First and foremost there is not a single magical alternative that cures all of the producer's marketing problems. There are  alternatives that if used wisely under reasonable conditions have served producers well for many years.  The question is  which of the available alternatives fits your needs. The Alternatives available include: cash sales, futures contracts, option  contracts, retained ownership or a combination of these.
 
     What marketing alternatives are available to the cattle producer depends upon the stage of production.   Some alternatives  are used more often at one production level than another.  There are profitable alternatives available at every production  level.  The cattleman’s job is to find each alternative and evaluate its ability to make his operation a profit

Producer Marketing Alternatives
     Producers may choose to market their weanling calves through a local or regional sale, sell to an off the farm buyer, or  forward contract with a buyer for future delivery.  It is also possible to use the futures markets to market weanling or stocker  calves.

     The objective is to market grass pasture, labor, capital and management by selling calves, cull cows and cull bulls. Generally  the majority of producers attempt to satisfy this objective through their local auction barn.  They do so for various reasons  including closeness to the farm, small number of animals to market, time it takes to evaluate other markets and the fact that  the local auction is a form of entertainment.

      The local auction is also the most cussed form of marketing in the cattle industry. Many producers' say that they have taken their animal to the local auction barn only to get ripped off. The fact is that the producer frequently does not know the market and is not willing to put forth the effort to gain an understanding of the market. With a little knowledge the producer would start to see what he can do to improve his situation.  By evaluating market alternatives, including the profitable use of a local auction, he can improve  the profit from his beef operation.

     Another cash market option available to producers is retained ownership. It can be used for his annual calf crop or stocker  operation.  It can also be used for the "best" of his heifer and bull calves destined for sale to other producers as replacement  animals. The market price target is useful in evaluating whether or not the producer should participate in retained ownership.

     Retained ownership decisions compare the sale of the calf today with a future sale at a heavier weight. Several factors come  into play in this decision. The producer must know the prices for the light weight calf and the expected price for the heavier calf. In addition he must know the cost of producing the weanling calf and the cost of carrying it the additional days.

     A good producer marketing strategy is to establish a reputation for producing above average stockers or breeding stock. Development of a sound production program requires a long-term commitment on the part of the producer. Good breeding  stock or the development of a quality stocker program doesn’t occur overnight. A good producer should take advantage of  his "good name". Surveys of cattle buyers indicate that an important criterion in price determination is the producer's  reputation. A good reputation normally brings buyers to the farm eliminating the need to sell at auction.

     Having buyers come to the farm to purchase cattle provides a marketing opportunity for both buyer and seller. The seller can reduce shrink and avoid commission costs. The buyer obtains an animal that has a known parentage and production  philosophy, and minimal stress.  On farm sales are a good opportunity for cow-calf producers to market their animals and  build a reputation with buyers.

     The producer can also use the futures market to lock in a price or shift the chance of an adverse price change.  However,  futures contracts are not readily adapted to lightweight calves. The difference between the futures price and the local price for these lightweight calves can be quite large.  This wide difference makes it difficult to accurately fix a price.

     Choosing the right market to meet your objective can be difficult. This is where the development of a market target price  becomes important. The producer has some bench mark to evaluate local market prices against what it costs him to produce  the calf.  Two things have been accomplished: first, the producer is capable of evaluating the price the local market is paying  for calves similar to his and, secondly he is able to really understand if this marketing alternative can successfully play a role in his overall beef objectives.