Pricing direct-to-consumer beef steers
 

We are raising our first cattle this year, with hopes of slaughtering our first steers next summer. So far, things are looking good. I estimated a price on the high side, not knowing exactly how they would finish, and have already received deposits on half of what we are selling. Clearly there is a demand, but I am having a lot of trouble setting the final price. Grass-fed beef is not all that popular around here, and for those who do it, in our area, pretty much everyone does full-size cows for around $1300-1800/head. We are raising Lowlines. The average price I've found by hanging weight is around $4.50 hanging weight, which seems to be the easiest way to price these boys, particularly since we aren't sure what they will weigh. What is the going rate for those of you in the midwest (IL, MO, WI, KY) region? How do you price your beeves?

Thanks in advance.

Here in Indiana, my customers pay $200.00 down. I deliver it to the processor, they (the customer) pays their processing fee and pay me $2.75 a pound from the hanging weight.

I don't do beef, but sell a lot of pigs by the half/whole. Pricing by hanging weight is the best way to do it I believe. The buyer only pays for what they're getting. By the head isn't fair for anybody if the animals aren't consistently sized.

I can't help you on price much, but if you feel you have a high-quality product, don't be afraid to price it slightly higher than you think you should. A premium product is worth a higher price. You just have to sell what makes yours better and then back it up.

Around here the average seems to be $3.25/Lb, based on hanging weight and does not incude processing. The buyer is responsible for selecting how they want it processed and the associated cost.
This price is not for "grass fed" beef though.

I just sold a half 2.50lb hanging weight they paid processing. We kept the other half and paid the kill fee. If your going to be feeding out for other people I'd want to get something down up front. We had our whole steer sold but didn't get anything down and they backed out on us late. At least if they back out you've got some $. This was my first time and Ill make sure to do it differently if I do it again. We found it hard to sell because people think buying from a farmer is great but don't realize how much its going to cost all at once, a plus for them if they put money down, and how much freezer space it requires. I guess a payment plan would be awesome if you pre sold. That way they could have it paid for by the time it's ready and you have your money to operate on.

200$ down or pay upfront if getting less then 200$ worth.( because we don't have room in our freezer for 2 and a pig.) and 3.75 a lb. hanging weight and butcher bill is on them. pay in full on delivery to butcher or they don't get off the trailer. Took one to butcher and guy tried to tell me he didn't weigh a 1000lb he walk on the scale at 1326 lbs. and 850 lbs. hanging.

We had already decided to do 50% down for everything we sell. I've learned a little $$ up front goes far to encouraging customers to return for the rest ;-) . I even got 50% down on our meat chickens this year. One customer bought the whole batch, and it was great knowing I had money up front, most expenses were covered, and everyone of them went home in a cooler after we processed. No storage space required, and we make our customers agree to that. I've just been debating on this steer, since we've done it both ways as customers--paid by the head and by the hanging weight. We preferred by the HW for sure, but I've heard a few stories about the legalities therein. That's why some of our ranchers sold by the head, to avoid those legal snafus. I don't suppose the feds would come after our one steer though. We can't be too much of a threat to the big dudes, right? :grumble:

That's why you put it in their name at the butcher. It is theirs when it goes in and it is theirs when comes out. No legal problems your not required to be usda. Our farm is Usda a royal pain in the a**.( You have to keep records of all chemicals used. All medicines used. Types of feed and one label from each type and how much.) If you pick it up and take it home and put in your freezer your freezer has to record temp every hour and you have to keep logs. And if usda ask you have to give it to them.
That's why you want them to pick it up. And yes they will come after you if someone reports you.

I've always sold live, delivered to the local butcher (3) of thier choice. I run my rig across the neighbors truck scales. $400 down to confirm the calf. And the balance the day I load them to deliver. Market has been running about $1.53 lb. this year.
Next years calves have already been purchased by the butchers that does the custom work for us. I don't think that I will do that the year after. There are too many folks calling for calves. I don't want them going somewher else.

$1.53/lb? Is that live weight or h.w.? I've never heard that low, but then again, I've only purchased direct-to-consumer grass-fed beef. Were these grass fed ONLY?

I guess I wasn't clear in my previous post. Sorry. I'll add a little more detail.
I sell live, at my corral, and deliver them to the butcher. This year they are going for abt. $1.53/lb. Essentially, I deliver thier calf, because they've already purchased it from me. I have no responsibility for what goes on between the butcher and person who bought my calf.
My calves aren't grass fed. That market isn't well established here and I have good customers that like what we're producing.
The inputs here, on grass fed, are pretty high by the time they are kept the additional time.
In the central U.S. where there is more grazing ground a person may be able to come out. If you have to feed and/or buy much hay it won't pencil out.
My calves will process at abt. 22 months after 100 days on a grind mixture of corn, barley, and sprouted cottonseed with all the free mineral and grass hay they want. They will weigh about 1150 to 1200 finished. I have one customer that likes a little more fat cap and they prefer a hiefer. I keep her about a month longer.
I trade for my grain. I buy the cotton seed. And put up my own hay.
We've built this up since 1990, with great sucess. The biggest thing that I've found is that the quicker I can sell these calves the more $ I yield for my time. Most of our calves are sold as conditioned weaners That go onto the wheat pasture for the winter. The calves that we feed out are the ones that didn't meet what the buyer wanting. Its usually 5 or 6 annually.
Theres 2 times for us to sell a calf and come out. Weaned or ready to process.
It takes alot of years to grow a new market niche. With cattle prices as high as they are, small mistakes have large consiquences.
By the way Redgate, you didn't say where you are at. That can be a big factor in a conversation of this type.

Just for comparison, the Kansas, Texas Panhandle feedlot trade was paying $1.30 for finished cattle last week.

CIW has a nice business, I'd think his risk and story would be worth more than 20 cents/lb though. But that's me.

Thanks for clearing that up CIW. We are in central IL. That's part of the issue I'm having is that the grass-fed and grain-fed cattle differ so much when dealing with the niche markets. I've already sold half my available beef at a price that boils down to about $4.50/lb h.w. I haven't really pushed the other half to sell yet, for whatever reason. Clearly there is a market, and the fact that what I did offer sold so fast would imply the price is right. I want to make sure buyers feel they are getting their money's worth, while still being fair and profitable to me as the farmer. The current price will more than cover all my inputs, with profit to spare. I like that, as it will help us grow a bit next year. Thanks for all the info!

What a sad state of affairs. We are living in an over regulated nation.
We sold our first 1/4 of grass fed beef last spring and kept 3/4 for our own consumption, knowing we were along way out before we would have more ready for the butcher. Sold that 1/4 AT $4 LB HANGING WEIGHT..
We have two steers that will be 1 yo first of the year.
When is the earliest age you would send one to the butcher, grass fed.
Anybody feed chaffhaye? Our cows love it, and we are thinking of finishing the steers on it.

I punched a few keys and came up some equivilant figures for a hanging weight of $2.78 a pound. Thats using my carcus yields, inputs and overhead costs.
Making an assumption here. With my overhead and inputs, keeping the calve the additional time to finish on grass/hay. I would need to have $4.93/lb. hw. to achieve the same return that I'm getting on my calves now.
By the way I figured if I kept a calf to 28 months of age. (I don't know how accurate that is to finish grass fed of similar live weight.) The time of year that I would have the calf based on my calving season and the method I would have to use to feed the animal. ie; pasture vs. feeding grass hay.
I feel pretty good about my #'s in comparison to what has been put out there in this thread.

I follow the market reports in our area.... when my calves get to be about 400 lbs I check the market price... if its running over a buck a lb I call a penhooker and start high, letting the penhooker talk me down a little and sell them usually for around 500 per head. Penhooker loads them up and hauls them off to market in hopes of making a little, I am happy and the calves really dont care one way or the other. :)

If I were only taking one or only took them one at a time to the butcher I would sell live weight. However I often take several at once and there for sell based on what the hanging weight turns out to be. 2013 I charged $3.25 hanging weight.

I sell mine at 18 to 24 months old so am not getting the weights that others get. I find my customers prefer this, less meat, less dollars, less space needed.

If you get a family to do this with a half and set assigned the money they would have used to purchase the beef the eat. That is they get a beef in February , so every time they have beef they set assigned some money throughout the year. When is it s time to purchase gain they have the money on hand. Customers of mine that actually put away what the store would have charged tell me that they have the money to pay me plus a little let over.

They think it saves them money, taste better and is better for them.

That seems to be how things are going here. The families that bought ours wanted less meat, so we are slaughtering earlier than normal--around 16 months. Our indirect costs (ie fencing, electricity, equipment) are divided over an assortment of animals and sales, so for the beef, it is about 1/4 of the total, divided over the years we've calculated it will last. Our direct costs are minimal. The purchase price of the cow is divided up over her, this year's calf, and next years calf (purchased as package deals). We don't vaccinate, use chemical dewormers (yes, I've studied it in depth, please no lectures here!), and our vet exams and fecal test costs are also divided over a number of animals. They are strictly grass fed, so hay is our biggest input, but only seasonal. We also produce a percentage of it on our own farm, and only feed the steers over for one winter. By the time it all works out (on paper, at least), I calculate each of our steers have a monetary value of around $500-700 (leaving a little room for unexpecteds). So, if I sell for $4.50/lb h.w., and the carcass is 350 lbs (they are Lowline), that comes to over $1500. That's at least $800 net PER steer, which is plenty to cover my labor and salary. It seems like I'm forgetting something, as that almost seems to be too good to be true, but I can't think of what I might be forgetting. Of course, this is our first year, so we still have to estimate and plan out anticipated costs at this point. Thus, another reason I fear something has been forgotten. Am I doing that right?

*Edited to add that fact that so far their weights seem right on schedule. They haven't been weaned, so they have had hay and mama's milk (which seems to have been plentiful by the looks of it!), which seems to have made up for any differences from not creep feeding or graining. I have seen averages on grass fed Lowline farms between about 300 and 500 h.w., depending on age, so I am estimating on the lower end at 350.

WEll we have a friend coming down from Alaska in April hopefully with a couple coolers full of salmon and halibut. WE where hopeing to trade and send him home with grass fed beef. Our oldest calf would be 15mos the last week of march. Would that be way to soon to butcher? And when should I pen and give him as much hay and alfalfa as he wants?

My understanding is that you can butcher anytime you want. The younger he is, the more tender and less meat there is. The older he is, the more meat there is, but tougher it is. All the steers we've purchased in the past were slaughtered between 18-22 months if I recall correctly, which sounds like the prime balance of quantity and quality. My calves get free choice from the day their born--alongside mom. Obviously, they mostly nurse the first few months. We don't currently have facilities to separate, though I may have to figure something out depending on whether the cow lets them nurse after she delivers her next calf or not. There will be about a 3 month overlap. I don't even feed alfalfa, except what they get out of the pasture. They get just mixed grass hay over winter (now) in free-choice round bales, and once the growing season starts, we push our animals to new mixed forage grazing paddocks every day. Certainly fattened the cows up this summer; hopefully it will do the same to the steers by the time we slaughter next year!

We only managed to get $2.25-2.50 a pound hanging weight on our grass feed steers this year. We had five to sell and two went to repeat customers. It is hard when other yahoos are selling at $2.00 a pound for grass feed beef. Someone was trying to sell at $4.00 they had the same animal on Craigslist for months they finally offered it up in 1/4's at about $2.75 a pound hanging weight. Your market it what the other locals are willing to sell for if they are willing to sell at less then it costs them to raise the animals you are in trouble. I'm only keeping three this year and they will go to relatives. I made more selling the calves this fall then I did the finished steers no reason to keep steers when they sell for the same or less and take 12 more months.

At some point you have to build a customer base. Your program for next year leaves your current two customers without beef. Is that fair? The other guys may have to lower their price due to their product not being delicious. Some people advertise grass fed beef only because they don't want to pay for feed and the meat, well, let's just say they depend on finding new suckers/customers yearly. When developing your business, your repeat customers and how many you can develop is what will help you create a profitable endeavor. My wife finds me the price of ground beef, the highest quality ground beef. I take that price and pencil out if I can make any profit off of our calves if I sell for that price. If it affords me some profit, that is the price for the year. My customers realize I am not standing firm on one and only one price, I am trying to utilize fair practices and they are aware of my pricing strategy. Our comment to new or people interested in our beef, "it makes for expensive hamburgers, but very cheap steaks!". And that is the truth. Our customers stuck with us two years ago with the extremely high grain prices, we told them up front and forewarned them, then we had the drought and high hay prices that kept that price high the following year. YOU have to believe in your product and price for you to make a profit. Most can't budget and don't have the up front money, so you have to get creative, sell them with a non refundable deposit and offer a payment plan and keep track of their payments faithfully. Then when the calf is processed, take the hanging weight - their deposit - their payments = amount owed. (try to estimate the cost and don't let them over pay to much if any). I strongly suggest keeping those two repeat customers happy and with fresh beef.

I agree with Farmerjonathan. Repeat (happy) customers should have priority.
We have just started and will only have two steers to butcher this year. We will keep a 1/4 of each for our freezer one in the spring and the other in late fall. WE have a list of people who say they are interested. we will begin to take deposits soon but repeat customers will always b at the top of the list.