Volume 1 gives you an inside look at Chad Groves, Beau Peterson, Brad Freking, Greg Howard, John Schwartz, Matt England, and Cristian Gutiérrez Jaramis—seven leaders helping shape the pork industry.
VOLUME 1
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CEOS OF THE INDUSTRY
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WHY WE’RE HERE Feeding a growing world population with safe, nutritious, and affordable pork is the common factor among the leaders you will meet through these pages. They do what is right daily for the pigs, for the people in their care, and for the environment to sustain our industry for generations more. Here you’ll find executives who originated sow farms, helped startup pork processing firms find their footing, are on the forefront of pig health research, are carrying on a family tradition, and more. Not all of them were born into pork production; in fact, a number of our industry’s successful leaders came to it from other sectors of farming, and others had no early background or formal education in agriculture at all!
The two things the leaders in these pages all have in common are years of experience in the industry; and a strong outlook on the future of their organizations. We’d like them to inspire you with stories of finding their place in swine agriculture and pushing our industry for higher quality and better practices.
We are proud to present CEOs of the Industry .
Jim Eadie Founder & Publisher, Swine Web
Cristian Gutiérrez Jaramis Vice President, Swine Franchise, Ceva Santé Animale
FEATURING:
CHAD GROVES p.4
SEABOARD FOODS
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BEAU PETERSON p.12
CARTHAGE VETERINARY SERVICE
GREG HOWARD p.20
CHRISTENSEN FARMS
JOHN SCHWARTZ p.28
SCHWARTZ FARMS
MATT ENGLAND p.36
TRIUMPH FOODS
REFLECTIONS ON VOLUME 1 EPILOGUE p.45
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ABOUT SEABOARD: •
Connected system for raising high-quality pigs 5-year focus on growing value- added chub, breakfast, & dinner sausage Acquired Daily’s premium bacon company in 2005 3 processing plants & 3 bacon divisions, and Mexico ham- boning plant
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CHAD GROVES PORK INDUSTRY CONVERT
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FAST FACTS: • 336,000 sows •
5,500+ employees across 5 states Leading U.S. exporter of pork; major customers China, Japan, Korea, and Mexico
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ABOUT CHAD: •
Intended to return to family food business Started career in Cargill egg division
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2021 joined Seaboard Foods Named President & CEO in 2024
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INFLUENTIAL INSIGHTS
HOW I STARTED IN PORK As a Cargill sales rep for eggs, beef, pork, turkey, dressing, sauces, oils, and salt (whew!), Chad found beef and pork dominated his sales. After a brief sideline into seafood and coffee, he was recruited to Seaboard to head up sales in 2021 by its recently retired CEO, Peter Brown. HOW I SEE LEADERSHIP Chad is still making the transition from head of sales to company CEO while replacing a mentor and friend. He prefers plan stability that doesn’t react to day-to-day market hiccups but takes a longer view of growth. INDUSTRY TRENDS OF NOTE The industry is still recovering from what Chad last year called “the worst 18 months in the history of pork” from high grain and other input costs. But 2023 was also Daily’s best year on record since 1893, proving value-added products are a great natural hedge against leaner years in fresh pork. WATCH CEOS OF THE INDUSTRY
OUR GROWTH PHILOSOPHY Seaboard’s innovation engineering is simple: fail fast, fail cheap, and fail forward. Get a new product out in front of consumers as quickly as possible in order to receive feedback — and solicit feedback from retail distributors and foodservice too. FACING NEW DEVELOPMENTS Seaboard’s Prairie Fresh retail brand uses packaging that seeks to resonate with younger buyers, as well as unique flavor profiles that so far include jalapeno bacon-flavored loin filet, Hawaiian sea salt tenderloin, and Nashville-hot pork products.
VISIT SEABOARD FOODS ONLINE
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actually the guy who hired me out of college, Chris Mulder — who’s actually the CEO of Leidy’s in Philadelphia, just north of Philadelphia now — came to me and said,“Hey, I’m leaving. I’m going to run sales for a company called High Liner Foods.” High Liner is the largest importer and manufacturer of seafood in the country, based out of Portsmouth, New Hampshire. And he asked me to come along with him for that ride and join as head of food service sales. So I made that shift. But that shift also gave me a very important connection. Chris was brought over by a guy by the name of Peter Brown. Peter is our current CEO, and at the time he was COO of High Liner Foods. I got to know Peter there. Worked very closely with him. I did not know him at Cargill. It’s 120,000 employees, so you don’t know everybody, but got quite a bit of exposure to Peter during that time. Peter then leaves to go work for Butterball, and Seaboard owns 52% of the non-controlling interest of Butterball, and so that’s when he joined the Seaboard family. I went to work for a coffee company. So this was really my first step outside of food service and step outside of protein, I went to work for a company called Trilliant Food and Nutrition out of Appleton, Wisconsin, and most people don’t know that name, but they’re the second largest K-cup manufacturer to Keurig, and so got quite a bit of exposure. It’s really not a whole lot different from protein. You know, you’re moving raw material all over the world into Appleton in order to create those coffee K-cups. And I knew it would be a short career in coffee because the owner was north of 70 years old, wanted to sell the business. And so I knew going into it, the focus was on getting the business sold. And after about a year, we were right there at the finish line with an acquisition in place, and my phone rang, and it was Peter Brown, and Peter had become CEO of Seaboard Foods, and at the time, was looking for a head of sales. And so that’s how I made the leap back into protein, here at Seaboard Foods. Well, it’s quite a journey. Chad, now when we look at the future, what’s your vision of the Seaboard Foods pork segment? When I look at Seaboard Foods, we’ve got a 27-year-old history, and that history is focused on our what we call the connected system.
AN INTERVIEW WITH CHAD GROVES
Congratulations on a new president and CEO appointment at Seaboard’s pork segment. Chad, can you share with the audience a bit about your background before this role? Yeah, absolutely. I grew up in a family that was dedicated to food. My dad was a sugar broker. Actually started his own company and bought and sold sugar from all over the world, and moved it into retail and other avenues here in the U.S. And so I went to school knowing that I wanted to be in food, and likely would go work for a couple years for someone, and then come back and work for my dad. And my brother at the time was running logistics for my dad, and I knew I would be the sales guy for them. So I went to Purdue University, studied selling and sales management there, and took my first job at Cargill, actually within their egg division at the time, known as Sunny Fresh Foods. That was really my first taste of the protein segment. The only other piece came, my dad also owned a butcher shop in our hometown, so I got experience working with the butchers. Had no idea that that experience would come back and be extremely beneficial in my life, but I grew up going to college, coming back, working holidays, things like that. When we got a few years toward the end of my graduation, and after I joined Cargill, my dad actually sold the business. There was quite a bit of consolidation down. And so that’s where my job at Cargill, thinking it would be a shorter stint, became a career for me. So I spent close to 10 years at Cargill. And a few years into my employment there, they actually consolidated down the sales teams. So I went from just representing eggs to representing beef, pork, turkey, dressing, sauces, oils, eggs and salt. I was moved throughout several different territories, but at the time, running the Midwest for Cargill and really going out to Seattle and Northern California, it became the largest protein segment for Cargill. So I got quite a bit of experience in the beef and pork segment, and really worked my way up through Cargill. And one day I was in my office, and the President of Cargill Food Service,
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WE’LL NEVER BE THE BIGGEST — THAT’LL NEVER BE A STATEMENT YOU’LL HEAR OUT OF OUR GROUP — BUT WE WANT TO BE THE BEST. AND WE FOCUS AND WE WAKE UP EVERY DAY TO BRING EXCELLENCE TO THE TABLE.
The connected system focuses on raising the best animals in the industry with the best genetics and feed programs to produce a higher quality product. And then from there, we’ve matured over that 27-year history into an enterprise with three processing plants, three bacon divisions, and then a hamboning operation down in Reynosa, Mexico. So I look at our organization, and we’ll never be the biggest — that’ll never be a statement you’ll hear out of our group — but we want to be the best, and we focus and we wake up every day to bring excellence to the table. When you look at that, we’ve got a 20-year runway ahead of us. So Seaboard has owned Daily’s Meats since 2007. Daily’s is a business, a bacon business, that really started in food service, and has a 130-year-old history processing meats and bacon into food service, but we only launched into retail three years ago. So if I were to look at the future of Seaboard Foods, that 20- year run that hopefully I will be able to lead, we’ll be focused on growing and expanding our value-added business. So, growing the Daily’s Meats line both into retail for bacon. We only launched retail bacon three years ago. Since that time, we’ve actually been the fastest-growing bacon brand but now we’ll look to parlay that into other categories, and so some of the categories, we’ve built a five-year plan. As far as the categories we plan to enter, we’re looking at and expanding into chub sausage. We dropped in capabilities within our Guymon, Oklahoma, facility to be able to better serve our food service and retail customers and move to more retail focused packaging. So think one-pound chubs, but then also grow and expand in the cooked and raw breakfast and dinner sausage categories. That’s an area we’ve really never played in.
But when you look at our share of the harvest within the country, our expectation is to get there both on the value-added side in addition to the live animal side. So continuing to grow in value added in the lines of chubs, cooked breakfast and dinner sausage, charcuterie, and then other cooked and prepared pork categories — that’s really the focus for our company and our brands moving forward. With your five-year plan, let’s look back at the last five years of challenges that may have helped define that plan, or anything that you’ve learned. Absolutely, the industry is coming off the worst 18 months in the history of pork production. We’re coming off COVID, where you had really strong protein demand, and you’re seeing that sink. At the same time we had extremely high grain and input costs, as well as labor costs coming into our business, which made, you know, really this past year, one of the worst years on record for our industry. Now, if you were to look at that, and you look at our Daily’s bacon business for 2023, they actually had the best year in their 130-year history. So if you look at the value-added business, it acts as a natural hedge to the raw and fresh pork side. And so it’s given us an incentive to move into that space and create a natural hedge for each other. So as the fresh pork side suffers, you have the value- added side that can pick up the other side of the business really. I would say that while we created that plan prior to this past year, this past year has really been the start of executing that plan, it’s only further driven the need for Seaboard to be more into the value-added categories.
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You’ve touched on some of these things, Chad, but leveraging your expertise with your extensive experience in global sales marketing and innovation, are there any additional ways you plan on driving the growth with Seaboard Foods pork segment? Absolutely. If you look at our brands, we look to drive meaningful uniqueness in any of the categories that we’re in. Now, being a board member on the National Pork Board, they’ve done extensive research to show that younger consumers are not gravitating toward the fresh pork category. They over-index on value add in pork, bacon, ham, things like that, but they shy away from the fresh pork side of our business. And so we must win and bring those consumers back to the category. And when you look at Prairie Fresh, which is our flagship brand on the fresh pork side, as well as seasoned and other items, as well as Daily’s, we really focus on driving new customers to the category. And so we do that by one, packaging, right, making sure the packaging really resonates with those younger consumers. But then two, flavor profiles. So Boomers historically have really over-indexed within the value-added categories, or chub sausage, or some of those other categories that we plan to enter; we must attract a younger consumer in order to have a compelling story for the retailers and food service operators that we go out and work with. So when you look at the innovation and the experience I’ve had in the past, how do we bring those younger consumers to the category? So if you look at some of our recent launches, we did launch a jalapeno bacon-flavored loin filet, a Hawaiian sea salt tenderloin, and then right now, we’re rolling out a Nashville hot product that we’ve gotten great consumer feedback on. Again, focusing on bringing those younger consumers to the category, because a garlic-and-herb flavor profile isn’t going to do it for those younger consumers. We’re also doing the same on the bacon side. We launched a steak-cut bacon that has really driven quite a bit of volume and growth for the Daily’s brand within retail, and then later this year, we’re launching a seasoned product that’s really never been seen before in the category: that’s a hot honey and a spicy maple. So really bringing that unique differentiation to the category in order to have a compelling story, both for the retailer and food service operators, as well as consumers.
The sky’s the limit. You guys continue to innovate, drive new activity. Now, when we look at the industry dynamics, I think we can agree the industry is evolving. There’s new consumer preferences, tech advances. How do you plan on navigating these dynamics and position Seaboard as a continued leader in the industry? We use an innovation process within our business known as innovation engineering, and there’s a few key steps to that — it’s failing fast, failing cheap and failing forward, right? Get the product out in front of consumers as early as possible in order to get that consumer feedback. What I found in some big CPG companies is that projects get too big to fail, and they get too big to fail prior to even getting consumer feedback. And so we bring consumers in really early in order to get that feedback and really get that information back in and look to pivot, change flavor profiles, packaging, really early on, so that we know that we’re headed down the right path. You know, my boss historically has used a quote that we use all the time, which is that if you fail to change, you’ll wake up in a world no longer fit to succeed. And so constantly bringing in that consumer and retail feedback, looking to drive new innovations within — and I can speak to some of them here in a minute. New innovation within our categories is really a focus for us. You know, we’ve got a proprietary technology at each of our three plants that judges the inner muscular fat score electronically for our animals, and we rail off our top single-digit percentage into what we call our Prairie Fresh USA Prime Program. That’s been one of the fastest growing sub-brands within our category, and it’s really focused on consumers that want a higher quality and more consistent eating experience. And so that’s what Prairie Fresh USA Prime brings to the table. We go into retailers, completely brand out the case, give them exclusivity within the marketplace. And we’ve seen some incredible results with the retailers who partnered with us early on, on that journey. About sustainability, Chad, I know that’s a big topic in the industry and corporate America. What strategies specifically for Seaboard environmentally, and just overall, do you have for sustainability?
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It’s a major focus for us as a publicly traded company. There’s new regulations coming at us that will require additional disclosures and then further mitigating some of our water and resource uses, but it’s been a major focus for Seaboard Foods over our 27-year history. So we use quite a bit of water, both at the farms to feed our animals, as well as within the plants. And so we’ve really focused on three phases, being better for the environment and Earth, being better for our employees and better for our business. And when those three things come together, right? It’s great to reduce our water usage and electric usage, but when we do that, you can see the impact that you’re making within our business. So we’ve had a major focus at all three of our facilities, as well as at our farms, in order to drive down the water and electric usage. In addition to that, we’ve invested hundreds of millions of dollars to cover close to 80 lagoons throughout Kansas, Oklahoma, and Texas that are really on the leading edge of technology for renewable natural gas capture at our farms. And you look at that, and yes, there is a financial reason to do that, but it’s also better for our environment. You know, it’s capturing that gas that otherwise would have made it into the atmosphere. We’re able to capture it, put it on the pipelines throughout Texas, Oklahoma and Kansas, and then sell the credits in California or into Europe as well. So those are some of the big focuses for our business around water, electric usage, and then the renewable natural gas production that we have down in our growing region as well. What about leadership challenges, Chad? Are there some key challenges that you faced or you anticipate facing, and as a new leader at Seaboard, how do you plan to address them? Is there a good example? The toughest challenge any leader will ever make in their business is becoming the leader of their peers. I’m moving from the head of sales to the CEO role, right? So I go from a partner to the peers within my team to lead that group. So I expect that to be my biggest challenge moving forward. I’m a very different leader than what Peter is. Peter turned 62 this year, and I just turned 40 years old. So very different dynamic in terms of how I lead, the aggressiveness that I show, versus Peter, you know — we’re different leaders, right? And so the whole organization will have to adjust.
PEOPLE ARE WILLING TO PUT OUT $80 FOR A STEAK (AT A RESTAURANT) BECAUSE THEY KNOW THEY ARE GOING TO GET A QUALITY EATING EXPERIENCE. THE BEEF INDUSTRY HAS DONE A GREAT JOB OF GIVING FINANCIAL INCENTIVE BACK TO THE FARMERS TO USE BETTER GENETICS, BETTER FEED PROGRAMS, IN ORDER TO PRODUCE A BETTER EATING EXPERIENCE. On the “why” behind Seaboard’s Prairie Fresh USA Prime Pork program that selects high-quality pigs for superior cuts
And I’m not saying that’s a good or bad thing, either, but it’s going to require some change within the organization. You know, we have built an extremely strong leadership team here at Seaboard. I look back to my time when I started here, to today, there’s one person on that leadership team that was there on the team when Peter came in.
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Quite a bit of change has rippled throughout our organization. But we also believe in stability. When we look at Seaboard as a publicly traded company, Seaboard Corporation, we maintain a relative balance and don’t react to day-to-day market interruptions or issues. We always take a long-term view. So the number one challenge for me is talent. If I were to go back three years ago, labor was a major, major issue for us — we could not get labor in the plants, and that really hurt what we were able to produce and convert within our plants. The last three months or so, we’ve been at full labor, and I didn’t think we would ever get to that point, but now the focus is on, how do we keep and maintain the best talent for our business and the best pork knowledge within the industry? Like I said earlier, we don’t ever plan to be the biggest, but we plan to out-maneuver and out-focus with our customers and really drive results for our retail and food service partners as well as our export partners. That’s a great way to see things, Chad. Now moving on to opportunities. What opportunities in the pork industry as a whole can Seaboard capitalize on to drive growth and innovation? As I mentioned earlier, the biggest opportunity for us is growing into those categories we have not played in before, expanding our brands in the categories that we really have not been in, the ham sausage and even the chub sausage side. So that’s going to be the focus going forward. The biggest industry challenge, though, that I see is that we don’t give an incentive for farmers to grow a higher quality pig. And when I say higher quality, I’m talking marbling and intramuscular fat, giving consumers a better eating experience. I’ll tell a quick story here. So we were down at an operations conference in Atlanta that’s held every year, and I was out with our team of plant leaders, and we went to a nice steak house. The vendor took us out, and as we’re going around the table, you know what’s happened with beef prices, right? And some of those menu prices are approaching $80 for a steak. I look at our operations guys, and each one is ordering, you know, a filet, a strip or ribeye, it comes to me and I order the double bone-in pork chop, right? I’ve got to stay true to the industry. And some of the operations guys look at me and say, yeah, it’s a crapshoot. It could be really good, or it could be really inconsistent. And that’s the problem for me, in pork. The Pork Board and
WE’VE REALLY FOCUSED ON THREE PHASES, BEING BETTER FOR THE ENVIRONMENT AND EARTH, BEING BETTER FOR OUR EMPLOYEES, AND BETTER FOR OUR BUSINESS.
Seaboard Foods, we can all do whatever we can in order to get consumers to try the category, but if they don’t have a great eating experience, that money and that effort and energy to get them to the category is all for naught because they won’t come back. And so when I look at beef, as prices have driven through the roof, people are willing to put out $80 for a steak because they know they’re going to get a quality eating experience. Back to my days at Cargill, I look back and Choice beef was maybe 50% of the mix. You had low single digits for Prime, and it’s completely changed. I mean, Prime is approaching 10% of the population, and Choice beef is upwards of 80%.
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You really can’t even find Select beef on the market anymore. And so the beef industry has done a great job of giving financial incentive back to the farmers to use better genetic programs in order to produce a better eating experience. If we stay stagnant, we don’t give farmers an incentive to grow a better animal, we’re always going to have that inconsistency. We’re always going to have doubts in the consumer’s mind. So how do we shift as an industry? You know, I referenced the Prime Program, Prairie Fresh USA Prime Program that we have, where we’re scanning animals and pulling out a single-digit of our population. So we’re where beef was on that journey originally. Now we’re looking at it going, “Okay, how do we expand that? How do we get from single digits to 10% to 15%? How do we continue on that journey without lowering our standards to produce better quality animals that our customers expect?” It’s essential that every time somebody orders pork, they know what they’re going to get and they’re excited about ordering it. Now, what about innovation and technology? So we’ll get you out of here on this. Chad, are there any tech initiatives or innovations that you’re excited about at Seaboard? Yeah. So we’ve had a pretty significant focus at each one of our plants. You know, when you look at all three of our plants, one is 27 years old, but the rest of them are some of the newest in the industry. And the advantage that we have of having some of the newest in the industry plants is we have space to put in technology. And so we’ve been on some pretty significant journeys through each one of our three plants. But I’ll reference Guymon, Oklahoma. We recently put in a chine- boning loin operation that’s fully automated and completely changed the setup that we have down in that plant. Now that install is not without challenges, right? Anytime you put technology in, you’re going to have a dip in productivity, a dip in yields. But because Guymon and the technical expertise that we have in that region and a strong plant leader, we’ve been able to come out of it, and we were the first ones within the U.S. to install that technology. Now we’ll look to put that technology in the other three plants. If I look at the Triumph St. Joe facility, they were one of the first to put in the back-fitting technology. So we tested it there. Then we’ll swap it into Guymon and vice versa.
So every day, we’re looking at two factors, right? One is labor. I spoke about labor getting more expensive.
So what technology can we put in, in order to reduce labor but more importantly, what technology can we put in to make labor even easier? If you look at that back-fitting technology, if you look at chine-boning technology, historically speaking, the hardest job in that plant is neckbone-lifting. When you look at the technology now, it’s become one of the easiest jobs, because everything is marked and scored, and it makes lifting that neckbone even easier. So constantly looking at that new technology, you know, when I look at Triumph Foods, and Seaboard Triumph Foods, we want to be on the cutting edge, and because we have the space in the plant, have the newest, latest, greatest technology in our plants to start. That’s been the biggest focus for us, as I mentioned previously; it’s also our Prairie Fresh USA Prime Program, bringing that technology. And I referenced earlier how it has not been an incentive for farmers to produce a better animal. How do we leverage technology as the industry as a whole? I don’t think that the solution to that issue is going out and putting more USDA inspectors in our plants in order to grade animals like we do in beef. There’s great technology that exists. So I would really look to NPPC and some of our USDA leaders to say, how do we do it differently than beef? And potentially better for the long run, because I know USDA is having trouble getting inspectors in. So how do we take the technology that’s in place for grading and create that incentive for the industry?
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ABOUT CARTHAGE: •
Began in 1980 as small vet practice; now multiple divisions including Nutrition, Supply, & more Focused on science-based, practical help that encompasses all steps of pig production Future focus on Data Analytics & Predictive Analytics
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BEAU PETERSON INTEGRATIVE SOLUTIONS SPECIALIST
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Conference for 35 years to educate producers
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150+ years combined experience among veterinarians Consultant to independent producers throughout the Americas and Asia
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189,000+ sows
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Grew up on small grain & livestock farm Originally went to college to be a vet Started with Carthage in 2019 as GM
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INFLUENTIAL INSIGHTS HOW I STARTED IN PORK
OUR GROWTH PHILOSOPHY Optimizing pig production systems means considering multiple components for each operation — not just feed or housing or flow or economics, but how they all interact and cog together. Beau refers to this as the “biology of systems” that Carthage’s multiple divisions work together to tackle. FACING NEW DEVELOPMENTS Data analytics is something in which Carthage has heavily invested, long viewing it as the “next big disruptor” in swine. Crunching multiple data streams will inform predictive analytics for its experts to work from in helping each producer.
Grew up on a small grain and livestock farm in northwestern Illinois, then went to the University of Illinois to become a veterinarian. Along the way, Beau decided to instead go into swine research, earned his Ph.D., and worked at The Maschhoffs for nearly 11 years before going to Carthage. HOW I SEE LEADERSHIP Describes himself as a servant-leader, un-flashy and transparent about business challenges. He has high expectations, but he wants employees to feel inspired and says giving them ownership in decision-making means “they will go further and faster than you thought possible.” INDUSTRY TRENDS OF NOTE Beau notes the most significant recent swine industry trend has been a significant lack of profitability, as well as disease pressure, particularly PRRS challenges. Biosecurity measures continually evolve to minimize the impact of disease in the barn. WATCH CEOS OF THE INDUSTRY
VISIT CARTHAGE ONLINE
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So we put a lot of focus on training; really working with those people to make sure that they’re learning the ropes to begin with, but then getting on a development path so that they can see more of a future in the business. When fast food restaurants are paying $15 an hour, it is going to drive a lot of inflation in our labor costs. And so more emphasis on the team members and development is going to continue to be a big focus of ours as we move forward with that. Biosecurity has continued to have to rapidly adapt. As you look back over the last two decades of pig production, what we do today for biosecurity is an entirely different world than where we were just 20 years ago. And it continues to increase in the speed of that transformation. But even just standard biosecurity practices, and again, back to training the people and getting them to execute them every day, every time is extremely important. And then eradication in what you do when you do have the disease, that has also shifted significantly in the last five to seven years, especially when it comes to PRRS. We have a team of 13 veterinarians and a large-scale research team. A lot of those resources go towards continuing to evolve and adapt our protocols and our approaches to disease eradication, to hopefully speed it up and, not just speed up the eradication, but minimize the effects while the disease is present on the farm. So those are, I mean, there’s a lot of other things we could talk about, but the profitability issue in the industry over the past couple of years is definitely top of mind, I think, for everyone in the industry, including us. And we felt that along with our clients, we have to get better every single day, and make sure that our clients can weather the storm and come out the backside with opportunities to grow.
AN INTERVIEW WITH BEAU PETERSON
Let’s get right into it with general industry trends. Over the past two years, what significant trends have you observed in the swine industry and how has Carthage adapted to support its clients through these changes? The last two years have been interesting to say the least, I think, for the pig industry. I think stating the obvious, but the most significant, trend we’ve seen is just a significant lack of profitability. As we look at the reasons for it, they’re very wide-ranging and complex at times. We’ve seen some pretty significant inflation in feed costs. We’ve seen really significant inflation in labor costs and labor costs end up impacting a lot of things that go into the overall cost of production for a pig. And I think in the last two years, and really it’s been a longer period than that, but the disease pressure in the U.S. and just how certain diseases, particularly PRRS, have changed, has all come together to create a lot of pretty significant headwinds for producers. Our approach to that is we try to adapt quickly and try to anticipate. So when you think about the cost side of the equation, we’ve put a lot of emphasis making sure nutrition programs, that either we are developing internally for our clients or we’re working with a client who uses another nutritionist, fit their system and overall goals. There’s no such thing as one size fits all in any of these labor costs. Labor’s always been a tough one for the industry, obviously. But I think as you know, as you see the cost of labor increase it becomes more and more important to make sure that you are getting the right people into the roles and on the farm, and then retaining them so that your investment in that development doesn’t get wasted. The Carthage System has done a nice job of creating a pipeline of people from Mexico that come in on the TN visa program. And what we’ve seen internally and with a lot of our clients who started to utilize the TN Visa program is that it really is a differentiated labor supply. The people that come on that visa are highly educated. They’re highly motivated. And with that comes a different level of responsibility for development and what you have to do to retain them.
We’ve got a few hot topic questions. Let’s backtrack briefly, you’re the CEO at Carthage. How did you get here? I grew up in northwestern Illinois on a small farm, grain and livestock. I went to the University of Illinois and actually wanted to be a veterinarian my freshman year of college. And about my junior year, I met a guy named Mike Ellis, who was a professor in animal science. He started to talk to me about graduate school. And it turns out that they would actually pay you to go to graduate school. That sounded like a pretty good deal and got me listening.
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The more I worked with Dr. Ellis and his graduate students, the more I fell in love with pig research. And Dr. Ellis’s program is very applied. So I went on to graduate school, did my master’s and Ph.D. with Mike Ellis and then joined The Maschhoffs right out of school, and did a variety of things in the 11 years that I was there. I led research and development, I was involved in supply chain management, and then had a general manager role, where I was responsible for about 60,000 sows. So that was kind of my pre-Carthage career and upbringing, but all very applied, and really got to work across multiple or really every area of the swine production business. And so the opportunity came up to come to Carthage, and it was just an opportunity to work with many producers, which is, again, what we pride ourselves on. We work with every segment of the industry in some way, shape or form. And the ability to take innovation and new technology and new approaches out to small producers and large producers alike was a very appealing concept to me. And I’ve been here for almost exactly five years, and enjoyed every day of it. That’s fascinating. Everybody’s journey is so different, but just hearing it, I think it makes us feel connected more with people in the industry. Now, back to the Carthage cost control and profitability. Beau, how does Carthage approach cost control while optimizing profitability? And can you share some specific strategies or innovations that have proven effective? It’s optimization of a pig production system. I’ve spent my whole career trying to master that. It’s difficult because it changes constantly. When we think about it, we think about optimizing profitability. Cost control is one component of that.
If you’re truly going to optimize a pig production system, you have to understand all of the components of the system. It is not just the health of your pigs. It’s not just your nutrition program. It’s not the genetics you use, it’s not the types of barns and facilities you have. It’s really how those things all interact together. We have a large research and development component within the business. That team is about 17 people today. And a lot of what they do is trying to continually further our understanding of the biology and all of those interactions of the different components of a pig production system. And so when you think about approaches and things that we do, I mean, that is a big part of it. We’re continually trying to further our understanding of biology and then economics has to be applied to that as well. It’s biology and an economic model that has to be mashed together. And I think that’s something that we do very well here at Carthage. Our name is Carthage Veterinary Service, but I like to say we’re a lot more than just a veterinary clinic. We have nutritionists on staff. We have people who focus on genetic programs. We have very good practical production people throughout the company. And, we really try to connect the dots in the context of the client that we’re working with, right? Because client A might have a particular equation that optimizes their profitability, but client B could be completely different. We have to constantly adapt to that. But when you understand the parts and the pieces, you can put it back together in the context of the client. Some of the nutrition strategies we use are good examples of that. We have clients of our nutrition program that feed corn, soy diets. They don’t have a good source of alternative ingredients, and so they largely feed corn, soy.
WE’VE FELT THAT ALONG WITH OUR CLIENTS, AND WE HAVE TO GET BETTER EVERY SINGLE DAY AND MAKE SURE THAT OUR CLIENTS CAN WEATHER THE STORM AND COME OUT THE BACK SIDE WITH OPPORTUNITIES TO GROW. On narrowing profit margins the past few years
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We have some clients who feed an incredible amount of byproducts from bakery meals to dog food — you name it. Whatever they can essentially get their hands on, they find a way to feed it. And so being able to, again, understand the economics, apply the biology of those things within a nutrition program and the cost of the ingredients that they’re pulling in, we customize it to those producers. We call our nutrition prescribed nutrition, right? Because it’s got to fit within the system. It’s not just the Carthage program, it’s our clients’ program. So tons of opportunities for those things. And then how does that lead into the importance of data? Data analytics is something that we have invested very heavily in here over the last five years at Carthage Veterinary Service. The industry has seen very few disruptive technologies over the years — artificial insemination, ractopamine, wean-to-finish production being a few examples — but it has been quite some time since we observed a new one. I truly believe that predictive and prescriptive analytics can be the next big disruptive technology for the industry. You can talk about artificial insemination being a truly disruptive technology, right? I mean, things like that have come along, and they’re usually few and far between. And I personally believe that data analytics, especially as we get into predictive and prescriptive analytics, is poised to be the next big disruptor in the industry. The industry is more at a point of descriptive analysis. What happened last month, what happened last week if we were lucky, we knew what happened yesterday, but typically, we were usually a week late. We’ve really tried to go to the next step of creating more of a business intelligence platform. We use Microsoft’s Power BI to build our analytics package, but with the adoption of handheld devices on the farm and being able to digitally input data instead of writing it on a piece of paper. Sending it to the office, the access to the data has become much more real-time. And so we’ve been able to utilize Power BI and that on-farm hardware, to really improve some of the real-time data reporting. So we have some data reports that they update four times a day. And so they’re as close to real-time as we’ve seen. With Power BI and just the capabilities of the visualization components of it, you can really create some true business intelligence reports that connect dots that don’t typically get connected in like the old KPI reports.
Recently we actually just hired a data scientist who just finished his Ph.D. in data science at the University of Missouri. His name’s Dr. Caleb Grohmann. We’re continuing to make those types of investments, so that our next steps are to get into the predictive analytics space. Our approach to it is that it has to be very practical. We can’t create black box algorithms that you really only create information that executive level leaders in a pig production business, can use. We have to create predictive algorithms that are going to assist decision-making at the slat level. That’s really what our current focus is moving towards so we can integrate those things into the programs and the data collection hardware that we already have on the farm, so we can use predictive analytics to assist a decision in real time at the farm, at the pig. So it’s extremely important. It’s always been important. It has just always been, we’ve always been so far behind on when we’ve actually been able to see the data and know what happened. But with the advances in technology, quite frankly, the expansion of the talent pool in data science, I think it’s a wide open frontier, and it’s one that we intend to participate in and, and continue to bring very innovative solutions to our clients. So Carthage emphasizes the holistic approach to swine production rather than self-optimizing individual parts. How do you ensure that all aspects of the production system work together to achieve optimal results? The first answer to that, Jim, is you make sure people are communicating. I think throughout my career, I’ve witnessed, and I’ve done it myself, sub-optimization within my particular area of expertise. So, you know, there’s the old saying that everything looks like a nail to a hammer, right? And so we at Carthage try to view ourselves as more of a shop, right, that has all the tools in it. And we bring the shop when we come to the farm. It’s human nature to an extent that if I’m a nutritionist, I’m going to think first and foremost about nutrition. If I’m a veterinarian, I usually think first and foremost about health. I’m a production management person, I think about people and executing processes. And the reality is all those things work in concert.
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It’s part of our core values that the solutions we provide to our clients have to be grounded not just in science, but they have to be grounded in practice. We go and look at the pigs, we go and look at the barns, we talk to the people who are actually taking care of the pigs. We understand the problems at that level. So then we can bring to bear all the resources we have within our company to provide a holistic solution that is working on a problem that is well-understood. That to me, when you’re talking about optimizing a system, that is one of the key components — it goes back to my days in graduate school, careful definition of the problem statement, careful definition of the objective. And when you can do that because you know exactly what’s happening, you can come to solutions that do truly connect the right dots and optimize the system. Let’s shift gears to leadership and vision. So, as the CEO, Beau, what’s your vision for the future at Carthage, and how do you inspire and lead your team to achieve these goals? It’s a great question, Jim. People development is one of my favorite things to talk about. My vision for Carthage in the future is that we continue to innovate while remaining grounded in those practical realities of what the producer faces. We have to bring solutions and we have to be thoughtful leaders for our clients. And we have to do that also in the context of what is becoming a global industry. Our business has evolved immensely over the last 40 years, starting out as essentially a one- or a two-man swine veterinary practice back in the early 1980s to what it is today, where we really offer just about every service that a producer could need. That’s something that as we think about the future, we’re going to continue to not only improve the services we have, but look for what is next. What is the next thing that producers are going to require, and that we should develop a competency to bring it to them? The way that we execute that vision is through the people. When you think about inspiring people, my job is to really continue to paint that vision. But more importantly, it’s to help them understand the purpose behind the vision. When people understand purpose, it makes it really easy to get inspired. We’re extremely fortunate here to have an incredible group of people at Carthage Veterinary Service. I think we have one of the best teams in the industry, and we just have a lot of strong leaders as well.
WE’VE ALWAYS BEEN SO FAR BEHIND (AS AN INDUSTRY) ON WHEN WE’VE ACTUALLY BEEN ABLE TO SEE THE DATA AND KNOW WHAT HAPPENED. BUT WITH THE ADVANCES IN TECHNOLOGY, THE EXPANSION OF THE TALENT POOL AND DATA SCIENCE, I THINK (PREDICTIVE DATA ANALYTICS IS) A WIDE OPEN FRONTIER. On continuing to provide innovative solutions to clients
The outcomes of the strategies we put in place within those different areas are extremely dependent upon how the other ones are put together and being executed. And so that’s something we put a lot of emphasis on and we dedicate time to making sure that the people within those disciplines in our business are communicating, and are going to the farm together. That’s probably one of the — you know, if you want to talk about a secret sauce and all of it, again, I’ll go back to the veterinarian and the nutritionist. They’ve historically had a strained relationship in the industry. But when you get the veterinarian and the nutritionist on the farm looking at the problems together, the solutions that they come up with are exponentially better than what they would’ve done on their own.
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That’s one of my primary roles and goals in life, is to develop leaders. You know, if I have people around me that are better than I am, we’re going to move a lot faster. And so it’s something I’m a firm believer in it. We put a lot of emphasis on leadership development and business development. We spend a lot of time on that here because it’s the most important thing we have. We are a company that’s made up of people, and it’s our most important asset as a company. And we have to spend a lot of time developing it and nurturing it. If you want people to be inspired and you want people to latch onto a purpose and really go and drive it, you have to give them true ownership in it. So that’s a little bit tricky at times because I think people will give accountability without responsibility or responsibility with no accountability. Getting that mix correct is something that I’ve seen. It takes the lid off of people, when it’s theirs, they understand the purpose, they’re truly accountable for it. At the end of the day, they will go further and faster than you ever dreamed they would. And so it’s a core value within the company of just being transparent about everything from the financials of the business. Our leadership team is very in touch with those things. They own it and they are decision-makers. It changes every day, and you keep communicating, keep it transparent, and people can get behind that. And when they’re running, you stay out of their way. What kind of leader are you, Beau? I like to think of myself as a servant leader. I wake up every day and I think about what I’m going to do for my team, not what I need them to do for me.
It’s not a new concept of servant leadership, but it’s always been important to me. I’m not a flashy leader. I don’t like to get up and give the fire-and-brimstone type talks to people. We just communicate. I’m very transparent. If there’s a problem, we talk about it. I have high expectations, but you have to have high expectations if you want to be part of a growing organization. As long as you’re fair about those expectations, and again, empower people and create the opportunities for them to achieve them, it really creates a dynamic and fun place to have a career. Listening is something that I continually work on every single day of my life. But you have to listen, you have to understand, and then you have to not tell people what to do, but help them develop in such a way that they can figure it out themselves. What about innovation and technology? We’ve seen the rapid advancement of tech in the swine industry. How does Carthage stay on top of it? And are there any new technologies or practices that you’re integrating for success? I think of innovation and technology in two ways, Jim, the first way is obviously what you’re talking about, right? The new gadgets and things that have come to the market, and there’s been a lot of them, a lot of them are really great. I think where most innovation comes from probably not just in our industry, but really throughout the world, is also figuring out how to use older technologies in different ways or improve things or think about them differently. And so we keep our fingers on the pulse of that new technology. I mean, all the stuff that’s coming. Again, a lot of that comes through our R&D team. We have great relationships really across the industry and get to do a lot of research with a lot of different organizations. We’re also not afraid to go put something in a barn. As an example, like the SoundTalks cough monitors. We have those in one of our research barns. We try to use our research facilities as a bit of a screening ground for a lot of the new technology to make sure that we understand it, and what it can do. But some of it you can’t. It has to be applied on a broader scale. And so we will do that.
WHEN THEY’RE RUNNING, YOU STAY OUT OF THEIR WAY. On empowering employees to problem-solve
So we always try to right-size it and, and look for the places where we can actually be successful with it.
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I think when we think about some of the stuff that has had a pretty big impact on our business over the last five years, getting digital devices into the sow farms has been a pretty big game-changer. We weren’t the first to do it by any means, but the Carthage System and a lot of our clients are now at that point, and a lot of the farms, every one of the employees on the farm has some kind of digital device with them all day long. And so the first thing that was created was the opportunity to have real-time data and real-time metrics and monitoring of performance on a daily basis. But that has quickly continued to evolve into utilizing programs like PigFlow. We can now direct the work of the people on the farm utilizing the handheld and the ability to just communicate. When you’re on a 6,000-sow farm, there’s a lot of ground to cover to get around and talk to everyone. And so just being able to communicate has been a bit of a game-changer. It all sounds really simple in the context of the outside world, if you will, because we’ve all had cell phones for so long. But getting past that, and getting Wi-Fi into the barns will continue to create opportunities for technology to rapidly advance. It will continue to create data visibility. When you look at that data that the new piece of technology is creating in a vacuum, it doesn’t tell you the whole story. It tells you part of it. And usually that is, it’s valuable. One of the things that we’re working very hard on is data integration. We have data that comes at us from multiple places, often through disparate information collection platforms. And being able to integrate all of that together into a common transcribed database that relates it all to the right farm or the right pig or whatever it is, it’s a fairly monumental task. And so that’s something, we have a couple of database developers on staff here, that that’s what they work on. That is where I think these types of technologies are really going to continue to change the game. When we can look at the environmental monitoring in the context of real-time, accurate feed disappearance and water disappearance and hopefully someday, the weights of the pigs in the barn that’s being measured by a camera system, now we start to get a holistic picture and we can really make some precision management type decisions with it. But that’s got to get integrated.
I think that is a piece of technology that isn’t quite there yet in the industry. And something that we’re working on and collaborating with people to continue to make that better.
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