The cattle business in Kentucky is good. Prices are high, herd quality is great and national recognition is on the rise. But buying and selling all those animals is no small feat.
Thankfully the stockyard business in the state has been growing, as well, to accommodate the industry.
Bluegrass Stockyards is a perfect example of how the business of selling cows has evolved and how an iconic staple in the Fayette County business community has expanded to become a statewide entity.
The Bluegrass Livestock Marketing Group, as it is officially named, is a privately owned company that has grown from its downtown location to also include six additional facilities across the state, the newest being in Albany, Ky., near the Tennessee border.
This new location is indicative of a long-term plan to take some of the pressure off the old facility in Lexington and to take the services to an aging customer base, according to Jim Acres, the company’s chief operating officer.
“We began the process of either building or acquiring markets farther out from the center here,” he said. “We pretty much cover, north to south anyway, the real concentrated cattle population in Kentucky.”
But Bluegrass is dealing with more than just state producers. With markets at the northern and southern borders, the company brings buyers and sellers from surrounding states.
Acres said the company typically trades cattle on an annual basis from about nine different states, including live sales, not just over the Internet. It will also send cattle into 15 to 20 different states on any given day, many of which go through a local cattle broker or handler.
On a statewide basis, Bluegrass sells cattle out of approximately 100 of the 120 counties each year.
All together, that equates to about 12,000 to 15,000 head of cattle per week throughout the year, with sales happening six days a week at one location or another, according to Acres. Between the seven locations and the Internet, the company will host between 15 and 18 sales each week.
Acres pointed out that as the market goes for producers, so it goes for the business, because it works on a percentage-based commission.
“Obviously, it’s to our advantage to get all the money we can for the customer’s product, because we benefit from that as well,” he said. “The high prices for cattle have certainly been good for our business over the last couple of years and helped us to have the cash flow to improve our facilities and put on some good people to provide higher-level technical service and consultation. It has been a wonderful stretch of time in the business, without question.”
That has come at a time when other business sectors have struggled. In fact, agriculture as a whole has done quite well during the downturn in the economy. Last year, farm cash receipts topped the $5 billion mark.
But there is more to the business than running cows into a sales ring and selling to the highest bidder. It can get quite complicated at best. The industry is regulated both on the state and federal levels, especially when it comes to health issues and working with disease-surveillance programs. The recordkeeping alone is enough to keep a staff busy all the time, not just for stockyard purposes but to provide traceability for the animals. Each sales facility is required to have a veterinarian present on sales days to provide animal inspection and services to the customers who need it and to write health papers for transport, just to name a few requirements.
There is also the issue of complying with environmental regulations. Every aspect of the business has a regulatory component to which it has to answer.
But the cattle business in Kentucky has continued to flourish, and the Bluegrass has played a major role in its success.
The downtown location is the flagship of the operation and is the largest market east of the Mississippi River. Acres described it as an historic landmark that has been there since the ’40s, seeing many evolutions not only in the livestock business but in Lexington and the Lexington business community.
“You’ve seen the packing houses come and go; you’ve seen other markets come and go; you’ve seen urban development in the Fayette County area, where we have had to reach out farther and farther to develop a customer base for this market, but it continues to thrive.”
And with that success has come a certain amount of responsibility to the industry as a whole.
“[Bluegrass] is probably the most important price discovery point at least in the eastern United States,” he said. “When you look nationally at quotes for what a feeder calf is worth, you typically see quotes out of Oklahoma City, Joplin, Mo., and Bluegrass in Lexington. It’s a big honor, but also a big responsibility, to know that the nation is looking to the work you do everyday to find what each class of cattle is really worth.”
As with any businesses, there is competition. Acres said that even though Bluegrass is a big player, this market is extremely competitive.
“There are three or four other major operators in this very same marketplace. With that said, we have about a 50 percent market share in terms of the available cattle,” he said. “But it’s highly competitive, and we have to work every day.”
To be competitive, Acres said you have to run the business right by being out on the road, going out and visiting farmers and conducting meetings.
“You’ve got to carry the message to the farmers, and you have to provide better service,” he said. “I tell our people constantly that’s the only thing we’ve got
to sell is service. We’re not going to buy these peoples’ cattle and try to make money off of them. We’re going to make our living by providing them good service and a good facility, doing it in a timely manner and getting them paid on time.
If we do those kinds of things, we’ll get our share of the business at the end of the day, and I think the numbers prove that that is right.”