb report. The average price was $1.75/lb. for wooled and shorn choice and prime lambs averaging 57 pounds live weight and $1.42/lb. for lambs averaging 100 pounds.

In conclusion, becoming familiar with livestock auctions can help new farmers to understand better the different players involved in the livestock trade, albeit the "commodity" trade. Learning to follow market reports and to understand market trends assists farmers to become better sellers regardless of which marketing channels they eventually focus on.