Are Cattle Buyback Programs the Key to Higher Premiums?

Baxter: Would you like to have more security in the way that you sell your cattle? It's a good question. A lot of us probably either sell at the sale barn where the prices can be pretty volatile or we have to market our cattle ourselves. And there's not a problem with either of those. But what if there was another option that could save you time from having to market your cattle or increase your security in what you're going to sell? Well, that's what we're going to be talking about today. All right, so I'm going to summarize that for you real fast. ⁓ So a buyback program, question one, is what is a buyback program? So first of all, like he said, ⁓ using the producer's genetics. So he mentioned if you were to buy a bull from Heartbrand Beef, then you would have the calf crop out of that bull. And then you would have to DNA verify those calves so they know their Aka-hushi cattle out of their genetics. Thank you for listening to this episode of the Cattle Innovation Station podcast. We hope you enjoyed this episode and if you got something from it, make sure to share it with somebody else so that they can gain the knowledge that you have as well. Also, if you're watching on YouTube, make sure to subscribe and any other platform, make sure to follow. Until next time, keep innovating the cattle industry. Signing off. Let's start with question one. What is a buyback program? Well, to answer that question is Mr. Jojo Corrales. He is the vice president of cattle operations at Hart brand beef, which is a Aka-hushi beef cattle company that ⁓ sells Aka-hushi genetics, but also buys them back and sells their own branded beef program. So he's definitely well versed on this topic. So question two was how does a buyback program benefit your operation? Question three is how do we join a beef alliance? How do we become part of a buyback program? And so we're going to answer that in the next clip, but we're also going to talk about, or he talks about why alliance programs are important because Alrighty, so in that clip he answered question two. How does a buyback program help benefit your operation? The answer was that they provide a premium for their cattle, ⁓ for their beef alliance members. ⁓ concern is, well, we know about the poultry industry, how vertical integration has hurt them. ⁓ this buyback program sounds kind of a lot like what could happen to them. All right, so question three is how do you implement a buyback program in your operation? Well, first of all, you buy the calves ⁓ from whichever program that you're wanting to buy from. And then you make sure that you're following the deal that you need to follow and check in the boxes and following the requirements of that program. But if you want to start a beef alliance, which is what he kind of explained in that clip right there. Now I'm going to ask you to recall a few things that we've talked about during this podcast. The first one being that at the beginning I said there was going to be a fourth question and here we are. The other things that I'm going to ask you to recall is that we've talked about retaining ownership through a buyback program and how being able to see that carcass data can help benefit your operation because you're seeing how your animals are prepared or It's time for another episode of the Cattle Innovation Station podcast. I'm your host Baxter Whitworth and today we're going to be talking about a way to stabilize your cattle herd's income and reduce the time it takes to market your cattle while also having a better way to see your cattle's progress throughout their life and how they're really making an impact in the beef industry. So there's three main questions that we're going to be asking today and a fourth one to come later. The first question.

Baxter Whitworth: Okay, so hopefully you're getting the concept of what a buyback program is. So question one, check. Now for question two, how does a buyback program help benefit your operation? Now, that's what we're gonna answer in the next clip, but I also want to go a little bit deeper and ask the question, how do I make sure that I'm protected in a buyback program? Because,

Baxter: Well, he gave a very compelling argument of why to use EID tags and how to go about getting those and using those. To conclude this episode, it's important to consider using a buyback program or a beef alliance in your operation. And that may be something that you use, that you don't use for all your cattle. It could just be you have a certain herd that's dedicated to a buyback program that can help generate revenue for you. But again, like we talk about with any tool, ⁓ it has to fit your operation.

Baxter Whitworth: ⁓ We hear of stories in the poultry industry of vertical integration where they have to sell to Passenger whoever ⁓ that's because They have a contract if they buy their chickens that they have to sell them back to them and they kind of control their process so We're gonna have to understand within this next clip and listen and make sure you understand where he talks about this Does a buyback program control you?

Baxter: You might've been thinking to this point, why can't I just sell it as beef myself? And he'll explain why it might be a better option to just utilize a beef alliance program. performing on the rail. And this also impacts your profit whenever you are retaining ownership because cattle that are sold, if you're selling cattle on the rail instead of just at a cell barn or whatever other type of cell method that you typically partake in, you are being able, then that changes how your profit and how your income comes in. So that changes what we're breeding for also. You need to find some other people that want to ⁓ sell beef with you because like he said, the reason that we have to form a beef alliance for a lot of people if they want to sell beef is because if you take 10 head to a harvesting plant, well, they'll be less likely to some harvesting plants won't accept that. And then also just being able to sell that's a little bit harder than And ⁓ you'd have to check the box for any other requirements that the producer might have. For them, they wanted them to be non-hormone treated and not have any implants. And they wanted to see pictures. had other things they wanted to know. Some other producers that might be doing a buyback program might want to see carcass data first or ⁓ some other sort of information. It's called a buyback program. And I'm joined by Mr. Jojo Corrales, where he's going to talk about what a buyback program is, how it works, and how you can use it to benefit your operation. But this is the key important factor. This is extremely important. In their buyback program, you buy their genetics, you buy the bull, buy the cows from heart brand beef. And this is the same way with other buyback programs. And if you're looking to get into a buyback program, this has to be a part of it for it to be safe for your operation. Buying the bull, buying the cattle, and then you have the opportunity. What is a buyback program? Question two, how does a buyback program benefit your herd? And question three, how can you utilize a buyback program in your operation?

Baxter Whitworth: So this is going to be a great conversation about ⁓ what a buyback program is and we're going talk about how you can either implement a buyback program in your herd ⁓ or take advantage of a buyback program from like heart brand beef. So Mr. Corrales, can you just start us off by talking about what is a buyback program? Yeah, absolutely. And I'll tell you my experience with what we've done at heart brand, but there are a lot

Jo Jo Carrales: So this is going to be a great conversation about what a buyback program is and we're going to talk about how you can either implement a buyback program with her

Baxter: And it has to be beneficial to you because it's not innovative if it's not actually helping you be a more profitable.

Jo Jo Carrales: or take advantage of a buyback program from somebody like HeartBrain Beef. So Mr. Corrales, can you just start us off by talking about what is a buyback? Yeah, absolutely. And I'll tell you my experience with what we've done at HeartBrain, but there are a lot of other options. mean, so being involved in a beef alliance or a branded beef program, most of those are sourced very similar. So if you use their genetics, you're able to

Baxter Whitworth: or just provide you an option. Spoiler alert, it helps provide you an option. But you'll learn more about that in this clip.

Baxter: Now, how do we measure this, though? Well, typically, if you're doing a buyback program, you will utilize EID tags so that you can track that animal from operation to operation their entire life. And that's what we're going to learn about in this next clip. but make sure that you're checking all those boxes and then you sell your cattle. Now there are a few other things that we do need to mention with the buyback program. ⁓ And some operations like heart brand beef, I know they a lot of times will allow you to retain ownership of your cattle. So you get to see the data of what happens when those cattle are harvested, not the people working together to have a beef alliance, which is just a group of ranchers trying to sell beef together. to sell those cattle back. They do not force you to. There's no contract that says you have to sell your calves back to this operation.

Jo Jo Carrales: If you use their genetics, you're able to sell into their program. And I think that does open the market versatility of how do you sell those cattle. So whether it's Angus or Akaushi or maybe some other program that's more on the raising aspect and not on the genetic side. But yeah, for example, if you do use a full-blood Akaushi bull from Heartbrand, you put them on your commercial cattle, which right now most of the cattle in the US are black.

Baxter: If you want to go about using a branded beef buyback program, just find whatever breed of cattle you would like to buy for that ⁓ buyback program and find probably the operation that has the best ⁓ premiums and benefits ⁓ in that even if it be a bad idea to just look across the board and try and find the best operation that has the best premiums that you can find. This helps bring out the whole point of the free market. They're providing you a premium and an opportunity that is better for your operation, but they're not constraining you to use in their operation. And that's the whole reason there is a premium, because they still have to compete with other competitors. ⁓ Like you mentioned, the grid or selling at a sell bar and a private treaty, whatever your competitor might be. They're competing with that. So the answer to question three is if you're wanting to join a beef alliance, you need to find other people that are willing to do that with you and decide what your requirements for your program are gonna be. And if you're wanting to participate ⁓ in a program, you're gonna have to buy the from whoever, Heartbrand Beef or whoever ⁓ is running that program and follow the requirements. carcass scan but the actual carcass data. But there is something that you have to make sure of. Make sure that if you are buying a bull, if you're buying cows with the intention of being able to sell back into a buyback program, that you know who you're buying them from and that you have a deal with them that you're going to that you're going to

Jo Jo Carrales: and are Angus influenced. ⁓ And most of the operations have actually worked on improving carcass genetics for many generations, which is good. So the two major prerequisites are get them DNA verified. And then we also don't allow a hormone implant into our specific program. So you do those two things. ⁓ Usually I recommend getting those calves DNA verified when they're about three months of age when you brand, ⁓ castrate, vaccinate.

Baxter: a way of selling the animal, your calf. So that's why the premium is higher, which ⁓ produce calves that are out of their out of their genetics and then This is great because this allows you the opportunity, makes the free market play itself and gives you an advantage and the premium for your cattle. answer the question too, is that you get a premium, but you're not constrained to selling to their operation. And if you're ever thinking of entering a buyback program where you do have to enter a contract to do that, I would recommend against that.

Jo Jo Carrales: ⁓ Put a DNA or pull a DNA sample put an EID and do all that at branding and then at weaning all you have to do is booster shots and by that time you'll have your DNA results back and that's when you usually start the process of offering those calves into a beef alliance. So you let them know how many head you have, let them know what they weigh. Usually that producer will ask you you know for a picture or two on those cattle. ⁓

Baxter: Make sure that you have a deal with them, that you're gonna produce calves out of their genetics and check all the boxes that we said, whether it be DNA verification, non-hormone treated, no implants, grass fed, whatever it may be, ⁓ because you don't want to get to the point where you're ready to sell those calves and then they're like, actually those don't fit our program. That's not good, because you just put all the money into buying those genetics, raising those calves, and because of the free market, the free market competitiveness that comes with allowing to sell to them or not. But I want to draw attention to something that he mentioned at the very beginning of that clip. And it's extremely important. He said that he they buy cattle back at around seven to 800 pounds. I think it was that that might be off. But the point is that he bought

Jo Jo Carrales: And what kind of mother cows are, where you're located, those type of things, when they've been weaned, what weight they are.

Baxter: You probably put a little bit of extra money in them to maybe fit in some certain areas. And if they can't get into the program, then you're probably not going to get rewarded for any of that extra input ⁓ from a sale barn or even if you do end up selling private treaty. Now you might, but it's still good to have a and a standard operating procedure in place with the buyback program in your cell.

Baxter Whitworth: the y'all provide or reimburse or however, ⁓ whatever ⁓ choice of reimbursement the y'all reimburse or provide a opportunity for ⁓

Baxter: cattle back at a specific weight, which is another box that you're going to have to check when selling those cattle back. So if you're buying bulls or heifers with the intention of utilizing them for a buyback program, you need to make sure that you are meeting the requirements of that beef alliance. And for one of those for heart brand beef,

Baxter Whitworth: the EID tags and the DNA testing? Yeah, that's a good question. Yes, so if you sell the cattle back into the Heartbrand program, yes, we will reimburse your DNA costs. So when you buy a full blood registered bull, they're going to be DNA verified and...

Jo Jo Carrales: the EID tags and the DNA tests? Yeah, that's a good question. Yes, so if you sell the cattle back into the Heartbrand program, yes, we will reimburse your DNA costs. when you buy a full blood registered bull, they're going to be DNA verified and profiled through the association. And then the offspring of those cattle, you would send DNA in, they would run a parent verification on all the bulls that were exposed to those cows.

Baxter: is that they want them to be a certain weight when they buy.

Jo Jo Carrales: That process is roughly 20 bucks and that's what we reimburse ⁓ per head to that producer. And in terms of EIDs, I think is a great technology. I highly recommend EIDs. Not only are they much easier, much more easy tracked through the packing plant to get that information back on their carcasses, the EIDs are way easier to get them scanned and identified to a carcass. But. Right now I think you can get through like the Texas Department of Agriculture or the Animal Health Commission. I believe they're completely available for free. And so if you want to contact your person, I know Mr. Matt Kubala is our guy here locally and he'd be able to steer you in the right direction. But I believe it's the Department of Health. that has been able to provide those EIDs for free to customers if they want them. And that's a great tool to put them in. And also, if you lose your tag ⁓ that you just had a regular tag in that CAF and it was already DNA verified, if you have that EID, all you have to do is write that tag and put it back. You don't have to re-DNA that CAF. So it's a good insurance policy. If you don't get them for free, I think they're normally two bucks or something like that through any of the major tag companies. But yes, I highly recommend EIDs.

Baxter Whitworth: that has been able to provide those EIDs for free to customers if they want them. And that's a great tool to put them in. And also, if you lose your tag, that you just had a regular tag in that CAF and it was already DNA verified, if you have that EID, all you have to do is write that tag and put it back. You don't have to re-DNA that CAF. So it's good insurance policy. If you don't get them for free, I think they're normally two bucks or something like that through any of the major tag companies. But yes, I highly recommend EIDs.

Viewer: then also, kind of expanding on that.

Jo Jo Carrales: And then also, kind of expanding on that, we generally buy feeder calves between 500 and 800 pounds. That usually fits us the best. After you tell us all the information about your cattle, we will give you a bid based on those specs, and then you can accept it or decline it. So like I mentioned earlier, you're not obligated to sell into Heartbrand if you want to sell to another Wagyu program, if you want to feed them yourself, if you want to implant them. and feed them conventional and sell them on a grid to one of the big packers. All of that is at your disposal. Whatever works best for you is what we recommend. And then also like here this past few years, we've bought more finished cattle than we ever have. So with corn being down, fats being up. Yeah, with corn being down and fats being up, more producers than ever have fed out their own cattle and Heartbrand's been paying, I bet, for the past six or so years, ⁓ 30 cents over per pound on all-natural, Akooshi finished cattle. And that'd be delivered to Cavendish Beef Packers in Hereford, Texas.

Baxter Whitworth: Yeah, with corn being down and fats being up, more producers than ever have fed out their own cattle and Heartbrand's been paying, I bet, for the past six or so years, 30 cents over per pound on all-natural, Akushi finished cattle. And that'd be delivered to Cabin of Speed Packers in Hartford, Texas.

Jo Jo Carrales: So this transitions greatly into what the next thing I want to talk about. How can you use a...

Baxter Whitworth: So this transitions greatly into what the next thing I want to talk about. How can you use a... how can you levy a brand to be or a buyback program from somebody like Hartbrand to help you be more profitable? And you just said one that y'all are buying at a premium, so.

Jo Jo Carrales: can you levy a brand to be or a buyback program from somebody like Hartbrand to help you be more profitable? And you just said one that y'all are buying it at premium. So, Yeah, for sure. No, I think that's what beef alliances are set up for is for the cow-calf producer to be involved in a bigger beef alliance that sells more quantity. So we know that if you sell, you know, harvest five or 10 head,

Baxter Whitworth: Can you expand on that? I think that's what beef alliances are set up for is for the cow-calf producer to be involved in a bigger beef alliance that sells more quantity. So we know that if you sell, you know, harvest five or ten head, you're probably not big enough to go into a distributor like Benny Keith or Cisco or US Foods, any of those. So when you get involved in a group that has like practices or like genetics, you're able to pull those animals together to have some

Jo Jo Carrales: You're probably not big enough to go into a distributor like Benny Keith or Cisco or US Foods, any of those. So when you get involved in a group that has like practices or like genetics, you're able to pull those animals together to have some sort of marketing ability. To have the ability to market whether it's a like type, like kind, like genetics into that branded beef program. Yeah, and then and then whatever their system is so I know there's some Angus programs And I and I don't know those specifics, but yeah, I think you you would get an agreement what time ⁓ What weight what price and and have you know have a buyer for your animal? I mean that's what it's all about is finding producers That want your cattle whether it's in the beef Whether it's on the carcass or whether it's his feeder calves if you're raising better animals and somebody's taking advantage of that and having a value for it, they're going to want what you're producing.

Baxter Whitworth: I ⁓ think that's great because sometimes either it can be hard to find a buyer, especially for that are in maybe the seed stock industry where ⁓ you're selling less of the cell barn and trying to find a direct buyer or even ⁓ a commercial producer ⁓ or anybody that's selling at the cell barn. ⁓ It can be hard to get a good price for them. And so to have someone that's kind of lined up to buy your cattle as long as you stay in their program and someone that, and being able to get that premium for using your genetics is a great opportunity.

Viewer: cattle that's staying in the program and someone that are in need of bringing in or using their genetics is a great opportunity. Now