Will Buyers Push Goat Prices To Unreasonable Highs?


I read Terry's editorial last month about the growing rift in the industry between commercial producers and show breeders. I deal mainly in the commercial end of the industry, and I believe there is much more to this than petty resentment over the high prices that show breeders get for their animals.

Unlike the commercial producers Terry mentions, I don't blame the show breeders at all for the high prices they get. In my area the big show breeders sell most of their animals at their annual production sales. The production sales are auctions, and the price is set by the buyers, not the sellers.

It is the buyers who are responsible for high prices, and I see many similarities between the show goat market and past market bubbles/crashes such as; the Tulip-Bulb Craze, the South Sea Bubble, the Florida Real Estate Craze, the Great Depression (1929), the Crash of 1987, the Asian Crash, and the Dot-Com Crash. In the US livestock industry most of us can remember the recent debacle with Emus.

I will briefly discuss the similarities between these crashes and the current show goat market here, but there is an excellent piece on market crashes at http://www.investopedia.com/features/crashes/ if you want more info.

All of the market bubbles/crashes I listed above resulted when buyers put so much demand on an item that they drove the price for it far beyond a rational level. A rational level being that which would be supported by the actual performance of the underlying item. Like bubbles floating to the surface of a pond, it appears that market bubbles will rise forever. Unfortunately, since they are formed from nothing substantial they eventually burst leaving you with little or nothing.

Like the current show goat market, the tulip bulb craze began with the importation of a new agricultural product. In this case it was tulip bulbs imported from Turkey in 1593 to Holland. The novelty and rarity of the tulips made them widely sought after, and drove up the price for them. Any of this sounding familiar?

Eventually a virus infected the tulips, but instead of killing them, it caused "flames" of color on their petals increasing the rarity of certain varieties. This caused the prices to soar even more for the most prized color patterns. Can anybody say paints, solid reds, etc.?

The rising prices led people to pay ridiculous prices they couldn't afford for tulip bulbs in the hopes that they could sell them for even higher prices to a "greater fool." Sound like anybody you know?

In many market bubbles buyers look not at the value of the item, but at the marketing hype and the vernacular used to describe it. Even though these descriptions are vague, even meaningless, buyers are infatuated with these items and pay ridiculous prices for them.

A prime example anybody reading this column should be able to remember is the dot-com stocks of a few years ago. Even though the companies had almost no earnings and were losing huge amounts of money, investors eagerly bid up their shares based on buzzwords like full south african, grand champion, ennobled, etc. Oops, those are the buzzwords the show goat buyers are looking for. I meant dot-com, networking, internet, information technology, etc.

Eventually, as always occurs in speculative bubbles, some people decided to sell and lock-in their profits while the market ran out of "greater fools" to buy the bulbs, stocks, emus, etc. The markets reversed, prices plunged, and panic ensued leading people to sell regardless of losses. How many of the big name breeders have gotten out in the last year now? Some of them sold their high dollar show goats to focus on raising commercial goats. Hmmmm!

If history repeats, and it almost always does, we aren't far away from the day where there is nobody willing to pay over a thousand dollars (or even a couple of hundred) for a goat. Judging from the number of people I know who are already selling their registered fullbloods for slaughter that day has already arrived for all but a handful of Texas breeders.

The prices for show goats will come down when enough people figure out that it doesn't make sense to spend $2,000.00 for a doe when you can only sell the kids from that doe for a small fraction of that amount.

The most puzzling part is how any of that is even remotely relevant or of concern to a commercial producer. I suppose it is because many commercial producers insist on buying stock from show breeders on the mistaken assumption that those bloodlines are suitable for use in a commercial herd.

As Terry said there is much crossover between the two industry segments, but I would argue that there should not be. At least not from the show side to the commercial. There is no reason why an outstanding animal from a commercial herd cannot be used as a show goat, but there are many reasons why you should be hesitant to use typical show goats in a commercial herd.

Price being an obvious place to start. If commercial producers resent paying high prices for top show animals the obvious solution is to buy seedstock from a breeder who specializes in producing commercial seedstock.

There are only a couple of breeders that I know of who specialize in commercial seedstock, but their prices are reasonable (especially for the quality of animal that you get for the price), and the animals have been bred specifically to thrive under commercial conditions.

The fact is that the demands placed on a commercial goat are vastly different and tougher than those placed on most show goats. A goat that has been bred and raised to flourish on pasture with little or no input from the rancher can easily make the transition to being a successful show goat with proper conditioning and training.

However, a goat that has been pampered its whole life and had its meals served from a silver feed trough is a poor candidate for use as a commercial herdsire. This is in my opinion one of the biggest and most legitimate complaints commercial producers have with the show goat industry.

I hear this complaint all of the time, except when I hear it the complainers apply it to all Boers, not just the show goats. It starts out with someone calling me looking for Spanish or Kiko herd sires.

Since I raise Boer herd sires I, of course, offer them some Boer bucks. The response usually sounds something like, "no thanks I bought a bunch of those last year from (name of show goat breeder) and they just laid around by the barn waiting for me to bring them food while my does were out in the pasture not getting bred."

I then have to explain that my Boer bucks are raised on pasture and we don't feed them so they shouldn't have that problem. Many are so skeptical that they still won't buy them, and insist on buying something else.

Another complaint I hear from commercial producers is how the show goat breeders are ruining the breed by breeding for extremes. Whether its bigger goats, wider goats, longer goats, etc. All of that stuff is fine for a goat that lays around in a little pen all day, but when you start expecting them to make a living on pasture extremes of any sort quickly become a problem.

Then there is the issue of toughness. Commercial goats generally don't get pampered. If they kid during cold weather nobody is putting out heat lamps for the kids. That doe better know how to clean and dry her kids quick or they are goners. Contrast that with what happens at your typical show goat operation where heat lamps and even heated barns are common.

Commercial does typically kid on their own with no human assistance, and everything goes fine most of the time. This also seems to be a rarity at many show goat operations where the owners spend kidding season sleeping in the barn with the goats or have a baby monitor rigged up so they can get up and hustle out there to assist with the birth.

Survival of the fittest improves the genetics and toughness of the animals composing most commercial herds, but seems to rarely be a factor in show herds.

Boer breeders who specialize in producing commercial seedstock frequently have to fight the perception that Boer kids are weak and slow to nurse after birth. A perception that has arisen because of the practices common in the show segment of the industry that has managed to breed out the vigor Boer kids are supposed to exhibit, and that they continue to exhibit in most commercial seedstock herds.

After birth commercial animals spend their lives on pasture learning from their mothers that plants are food, which plants are safe to eat, where to find shelter in a storm, and other lessons important for survival in a pasture or range environment. Most show goats learn that food comes from a sack, and shelter is a building.

Your average commercial doe weighs less than 120 lbs and is expected to get enough nutrition from the range she lives on to conceive and raise twins every year. If she doesn't do this the rancher is likely to cull her. A show goat doe weighs 50% more, and depending on the names on her pedigree might get away with producing a single every year on full feed. Put her out on pasture with no supplement and she is likely to fail to breed at all.

Commercial goats are bred and selected for their fast growth, early production, muscling, and ability to produce and succeed under pasture conditions. Show goats are bred and selected for their conformation to an arbitrary breed standard, and their ability to produce and succeed in a confined feeding operation.

It is difficult to see why commercial goat producers would pay any attention to the show goat side of the industry. I'm not aware of any other livestock industry in this country where commercial producers look to the show sector for seedstock for their operations.

When I see ads for bull sales the ads stress performance figures, not show results, and the cattleman I've spoken with that are entering the goat business speak with derision when they discuss show cattle for the same reasons that I outlined above that commercial goat producers deride show goats.

It appears that what is happening in the goat industry is normal, and probably healthy. The commercial segment will separate from the show goat segment, and there will be less interaction between the two.

I won't deny that the show breeders have spent a lot of money, but most of that money has not gone towards research or development that is of benefit to the entire industry. The amount of time and money I and a couple of other commercial seedstock breeders invest in R&D every year dwarfs what the show breeders spend if you look at items that are likely to benefit the industry as a whole.

I don't consider things like embryo transfer or cloning to have much broad benefit to the industry especially when we have a long way to go in identifying the bloodlines with the best commercial traits. Not much point in cloning or running an embryo program using an animal whose commercial value is questionable. The cost of those technologies will also have to drop dramatically before they are of much use to your average commercial producer.

This industry needs investment in performance testing and market development, not high tech reproductive methods, and the breeders who are investing their time and money in those areas are primarily breeders I would classify as commercial seedstock producers, not show goat breeders.

Finally, I am not aware of any breeder who is receiving premium prices because they produce consistent goats with perfect conformation, no cull factors and rapid growth. Commercial producers might not grouse so much if show breeders were exclusively selling fast growing goats with perfect conformation for high prices. Unfortunately, that is just not the case. In many instances the animals that are selling for high prices are inferior to many of the goats in a commercial herd.

The breeders who are receiving high prices don't performance test their animals anymore (many never did), nothing more embarrassing then having the offspring of your big name show winning buck go to the performance test and grow more slowly than the Spanish goats. As far as most show goat breeders are concerned there is an easy way to remedy that, and if you think its to get rid of the buck and start over with a better bloodline you'd be wrong.

As for conformation and cull factors I've looked at plenty of animals that have sold for high prices over the years that had obvious faults and/or cull defects. The primary driver of these prices were buzzwords and hype, not value.

The buyers of these animals confirm this themselves when questioned as to why they would pay the sums of money they have for culls. Inevitably their reasons for purchasing the animal are the breeder's name, the animal's pedigree, and that the goat is full south african. They never mention the perfection of the animal they purchased.

Do I fault the sellers for this? No, not anymore than I blame the dot-com companies that had successful IPO's a few years ago and later went out of business leaving their investors with worthless stock.

In both cases buyers made unwarranted assumptions about what they were buying even though a cursory investigation would have shown them that the stock or goat they were purchasing wasn't worth a fraction of the price they were about to pay. In both cases there were/are numerous knowledgeable people warning buyers away, but the buyers don't want to listen. Whose fault is that? Certainly not the sellers'.

It is no small wonder then that commercial producers view the show segment of the industry the way they do. There were groups of people making similar criticisms of the dot-com stocks before that bubble burst, they were called bears and value investors. The bears came out alright on that deal, but the value investors saw their stocks drop too (albeit not as badly) when the bubble finally burst.

That is the kicker about market bubbles. It would be one thing if the only people hurt when the bubbles burst were those who participated in the speculation, but that seldom is the case. Many of the biggest market crashes were followed by depressions that hurt entire countries, and even minor crashes almost always affect other parties.

As Terry stated in his column there is room for commercial producers, show breeders, and even hobbyists or pet goat operations, but given the potential for more widespread damage from a crash in the show goat market that could affect other segments of the goat industry, commercial producers are probably correct to be concerned about the speculative prices being paid for show goats. The sooner and more completely they separate their segment of the industry from the other, the better off they will be.

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This page updated 12/21/03