Murphy Family Farms Inc. Business Information, Profile, and History

History of Murphy Family Farms Inc.

The largest swine production company in the United States, Murphy Family Farms Inc. supervises operations that raise piglets to hogs for slaughter in a six-state territory. Murphy Family Farms contracts with other farmers to use their land and their labor to fatten hogs for market, relying on 500 contract farmers in North Carolina, Oklahoma, Missouri, Iowa, Kansas, and Illinois to raise its swine. The company is considered an innovator in the breeding and fattening of swine, having developed a systematic, scientifically-based method for raising hogs. The investment has worked wonders, building the company into a market leader. In 1997, the company controlled 125 sow farms, housing a total of 275,000 sows, twice as many as its nearest competitor. All told, the company watched over six million hogs in 1997 during their maturation to market weight. A privately owned company, Murphy Family Farms is headed by Wendell Murphy, who built the business into a national leader. Murphy owns two-thirds of his company. The remaining one-third is jointly owned by three members of his immediate family.

Origins

No one in the history of U.S. agriculture had a greater influence on swine breeding than Wendell Murphy, a self-made billionaire in the business of raising hogs for slaughter. Murphy's dominance in the science of raising hogs was unquestioned in the 1990s, but when he began his ascent in the 1960s no one, including Murphy himself, could have imagined he would build a massive empire populated by hogs. Murphy did not set out to become a hog farmer, and neither did he hail from the hub of hog farming. Murphy was born and raised in North Carolina, where tobacco farming was the agricultural pursuit of choice. Hog farming, on the other hand, was most prevalent in the Midwest, where Iowans reigned as the nation's champion hog farmers.

After adolescence, Murphy left the sleepy confines of Rose Hill for Raleigh, where he studied agriculture at North Carolina State. He completed his studies in 1960, leaving with a degree in agriculture, and immediately took a job teaching agriculture for $4,080 a year at a high school near Rose Hill. While Murphy spent his days teaching, his wife worked as an office clerk. Together, after two years of work, the young couple saved $3,000, which they handed over for a $10,000 mill that ground corn. The balance came from Wendell's father, a tobacco farmer, who guaranteed a bank loan for the remaining $7,000. Wendell's father shouldered the financial risk somewhat begrudgingly, acquiescing only on condition that his son keep teaching school during the days. "I had to nag Daddy for months for that money," Wendell Murphy remembered, but once he had it he was in business as a grain miller.

Murphy sold his feed to neighboring farmers and used whatever he could not sell to add another activity to his already busy days and nights as a school teacher and grain miller. Murphy started raising pigs. He sprinkled his leftover grain in a mud pit, and waited until his hogs fattened to their market weight of 250 pounds. The number of boars and sows quickly proliferated. By 1968, their numbers had increased to such an extent that Murphy stopped selling feed to other farmers and used all of his yield to feed his hogs. Although not the only hog farmer in North Carolina, Murphy was an oddity of sorts, but despite his ill-suited geographic setting he had committed himself to a life of hog rearing. The severity of his commitment was demonstrated as soon as disaster struck.

1969: A Defining Crucible

In 1969, one year after Murphy had exchanged his hopes as a grain supplier for hopes as a hog farmer, a cholera epidemic swept through his farm. At the time Murphy watched over a drift of 3,000 swine. Their continued existence was not permissible. Each one of Murphy's hogs was destroyed by officials from the U.S. Department of Agriculture (USDA) shortly after the disease manifested itself. It was a summary end to Murphy's fledgling occupation as a hog farmer, exacerbated by the quarantine enforced by the USDA once all Murphy's hogs were slaughtered. Although the devastation could not have been more complete, Murphy was determined to find a way back into the hog farming business.

Making another go at hog farming was a difficult task considering Murphy's farm had been quarantined, leaving him without any swine or land, but Murphy used this glaring deficiency to his advantage. He introduced contract farming to the hog business, borrowing a practice that had been used nearly exclusively by poultry farmers. Murphy approached his tobacco farming neighbors, offered them the necessary fences, food, and piglets, and had others raise his hogs for him. In exchange for providing labor and land, Murphy's contractors received $1 for every hog taken in at eight weeks old and returned 15 weeks later, at which time Murphy could cart his fattened hogs to the packinghouse. It was a perfect arrangement for a farm-less hog farmer strapped for cash, and a welcomed opportunity for anyone taking on the duties of one of Murphy's contract farmers. Raising hogs for Murphy provided a guaranteed source of income, a luxury not often enjoyed in farming.

Contract hog farming solved Murphy's post-cholera dilemma, providing a quick solution to a short-term problem. However, contract hog farming, realized its greatest strength for Murphy as a long-term approach, allowing him to expand his operation without having to purchase land. With plenty of farmers ready to jump at the chance of securing a steady stream of income, Murphy's only obstacle was the intensity of his own ambition, which was not found lacking. During the 1970s and 1980s, Murphy expanded throughout North Carolina, building his hog farming business into a statewide enterprise. The only major problem Murphy had to contend with as he spread his operation across his home state was the chief reason why Iowans were renowned as hog farmers and North Carolinans were not. Grain, particularly corn, was abundant and inexpensive in the Midwest, providing hog farmers from Iowa and neighboring states with ample, cheap feed for their hogs. Considering that roughly 65 percent of a hog farm's costs were incurred from feeding the hogs, cheap grain represented a significant advantage for Midwestern hog farms and an elusive treat for Murphy. For help with this inherent problem for North Carolina hog farmers, Murphy turned to agriculture experts. The answers he received made Murphy a billionaire.

In retrospect, the 1969 cholera epidemic proved to be a valuable lesson for Murphy. It served as the impetus for two pioneering moves that made Murphy Family Farms the unrivaled giant in U.S. hog farming. First, the epidemic barred Murphy from using his land to raise hogs, forcing him to turn to contract hog farming. Second, it taught him first-hand the devastation delivered by disease, the biggest risk for pig farmers. Never wishing to endure the catastrophic losses resulting from disease again, Murphy had to find a better way to raise hogs. He had to find a better way not only to protect his hogs from disease, but also to somehow loosen the tight grip Midwestern farmers had on the hog market. To do so, Murphy realized the only way he could compete was to embrace the latest technology and discover a more efficient method to raise hogs, an approach that would increase his sows' yield and better manage his costs and time. Murphy's experts developed such an approach, and Murphy Family Farms benefitted mightily.

At the time, there was not much science in the centuries-old business of raising hogs for slaughter. Typically, there were between 2,000 and 3,000 hogs on one farm, penned together from birth until they reached the magic weight of 250 pounds. Murphy's experts found this method self-defeating. They divided the life cycle of a hog destined for slaughter into three stages, with the parameters of each stage dictated by the overwhelming need of every hog farmer--and particularly Murphy&mdashø avoid exposure to disease.

Murphy's technicians discovered that during the first two weeks of nursing, a sow passed on vital antibodies to her young. After that juncture, the sow starts passing on diseases. The agriculture experts also pointed out that older hogs pass on disease to younger hogs, making the scenario of 3,000 hogs, young and old, penned together into the same enclosure a recipe for disease. This knowledge prompted sweeping changes in the manner in which Murphy Family Farms' hogs were raised. After piglets turned 15 days old, Murphy took them away from the sows, herded them into sanitized former school buses and shuttled them to the next contract farm. The growing piglets stayed at their second home until they reached 50 pounds, which generally required approximately 50 days. Next, to avoid the diseases passed on by older hogs, that same group of hogs, now 10 weeks old, was sent to a finishing farm for the remaining 21 weeks it took to reach the market weight of 250 pounds. By raising his hogs in this manner, Murphy gained the advantage he needed to shrug many Midwestern hog farmers aside and fuel his rise toward becoming the largest hog farmer in the United States.

Dominance in the 1990s

By the 1990s, Murphy's contributions to the science of raising hogs could be measured on a national scale. Between 1989 and 1994, the number of hogs per farm in North Carolina ballooned five-fold, compared to a 60 percent increase nationwide. In 1989, North Carolina produced 5.4 percent of the country's pork. By the late 1990s, North Carolina produced 11 percent of the nation's pork, second only to Iowa. Murphy's new, science-driven approach to hog fattening was responsible for a discernible shift in the nation's geographic orientation of hog farming.

Underpinned by a proven formula for success, Murphy Family Farms did not restrict its business activities to the boundaries defining North Carolina. The company had done much to tilt the pork production scale in North Carolina's favor, but the Murphy Family Farms' program of hog raising was too successful to remain in one state. Further, the company's system of contract farms made the Murphy Family Farms formula ideal for export into other regions. The company expanded into Iowa in 1986 and a decade later was moving into Kansas, with neighboring states brought under the company's purview during the interim. In each state, the same procedure developed in North Carolina was followed strictly, with the emphasis on creating a disease-free environment as severe as ever. Particular attention was paid to the company's all-important sow farms. Any contract farmers hoping to do business with Murphy Family Farms were forbidden to operate hog farms within one mile of a company sow farm. To enter one of the company's sow farms, visitors and workers were required to shed their clothes, shower, and wear company-provided coveralls and rubber boots. Inside the sow farms, the largest of which housed 3,600 sows constantly mating, gestating, and delivering, workers wore earplugs as a defense against the deafening squeals of a Murphy Family Farms sow farm operating at full efficiency. Inside the nursing rooms, the sound was more soothing, as the songs of Garth Brooks and other singers were piped 24 hours a day into the areas housing piglets. Intended to calm the piglets and accustom them to the sound of human voices, the musical recordings were one aspect of the science employed by Murphy Family Farms to raise as many hogs as possible. Although the methods used by Murphy Family Farms would have struck past generations of hog farmers as eccentric, few could argue with the company's success.

By the late 1990s, Murphy Family Farms was averaging an annual output of an estimated 22 piglets per sow. The national average was less than 15 piglets per sow. In terms of the costly necessity of feeding hogs, Murphy Family Farms again far exceeded the national average. Typically, hog farmers used four pounds of feed to realize one pound of weight gain on a hog. Murphy Family Farms only used three pounds to put on the same weight. Clearly, Murphy's desire to increase efficiency in the 1970s and 1980s had materialized by the 1990s, and his dominance in the industry supported this conclusion. In 1997, after expansion had carried the company outside of North Carolina into Oklahoma, Missouri, Iowa, Kansas, and Illinois, Murphy Family Farms owned 275,000 sows, twice as many as its closest rival, Carroll's Foods, and six million hogs. With this remarkable lead over its competitors, Murphy Family Farms looked to the next century and the continued success of its groundbreaking procedures for raising hogs.

Principal Subsidiaries: Murphy of Oklahoma; Murphy of Missouri; Murphy of Iowa; Murphy of Kansas; Murphy of Illinois.