Going into business with people is like getting married - a serious commitment - and people might need to think more about it.
The formation of a syndicate of buyers is becoming more common, especially with the prices that some of the high-sellers within sales are demanding.
But how are these syndicates formed? And what are the pros and cons of getting involved in them?
It is a big business agreement to work with other people on the utilisation, management and marketing of animals and genetics, yet on some occasions it is only taking producers a quick two-minute chat over a steak sandwich followed by a hand shake to establish years worth of friendship or heartache.
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Partnering on an animal is different to involving three or more operations in the one deal. Many say a partnership involving two studs or producers is believed to be a more streamlined, "easy" alternative.
From talking to studs which have joined forces to secure top-priced animals, the formation of bigger syndicates can happen a number of ways.
For Merinos, if a syndicate is formed it usually involves a classer or agent that has a thorough understanding of the individual stud's or producer's breeding system and breeding objectives. This is similar for meat breed sheep.
The evolution of a cattle syndicate though seems to differ a lot more. Sometimes it is an agent suggesting it, after a number of enquires have been made on a bull. On occasions a semen company puts it together, while other times studs might tee up their buying party before the selling season starts and then they go in search of the perfect article.
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Whatever way it comes together, I wonder how many actually sit down together do the sums or draw up some sort of contract or outline to the management of the syndicate?
How much does each party pay? What is your percentage of ownership? Is it an even split? Does someone pay more for walking rights versus semen interest? And is there scope to get international players on board? These are all some of the valid questions that need to be addressed before signing the dotted line. While the most obvious benefit of a syndicate is sharing the costs of high-dollar individuals, or getting a piece of the pie, the positives don't stop there.
More recorded progeny across a number of herds that will have data being collected is believed to be a huge win. Likewise, semen sales to make a further profit and shared costs associated with the marketing and promotion of the individual can be seen as beneficial.
However, the struggles that come with buying in a syndicate may be a little too much for some, leaving people saying "why did we bother?" or "we won't be doing that again".
If a bull is travelling between places, especially across borders, who fits the bill for transport and/or health testing that may need to take place?
An injury takes place on one person's property. We'd hope there was insurance involved, but if not how is it resolved? Do the others in the syndicate have to be compensated due to not being able to collect or use the bull at all before injury, resulting in only one stud involved getting progeny?
Similarly, what if a stud has finished working the sire but has sent him to the next stud in rough condition, underweight and you have to rest him before thinking about putting him out with females? This could potentially mean you have to leave them empty for longer, blowing out your calving/lambing.
They're all risks we take, but are you comfortable with it? Have you thought about it before diving into it?
On the marketing side, having an understanding of how to approach semen sales is crucial. Options include getting a semen company to purchase the rights or choosing to market the bull within house. Agreements on whether stud and/or commercial semen will be marketed, or when this process begins is another factor to consider.
Even after a syndicate is formed, more people might come to the party wanting to buy the New Zealand or state-based semen rights in the individual, and ensuring this is adhered to and no private sales occur outside of the agreement is important.
Purchasing in a syndicate with people that will be your direct competition can be tricky - you are will be marketing the same genetics to the same cliental at the same time. Many opt to link up with people from different regions or completely different states to ease this potential conflict.
Females are an even more testing. Say you partner with another stud on elite female with the hope to add her to the donor pen.
This generally means all calves are sold, with the profits split. But say it comes to flushing her and she doesn't produce, or she gives 10 eggs and each party gets five but the implant at one owner's place goes well while the other doesn't.
It is a gamble, as is many parts of breeding livestock, but could you as an owner handle one person benefitting while you are left with nothing?
Knowing the people you are teaming up with in syndicates has been said to be the most important thing - it is crucial to have a strong relationship with them, understand their character and streamline open communication channels.
All in all, a syndicate has its pros and cons, and individuals have to weigh up their risk profile to ensure they are comfortable with the business agreement before that bid card goes up.
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