Joe Lichtie remembers Superior Livestock's first live video auction. It was 1987, at the Western Stock Show and some 20,000 head changed hands that day. "All the big players were there," recalls Lichtie. "They all sat there, bidding, watching the sale. But when we left the sale barn that day, 85% of the cattle had been sold over the phone to someone not physically at the sale. They had watched the animals on a satellite broadcast. That really opened some eyes."

Uniformity is the key when selling cattle via a camera lens. (DTN/Progressive Farmer photo by Larry Fleming)

Studies comparing prices received for cattle sold by video, versus those sold in live auctions, tend to find an advantage for sellers using a camera lens to market. Utah State agricultural economist DeeVon Bailey looked at live cattle auctions in Oklahoma City, Okla., Dodge City, Kan., and Greeley, Colo. Those auctions were compared to Superior Livestock video sales. After adjusting for trucking, shrink and commissions, he found average net prices for cattle sold on the video auction were $1 per cwt over Oklahoma City, $3.36 per cwt over Greeley and $1.48 over Dodge City.

Today Superior's Lichtie says it's not satellite broadcasts, but the Internet that is the central player in many livestock sales. Now manager and president of Superior Productions, he has been with the video auction company for more than 20 years. He recalls that first 1987 sale as the beginning of a fundamental change in how sellers and buyers of all sizes—and in all parts of the country—trade cattle.

It's a business that has become huge, and very diversified. Superior Livestock is the national leader, selling some 1.5 million head annually. In one July sale this year, the company claimed the record for largest video sale in a five-day event that auctioned off 346,000 head from 26 states. Lichtie says a majority of the calves they sell hits from May through September, adding up to 750,000 to 1 million head. And he says in today's market, 94% of those animals are on a health program.

"You can call it value-added," he says. "But in today's market it's more like it's a discount if you don't do it. Buyers want to know animals are healthy and they want them to be age- and source-verified too."

If some producers see that as a downside to selling through a video auction, Lichtie points out it's more than offset by the fact that they don't have to load up their cattle and haul them anywhere. Those cattle stay on the ranch, keep putting on pounds and are marketed to a national audience, which in Superior's case consists of 6,500 registered buyers.

Steven Blank, an agricultural economist at the University of California, has been following video auctions for 20 years now. He says smaller producers can really gain an advantage with these auctions, because they allow forward contracting even if you're not big enough to fill out a future or options contract yourself.

"I see that as a free benefit of this market outlet," he says. "You can sell earlier than delivery if it allows you to catch a good price. And a lot can be any size."

That doesn't mean, however, a lot should be any grouping of any cattle you happen to have to sell. In fact, Blank says research shows there are a few ways producers can consistently maximize their sales price on video auctions:

Uniformity

While it's true that with video sales a lot can be any size, Blank says animals in a lot need to be as uniform as possible. "We've found the more uniform a group of animals, the more one animal looks like the next, the better your price—as much as 5 or 6 cents per pound better. So if you've got a real motley crew, it's better to separate them into different lots because the penalty for throwing a lot of varied cattle together is tough."

Lot Size

The good news with video sales is you don't need a truckload-size lot; the bad news is you'll probably get less money for smaller lots. Blank says there is a premium price associated with a lot size that approaches a truckload (about 50,000 pounds). Get enough animals together to fill a truck, even if that means commingling with a neighbor, and you'll get a better price.

Value-Added

Buyers are willing to pay extra for what is seen as market preference—a fairly fickle attribute that can change with the latest newspaper article. Right now, for example, "natural" beef means an extra cent or two in a producer's pocket; implants can mean a deduction. Age- and source-verified cattle are consistently good bets, adding 1 to 2 cents. And black cattle still tend to bring more.

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