Young Farmer Cashes In On Corn With Cattle
At a mere 28 years old, Tony Schwarck jumped headfirst into a high-effort and high-risk business venture. After a decade of working with his parents and grandparents on their row-crop operation, he knew his future in farming would need to take a different path. Farmland and cash rents were sky-high in his competitive area of northern Iowa, so expanding their corn and soybean acreage to support three families was a big hill to climb.
Tony and his wife, Aarika, began researching ventures to complement their existing operation and generate new income. They had two resources during the winter months—time and corn. The couple explored several diversification options, but it was beef finishing that finally penciled out. The Riceville, Iowa, couple became farmer feeders, and in that first year, 2013, they marketed 300 beef heifers.
“We wanted to utilize our homegrown corn,” Tony says. “A young producer has time and not a lot of equity, so livestock is a great fit. We take the corn we raise, feed it to cattle and they are giving us a byproduct we can apply to our fields to help us grow better corn. It’s really added value to our acres of corn, and now we concentrate on marketing corn through cattle.”
This year, the Schwarcks are on track to market 2,500 head of cattle. They have also expanded their crop business to 1,200 acres of corn and soybeans, up from the first 160 acres Tony rented on his own in 2006.
Tony is armed with considerable management skills and sheer nerve. His ability to reimagine and build a venture from the ground up are just a few of the reasons he earned the 2019 Tomorrow’s Top Producer Horizon Award.
“Tony’s work ethic and decision-making abilities are unparalleled,” says Robert Williams, a CPA with Hogan Hanson and the Schwarcks’ long-time adviser.
Analyze. Monitor. Act. When the Schwarcks decided to become farmer feeders, they faced a big challenge: a lack of capital. They knew their plan could work. They just needed to get the bank on board.
This new venture created an opportunity to find a new lending partner. Their lender, Eric Paulson, helped them restructure debt and set them up on a borrowing base. Each month, the Schwarcks and Paulson analyze that borrowing base.
“This monthly review has made me a better manager, as it allows me to constantly know our financial numbers,” Tony says. “Every month Eric is looking at our numbers. If we have a good month, he points out what we did correctly. If we have an off month, we can identify problems and potential problems a lot quicker.”
“Tony and Aarika have utilized timely financial analysis toward managing their growth and improving efficiencies,” says Paulson, senior agricultural loan officer with Wells Fargo in Mason City, Iowa. “They are constantly asking for ways to improve both day-to-day and strategic operations.”
Aarika has taken over the farm’s record keeping and accounting. She created two accounts, one for cattle and one for grain, so they could properly assess financial decisions.
Numbers were always the basis of decisions for the Schwarck family, starting with Tony’s grandfather, Chris Schwarck and father, Dan Schwarck. “When we had meetings, even when I was young, the numbers were discussed,” Tony says.
This process of sharing financials with successors is key in making successful management transitions, says Dick Wittman, a family business consultant and Idaho farmer.
“Doing so exposes your successor to your business culture,” Wittman says. “Plus, someone wanting to join the operation needs to know the scale and scope of the business.”
“Feeding cattle has made me a better farmer.”
Comfortable Cows. Strict financial analysis led the Schwarcks to expand their finishing operation in 2017. They built a state-of-the-art cattle facility that houses 600 head. The building’s monoslope pitched roof and curtains allow sunlight and cool air in but keep snow and rain out.
“We can can’t completely control the environment, but we can really help it,” Tony says.
The Schwarck team uses a cloud-based software program, Performance Beef Livestock Analytics, to track data such as the cattle’s weights, feed ingredients and costs. Every day the cattle’s rations are automatically recorded using an iPad linked with the scale on the feed truck.
“This lets us track performance and weight,” Tony says. “We keep track of all costs, including freight, vaccines and vet expenses, death loss and any money we have invested in a hedge account. This allows us to be current on breakevens and billing.”
Typically, the feeder calves arrive at Schwarck Farms straight from a breeding ranch and weigh 550 lb. to 650 lb. Around 220 days later, they are ready to be sold, weighing around 1,400 lb.
The Schwarcks’ row-crop operation provides 60% of the corn they feed to the cows. The balance of their corn production is sold to local ethanol plants, from which they buy distillers’ grain.
To reduce costs, the Schwarcks traded their hopper trailer for a belt trailer so they can haul corn to the ethanol plant and reload it with distillers’ grain for the feed yard. “This alone saves our operation roughly $800 per week,” he says.
This constant eye on costs helps Tony smartly buy feeder cattle. “That’s one thing I have to work on,” he says. “If the numbers don’t work—pass. They sell feeder cattle every day of the year.”
Constantly, Tony sees how his experience as a farmer feeder improves his crop operation and vice versa. “Raising a market steer is the same philosophy as growing an acre of corn,” he says. “It’s the little things that count—that’s what separates big yields from small yields. Feeding cattle has made me a better farmer.”
For instance, having interests on both the supply and demand sides of the marketing ledger provides perspective. “Farmers are sitting on corn waiting for a better market, and we are moving that corn all the time and catching profit on it with the cattle,” Tony says.
For grain marketing, Tony develops what he calls a “strike zone” for prices. “When the market rises over our cost of production, I start making small sales. As the market continues to rise, I continue to sell until we are 60% sold,” he says.
Time To Delegate. As Tony has shifted into his leadership role, he’s assessed how he spends his time. “Being a young producer, I felt I needed to be the one who planted, fed the cattle, sprayed, etc.,” he says. “Now I know employees place a stronger bond with their jobs when they realize they have purpose and take pride in their work.”
Beyond family members, Tony employs two full-time and two part-time team members. His goal is to align employee strengths with daily roles and to provide a professional environment.
Tony says he’s lucky to have both his father and grandfather as mentors because they fall on two ends of the spectrum when it comes to risk. “I’ve learned from my dad to not bite off more than you can chew, and I’ve learned from my grandpa an opportunity doesn’t present itself very often, so be ready,” Tony says.
Looking forward, Tony is focused on fine-tuning his cost of production and maximizing profit.
“We’re margin operators in every aspect of our operation—whether that’s growing an acre of corn or producing a market-ready calf. The margin is thin, so we want to maximize every dollar we spend.”
Watch a video about Tony Schwarck’s operation and learn more about the Tomorrow’s Top Producer Horizon Award at bit.ly/Tony-Schwarck
A Snapshot of Schwarck Farms
A Family Affair: Tony Schwarck is a fourth-generation farmer in Riceville, Iowa. In 2004, he joined his family farm, which includes his parents, Dan and Laurie Schwarck, and grandparents, Chris and Ann Schwarck. “It’s a father’s dream to have your son follow in your footsteps,” Dan says. Tony and his wife, Aarika have a daughter, Annalee, 2.
Crop Farming: Tony’s crop operation includes 1,200 acres of corn and soybeans, while the family’s combined operation is 2,600 acres. The Schwarcks analyze soil and yield maps to set yield goals. Last year, they overhauled their 16-row corn planter with high-speed planting capabilities. “It was almost like getting a bigger planter since we can cover more acres in day,” Tony says.
Beef Finishing: In 2013, Tony and Aarika started a beef finishing operation. In the first year, the couple marketed 300 beef heifers. In 2019, they will market 2,500 head of cattle. Nearly all the cattle they finish are Black Angus, and they use the Iowa Cattle Marketing Group to negotiate the best price for fat cattle.
Leadership: The Schwarcks support many local organizations and causes, such as the Riceville Fire Department, Riceville First Foundation, Wapsie Great Western Bike Trail and the Riceville FFA Chapter. They are also members of the Iowa Cattlemen’s Association.
Photos: Pat Lichty, Top Producer