Used Car Salesman, Ducks, and the Future of the Dairy Cattle Breeding Industry


If it quacks like a duck, looks like a duck and walks like a duck.…it is usually a goose.  That is how I sometimes feel when I attend certain elite dairy cattle auctions.  You attend some of these high-end auctions, and you see the top prices that some of these animals sell for, and you can’t help but be amazed.  But, something just doesn’t feel right.  You never see a complete buyers list from these sales. Heck, you sometimes don’t even see people actually bidding on these animals. And yet they get knocked down at $200,000+ for a 2-month-old? Sometimes it just doesn’t feel right.  It feels like you have been sold a lemon by a used car salesman. It just feels dirty.

The National Auctioneers Association has the following key codes of conduct that are requirements for membership:

  • Members must not build unreasonable expectations about the outcome of an auction in the mind of a potential Client in order to secure the Client’s business.
  • Members should conduct their business affairs so as to promote a positive image of their business and therefore the auction profession.
  • Members shall provide customers with a clear understanding of all the terms and conditions of the auction.
  • It is highly recommended that Members communicate terms and conditions of the sale in written form prior to the commencement of the bidding.
  • Members should, to assure better service to the seller and to prevent misunderstandings, enter into written agreements or, at a minimum, clear oral agreements that set forth the specific terms and conditions of the engagement.
  • Members have an obligation to conduct their business affairs in a professional manner, developing their contract forms with this Article in mind.
  • Members must ascertain all pertinent facts necessary to implement a professional marketing campaign.

For the most part, some elite dairy cattle genetics auctions in North America are like the Wild West and only choose to adhere to these codes when it suits them.  Things like full disclosure of buyers lists (a must for a public auction), no reserve or agreed upon minimums on lots unless publically disclosed prior to the auction, all monies must be paid out in full at time of sale unless mutually agreed upon by all parties prior to the sale.

There are some egos in the dairy cattle breeding industry that are as big as or even larger than real estate mogul, television superstar, and author Donald Trump. One of the things that has made Donald so rich is his ability to identify and close lucrative deals. The challenge is that in the dairy industry we have some who think they are Donald Trump, but their actions are more similar to a used car salesman.

Personally, I have the theory that ­­the bigger the “show” someone has to put on, the bigger the scam is that they are trying to hide. When the numbers makes sense and the potential investment pencils out well (Read more: The Bullvine Dairy Cow Investment Calculator), you don’t need to put on the extravaganza and make it into a “party” to get people to attend. Discerning investors will attend because that is exactly what good investors do. They buy investments that will make them money.   They don’t need to be plied with booze or schmoozed with parties to get them to open up their wallets. The smart investments do the talking for them.

Don’t get me wrong. There are often times at these sales where the investment makes sense.  That is why you see many AI companies coming and buying these animals.  They have penciled out that the cost of acquisition for these females, combined with the cost of producing elite bulls from this purchase, is a wise investment for their organization.  That is because they have done the math and realize that in the long run the cost of this program combined with the ability to control their own product development is cheaper than continually sourcing their bulls directly from seed stock producers (Read more: SHOULD A.I. COMPANIES OWN FEMALES?,  WHY GOOD BUSINESS FOR A.I. COMPANIES CAN MEAN BAD BUSINESS FOR DAIRY BREEDERS and MASTER BREEDER KILLED IN TRIPLE HOMICIDE).  Unfortunately, in the long run, it is actually a bad thing to sell to these companies as they will be buying less and less from seed stock producers as they produce their own bulls.

For the past few years, I have been writing about this very issue and how it will kill the seed stock industry. (Read more: WAS THE GENOMIC INVESTOR BOOM NOTHING MORE THAN A BIG PONZI SCHEME?WHO KILLED THE MARKET FOR GOOD DAIRY CATTLE? and HOW I KILLED THE DAIRY CATTLE MARKETING INDUSTRY)  However, this past week I was reminded why things may not entirely become controlled by the A.I. industry and other genetic corporations.  As I was visiting Oakfield Corners Dairy for a Bullvine TV Interview (Oakfield Corners Dairy (OCD) – Dairy Breeder Video Interview) prior to their Spring Sensation Sale (The Oakfield Corners Dairy Spring Sensation Sale) I was reminded that all is not doom and gloom for seed stalk producers. There are certain types of seed stalk producers that will not only compete with the large AI companies, they actually have a competitive advantage over them.  That is because they have a cost effective recipient pool. OCD milks over 6,000 dairy cattle. Even the large AI companies cannot compete with that when running their programs that cost upwards of $5,000 per live calf.

The other factor that became evident when I was chatting with the Lamb family, and the team at OCD is that they are just great quality people.  There was no sense that I was being “sold” a bill of goods.  They are great salt of the earth people, who are smart business people running a great business.  I was not being plied with booze, or being talked into joining some buyers group that never materialized.  And that’s probably why when one of the highest GTPI (+2765) heifers, OCD Delta Missy,  did not get knocked down at some ridicules price like $1,000,000 or even $300,000. Instead, she was sold for $190,000 to the Progenesis program from Ontario.  There was not some buyers group that needed to be pulled together after the sale, there was not some deal that had to be worked out afterward.  There was a clear, smart investment at a good price for all parties involved.

The Bullvine Bottom Line

These events have helped rebuild my faith in the elite dairy cattle genetics marketplace.  Sure there are going to be significant challenges, in particular for those running small to mid-size programs when it comes to competing with the large operators and the AI companies.  But it reminded me that even in today’s digital age, where you can see pictures and videos of animals selling in a public auction,  it’s still important to invest with  people you know and trust.  For me ,as a result of my personal dealings, that means people like Brian Craswell Auctions, Ferme Blondin, Pierre Boulet Auctions, Norm Nabholz, MD-Hill Auctions, Kueffner Holsteins, Jeff Stephens, The Cattle Exchange, Tom Morris and Blue Chip Genetics are all people that I know and trust. I don’t get that icky used car salesman sense when dealing with them.  I am not saying that you should only use these people.  What I am saying is work and invest with people that have good reputations. If you don’t know them personally, ask someone who does.  If you don’t get a good sense about it, remember Donald Trump’s famous quote “Sometimes your best investments are the ones you don’t make”.

 

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