It started off simply enough. Tom Owen and Edwin Chaney had decided to start selling calves through a local feeder cattle marketing alliance. To meet sale requirements, they had to wean and precondition their cattle first.
After a year of doing the work separately, Chaney told Owen, "It looks like it would be a lot easier for you to bring your calves here to wean and precondition them and let me feed them."
It wasn't just easier, but more economical for both of the South Boston, Va., producers.
Owen had preconditioned his calves on free-choice corn gluten and soy hulls, along with free-choice hay. The calves ate 17 pounds a day of the byproduct and gained 3 1/2 pounds a day.
Chaney was only feeding 6 to 7 pounds of the same feed while grazing calves on fescue, orchardgrass and clover. His calves gained an additional 1/10 to 1/5 pound every day.
But with a 60-head herd, Chaney knew he wasn't getting the best price on feed. And Owen, with his 40-head herd, felt the same. When they were weaning calves separately, neither one needed enough feed to do more than buy it by the bag.
But Chaney did have a grain bin. And that started the two talking and thinking. They decided to buy feed in bulk and feed their herds together.
"We are saving 60 to 70% buying it in bulk," says Chaney. But that's not the only advantage. By preconditioning their calves together, the two producers were able to pool and sell them through the Southern Virginia Beef Alliance.
Last summer, Owen says, "the calves brought at least $50 a head more than similar calves sold one at a time through the sale barn."
Preconditioning and selling calves by the truckload is a strategy that normally pays.
"The things that make up preconditioning—weaning, vaccinating and making sure the calves know how to eat out of a trough—are ways for the cow/calf producer to get all the value out of feeder calves," explains University of Georgia livestock marketing specialist Curt Lacy.
"It's hard to get a better price than by selling in truckload lots when you are selling through conventional channels."
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Partnering up
Weaning and preconditioning their calves together was just the beginning of cooperation for Virginia cattlemen Tom Owen and Edwin Chaney.
Here are other areas where the two have found the buddy system works well:
Land rental. They rent pastureland and raise their replacement heifers together.
Artificial insemination. Both former dairymen, Owen and Chaney know how to artificially inseminate cattle. Whoever is heat checking on a particular day also does the breeding. The cattlemen own an AI tank together.
Tractors. They've purchased a tractor together. Chaney uses it in the summer when he makes hay. Owen uses it in the winter when he feeds hay. "That is one of the best things we've done," says Owen. "I'm getting used to a 4-wheel-drive tractor. It is better than I could have ever bought by myself."
Labor swap. "When you're small you can't afford to have help on standby," says Chaney. "Tom was buying hay. I told him I would rather have him help me. Now when it's hay time he digs in and helps.
Input sharing. When divvying up inputs and costs, Owen and Chaney do it on a per-head basis, at least when it comes to the feed. Chaney has a scale in the barn, and they weigh feed as it comes out of the bin then divide the cost by the number of head each has in the weaning lot. They both try to make sure neither takes advantage of the other. "I don't want to ever come out on top," Chaney says. "I'd rather be on the losing end."
Vacation time. This arrangement means both men can actually go on vacation with their families. "It all seems to work itself out," says Owen. "There are so many things we can do together we couldn't do by ourselves."
Get it in writing
Curt Lacy is all for arrangements like the one between Tom Owen and Edwin Chaney. But the University of Georgia livestock marketing specialist says a good partnership needs a good agreement in writing.
So while Owen and Chaney seem to thrive on their informal Golden Rule partnership, Lacy advises to "get it in writing. Ask the difficult questions before they are an issue. If they are too hard to ask before, think what it will be like when real money is involved." He suggests discussing the following:
How will assets, like equipment, be titled?
How will purchases be financed?
What happens when both partners need the equipment at the same time?
Who pays when a piece of equipment tears up?
How will you divide the partnership? It doesn't have to be a 50-50 deal. It could be one-third/two-thirds, for example. Partnering is just a smart way to take advantage of economies of scale.
The payoff at the sale barn
In the early part of this decade, smaller south Virginia cattle producers like Edwin Chaney and Tom Owen were about out of marketing options.
The local state-graded sale barn closed, and they didn't have enough calves to fill a semi truck on their own. The answer was the Southern Virginia Beef Alliance (SVBA).
Formed in 2002 by 18 producers, SVBA members wean, vaccinate and precondition calves for at least 45 days. Then they're sold as Virginia Quality Assured feeder calves through the long-running Virginia Cattlemen's Association Tel-O-Auction program.
Even though the calves are still on their home farms when they actually sell, they are advertised in the truckload lots buyers favor. On delivery day, producers haul calves to the Halifax County Economic Development Commission ag facility where the healthy, feedlot-ready calves are sorted into uniform lots and loaded onto tractor trailer trucks.
Since the SVBA sales started, more than 5,100 calves have sold through the alliance. And they're selling at a $29- to $30-a-head premium, compared to the special graded feeder calf sales.