By Laura Nelson, Industry Information Specialist Certified Angus Beef LLC
A good feedlot manager knows his business inside and out. If you're considering a partnership or retaining ownership, it's your business to know it equally well.
"There's no need to be shy in asking questions,” says beef cattle specialist Paul Dykstra, with Certified Angus Beef LLC (CAB). "Be upfront and know what you're getting in to.” CAB offers questions to consider in the marketing section of its Best Practices Manual, available at www.cabpartners.com/bestpractices/index.php or by calling 800-225-2333. Here are a few major topics for your first sit-down with a potential partner.
Get the basics on the feedyard's background. How long have they been in business? What are the manager's goals and philosophy of feeding? What kind of cattle do they typically feed? Do they feed cattle from your area?
Feedlot manager Shelby Jones says potential customers of Ranger Feeders II LLC, Dighton, Kan., ask such questions. "They're trying to get a big picture of what goes on at this feedyard, what we do and why,” he says. From issues of cattle comfort to the finer points of attention to detail, "accurate two-way communication is essential.”
This is the reason you're entrusting the manager with your cattle, so it better make sense. What do they feed, why, and where does it come from? Do they have emergency feeding plans for when bad weather or other disasters strike? How consistent is their feeding schedule?
"Understanding how feed is accounted for eases the mind of newcomers,” Jones says. "So we usually talk about how the feed is weighed to a pen for each feeding, and how it's recorded and posted to the pen.”
Rations are customized and change through the year and as your cattle progress toward finished weight, their intake constantly monitored for quantity adjustments. "Starter rations” may vary with calf type and age, and how much intake they are accustomed to, Jones says. Sharing that information can reduce digestive upsets and stress that may lead to other diseases.
Closeouts or performance records
Managers should be happy to show you a sample closeout record, but if you don't understand what those figures mean, it's not going to do any good. Iowa State University professor Dan Loy says producers should question anything and everything on a closeout.
"Some of these questions are going to seem simple, but they're important,” he says. "What were the weighing conditions? Were they full weights, were they adjusted to a standard dressing percentage at the end? Do you calculate deads as part of the cost of production or is the death loss ignored?”
Ask about how the numbers on the closeout were calculated – how do they determine the number of days on feed? What's the markup on feed costs, if any? Be sure to clarify any acronyms or abbreviations you're not familiar with.
This is where numbers better start making sense if you're going to make this partnership work. CAB's Gary Fike, beef cattle specialist, says it's critical to know and understand all your financial options when going into business with a feedyard.
"Ask about their financing options, what interest rates are and how much equity you need to leave in,” Fike says. "Given the beginning value on cattle, ask what opportunities exist to hedge them or enter into a basis contract. Asking about such risk management techniques doesn't take the risk out of the market, but it does take the unknown out of what you stand to earn or lose.”
Keep asking until you feel well informed in choosing the feedlot. If a manager doesn't take the time to answer all your questions thoroughly, he's probably not someone you want to do business with.
"The big deal in finding a feedlot that works for you is making sure you're going to a yard, you're talking, and you're asking questions,” says Mark Sebranek, manager of Irsik and Doll Feedyard near Garden City, Kan. "I give potential customers all the time in the world – if they want to talk for three hours, we're going to talk for three hours. They're going to ask what they might feel are stupid questions, but they're not. They've got to ask all those questions to make sure they're comfortable with what we're doing.”