Farm majority owner Max Schmidt says the key is that everyone simply gets along with each other.
June 15, 2013
Every Friday morning, Max Schmidt rises early to prepare a big batch of scrambled eggs using two dozen eggs, cheese and locally processed pork sausage. There is fresh coffee cake or homemade rolls made by his wife, Georgia, and, of course, a fresh pot of coffee and orange juice. An extra 2 lb. of pork sausage is prepared to top it off.
It’s a meal fit for a king. But for the 70-year-old Elma, IA, pork producer, it’s his way of taking care of his family. Although the four young men crowded around the kitchen table aren’t his immediate family, they are his pork-producing family and all are partners-owners in KMAX Farms LLC.
Energized by a hearty meal, plenty of discussion and laughter, Schmidt and the young team set off to ship two loads of market hogs to an area packer.
Solid Relationship
It’s a good relationship that is built on mutual trust and respect, sharing duties and decision-making among the partners and Schmidt, says Duane Bodermann, a 20-year veteran and manager of pork production for the nursery-to-finishing operation. At age 43, he is the eldest of the employees-turned-partner group. He is in charge of the 6,000 nursery spaces scattered around a half-dozen sites.
Trent Thiele, 30, who joined the team in 2011, is manager of pork production for the 14,000 finishing spaces sited on a variety of locations near partner’s homes, where land adjoins Schmidt’s 3,600 acres of cropland. Siting was intentional to allow manure application locally, appeasing neighbors’ concerns about manure odors and tankers visible on rural roads, Schmidt says. There are eight permitted sites, all within a five-mile radius of the home farm.
Brian Haeflinger, 30, who started in 2008, manages the farm’s computer-automated feedmill, which is capable of producing up to 150 tons of feed daily. Normal operation is 70 tons of feed a day. The mill was built in 2009, when the local feedmill at Elma went out of business. Brian also helps load market hogs, power washes barns and performs other tasks as needed.
Jason Haeflinger, 30 (Brian’s twin), who started in 2005, handles daily chores at many production sites and assists where needed. Jason is also in charge of economic control, checking feeders daily. “Feed wastage is one of our biggest problems. You can’t afford to waste $300-a-ton feed,” Schmidt says.
Operation Evolution
Schmidt says all of the hogs, hog barns and land they sit on, and the feedmill are owned by KMAX Farms LLC, with shares purchased by the partners.
The seeds for development of the LLC were planted about 15 years ago, when Schmidt and Bodermann set up their first agreement. “We built this 800-sow unit together on land that Duane owned. He owned the land and I owned the barn,” Schmidt recalls. “It was based on a 10-year plan, which stipulated that in 10 years I was obligated to sell him the barn and he was obligated to buy it.”
By 2004-2005, when the transaction was to move forward, the hog market tanked and creditors indicated the deal wouldn’t cash-flow for Bodermann, Schmidt explains. So the pair “agreed to get along, because it was all we could do,” Bodermann adds.
“It was a good summer to get out of sows, which were selling for $63/cwt. Baby pigs were virtually worthless and lots of pigs were available for sale. We were buying weaned pigs for $3 [each],” Bodermann says. The sow herd — 800 sows housed inside and 450 housed outside — were all shipped to market.
About that time, Schmidt was serving as environmental committee chairman for the National Pork Board. On a committee trip to Canada, he got a firsthand look at some sow facilities with impressive productivity; few litters were less than 12-13 piglets.
Realizing that he couldn’t compete with the Canadians on sow productivity convinced him to stick to his farm’s strengths, and focus on nursery and finishing pig production.
Schmidt and his team currently buy 1,000-1,200 pigs a week from two sources on contract, one near Faribault, MN, and the other near Rockford, IA. Three-week-old pigs weighing 13 lb. are raised in half a dozen nurseries for six weeks, and then spend the next 18 weeks in the eight finishing barns. Pigs are marketed at 280-290 lb.
Some packers prefer heavy weights, Schmidt says. It also helps spread the cost of the $40-$45 weaned pigs and high-priced feed over more pounds of pork. “When you can put an extra 20 lb. on that pig, you can buy fewer weaned pigs in a year’s time and still come out with the same amount of revenue,” he adds.
Roughly two-thirds of KMAX Farms’ pigs are sold on the open market; the remaining one-third are sold on contract.