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Meet the Man Who Built the Modern Pig Business
When the annual Pork Powerhouses ranking of the largest pig producers in the U.S. launched 25 years ago, the company at the top of the list, with 180,000 sows, was Murphy Family Farms. Founder Wendell Murphy had built a pig empire from dirt lots among the pine trees around Rose Hill, North Carolina.
By 1994, his family-owned company was producing more pigs than the state of South Dakota or Ohio or Wisconsin, a fact that was shocking to many Successful Farming magazine readers at the time.
Murphy stayed at the top of the Pork Powerhouses ranking for the next four years, expanding to 337,000 sows, before selling to Smithfield Foods after the epic hog market collapse of 1998-99. Today, his children are still raising pigs on contract for Smithfield.
I sat down with Wendell Murphy, now 80, in his Rose Hill office, to reflect back on the incredible changes he has seen.
SF: Tell me about the farm where you grew up.
WM: We lived on a 30-acre farm and the main source of income was tobacco. We had cattle and pigs, but that was a sideline. Tobacco was the main source of income for the family. We farmed with mules. We did not have a tractor until I was in high school. My dad was a teenager during the Great Depression and he witnessed so many people losing everything that he was dead set against debt. He did not borrow money. We lived on whatever he had.
SF: Did your dad live to see your success with Murphy Family Farms?
WM: He did. Daddy died in 1990. He helped me a lot. Without him I could have never gotten it started.
When I graduated from college, I took a job teaching vocational agriculture, but I really wanted to own a little feed mill. I did my research and determined that the very least number of dollars I could get started with was $13,000. That was 1961. I made $4,080 gross in my teaching job, but my wife worked at DuPont, so between us we had saved $3,000. That left $10,000 that I had to have.
I approached Daddy about cosigning a note. I didn’t ask him to mortgage the farm, just endorse a note. His answer was no. He just could not imagine doing anything like that. Every night I would go over and have supper with my parents so we could discuss my idea of doing this little feed mill. After weeks of meeting with Daddy at night he finally agreed that if I kept my job teaching he would help me get the mill started, with the understanding that payments on the note would come from my teaching salary. I continued my teaching job for three years and then went full-time at the mill.
My daddy’s reputation, his name, was impeccable for honesty and integrity. That was an advantage I had going in.
SF: Your idea paid off.
WM: It was unbelievable how successful it was from the first day. Back in those days there was not a single combine in Duplin County. The corn was harvested in the husks or shucks. We would shell that and sell the corn to the local poultry operations. We paid the farmers 10¢ a bushel less than I could sell the corn for. After a year or two, I had the idea to grind the cobs and shucks, bag it, and sell it. That was the thing that really helped us get going. Nobody else was doing it. Other mills spent more on incinerators to burn the cobs and shucks than we spent on our whole feed mill.
SF: A key in agriculture is taking a waste product and making it valuable.
WM: Absolutely. We called it a custom mix. Farmers would bring their corn into us and we would shell it, grind the shucks, add supplements in the mixer, stir it up, put it in a bag and they would take it home with them.
SF: When did you start with pig production?
WM: Pretty early on. We were making more feed than we were selling, so we started buying feeder pigs. [The feed mill with feeder pig finishing barns behind it is shown above.] It didn’t take long before we didn’t have time to do the customer’s work. I had to tell people that we were discontinuing servicing their feed needs because we had to use the feed mill fully for our own. We opened the mill on Labor Day 1962. By 1968, we discontinued the public work.
The first combine showed up in the community in 1963. The next year there were three or four. I saw the handwriting on the wall. We were going to have to do something besides grind shucks. We were doing really well buying pigs and putting them in dirt lots.
SF: When did you get started with sows?
WM: 1979. We were dreading that day. I didn’t want to invest in concrete and environmentally-controlled buildings. We were doing everything outdoors until 1979. Finally it reached a point where we just could not get enough feeder pigs. We were hauling them in here from several states, all over the south, Tennessee, even Iowa and Missouri, but the supply had got to where we couldn’t continue to grow without adding sows.
SF: When did you start expanding in sows?
WM: In the early 1980s. We started with contract sows and then by the 1990s we were building sow farms. [The first farrowing operation is shown above.] I found the right people to help me. I hired Randy Stoecker from PIC. He had more knowledge about the hog industry than anybody else in America. Randy deserves a tremendous amount of credit for all we accomplished. It was so much fun working with him.
SF: North Carolina didn’t have the farm crisis of the 1980s like farmers had in the Midwest.
WM: That’s true. In fact, we never missed a beat back then. It was good all throughout.
SF: Did that gave you the upper hand going into the 1990s in the hog industry?
SF: How big were the sow farms at that time?
WM: When we first started contracting sows, we had a standard herd size of 200. That was a size that a man and his wife could manage without hiring any outside labor. The only problem was that sows are a seven-day-a-week job like a dairy, so they had no time off. So we increased the size of the herd to 300. That allowed them to hire one part-time person so they got a weekend off now and then. Production got better. Next we went to 500 sows and it was the same story again; production gets better. We go to 1,000 and then 1,200 sows. Every time we made the size of the farm bigger, production got better.
One day, Randy came in and said we should go to 3,600 sows on one unit. He had never told me wrong before, so we tried it and it worked. Eventually, there was a farm in Oklahoma with 11,000 sows. The bigger the better. With bigger herds there is enough there to justify a more sophisticated manager. Your farm manager, he or she, is so critical.
SF: You started contract feeding hogs in the Midwest in the mid-1980s. Why?
WM: I had never thought about going to the Midwest, but a company called Plainview Hog Farms called wanting us to buy them. They were struggling. It made me nervous because their operations were very inefficient, but I saw that if it didn’t work I could liquidate the assets and still come out all right. I wasn’t taking much risk. We inherited a first-class guy from Plainview, Conley Nelson [now Midwest division general manager for Smithfield Foods].
SF: How were you received in the Midwest?
WM: It was kind of rough getting started. We were the only contract producer. We were not readily accepted in some areas. Neighbors didn’t like the idea of other neighbors growing hogs under contract. I don’t know why. We were slow to be accepted in the early going, but the longer we were there and the more good things people were hearing about the results of the growers’ investment, the easier it got. Eventually we overcame all that and it became a major part of our overall business.
The financial projections on the growers’ buildings exceeded what we told them it would be. I am so proud to say that throughout our entire career we never had a contract grower who failed. They’ve all been successful, every one of them. The barns are still in use.
SF: The growth of the swine industry hit the wall in 1998.
WM: The problem was slaughter capacity. We literally had more pigs coming to market than there was capacity to slaughter. The packers paid us as low as 9¢ a pound at one point. Truth is, they could have paid us nothing and we would still have carried the hogs there because we had nothing else to do with them. If they had offered nothing we would have had to send them.
During that time the packers were literally raining money because the hogs were coming in virtually free and they were selling meat at the same price as before. The price of meat in the stores never came down. We sold hogs for 9¢ a pound. God almighty.
SF: Could that happen again?
WM: The increased slaughter capacity in the industry today will keep that from happening again.
SF: What was the best year?
WM: That was 1997, the year just prior to the collapse; 1998 and 1999 were the disasters, but the year before that we sold live hogs for 70¢ a pound and made more money than we ever had.
SF: Your North Carolina neighbor Prestage Farms is putting in a new plant in Iowa. What do you make of that?
WM: If they are going to raise the pigs, they darn well better have a place to kill them. That was our problem. I knew in the 1980s that we had grown to a size that we needed our own processing plant, but I was looking at how much money we were making and how much money the plants were making, and I just kept on adding pigs instead of putting in a processing plant. By the time we got into the 1990s, getting a permit to build a plant in North Carolina was impossible. We should have done it in the ’80s, but we didn’t.
Keep in mind, up until the late 1970s, there were at least eight packing houses that I could call every day and get a bid. I knew how many pigs we had going out the next day and whoever had the high bid got the pigs. There was competition. Now there is none. Smithfield is the only packer.
SF: Any regrets, besides not building a packing plant in the 1980s?
WM: I made a conscious decision many years ago, and this was a terrible decision, that I was too old to understand and operate computers. Now it seems the axis of the earth turns on computers. I’m computer illiterate, but I use an iPad to read newspapers.
SF: How tough is the pig business?
WM: Hog farming is not glamorous, that’s for sure. My old friend Sonny Faison used to say that raising pigs was kind of like prostitution. It was never going to be socially acceptable, but you can make a little money. I miss Sonny terribly. He was so funny. [Faison was president of Carroll’s Foods, which was also bought by Smithfield Foods in 1999. He died in 2006.]
SF: The hog industry has stopped growing in North Carolina since you owned Murphy Family Farms.
WM: The moratorium stopped us. That is probably a good thing. We had enough pigs to satisfy the East Coast market. We certainly don’t need to be hauling the corn to North Carolina and then hauling the meat to California.
When I was in business, we were a net importer of pork. Now we export close to 30% of the pork we produce. Those markets can cut off at any time for any reason.
SF: What do you make of the recent nuisance lawsuits in North Carolina?
WM: They are damaging the industry and Smithfield for sure. Odor is hard to measure. In Duplin County we have more pigs per acre than anywhere in the United States, and I rarely smell anything. I have several hog farms within a mile of my house and I get a little aroma once or twice a year. It is a very brief period of time.
SF: What do you make of the changes in the hog industry?
WM: Throughout agriculture, there is consolidation. I can’t think of a single independent pig grower in North Carolina that’s not vertically integrated. Even the family-owned operations are not totally independent because they have contracts with the packers. When we started back in 1962, we were buying feeder pigs off of the local sales, and those have all closed now.
SF: Does that concern you?
WM: No, I don’t think so. That is all in the past. There is no question that we are producing pork more efficiently today than it’s ever been done before.