Episode 119: Empowering Generational Family Farmers with Corwin Heatwole

Hi, friends, this is John. Welcome back to the Regenerative Agriculture podcast where we have all kinds of fun conversations related to regenerating our soil, regenerating ecosystem health, plant health, animal health, and ultimately our own health. And of course, as a part of that, it's important for us to regenerate our relationships and to regenerate our capacity for stewardship so that we can be closely connected and reward farmers well for doing a good job. I've been looking forward to the conversation we're having today for some time. I'm very pleased to have here with me Corwin Heatwill from Farmer Focus. Corwin has been doing an amazing job. One of the pieces that is so desperately needed in our space is facilitating market access. And Corwin has quite a remarkable story in that domain. So Karwen, please tell us a little bit about your, your journey, the whole story, the arc of scope of the work that you're doing today and what brought you here.

Thank you, John. First, it's a pleasure to be with you today and I'll take you back to how I grew up on the farm and just valuing the farming lifestyle. I'm a sixth generational farmer here in the Shenandoah Valley and growing up on the farm, just got immersed in the farmer's lifestyle and working hard on the farm, taught work ethic at a young age. Get your hands dirty, barefoot in the barns and around, you know, manure squishing up between your toes. Not sure how many brain cells that affected, but hopefully not too many.

Oh, I would expect that it affected them, but probably positively. We have our, a large part of our neural network associated with our gut and that's associated with our microbiome. So yes, our microbiome affects our ability to think about.

Well, I, I'm not surprised by that and I'm sure that you, not surprised that you have knowledge on that, John, but you know, growing up on a farm, it, they say, you know, you can, you can take the, the boy out of the off the farm, but you can't take the farmer out of the boy. And after going on several business adventures, I had purchased my first farm at 23 years old. And after several years of raising, running a farm, growing for an integrated company and seeing some of the challenges firsthand for myself that I didn't have access to when I was, you know, just growing up on the farm, doing the work and not understanding all the financial challenges and all the inside workings, really started to try to wrap my mind around the system and where we could Potentially make it better. But there was that big hurdle of, well, how am I going to do this? Where am I gonna find the time? Where am I gonna find the money? So it was where one of the other companies I had started, it was an insulation company, had reached a horizon where we had hired someone to take over my head position. And it freed up a little time and where I was at, with enough financial wherewithal, I set my mind and heart to essentially starting a company that I could grow for as a poultry producer. Because the farm that, that we had, the kids loved the farm. We didn't live on the farm, and that was one of the things I wanted to work toward. But you ever asked the kids, where do you want to go? Well, they always wanted to go to the farm. We had a spring fed pond behind the poultry barns up against the foot of the mountain. And we had docks, diving boards, sliding boards, little beach area. You know, you could fish and cook food over the fire. And it was a. Highlights. We'd work hard, play hard. And it was, it was my favorite place too. Absolutely. And I've always loved the animals and loved the, just the, the amount of gratification there is in a job well done with growing animals that you are just, you're really proud of. But when it doesn't make sense financially. And the question kept haunting me, can I pass this farm to the next generation and expect them to carry this burden? And I knew the answer. Deep down, I knew the answer. I couldn't. I could. So I was faced with tough decisions. Do I invest in this farm, trying to give it a future for my children, hand them the burden, or do I wind this farm down, run it hard, you know, wear the equipment out and sell it to the next poor soul that blindly comes into this investment? And, and it's going to have a lot of struggle. So it was through that lens that we, we need to start a company that can partner with growers in ways that allow growers to be financially, financially viable and sustainable for the next generation. And that's why our mission statement for the company is to promote and protect generational family farms. So I can give you details of where some of our struggles came about, how the grower model of how we partner with growers actually came about in detail. But that's, that's just a little bit of the, the backstory.

I love that model. I love the motto that's framed around serving and protecting family farms. Because some time ago I released a podcast episode where I described the work that we are embracing with our regenerative verification, integrity grown, which is a space that I got into somewhat reluctantly, but. But I fundamentally believe if we want to have a conversation about regeneration at scale, the fundamental thing that needs regenerated, without which nothing else is meaningful, is regenerating our capacity for stewardship. In other words, we have to have more people. We need more people on the landscape who have loving, caring relationships for the ecosystem, the landscape that they're managing. And to do that, you need to compensate them well, you need to pay them well. I was on a panel once talking about regenerative agriculture to a financial audience, a group of investors who wanted to invest in regenerative farmland. And I made the comment to the room that if farmers put a similar amount of effort and energy and dedication and focus into any other significant trade or craft or like or an equivalent amount into the financial space, they would, as the people who were in the audience, they would be paid three to five times as much as they are paid as a farmer, perhaps more. And that brought kind of a. A collective gasp and a realization of reality to the room. So I greatly appreciate and respect the work that you're doing and the way that you're framing that. So why don't you tell us a bit about where your operation is right at this moment, what's the scope of your work, and what does it all look like?

Currently, we have two processing facilities located in Harrisonburg, Virginia. So we're right in the middle of the east coast.

Carwin, I'm actually realizing that we're missing some context. You have two processing facilities, but processing what? Doing what? We haven't talked about that yet.

Yeah, I was going to get to that in a bit, but let's circle back. So you go back to pre startup and we say, so how are we going to start a chicken company that can be financially viable in a world where most processing plants produce 3 to 10 million pounds a week and margins are sometimes between 1 and 5 cents a pound? And it was through collaborative conversations with local farmers that the idea to be organic surfaced. So I went rushing back to my old slow desktop at home, fired it up that evening, and before the sun went down, I had no doubt what I was going to do after reading the organic standards. The natural light, the dark time at night, the relaxed density, everything that the standards required is what we knew would grow a great chicken. It's an environment that wouldn't hinder and add cost. It would actually be an environment that would allow chickens to thrive, of course, outside of the Additional cost of organic feed, it wouldn't be a burden. So I become very excited about it at that moment. And so that's when we set forward to start an organic chicken company. And before the close of that week, I had found a farm to certify organic. And I'd ordered 300 chickens. Very first chickens I'd owned in my life. I had grown millions of chickens for the integrated companies, but this, this was the first chickens I ever owned. It was 300.

What I like about that story is you have this. This interesting juxtaposition of starting small but moving fast.

Sometimes too fast. So chickens. And that was spring of 2012. So we are an organic chicken producer. So to give you an idea back up to how the insulation company got started, so we. I was doing some random construction and I was building my own house. And as the insulation contractor pulled away, as I stood on the front porch and said, if they can treat people like that, with that kind of service and charge that much, they need competition. And never had a thought before to start an insulation company within six weeks, had a warehouse, trucks, licensed, insured, and we're doing a first installation job. So. To jump forward in the story, though, back to organic chickens, we were going to have a local processor process those birds. And when those birds were about three weeks old, those 300 first, 300 chickens, they called and said, we're no longer going to be able to process your birds. And I freaked out a little bit. Like, what? You're not going to process my birds? You know, and in three, four weeks, these, you're. Someone's going to have to slaughter these birds. And I knew no one else was going to be available to slaughter those birds. And at the time, you know, some of our biggest challenges become some of the most pivotal moments for us in our business. And that was one, because we scrambled and looked far and wide, and we did find someone to process those birds a lot farther out of the area. But it showed us that if we wanted a viable business model that wouldn't be susceptible to, could we find someone to process our birds? And when would they. How long would they work with us? We knew at that moment we had no choice but to create our own process and capabilities. And that was incredibly pivotal. And so anyway, that made us look for our own building and our own set up our own equipment. And the Lord saw fit to open doors at a large, previously abandoned processing facility downtown Harrisonburg that was being used as a warehouse. And the owner of it was delighted to do a lease purchase to Us at a very attractive rate because, you know, it was adding value to him. And it was a, it was just a perfect fit to give us a lot of square footage at very low cost and help, you know, help us get started.

So you started out with the vision of being a chicken farmer, a chicken producer, and then shifted into processing. And what is the, what's the scope of your processing today? How many years ago did this happen?

So put the first 300 birds on the ground in 2012. And at that time, you know, paying someone to process them, that went really good. And we got up to 2,000 birds a week. And what was important about that is I had made the breakthrough. I had went from growing for an integrator to owning the birds in my barns, complete operational control, making about five times the amount per bird that I was previously. Yeah, we were catching chickens and hauling them at night and we were, we were working hard, but we were loving every second of it.

Well, you were making money.

We were making money. And back and back to your previous statement about when farmers aren't making money, what they can't invest in. We always say if, if farmers aren't in the black, they can't operate green. And as a general whole, as you know, farmers are very passionate about what they do. Rarely they enter farming because they're pursuing a lucrative career. They're deeply passionate about what they do, and they love the land and the animals and they have a desire within them to be stewards of it.

Exactly.

But they're often hungered by the lack of profitability in their operation to implement these stewardship principles.

Exactly right. You nailed it.

So that pivoted into creating our own processing plant. So when we found that large space and we created those processing capabilities, that was spring of 2014, exactly two years from putting those first 300 birds on the ground. But that we was going to be capable of processing more birds than what I could produce just off of my two farms. That's what made the exciting opportunity to partner with other farmers. And that's where the farmer focused model of how we partner with farmers was born. Over that opportunity. So we went out and sat down at kitchen tables with farmers and that we have an opportunity to create the dream model. We can brainstorm something into existence. So those kitchen table conversations are what with other farmers was what developed what we're still operating with today.

So I want to dig into those relationships that you develop with farmers and how, what came out of that. But before we go there, let's dig a bit into the market, you're the point where you're producing 2,000 birds a week on your own and you see a pathway for other farmers to join you. What did the marketing look like and what did it look like to. To build a brand and to build a pipeline to move that many chickens into the marketplace?

At that time, I was partnered with Ayrshire Farms in Northern Virginia and they were a. They had a very small processing facility and they had a need for well grown organic chickens and they didn't grow up farmers like myself. So there's one thing I knew how to do really well and that's grow a chicken, process a chicken and market a chicken was all new territory for me. So that's where it became a perfect partnership. And that was the majority of my sales in the years where I was just growing live chickens and, and hauling them primarily to Ayrshire Farms. And then when we started the processing facility, that opened up a whole new realm of operating our own processing plant and the sales arm and marketing. And we started off mostly with bulk industrial, like to sausage manufacturers and those people who just buy bulk. We did not start off with a retail brand, but it became very apparent very quick that we was going to need to enter the retail space being organic and more niche for us to extract the proper value for what we were doing with certified humane, global animal partnership, certified organic and all the attributes that we needed a brand that could represent that.

So I've had several business venture experiences where I've been the one step removed from retail. I've. I've never actually taken foods to the retail space other than if you would count a farmer's market or a roadside stand many years ago when I first started out. But it seems to me that getting into retail brand building is a significant lift and a slippery ice field to navigate. What has that whole process been like for you?

Oh, you're bringing a lot of flashbacks. It has taken many twists and turns and it has reshaped itself multiple times through our journey of developing a brand. And we changed the brand name three different times until we finally landed on what we believed represented us, who we are and what we're about. When you just take one glance at the Farmer Focus label, it says who we are and it was one of our customers that we were were selling to. God bless her, she had the strength to share this with us. She said, your brand is not good. I don't know why you don't just call it Farmer Focus because that's who you are so much. Because we Talked about it at first, I'm like, that does not have a ring to it, Farmer Focus. But as we thought about it and discussed it internally, it grew, it grew on us until it did become the brand. And then we actually changed the company name to represent the brand to eliminate additional confusion.

And as you've gone through these various iterations, well, with your most recent iteration of being, of branding being branded as Farmer Focus, what has customer response to that been like?

Customer response has been very positive. And what we've realized as well is that the majority of our marketing spend has been a waste. When you design your brand well, it tells your story. Not entirely. You still need to, to put some, some effort behind it and build a lot of content and support it. But your brand and the quality and consistency will speak for themselves and, you know, you'll experience a pretty good growth in your brand.

You know, I'm. I'm reminded of a story. Oh, it's on the tip of my tongue. And now the name is escaping me. I want to say the company was called Moonshot. It was recently acquired by Patagonia, like nine months or so ago. And they were a healthy snack bar. And when listening to the founder's story, one of the pieces that I was really intrigued by was that they, they iterated their packaging and the information on the packaging, if I recall correctly, it was like six times in a year. They just rapidly prototyped, rapidly iterated, and until they finally hit on the it, that that resonated with people and caused them to make buying decisions. And when they got it right, it had an immediate and significant impact on sales. It was not small. And I think it's so easy for us to forget that we are not the audience that we need to appeal to, where our audience is in their mental headspace and what they believe to.

Be true about the world, very true. And myself growing up on a farm, I automatically assume that people should know everything about how a chicken is grown, how farmers are treated, how this relationship works, what it takes to get food to the table.

And.

And then reality hits me and I realize everything has to be explained and presented in ways that show this.

You know, there's this fascinating juxtaposition. This is a reflection on how people's minds work. I've come to the realization that everyone knows something that I would benefit from knowing if I can just figure out what that is. But then the flip side, in many cases, very frequently had the experience. You can't just go ask people what that is. What is something that you know that other people would benefit from knowing. They'll really struggle to answer that question. And the reason we struggle to answer that question is from this idea that's called the curse of knowledge, that you are so familiar with what you know, that you assume everyone else knows what you know, not realizing that most people have no idea of some of the things that you know.

Very true. Yeah, very true.

So let's come back to the conversations you were having with other growers around kitchen tables and building alliances and building a larger network to. To produce more chickens. What did that whole process look like and how has it evolved?

So the kitchen table discussions were, you know, if you were growing for a company, and how would you desire that relationship to look? And as some people don't know, but the partnership that farmers have with the integrated companies is kind of trying to think of the right word to describe it.

I don't think it qualifies for the word partnership. It's more like a feudal surf.

Okay, so you described it. The farmers bullpen. Appreciate that, John. I didn't want to go there, but the farmers don't own the birds in the barns. They really don't have operational control. They are told what to do and when to do it, how to do it. And I disagreed with that substantially, because every farm is different. Every farm needs to be operated differently. Every farmer has a different tolerance for risk and different things. So. And farmers need to be able to live out their convictions on their farm. So that's what really came out in those kitchen table conversations is I, I want to own the birds in my. In my barns. I want that risk, risk, reward. I want the opportunity to be paid fairly for those. I don't want to be paid in a tournament system. I want clear and transparent pay terms. And, you know, with ownership became came operational control. So. So the model, that's the model that we built. All of our farmers own 100% of everything that's on their farm. The chicks in the barns, the feed in the tanks, everything is owned by the farmers. And our governing standards are our certifications. And I love it because Farmer Focus makes zero requirements of the farmer. None whatsoever. We're partnered with Certified Humane Global Animal Partnership. 100% of our farms are GAP Level 3 and certified organic. Now, obviously, we need consistency of breeds, genetics, feed, feed rations and all that. And that's what, that's what Farmer Focus provides to the farmer. But the practices on the farm, you know, what bedding you use, the depth, the, you know, natural light that everything the farmer does is in the control of the farmer. And farmers just love when the company stays out of their business. Because if, you know, the farmer does exceedingly well or if a farmer struggling, you know, obviously we're going to come alongside them and do everything we can to help every farmer be as successful as possible. But you know, it's the performance of the farm is, can be influenced completely by the farmer's level of commitment.

What happened with the farmer economics once they had complete control and autonomy? I seem to recall, if I understood correctly, a little bit ago you said that your income increased 5x once you had control and once you started producing organic birds. Is that right?

Yes, that's when I was selling the chickens to Ayrshire farms in Northern Virginia. Obviously the economics have shifted some as we've scaled from 300 chickens to 300,000 then to 600,000. The economic shift a little bit. But for the partnerships with the farmers, the farmers have seen their net income increase on average 35, 40, 45% which, which is substantial. When you know you're your payments and your operating costs essentially stay flat and your income increases, that's a big lift. That creates a lot of additional cushion.

Well, it creates the opportunity to make investments in regeneration and to. Yeah, creates the opportunity to be better stewards. So what is the scale that you're operating at right now?

We're currently producing a little over 600,000 chickens a week. And about 450,000 of those are organic. The rest are no antibiotics ever. Outside access, non GMO products. And we're working to develop a retail line around that too. So we're now entering into some diversification as we've seen as markets shift. This is one thing we've learned, and we learned it the hard way. As markets evolve. Right. And economic pressures ebb and flow, the organic market can be really strong and see double digit growth. And then like over the last two years, we've seen it actually stall for a little bit and there become a lot of pressure. So what we have decided as a company to have two product lines allows us to ebb and flow. Significant that we can more consistently keep the barns full and focus on consistent farm revenue.

When you're at the scale of 600,000 birds a week, how many farmers are a part of that grower network and are contributing to that pipeline?

About 130 farm partnerships.

That is awesome.

It's very exciting. You know, thinking back on all of this and to where I am at now with as this has evolved. I was on my farm running the Farm running some other small business. For 10 years, I was CEO of the company, and now I'm chairman of the board, head of Regenerative Ag Farm Innovation and Grower Relations. And now I'm spending more time back on the farm. So I started the company to create the model, create this financially viable farming. So not only am I living the dream on my own farm with my own children helping run it and everything, and I'm spending more time back on the farm. Now, 10 years later, after all of this, 130 other farms get to tag along on this journey with us. It's. It is quite a privilege.

That's quite an achievement. That's quite an accomplishment. Carwin, congratulations.

Well, thank you.

But the piece that comes to mind, for me, it is. It is not just those. It is not just those farmers. But when you think about the grain pipeline, you're also supporting many other organic grain farmers as well. Do you have any idea of what the scope of overall land impact looks like?

Yeah, it takes about 225,000 acres of production to produce the grain that our chickens consume.

That's a significant impact. There's always more needed, of course.

Yeah. And that's one of the challenges for us is domestic supply. And I'm sure we'll get to it here in this podcast.

But let's talk about it right now.

It's part of what we're working on for the future. As the interest in organic meat consumption has really skyrocketed here in this country, the amount of farmers willing to take the big risk of organic transition has lagged far behind the meat consumption, making an undersupply of organic grains. And it's forced a lot of us to purchase the majority of our grains internationally, which is deeply concerning to, you know, for many different reasons. And that is what we're going to be working on here.

How much of your current grain supply line comes from domestically? How much, what percentage are you forced to source internationally?

It's 20 to 25% domestic, 75 to 80% international. And that's where, as we look into the future, we get excited about investing time to go further up the supply chain to where the fields that the grain is grown in, even to where the seed is produced, and the genetics of the seed that needs to come into this pipeline and network of farmers. So instead of working with companies to secure the grain that we need, and it comes from international and all over, and we're starting to work on it, and it will grow legs, and it's starting to the legs Used to be pretty short, but now they're starting to, to move and wiggle a little bit and that's to start to build relationships directly with each crop producer, whether you have 20 acres or 5,000 acres. I've met with them all. A meeting with a farmer that has 7,000 acres, organic acres, and farmers that want to transition to organic. And we're working on building direct relationships with these farmers to where, you know, their success is our success. And it's a true partnership and that's where we all want to work together to make sure that they are getting the right seed at the right genetics at the right price price and they have access to the right fertilizer and that we can bring additional diversity into their rotations to help their own success. Because as their yields go up and they have less volatility in their operations, then we all win together. So it's a, it's a big picture look than just saying, hey farmer, can I buy corn and beans from you? It's a holistic approach to how the partnership works.

So when you use the term entering into a partnership with the farmer, you also use the word partner between the big aggregators and farmers. So I'm going to push here a little bit to understand exactly what you mean when you use the word term partner in this context. To what extent are you partnering with growers on off take agreements and really solidifying their market access as well?

Yeah, so I will back up and thanks for the question. Should not have used the word partnership earlier. If you could just use the word arrangement and a partnership would look more. Let's say that you are preparing to transition your farm to organic and you're concerned about the economic viability of your farm during transition. You're concerned about the best practices that you should be implementing to not just weather the transition to organic, but the practices once you're organic or you know, is weeds going to take over your farm? What kind of yield can I expect? And another big concern of farmers is who's going to buy my grain and how much am I going to get paid? Because where the organic market is, where the grain market is today is typically far from where it will be three years from now. On the other side of transition, typically we look back at historical swings, highly unpredictable. And so a partnership looks at all three partnership looks at how can we invest in the farmer and help them soften the financial impact of transition and what all resources can we bring for best practices and just walking with the farmer through the transition. Lots of education and Then long term off take agreements on the backside where, you know, obviously the longer the better for us. But we want farmers to have flexibility and options. So it really comes down to each individual situation as to how long a farmer wants security on who's want to purchase their grain and what percentage of the grain that we're, you know, that we should be purchasing to eliminate our risk. And there's a light.

Yeah. When you think about developing these, these partnerships with the, with the grain producers, according to my back of the envelope math, you need somewhere between 160 and 170,000 acres that you could, that you could utilize domestically. What is the optimal geographic footprint for that? Look like if you could pick and choose where your grain was coming from, what would the geographic footprint be that you would desire to source from?

Well, where we desire to source from and what helps us mitigate risks can be different. Right. You know, for the cost of logistics and the carbon footprint of logistics in our backyard is better. And there is a lot of acreage in Virginia that is excited about transitioning to organic. And actually we could produce the majority of our grains right here in Virginia, or I will say within a three hour radius of where I'm sitting. But that would add too much volatility to, you know, if a drought hit this area, we could be very undersupplied for a year and be very volatile. Very, a lot of risk to an open market because we would have to turn and pivot and purchase grains without contractual relationships in place. And so through that lens, we look at spreading out farther from Pennsylvania to North Carolina and a little bit farther west. In fact, this summer I have a number of road trips scheduled to visit a number of farms that are either interested in transitioning to organic or already organic. And then discussing how we can most effectively utilize some rail opportunities for to rail in the organic grain and rail out products like pelletized poultry litter and things that they can't get.

So when you say several trips west or how, how far west is reasonable, you're looking in the I states, the, the Midwest corn belt region.

Further west than that? Yeah, yeah, I'm looking in that region. And something I haven't drilled down on yet is what percentage of our supply is the right volume to mitigate risks to delegate into different regional pockets to operate in.

Well, for all of our listeners, I have a request for you and a goal, and that is I want you to fill up Corwin's inbox and phone voicemail and get him more supply than he needs. I'm pretty sure that's going to be possible.

I think it is possible. And thank you, John. I love meeting farmers and going and visiting with farmers and working on this. And the more I visit with farmers, the more I realize that what sounds large at 225,000 acres is going to be over subscribed very quickly. And that is really exciting.

That is exciting. But it also then asks the question of how do you see? You mentioned that the last two years demand for chickens has stabilized and slowed down a little bit from the previous rapid growth. And none of us have a crystal ball. But do you have any perspectives or insights into how you see your overall size and scope evolving over the course of the next half a dozen years or so?

Yes. Well, when I say the market has softened, the market softened. But our sales has not softened. And we have been blessed to now have achieved the largest organic chicken brand on the East Coast. And we've been fastest growing for five years running now. And the brand is maintaining momentum, a rate that we can't keep up with. The chicken market actually declined by 6. The organic chicken market declined by 6% in 20, 22 and 23, but our sales increased by almost 15%. And that's by store. That's not. We've kept adding new customers and adding stores, and our product.