1. Anyone who will buy for 50 cents is a redflag. A good buyer will and should get a buck from JBS or anyone else. All our customers in our order buying business are charged a buck.
2. He's a dummy, I know that too.
3. If you want to order buy, you make the commission, if you can make something on freight and meds too, great. The cardinal rule is DO NOT markup cattle and a sale barn that tries to get you to collude withe them, you need to steer clear of.
4. While shenanigans with buyers can happen anywhere, that part of the world is where its most prevalent.
5. If you want to markup cattle (Lots of good people, including ourselves do, this isn't a secret), go put them together under your money, and mark them in purchased direct from you.
That one step sounds simple but it actually serves a purpose in keeping this sort of nonsense out of the industry.
Underfunded operators can't buy and trade so they strictly order buy. When they try to pull this, P&S will catch on. The barn gets greedy and agrees to remark the cattle and split the up. Instead of getting the doors shut at the barn, he takes the wrap. He will be deemed unfit for trade, and pay a fine. His company will reorganize as a different entity and he'll be right back rocking and rolling at the barn where he took the wrap and elsewhere. While certainly not common, it's an Oklahoma cowtrader angle from way back, just happened to occur in Kansas.
6. The key to being a buyer for a long time is transparency. For all the cow buyer jokes we all hear and tell, all of the best buyers are honest down to the last dollar and last head of beef. This is a shockingly small business. If I don't know of a guy, in 2-3 phone calls, I can know what he knows, what he doesn't, where he feeds cattle, who he's married to, if his money is good, if he's a slow pay, hard to ship to, etc. etc. etc.
7. If you want to be an order buyer, you can't be underfunded, there is always a hangup and one will always have to float more of their purchases for more days than they planned.
Our buying model is simple. If we order buy, we charge $1/cwt. plus the freight delivering the cattle, we operate on a very large volume with 3-4 trucking companies and can typically get the buyers cattle delivered under budget while still marking up the freight 10-25 cents/mile. We pay for the cattle and bill a delivered price to the buyer, including the barn or video invoice and a freight bill from us. We also charge a $20/semi load service charge for handling health certificates, brand inspection and any other needed paperwork.
We also often times put some cattle together that we believe will fit the needs of one or more of our buyers. The name of the game there is to get the cattle bought as economically as possible and turn them to the buyer with a markup closer to $5/cwt. If it doesn't look like that's realistic, we just order buy. If we are going to be out the cost of the cattle 1-2 weeks, that is more in line with what we want to be making, otherwise we are content to make the $1/cwt. plus freight markup and not tie up operating cash.
We do also buy a certain amount of breeding stock. We charge $25/head on cows and $100/head on bulls.
Buying isn't our primary business but has been a good way to diversify for a lot of years. We are small compared to lots of commission companies. We have a couple guys going to barns daily and buy cattle out of the country several days a week.
Our customer base is also small, on purpose. We prefer to buy for a small group of large, well funded ranches and feedlots and ourselves.
