Group Sales

By Becky Mills
Progressive Farmer Contributing Editor

Visit most of the larger operations in Central and South Florida, and you'll likely see fifth- and sixth-generation ranchers still moving cattle by horseback and using branding irons for more than wall decorations. However, eight of those ranchers have put aside traditional ways of marketing, as well as some of their independence, to form Florida Heritage Beef Limited Liability Company (FHB LLC), a super-sized marketing group.

"A group of us can offer a large number of like cattle as far as quality, health protocols and age and source verification," says St. Cloud rancher Billy Kempfer. "We felt like if we could offer more cattle, we could open up more markets."

The journey toward FHB more or less started in 2003, when the Kempfers, including Billy's sons Henry and George, started marketing their calves with neighbor Alan Kelley, manager of the family-owned Kenansville Cattle Company. They collected a list of buyers, photographed their calves and sold around 20 loads a year on a spring conference call.

It worked well for six years, but Henry Kempfer says they kept thinking about expanding the sale and wanted to bring a select group of reputable ranches together.

At the same time, Gene Lollis, manager of Lake Placid's Buck Island Ranch, was visiting with other ranchers about group purchasing of pharmaceuticals and ranch supplies.

They pooled ideas and, as a result, Ru-Mar Inc., Walpole Land and Cattle Company, Russell Cattle LLC, Williamson Cattle Company and Lykes Brothers Inc. joined Kempfer Cattle Company, Kenansville Cattle Company and Buck Island Ranch to form FHB.

While group purchasing is still a work in progress, FHB is on track with marketing. The first two years the group used an Internet sales company but have since evolved into large-scale private treaty sales. Henry Kempfer says the change was a positive one. "It has been a price jump for us. For the buyers, 200 loads is more attractive than 20 loads. FHB has way more than paid for itself."

SELLING THE BIG NUMBERS

Kansas State University farm management specialist Kevin Dhuyvetter agrees there is marketing strength in numbers. When selling calves through an auction barn, premiums for larger lots are typically maxed out once truckload-sized lots are reached. This is partly because sale barns usually aren't equipped to handle multiple truckload lots.

While the idea of offering their calves under the FHB name sounds simple enough, it was anything but. "It took us six months to get the operating agreement together," Kelley says.

A strategic planner worked with the ranchers for two full days to formulate a long-range business plan. "It was really helpful, but it was not cheap," says Henry Kempfer, who says the bill was divided among the eight ranches.

And yes, there were and continue to be meetings. Henry Kempfer says the group has met religiously once a month for three years. They make meetings as efficient as possible by appointing committees to handle things like marketing and purchasing. They also rotate meetings between ranches.

Agreeing on the Details

During these meetings, founding members set some requirements for selling under the FHB name. These requirement include:

-- One round of modified-live vaccine (MLV) or two rounds of killed must be given (most of the ranchers actually give two rounds of MLV).

-- The entire cow crew of each ranch must be Beef Quality Assurance (BQA)-certified. In fact, two of the eight ranches have received the National Cattlemen's Beef Association BQA award.

-- Ranchers must have actually fed out part of their cattle so they know what they are producing. Some are currently participating in progeny and tenderness testing.

"It is phenomenal what people are willing to do to be a part of FHB," Henry Kempfer says. One ranch had always sold private treaty. When they joined FHB, they had to deal with extra sorting (FHB sells by breed type as much as possible) and the uncertainty of selling in an auction.

"They were scared to death," Billy Kempfer says. "They had an awful good offer before the sale, but it got blown out of the water during the sale."

Even with the private treaty sales format, there is one extra sales charge with FHB. There is a $1-per-head assessment -- 50 cents due when the cattle are contracted and 50 cents when the cattle are shipped. FHB uses this assessment to build revenue for the company.

The lack of marketing charges is one reason Henry Kempfer says, "We do love private treaty sales. There is no commission, no sales cost, and there is both an up- and a downside."

Since FHB is selling by private treaty, the ranchers act as their own agents. They will video cattle and send footage to prospective buyers, but they also encourage buyers to come see the cattle. Trust is an important part of the group's philosophy, because in some cases, buyers will take cattle sight unseen. "The cattle have to be represented accurately," Kelley emphasizes.

"We're not trying to get more than the cattle are worth," Henry Kempfer adds. "We want to describe them for what they are and get what they're worth.

"We don't want people to think our product is elite," he continues. "There are other ranches that have cattle as good or better. We're unique because we're selling so many good cattle at one place."

The FHB group makes a point of taking an annual trip to cattle-feeding country to meet with buyers. "We find out what's working and what isn't. If buyers know you are trying to make things better, that goes a long way with what they are willing to spend," Henry Kempfer says.

While they continue to tweak their system, FHB members are looking ahead. "Our ultimate goal is to stay in business," Kelley says. "We want to continue to build our numbers by adding more ranches with the same goals. We want to be in it for the long haul."

DIY MARKETING GROUPS

If you're interested in forming a marketing group similar to Florida Heritage Beef (FHB), here are tips from St. Cloud cattlemen Henry Kempfer and Alan Kelley:

-- Think big but consider starting small.

"It was a little tough moving forward with eight ranches," Kempfer says. "But the knowledge each entity brought to it was unbelievable. Everybody in the group has something unique to offer." But founding members should have a similar mind-set, he says, another reason they were able to make progress with a larger group. "We all had similar quality requirements we had set for ourselves. We have similar business ethics and philosophies, and have the same end goal in mind."

-- Be selective about members.

"If you add people, make sure they have something positive to offer," Kempfer says. "FHB is not so much about the quality of the cattle but of the people." Kelley adds, "If a group doesn't have honesty and integrity, they won't last."

-- Communicate, communicate, communicate.

"We're all outspoken," Kempfer says. "We don't hold back our feelings.

"We never felt uncomfortable disagreeing, though" Kelley says. "When there is a disagreement, we fix it and move on."

For more information on FHB, visit its web site at www.floridaheritagebeef.com.

Copyright 2013 DTN/The Progressive Farmer. All rights reserved.