I had always told my kids and nephews in the second generation that we will see a time when pigs are worth less than zero, because there is no insurance, there’s nothing you can do to mitigate some of those risks. And during that time, we did see prices less than zero. It cost us about $22 a head to cull some of the pigs that we had to cull. And there’s no way to mitigate that risk. Yeah, we had the futures sold, but the futures never dropped below $30. And the negative $22 is a $50 basis or a $100 per head negative basis, and that doesn’t work very well. And so I think to respect the risk that we face every day is a good lesson. The other thing about going through times like that is just, you know, to test your core values. We all put these things on our website and they can seem kind of cliche, but as we were euthanizing pigs and giving pigs away, we’re also honoring purchase agreements on the other side that we purchased pigs, about 20,000 sows’ worth of production every week. And we should honor those contracts. That’s what we’re called on to do. But sometimes it’s easy in those types of situations to make knee-jerk reactions. And I’m glad that our team could look at the long, long view and not make short-term decisions. Let’s touch on innovation and sustainability, John. Schwartz Farms has a reputation for balancing tradition with innovation. Can you give us an inside look at how you foster a culture that respects longstanding values, but constantly pushing for cutting-edge solutions? It’s not only possible to stick to your tradition in the core values and be innovative, I think it’s expected. And in our business, we have to constantly be innovating. And I think if you create a culture, you mentioned culture in your question, and culture is underrated as a value in a company, and if you create a healthy culture, one where you support your people, and create a winning culture, they will do almost anything for you. An example of innovation, the Proposition 12 situation in California came to the point where it was obvious it was going to be a law that was going to be enforced. And we have a lot of problems with Proposition 12. The interstate commerce issue part of it alone is a big issue, however, ultimately it doesn’t make any difference what I think. What’s important is what the market needs and the processor that we sell to. We’re faced with feeding supply for California.
I BELIEVE IN SCIENCE. I THINK SCIENCE WILL TELL US WHAT WE NEED TO DO AND WE’LL HAVE TO ADAPT TO IT; HOWEVER, THE CHALLENGE WE HAVE TODAY IS, WE AREN’T QUITE SURE WHAT WE’RE BEING COMPARED TO. WHERE IS ZERO? WHERE DO WE START FROM?
On adapting to a carbon credit standard to reduce emissions
And, you know, I want to emphasize that by no means did I ever face these stresses alone. We have a great team that steps up and shares equal amounts of stress and accountability. But in that situation, when the plant shut down, we were in a little bit of a unique situation there. There was not much of a segment of the economy that wasn’t impacted negatively by the pandemic. However, what made our situation unique is where we’re located geographically. The plants that we supply had the biggest situation, the biggest challenge with employees not showing up because of Covid outbreaks. And so we didn’t know, with a live animal that continues to grow, what do we do? We didn’t know when the plants would open up and at what capacity. So we were faced with very tough decisions. And we did have to cull a fair amount of animals, and give some away, whatever we could do to get through that situation. Everybody stepped up and did their share. And we had a great response from the management team and family and everybody. Out of these stressful times, there’s always lessons learned, and one was the tremendous risk that we face in this industry every day.
31
Made with FlippingBook - professional solution for displaying marketing and sales documents online