Selling options

There are a number of livestock selling options available to red meat producers. Optimising returns when livestock are sold is a key determinant of profitability and depends on the ability for the producer to meet market specifications, selling method and sale process.

Selling systems

Selling systems vary in their efficiency and suitability for individual enterprises and circumstances. Producers should regularly evaluate market opportunities depending on feed supply, their financial circumstances and changes in market price.

Remaining open to and aware of alternative market options is crucial. There may be a better price to be achieved through a different option or a better match for the range of product specifications a producer can supply.

In order to remain flexible it is important that producers remain well informed of market trends and movements. The National Livestock Reporting Service (NLRS) provides information designed to keep producers informed of market movements. This information often illustrates the correlation between prices and market specifications.

Producers should consider building alliances and developing long-term relationships with regular customers. This will encourage feedback and allow a greater understanding of the needs of the customer. Advantages may also be realised by becoming a preferred supplier.

Meeting market specifications will help producers to maximise returns and gain a reputation as a reliable supplier of livestock. Critical variables and decisions regarding the cost effective selling method vary between locations and species.

Cattle selling options

• Saleyard auction - Livestock are transported to central saleyards and sold to the highest bidder. Prices reflect supply and demand in the market on the day.
• Meat Standards Australia (MSA) eligible sales - Cattle can only be sold only through MSA licensed saleyards or livestock exchanges. Producers and agents must be registered.
• Paddock sales - Livestock are inspected on the vendor's property by a buyer or agent and sold from the paddock.
• Stockyard sales - Livestock are weighed, graded and priced for sale.
• Over the hooks (OTH) - Livestock are delivered directly to the abattoir with change of ownership taking place at the abattoir scales. Terms of sale vary between abattoirs. Livestock must be accurately assessed for sale to avoid price penalties.
• AuctionsPlus - An electronic online auction for the sale of livestock by description (previously CALM). Combines the best features of the saleyard system and allows direct consignment to the abattoir or buyer.
• Forward contracts - A contractual agreement between a seller (eg producer) and buyer (eg processor) to supply a given product at a future point in time for a given price. In some cases the price is fixed, thereby reducing the producer's exposure to a fall in market price.
• Producer alliances - A group of producers working together to service market place requirements.
• Value-based marketing - Based on the principle of being paid for the inherent value (quality and quantity) of the product to the buyer and the end user, such as systems that provide clear feedback from the consumer to the producer and has a pricing system supporting these signals.

Sheep and lamb selling options

With the sale of sheep and regardless of the selling method, the buyer will pay on an estimated or actual weight of carcase with a skin value added.

• Saleyard auction - Livestock are transported to central saleyards and sold to the highest bidder. Prices reflect supply and demand in the market on the day. Auctions offer immediate sale with all stock types and lots of any size accepted.
• Paddock sales - Livestock are inspected on the vendor's property by a buyer or agent and sold from the paddock. Buyers prefer large numbers and an assessment in weight and fat score range is an advantage in price negotiations.
• Over the hooks (OTH) - Livestock are delivered directly to the abattoir with change of ownership taking place at the abattoir scales. Terms of sale vary between abattoirs. OTH allows lambs to be sold at the optimum time in terms of market readiness and pasture use efficiency. Livestock must be accurately assessed for sale to avoid price penalties.
• Forward price contracts - A contractual agreement between a seller (eg producer) and buyer (eg processor) to supply a given product at a future point in time for a given price. In some cases the price is fixed, thereby reducing the producer's exposure to a fall in market price. Producers can manage contracts to sell lambs at optimum times in terms of market readiness and pasture use efficiency.
• AuctionsPlus - An electronic online auction for the sale of livestock by description. Combines the best features of the saleyard system and allows direct consignment to the abattoir or buyer. Producers retain full control of livestock and are assured of market value or better when protected by the reserve price set.
• New selling options - A payment system based on lean meat yield is available in two Australian and eight New Zealand processing plants. It rewards those producers who carefully manage stock for optimum weight , muscle and fatness of their slaughter lambs.

Goat selling options

Goat selling options are limited compared with other livestock sectors.

• Saleyard auctions - Livestock are transported to central saleyards and sold to the highest bidder. Prices reflect supply and demand in the market on the day and few saleyards currently support goat sales.
• Paddock sales - Livestock are inspected on the vendor's property by a buyer or agent and sold from the paddock. Producers rarely receive carcase feedback. Buyers, often processors or depot operators, prefer large numbers and an assessment in weight and fat score range is an advantage in price negotiations.
• Module 8: Marketing on MLA's Goats hub: Profitable producers' best practice guide provides more information on marketing and selling options for goat producers.

More information

• The EDGEnetwork