Economics: February 2005

Retaining ownership of cattle into the feedyard can be a stressful time for producers, typically because the cattle are many miles from home, other people are managing them and the average producer doesn't understand enough about what is going on with the cattle in the yard. There are many factors to consider when selecting a feedyard.

The following are items that need to be compared and examined when selecting a feedyard.

1. Location - To minimize freight costs when selecting a feedyard, location is a very important consideration. Other important factors include typical weather in the area, availability of feed grains and number of nearby packing plants.
2. Reputation - A good reputation is an important factor. Talk to others in the industry. Talk to the feedyard's banker to get an idea of their financial condition, and ask for references of people who have fed there in the past.
3. Appearance - A well-run feedyard should be clean and have good drainage. There should be adequate bunk space and ample water available. The working facilities and hospital areas should be clean and well organized.
4. Feed system - A well-run feed system starts in the mill. The feed mill should be neat, well-organized and have a good record-keeping system. Questions to ask include: What feeds are used? How are they processed? When is feed bought? How often do they feed?
5. Management - Some of the questions to ask include: Are consulting nutritionists and consulting veterinarians used? When you call, are the employees professional? Can you get a decision-maker on the phone? Who makes the decisions on selling the cattle? How much and what type of information do you receive back from the feedyard?
6. Costs - Find out how the feed is billed. The markup may be a flat percentage, a yardage fee or a combination. Can you prepay feed costs? How often will you be billed? How are the other charges (processing, vet/med, insurance, taxes and dues) handled?
7. Financing - The availability of financing is an important consideration. Where is the financing coming from? What is the cost? How much equity is required? Most yards require $100 to $150 per head. Does this one require more or less? Will the feedyard reimburse part of the equity you have in the cattle at the time they are placed in the lot to assist in your operation's cash flow position?
8. Selling - Ask how cattle are normally sold - in the beef or live? Is basis contracting, formula selling or grid marketing an option?

These factors will give you a better idea of which feedyard you may want to place your cattle in, but not if your cattle will perform once they get there. Also, they will provide you with additional financial margins for the retained ownership. To determine the viability of this option, you should talk to a Noble Foundation economist and livestock specialist. We will be glad to discuss the feasibility of this option with you.

Above factors taken from Cattle-Fax Retained Ownership Analysis, 9th edition.