Betty Jo Gigot, Editor and Publisher

A mist lay close to the ground, swirling around the Schwertner Select cattle grazing on the lush green pastures around the sprawling Capital Land and Livestock headquarters. It was a far cry from two months before when fires were ravishing the area. Because of the drought, many had gone off to auction earlier than usual – just part of the facts of life in the cattle business. Flexibility remains the key to the business.

The early morning routine at Capital was broken only by the bawling of calves missing their mothers after being weaned the day before. Sorting crews were just finishing, putting together lists of truckload groups so that the “upstairs crew” could pick up the phone and start marketing yesterday’s buys. By nightfall, they all would be on their way to their new homes across the plains of the Midwest, ready to start a new cycle in their journey.

Eugene Schwertner must have been amazed at the scope of the business he founded from a small auction barn he built in Schwertner, Texas, after he returned from World War II. The tiny town north of Austin that was named for his grandfather and where his grandfather had been a mule trader and his father had been in the auction business, represented a return to his roots for Eugene.

Next came an auction barn in Austin. In those days auction barns were located in the big cities and were pretty much a closed shop, catering to the large cattle buyers. Eugene thought that the small seller needed a place to market his cattle and, apparently, he was right. Soon other small towns asked Eugene to develop auctions in their communities. The result was auction barns in eight different locations. Eventually, the company developed into an order buying business, sending trainload after trainload of cattle to California and Nebraska feedyards. In the late ‘80s, opting for a more rural setting, the company built a new facility back in Schwertner.

An education of a lifetime
“Some of my first memories are of my father, mother and sister, Sherri, traveling from one auction barn to another,” Jim Schwertner said. “Mom kept the books and each auction had a different checkbook. At the beginning of each auction Eugene would ask, ‘How much money do we have in the bank now?’ and my mother would tell him. At the end of the day, he would ask the same question. He knew where he was financially at the end of every day.

“He would say, ‘Son, anyone can make money if they work hard. The difference is knowing where you stand every day.’ Today we use computers, but we run a profit and loss statement at the end of every day. My dad taught me how to do that, to keep account of things. That is why they call it accounting. The banking business is the same way. You always have to know where you are.”

Schwertner likens it to piloting his plane. “You have to know where you are and where you are headed, and you have to have fuel on board in order to do that.”

Jim lost his dad in July of 1998, but his words come back to him easily as he sits in a rocking chair in his late father’s home. (The house is now used for family gatherings and guests.)

“We sat right here, right before he died and visited about the future. I told him that I was worried about carrying on the family legacy. He said, ‘No way. The company is yours and you can do what you want to with it.’ I really appreciated that.

“My father was my mentor, teacher and best friend,” Schwertner said. “Lots of fathers and sons have a difficult time working together because they micro-manage them. My dad did not do that. He understood he had to let me go out and take some risks, and I was smart enough to understand the reputation of the company he had built.

“The business didn’t scare him. After all, he had been with the Navy Seabees at Guadalcanal and Okinawa where he saw half of his buddies die. What could look so bad in the cattle business?

“Through the years, we lost a lot of money at different times. I would ask my Dad if he was worried, and he would say no. He always said that as long as you have your health and a banker, you couldn’t lose.

“I never crossed him after he made a decision. We would discuss it, but after he made a decision, we rode the bad times together and so did our employees. Those employees have always been considered the most valuable asset of the company and were the primary focus when the company won the 2005 Beef Industry Vision Award.

A quick lesson
Jim Schwertner had been back from college at Texas Tech just a few weeks when the crash of 1974 happened. “We were order buyers, sending cattle to California and Nebraska in those days. All of sudden half of our customers went away and we had to find another way to do business. We became livestock dealers, taking title ourselves. It was a pivotal point in the company and hard to make the change, but we managed.

“We were and are working on the business model that my great grandfather set up, gathering livestock (he dealt with mules) and selling them. In our case, we hedge our risk by only owning them for 24 hours, win, lose or draw. Each week, 15 buyers sit on the seats at 110 sales within a 250-mile radius of Schwertner. Cattle are shipped to the headquarters that afternoon to be sorted, sold and shipped by the next morning after being sold over the phone by the company salesmen.” The company estimates they have sold over 20 million head of cattle in the past 60 years. Using newer technology, buyers can log in on the company Web site each morning to view photos of cattle available for sale each day.

Customer service
“The key to success in any business is to be agile and quick on you feet, and to make sure that you stay with what the market dictates,” Jim Schwertner said. “Timing is key; you don’t want to be the first or the last to do anything.”

Always looking for ways to serve their customers better, Schwertner saw an opportunity in the late 1980s. “1989 through 1991 were tough times in the industry. I looked at the National Cattlemen’s Beef Association’s Quality Assurance Audit and was amazed at the inefficiencies it pointed out. Not weaning calves was costing the industry $100 per head. My dad had been weaning calves on our 20,000 acres of improved grassland for years, but he didn’t think that our customers would be interested in paying $1 per day to have their cattle straightened out before they received them. I was convinced the numbers were right, so Dad finally let me have 5,000 acres for six months to prove it to him. After that, all bets were off. He gave me the opportunity and the Schwertner Select program has been a total success since → its inception. Program cattle stay for 45 days and we guarantee anything over a 2 percent death loss. Adding value was the key.

Newest on the list of customer services is the BVD/PI testing lab recently setup at the company headquarters. (See page16)

Schwertner learned how to market cattle from long-time family friend Julius Caesar. Caesar had come to work for Eugene as a youth and became one of the best salesmen in the industry, selling thousands of cattle into the California market.

Caesar taught Schwertner to market cattle, and Schwertner has taken his lessons seriously. Today, Capital is working with other dealers and order buyers whom they trust because they need more supply.

“What we do best is sell cattle,” Schwertner said. “The industry is supply driven and we are looking for more supply. We are very selective about the people we use to buy calves for us; we’re always looking for honesty and integrity. We want to be the Wal-Mart of the industry, with one stop shopping. We have to be the one.”

The only way that will work for Schwertner is with the team he has worked so hard to put together. Most of the staff has been with the family for 20 years.

”In our business, we work seven days a week and our people have to be committed and dependable.” Schwertner also credits his wife of 31 years, Patty, for her support. Remembering his mother, Gloria, he commented that he and his father both were lucky to have the women they married.

To the future
“Long term I am bullish on the market,” Schwertner said. “I am positive about the beef industry. Times are tough right now because the drought has flooded the market, but that will only last for a three- to four-month period.

“If I was a young man, I would get into agriculture. The average age of cow-calf operators is 65, and only 1 percent of the population is going to have to feed the nation and some of the rest of the world. Somebody has to do it. So, I am positive about the cattle business as long as people are buying our product and they continue to do that.”

Schwertner does not believe that consolidation will be a true detriment to the industry. “Community banks are doing better every day in spite of the big players in that industry. Critical mass does not always work. The beef industry is different from chickens in a coop under a roof. The key is real estate because ranchers have to have real estate.”

Schwertner also believes that the thousands of small herds spread across the country will prosper and grow. Those farms have 25 head of cattle and the owners have a job in town. “Most of the people who raise cattle sell then when they have to buy feed. That has not changed from the old-time Iowa corn farmers.”