As we approach our annual Conference, Show, and Sale in Dubuque on September 8th -10th, the RDUSA Board has been privy to the latest update on the sale animals (including pictures).  The sale catalogues should now be arriving to RDUSA members, and you can see that It is a terrific group of animals.  Prospective Devon buyers would be well-advised to take advantage of having so many great Devon cattle available in one place.

During the conference, you will inevitably hear about the countless merits of grass-fed/grass-finished beef, as well as the specific merits of Devon cattle within this growing market.  While this amounts to a lot of valuable information on “Why Devon”, we understand that many folks are unaware of the different strategies available to those wishing to build a premium Devon herd.  In fact, I don’t believe we’ve ever really given instructions on “How Devon”.

Over the past decade of my involvement with the Devon breed, I’ve noticed some common themes at our annual sales.  Generally, the sale coordinators do a fair amount of arm-twisting to get consignors to sell animals that they don’t really want to sell.  Many of these consignors agree to sell these “select” animals because they want to both support the breed and promote the quality of production coming out of their own operations.  All of these machinations result in a tremendous opportunity for buyers and breeders to visit with and assess different production lines, as well as ultimately bid on a buffet of different Devon genetics.  This provides all breeders a very convenient opportunity to do some one-stop shopping, as well as support the consignors that have gone thru all the work of raising, testing, hauling, and maintaining cattle at the Event.

Sounds good, you say?  Well, other themes I’ve heard every year are statements such as:

… “I REALLY liked a couple of those animals, but didn’t bring a trailer”.

…”These are the type of animals I want to buy, but I’m uncomfortable with the bidding process”.

…”The ones I really liked were bid up out of my comfort range”.

…”Gosh I wish I would’ve signed up as a bidder, because I would’ve bought several at those prices.

…”I loved the animals but we’re not quite prepared yet with all of our fencing work”.

…”I can’t pay more than commercial prices, as that is all I’m guaranteed to receive”.

…”I need to get more comfortable with the ability to make a Devon operation profitable”

I’ll address these statements directly at the very end of this writing, but in the meantime I will explore the different options that buyers can use to build their herd from their “select” animal(s).  For examples sake, I will be speaking about females.

Option 1 (Plain Vanilla):

Most folks just intend on buying “that” gorgeous female, taking her home, and hoping she has more heifers than bulls so that they can retain them for herd-building purposes.  The reality is that, over time, you will probably get about 1:1 bulls to heifers out of her at about 85% weaning rate.  In order to evaluate an economic purchase price, you will have to be comfortable with the expected market value of both her future heifer and bull calves, the longevity of the female purchased, and her residual value.  Therefore if I’m looking at a cow under this approach, I may see a desirable 4 year old (we’ll call her Millie), figure that I can conservatively get another 8 calves out of her (net 7 with the expected weaning rate), and that the 3.5 heifers will average $3000 and the 3.5 bulls for $2000 (selling 25% as herd bulls, rest as weanlings for grass-finishing).  So, in short, I’m looking at revenues of (3.5*3000) + (3.5 *2000) = $17,500.  You will then need to assess the residual value of Millie and deduct all of the various keeping costs.   Granted, I’m talking averages here, and averages certainly hold true with greater numbers.  Also, the ability to attract higher prices for Millie’s production are dependent on your management and marketing capabilities.

Many of these factors answer another question we often hear at our sales, such as “why are these other breeders buying animals, even those that have animals for sale”.  No, this isn’t some nefarious inside game of trading animals amongst breeders, it’s simply the result of experienced breeders running an astute business and acting on the substantial value that often presents itself.  One of the main advantages of the “select sale” is that you don’t have to be a cattle expert to know whether you’re bidding on a quality animal.  These sale animals had to meet specific criteria in order to make it to the sale ring, which often involves having hard discussions with some sellers whose animals just “don’t measure up”.

To finalize the important elements of Option 1, each buyer will need to determine their comfort area around future calf prices, residual cow price, cost of keep, and their necessary return on investment.  In this example, if I require an average 8% annual return on investment, I should be willing to pay $9,500 for Millie based on my expected calf revenues and assuming that her residual value at age 13 will roughly equal her (cow/calf) cost of keep for those 8 or so years.  I’d expect that the ability to pay this amount and still receive an 8% ROI would shock some folks, as it beats the pants off conventional investment opportunities!

Side Note:

Devon cattle have always been in very short supply.  There is always this “chicken and egg” discussion when it comes to Devon cattle.  It goes like this…”We need a lot more carcass data to prove the tenderness and quality characteristics of Devon cattle to the cattle-buying community.”  Everyone agrees, yet there are only a couple of folks that have ever really put much focus on this.  Why is this?  Well, it has a lot to do with the fact that there are not many Devon cattle around, and most folks are simply unable (or unwilling) to dedicate a statistically relevant # of animals to an independent, 3rd party program designed to provide this sort of scientific data.  It becomes even more difficult when you realize that everyone selling Devon beef has more demand than supply, which represents a significant additional financial sacrifice for them to undertake such a project.

This supply deficit also makes it difficult to buy larger groups of animals, which increases the per unit costs of transport.  So how does a new breeder hope to build a quality herd with such limited supply availability?  Enter the world of embryo work!

Option 2 (Embryo Route):

Every once in a while you’ll find that one animal that you know you must own.  It may be the one that you are using as a foundation female, or one that brings something unique to your herd.  I suspect that there will be quite a few of these “foundation” females in this year’s sale.  How can a new breeder capitalize on this opportunity?  After all, if I’m a new breeder, I’m thinking things like “Heck, I don’t even have a bull, and I only know enough about cattle to be dangerous.  Embryo work sounds really complicated, expensive, and scary!”

Don’t fear.  The simple truth is that embryo work is an excellent way to create a quality herd quickly, especially if you have access to good recipient animals (such as the Devon %-blood animals in our upcoming sale) and a good embryologist.  Also, with the commercial cattle price decline, it has become much cheaper to enter into an agreement with someone that has quality commercial stock, and is looking to beat the commercial market prices by 15-20%.  You can simply lease selected cows to use as recipients for your Devon embryos, and pay them 15-20% more than the commercial prices at weaning.  Presto, instant Devon calves!

Under this option (as a new breeder), I would look at purchasing 3-5 select, proven females to serve as my foundation cows.  In general, you can expect an average of 6 embryos/flush out of each donor cow.  So let’s say I purchase 5 cows @ $7500/cow at the auction.  I calve these out and then send them to the nearest embryo center, and get them each flushed twice.  Having been involved in flushing over 1000 embryos in the past 10 years, I can tell you that our average “all in” price/embryo was about $300 (cow price not included).  So these 5 females would average 30 embryos/flush, and flushed twice would yield around 60 viable embryos.  The other benefit to flushing is that you can pair these flushes with the very best bull semen on the market, and modern technology even allows us to now used sexed semen to increase our desired gender result.  All of this flushing work can be conveniently done at the embryologist’s center, which tends to maximize the total results. Also, you can pair different bulls at each flush, which (in this case) would get you 10 different pairs of genetics.

To conclude our example above, I paid $37,500 for my foundation Devon cows, calved them out, and flushed them each twice.  The result should be around 60 embryos.  Let’s say that I used sexed semen (about 90% accurate), which would result in 54 female and 6 male embryos.  Given the average take rate of about 50%, I should then expect about 27 Devon heifers and 3 Devon bull calves.  Assume that I work a deal with a recipient provider for weaned calves @ $1250/calf, I’d add another $37,500 (30 calves @ $1250/calf) to my investment.  I would expect to pay about $1000 in semen expenses for all the flush work (using 2 straws each time), so my total expenditures would be:

$37,500 for the 5 females

$18,000 for the 60 embryos

$1,000 for the semen

$37,500 for the recipient program

$4,500 for the embryo implant costs

Grand total of $98,500 outlay

For this investment, you would expect to result in 4-5 initial calves out of the bred cows purchased (call it 2 heifers and 2 bulls for ease).  You would also expect to wean most of the 27 heifers from the host/recipient cows (call it 25), and most likely all 3 bull calves.

So, within a couple of years of purchasing your “Fab 5”, you should be the proud owner of 5 foundation females that will be about 4 months  late calving the next year (due to embryo work), 27 Devon heifers (2 natural and 25 via embryo) and 5 Devon bull calves (2 natural and 3 via embryo).  If you assume the heifer values at weaning to be around $3000, and the bull calves to average $2000, you’ve created $81,000 + $10,000 = $91,000 in calf value, and you still have your Fab 5.  Under this scenario, your cost/heifer alone would be a little around $2000, and you would get to dictate the breeding using the very best available semen.   All this activity should result in a herd of about 37 animals within a couple of years, with the future opportunity of selling embryo packages out of these females as you develop and promote their offspring (and are now experienced with the process).

Option 3: (Option 2 under a partnership)

I know that many of you are probably getting a little queezy when looking at the costs involved in Option 2.  Well, another thing we’ve done with great success is to purchase foundation animals under a partnership and spread the risk/reward amongst the group.  This also gives you the opportunity to syndicate offspring, and build future capabilities that may otherwise be limited.

As an example, simply take Option 2 and slice it into multiple pieces.  3 partners would have an outlay of $34,333.33 each and would each own 33% of the offspring.  The structures for these types of arrangements are almost limitless, but you need to get your gameplan together before bidding.

Option 4: (Buy and implant embryos)

This option works well right now if you have commercial cows available, as it will currently allow you to get purebred stock out of commercial cows that would otherwise not be very lucrative.   There are plenty of Devon breeders with embryos for sale, so you would just need to ask around.

Option 5: (Private Treaty)

If you’re not ready to buy, want something from a local breeder, want a uniform larger group of animals right now, or the auction process just stresses you out, there is always the private treaty route.  Most likely, you will be looking at weaned or yearling heifers, as most breeders sell out of available animals before they’re old enough to breed.  If you don’t see want you want in Dubuque, I’d recommend calling a Devon breeder in your area.

Summary:

Hopefully this will give you some idea as to “how” to accumulate Devon in a financially responsible manner.  While some of it may seem daunting in the beginning, it will soon become old hat.

Many of the themes I listed earlier have easy answers:

-If you’re concerned about not having a trailer at the auction, there are always breeders heading all directions that are happy to assist in hauling.  Just ask around, as it always seems to work out.

-If you’re uncomfortable with the bidding process, talk with a Board member and/or the auctioneer beforehand.  We’d be glad to help ease your concern.

-If the cows you liked were bid out of your comfort range, was your comfort range dictated by sound financial analysis, or so low that you could never reasonably expect to purchase select females?

-If you didn’t sign up to be a bidder and missed out on great opportunities, the ultimate buyers are generally happy that the animal went for less than she was worthJ

-There’s nothing like a sense of urgency to get farm projects done, and running a temporary electric fence takes very little time.

-If you can’t get comfortable with paying (or receiving) more than commercial cow prices, I’d recommend that you stick with commercial cows.  Just sayin’

-If you have questions about how to make your Devon operation profitable, call an experienced Devon breeder in your area.  There is a breeders listing on our website.

Please feel free to comment if you have questions, and I hope this little exercise will allow you to sharpen your bidding strategies for the upcoming Dubuque sale.  Daniel, Jamie, and Sheldon should be commended on putting together a terrific group of animals, and I look forward to seeing you all there.

Sincerely,
Greg Hickl – Red Devon USA Board Member
Owner/Operator – Fourche River Farm & Cattle Co.
www.fourcheriverfarm.com