By Lorie Woodward Cantu
Editor's Note: This is the final installment in a 12-part series on stocker cattle management. This series has been created in partnership with Chris McClure, Gold Standard Labs (www.bvd-pi.com), a lab services company based in Hereford that specializes in BVD-PI testing and blood pregnancy tests; and Danna Schwenk and Karla Whitmore, CattleXpert Management Software (www.cattlexpert.com), a software company based in Elkhorn, Neb., that specializes in feedlot and stocker management applications.
While some management and production practices in the stocker industry are easy to put a pencil to, there are other hard-to-value intangibles that separate successful operations from marginal operations.
"The cattle business is a 100-percent relationship business," says Jim Schwertner, president and CEO of Capitol Land and Livestock Company in Schwertner. "Our company has been operating since 1946, and I believe our success and longevity can be attributed to our commitment to doing what we say we're going to do." Schwertner likened the company's satisfaction guarantee to Walmart's saying "if you don't like it you don't buy it."
This willingness to stand and deliver has allowed the Schwertner family business, which was founded by Jim's father, Eugene, to become one of the largest cattle dealerships in the nation. The elder Schwertner found a niche buying Texas cattle directly from auction markets, aggregating them at the family's facilities in Central Texas, sorting them into uniform lots, and turning the inventory as rapidly as possible.
Today, most cattle leave the premises en route to buyers within 24 hours of the stock's arrival. Using the original business model, Capitol Land and Livestock Company moves about 500,000 head per year through the dealership.
"Our company completes about $300 million in sales annually," Schwertner says. "We have no contracts. All of our business is done over the phone. It's like my dad taught us, in the end, the only thing you've got is your reputation. Your reputation is what lasts." It's a lesson that he and his sister Sherri Madden, who also works in the business, took to heart. They have passed it along to the next generation of Schwertners, including Jim's children Jimmy and Samantha, who are actively involved in the day-to-day management of Capitol Land and Livestock Company.
Eugene's entrepreneurial spirit
In addition to teaching his successors to protect their reputation, the late Eugene Schwertner also encouraged entrepreneurship. Entrepreneurial vision led the company to develop the Schwertner Select program in response to a National Cattlemen's Beef Association audit performed in the mid-1980s. The audit found that ranchers were losing $80 to $100 per head by improperly weaning calves.
"If cattle are not weaned properly and put directly into a feedlot, they suffer a 5 percent death loss and operators expend $40 per head in medicine," Schwertner says. "If cattle are weaned properly, the death loss drops to about 0.5 percent and medicine costs falls to about $5. Properly weaned calves perform more like yearlings, and that makes a significant impact on the cattle's performance and an operator's bottom line."
Through Schwertner Select, calves are properly weaned and backgrounded on consignment. Unlike most other backgrounders that use a confinement system, Schwertner Select runs the calves on 20,000 acres of company-owned pasture improved with a mix of Tifton 85 and rye grass. The stocking rate is 1 head per acre and the cattle are held for 45 days.
"Backgrounding on pasture instead of in a pen makes a big difference," Schwertner says. "In addition to having plenty of room, there's just something about grass that can't be bought in a bottle. If you're able to put cattle back in a natural environment, Mother Nature will take care of a lot of problems."
With that said, personnel follow a strict health protocol, and a full-time veterinarian keeps a close eye on the stock. The combination of nature and vigilance allows Capitol Land and Livestock Company to guarantee consignors that death loss for cattle enrolled in Schwertner Select will not exceed 2 percent. Since its inception, the program has been well-received. Each year 180,000 to 200,000 head are backgrounded through Schwertner Select.
Good decisions can be traced back to people
Over the course of 66 years, the cattle industry has changed, and Capitol Land and Livestock Company has changed with it. Today, the company employs a consulting veterinarian and a consulting nutritionist to help ensure that the cattle are performing at their peak.
"The cattle business is big business now, and it has gotten more technical as time has passed," Schwertner says. "To maximize productivity and efficiency, you have to have experts like veterinarians and nutritionists who understand the interaction of genetics, nutrients and pharmaceuticals."
Another change has been the advent of computer technology. The company uses customized software to meet its unique needs. And while Schwertner acknowledged the positive impact that computers have had on the company's ability to track performance and measure outcomes, he noted that the best, most complete data is useless without analysis.
"No doubt good data is vital, but successful strategies and good decisions can always be traced back to people. They are the ones who make sense of the numbers," Schwertner says. "Of all of the intangibles in our business, our employees are one of the most important." The company, which also includes trucking and farming enterprises, employs 125 people in jobs ranging from cowboys and cattle buyers to truck drivers and accountants.
"A successful company is not only the result of good leadership, but of good people," Schwertner says. "Our employees not only understand our system, but have personal integrity and are committed to doing a good job. Our customers know this and consequently they entrust us with millions of dollars worth of their cattle because they don't have to worry about our people doing the right thing."
The average employee has worked for Capitol Land and Livestock for 20 years, he says. When Schwertner is making a hiring decision, he looks for 3 key things: a strong work ethic, high personal integrity and self-starting initiative.
"I can teach anybody our system and I can teach anybody the cattle business," he says. "But I can't teach them to work hard, to be honest and to be aggressive. Those are inborn characteristics that are essential for their personal success and the success of our company."
He continued, "Anybody can come up with a good idea, but successful people are the ones who implement it."
"Stocker Cattle: The Human Component of the Stocker Business" is from the December 2012 issue of The Cattleman magazine.