Archive for Online stock auctions

Better Returns From Price Transparency and Marketing Control

March 7, 2011 at 2:41 pm · Filed under farming, livestock, Livestock issues, Livestock marketing, meat industry, Online stock auctions, Online trading, rural australia, Rural business, Rural meat production costs, Stock agency, Uncategorized ·Tagged , , , , , , ,

The livestock market isn’t all that difficult to understand, is it.
I’m sure we’d all be very happy if there were several buyers for our stock every time they went to market. Store animals do OK when grass is good enough to attract more competition by our colleague producers and we can’t do much about that. Unfortunately, anecdotally, when it comes to fat animals, buyer competition seems to be becoming more of a rarity with the duopsony of the two big supermarkets putting the screws on prices. However, even in this situation some times there is going to be some open buyer competition at ‘yards. Such competition doesn’t happen when stock is taken direct. So, why are producers increasingly dealing direct and allowing processors to cut their beasts up before deciding what price they will receive? Sounds more like gambling than risk management to me. Sure, ‘works’ prices can seem very good. But how much better is one works than another? And how do they really compare to the ‘yards?
Even when some producers have the luxury of comparing between 3 ‘yards and 2 processors, how can they do it without a system for comparison?
Without any livestock market transparency (past prices from a recording service based on averages can be a waste of time if you have animals at the top or lower ends!), the best I can think of is to request grids that will hold for 2-3 weeks from the various works and list stock for online auction e.g. Saleyards.com.auwith a Reserve price that would be acceptable to you. If they don’t sell, then you can always take them to the ‘yards or works and take your chances.
If works can’t guarantee prices this far out why would you take the chance of trusting them as they are price-makers and producers are price-takers? Surely growing stock for up to 3 years all at your cost and risk, you deserve better. You can take more control now.

What do you think?
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Where Do Livestock Producers Source Their Livestock?

May 18, 2010 at 5:17 pm · Filed under farming, high prices, livestock, Livestock issues, Online stock auctions, Online trading, rural australia, Rural business, rural issues, Stock agency, Uncategorized

The stock agency business is alive and well, but for how long? Elders is on the ropes, Landmark seems to be chugging along and Roberts is making money out of the rural and regional real estate businesses it has purchased. But what value is there in the livestock job?
Historically, agents will be paid for providing value to one party or the other. So, what value is provided by agents to livestock producers?
The accepted rationale has been that the agency business is based upon agents knowing who has stock to sell and who wants to buy it – and at what price. We all have stories of buying stock from a neighbour through an agent because we didn’t know it was available!
However, isn’t the reality that so many agents work their butts off to fill their ‘yards committments? If this is the case, then there wouldn’t seem to be a lot of work going-in to actually matching requirements to availability. Or perhaps there is.
In this age of emails and websites (to say nothing of the old fax-outs) providing information on available stock and buyer requirements, you’d think that agents would be able to source stock for their producer clients before it hit the ‘yards. Now there is also the availability of not only sourcing but also trading online e.g. There is the old CALM (AuctionsPlus) that attempts to emulate the ‘yards with its fall of the hammer system at a given time and now there is even a new online bidding system available at www.Saleyards.com.au where bids can be taken 24×7 on a success-only basis.
I guess this sort of thing must be happening as more and more ‘yards close their gates for a variety of reasons. Otherwise, how are buyers and sellers going to know the true market value of their hard-spent product that needs to generate an optimum return to pay-off the expenses incurred in production. Should they continue to accept agents advice on sourcing and pricing or let the market decide?

What do you think?
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The Elders Saga Rolls-On

May 18, 2010 at 4:51 pm · Filed under farming, high prices, livestock, meat industry, Online stock auctions, Online trading, rural australia, Rural business, rural issues, Stock agency, Stock Agents, Uncategorized

As we commented here a while ago, Elders is in trouble (Today’s share price just $1.115!). Like most agency businesses, they have a lot of fixed costs including high agent salaries, office rents, office staff, travel costs etc etc If it is true that their much touted restructure has in fact taken them back a step to an inefficient merchandise distribution process and their forestry and Hifert businesses are still nooses around their neck (see this Businessspectator comment), then what is the realistic future for this once great rural brand?
While the rest of the World is going online and rejigging their actual business operations to survive, (rurally this would mean more online selling of merchandise and livestock and less ‘yards and warehousing emphasis), perhaps Elders hasn’t seen itself clear to anything other than metaphorically shift the chairs on the Titanic.

What do you think?
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Maximising Livestock Prices In Australia

February 5, 2010 at 1:10 pm · Filed under farming, high prices, livestock, Livestock issues, meat industry, Online stock auctions, Online trading, rural australia, Rural business, rural issues, Stock agency, Stock Agents

Why is the sale of livestock so different from the sale of shares listed on the Australian Stock Exchange? e.g. for BHP, Comm Bank, NAB, Rio Tinto, etc ?

Wouldn’t it be niece (ideal?) to have 21 million potential purchasers (or more) eyeing your livestock off and bidding on its price.
Well, why doesn’t this happen? Can it happen? If so, how?

Currently, in a nutshell, shares are displayed for the World to see and their owners and agents (or stock brokers) go about marketing them to their clients.  They are then sold (by brokers in a competitive market) and their last price (and price history) is displayed for public consumption from anywhere in the World. Livestock on the other hand is a very disorganised marketplace – and as the analysts tell us, there is money in confusion.

A head of livestock is the pure embodiment of a ‘stock’ because what you see is what you get. You can know its breed and age, have it weighed, you can see its color and muscling, know the region it was grown in and its feed for the past 100 days, etc A share on the other hand is representative of the company in which it has ownership. While you can know a lot about a ‘share’ too, it has a lot more information underpinning it and its information is much more easily obtained or ‘transparent’ and there are so many more analysts crawling over its data and advising the market of its profile.

For livestock, there are:
Direct sales from the farmgate where the owner (producer/farmer) has to guess whether they are getting a fair deal, (i.e. How do they know the ‘true’ market price at the time of sale?)

Direct-to-Processor sales where producers transport stock to abbatoirs who kill and process them and then decide what the carcass is worth, paying the producer once that is done. (An interesting phenomenon to grow stock for 380 days and then have someone else decide what price its worth AFTER they cut it up!). This certainly doesn’t leave a lot of room for price control or negotiation. 

Physical saleyards is the other major sales method, where stock generally won’t come home at any price offered otherwise transport and fixed (non-success-based) selling costs are incurred. Frequently there are few competing buyers at saleyards. Stock here are at the mercy of event management. (And stock quality is poorer than on-farm sales, despite improvements in yards over the years).

Online selling is currently very old-fashioned emulating a physical saleyards and almost mandating agency intervention at inflated fees. However, at least it does enable stock from various regions to be placed on the one market and have buyers from anywhere compete for the purchase. It still has a way to go until it mirrors the ASX’s 24×7 abilities and agents competing for work if at all (like eBay), but stay-tuned this is not far away.

So, the really big defining difference between the two stock markets is that shares are displayed for the World to see their profiles and prices and to be bought and sold 24 hours a day, 365 days of the year and all buyers must operate through their listing market, be it new York, ASX, Newcastle, London or Dubai. Livestock on the other hand is a confused market where prices for the same animals can vary significantly on the same day in the same town!

Hold your hats, people! In a global World of cost-savings, more powerful online marketing and more savvy producers, this situation is going to change and change appreciably!

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