Capstone Commodities LLC
Based in Round Rock, Texas, Capstone Commodities LLC is a feed ingredient merchandising company selling a range of feed supplies to dairies, feed yards and feed mills. The business currently ships more than 2,000 tons of raw materials and feed ingredients per day across Texas, New Mexico, Kansas and Oklahoma by truck and by rail.
Capstone Commodities closely manages all shipping logistics, from the point a load leaves all the way through delivery. Keeping a close watch on shipments means Capstone Commodities is more responsive than most feed dealers and can better serve customers’ needs quickly.
Michael Rickert, president of Capstone Commodities, founded the business in June 2007 after years of related agricultural experience. “My family owned 3,000 acres of farmland in southeast New Mexico with about 30,000 head of cattle,” says Rickert. “I grew up working on the cattle feed yard through school during summer and vacations.”
A viable business opportunity
In the early 1980s, more dairy operations began to migrate from California to southeast New Mexico. “The farmers in California could get a high price for their land, so many settled here close to our family’s ranch,” recounts Rickert. “Area dairy farmers started asking my uncle if he would sell them feed and so we began doing that in the early 1990s. Eventually my uncle sold off this division, along with the feed yard, to an employee.”
Fresh out of school, Rickert went to work for the new owner but he quickly found he was dissatisfied with the way he ran business. “There was a company out of Oklahoma looking to expand in this area so they hired me to manage their commodity trading company out here and I did for about 16 years,” he recalls. “I brought my existing customer base of New Mexico dairy farmers to the table.”
After some time, Rickert and his wife decided it was time to move their family back to their roots in Texas. “In 2002 we moved back to Austin,” he says. “I’ve always wanted to run my own business and I figured it was a good time to start.”
As the industry has evolved, the business model has changed a bit. “Back when my uncle started selling feed we mixed ingredients at our mill,” he says. Now with the invention of mobile feed trucks, Capstone Commodities sells the raw feed materials, such as cotton seed, soybean hulls, hominy, canola meal and more, to dairy farm customers and they blend the feed on their own.
Squeezing out the middleman
When Capstone Commodities began, it was just Rickert and his secretary. “We’ve really grown since then,” he says. “We now have seven employees and plenty of business that’s really been fueled by word-of-mouth. I’ve never felt like we’ve needed to do much advertising or even have a website until recently.”
Now that Capstone Commodities has added a significant amount of staff and more traders, Rickert says he feels there is a need for a website and more marketing. More outside pressures from larger buyers are also forcing Capstone Commodities to expand its digital presence.
“One of the biggest challenges we face in this industry is consolidation,” says Rickert. “This is the No. 1 issue. There are larger corporations and fewer and fewer middleman guys like us. This means there are fewer companies to buy product from and the people you buy from just want to go around you and directly to the customer.”
Rickert says the reality of industrywide consolidation has Capstone Commodities thinking about its place in the industry and how the company can stand out. “I think the reason we’re successful is we’ve developed great relationships and our customers trust us,” he says. “We provide our customers the best advice on when to buy products. Our service is the best in the business — that’s the big thing.”
Closely monitoring logistics
Much of Capstone Commodities’ business is reliant on rail service, making freight another challenge. To combat this, Capstone Commodities has set up more routes and unloading sites strategically located near areas with higher concentrations of dairy farms. “We have our Texas facility, but also unloading sites in Kansas, New Mexico and we’re trying to enter Colorado too,” says Rickert. “Our main customers are in New Mexico and Texas, but we’ve expanded our footprint in the last two years. We have added strategic unloading facilities, such as the sites in in Stratford, Texas, and Garden City, Kansas, to help us cut freight costs and better serve customers.”
Aside from rail shipments, Capstone Commodities manages a fleet of 24 trucks, dispatched daily. “We don’t own the trucks, but they work exclusively for us,” says Rickert. “We dispatch them and put together a roundtrip plan so we can better control the routes and adjust service if needed. This level of constant communication helps us know exactly where our shipments are. It’s a lot of hard work to do this, but it helps us serve our customers better than our competition.”
Currently Capstone Commodities is shipping more than 2,000 tons of raw feed ingredients a day, but Rickert says that number ramps up through winter months. “The winter is a busier time of year for us because cattle up their intake in cold weather to maintain their energy and stay warm,” he explains. “Another factor is the cotton harvest season in Texas. We purchase tons of cotton seed and ship to dairies in the fall and early winter months.”
Despite mass consolidation and everyday logistical challenges, Capstone Commodities LLC has made its name known throughout the lower Midwest and the Southwest for prompt service and trusted delivery.