The term private treaty is applied to sales negotiated between two individuals. According to Derrell S. Peel, livestock marketing specialist at Oklahoma State University, this is contrasted with sales that occur in some public market setting, such as an auction.
Whitney Whitworth, associate professor of animal science for the University of Arkansas at Monticello, said that treaty sales will occur due to a, “personal preference over type of sale, perhaps they want to ensure a certain price for their animals.”
Some producers may not like the high-pressure atmosphere of an auction. “Some prefer the slower personal pace found in private treaty sales,” said Eldon Cole, regional livestock specialist for University of Missouri extension. “They may not need to make a purchase at the time a sale is being held since most production sales occur only once a year or sometimes two times. Some buyers like to make selections before the cattle have been picked over.”
There are advantages and disadvantages to all selling methods. “Private treaty sales offer an opportunity to sell at a higher price, if the seller can identify a buyer that has the most value for the product,” Peel said. “By negotiating directly with an individual a seller may extract a higher price. This implies that the seller understands the market and the buyers very well.”
According to Cole, sellers should also tell potential buyers what special features that would make their animal more unique and valuable than others.
Semen or breeding soundness exams, trichomoniasis testing of bulls and pregnancy test results should also be ready from the seller for potential buyers. Sellers also need to, “guarantee freedom from being a carrier of a genetic defect,” Cole added. “Perhaps a guarantee if the animal doesn’t breed, money will be refunded or a like-replacement will be offered.”
“Many sellers offer custom hauling of purchased animals to your operation if you spend over a certain dollar amount or if you are a repeat customer,” Whitworth said. “That way, a customer may not have to bring a trailer with him. This may be appealing to certain buyers.”
Whitworth added that may take several years or several sales to gain maximum profits. Developing strong customer relations is, “the key to ensuring profits for continued years,” Whitworth added. “If you have a producer who a bad experience with the seller, rest assured that everyone at his local coffee shop is going to know about it. This can make or break a seller for the future.”
According to Cole, producers need to know that private treaty sales can be unpredictable. A buyer may call to say that he’s coming but never show up. He also warns sellers to be cautious about payment especially if you’re dealing with a buyer for the first time.
Cole suggests that sellers participate in educational events; this will be an opportunity to share with prospective buyers that even though you don’t have a production sale you do have good genetic material for sale. The cattle number may just be 20 or so cows, or less, which is enough for many buyers.
“In both types of sale processes remember that customer service is valued highly today,” Cole concluded.
