Sit down for a visit with Wendell Murphy and his son, Dell, and some words will flow easily into the conversation — dedication, hard work, community, family.
Another word has crept into their daily vocabulary in recent years — diversification.
The story of Murphy Family Farms' phenomenal growth from feeding feeder pigs in dirt lots behind the mill at Register's Crossroads, NC, to the world's largest pork production system is widely known. When the family business sold to Smithfield Foods in 2000, many thought the Murphy family's chapter on pork production had closed.
Not so. The Murphy's retained some of the family-owned farms with the understanding that they would raise hogs under contract for Smithfield Foods.
As 42-year-old Dell explains it: “Anything that goes in or on the pigs is the integrator's (Smithfield's) cost. The parts and pieces that don't go in or on the pig are generally the contract growers (Murphy's) responsibility.”
The current Murphy-owned farms provide Smithfield with 3-week-old or 10-week-old pigs, depending on the facility they come from, then raise them in finishing barns to about 270 lb.
“Each time they move, Murphy-Brown (the production arm of Smithfield Foods) pays a fee for our facilities and services, the same as occurred under the original Murphy Family Farms contract,” explains Wendell.
But the sale left the Murphy's without an infrastructure to support their farms. They formed Murphy Family Ventures (MFV) to help fill that void.
Dell sees the services of the MFV swine production group as comparable to the Midwestern model of veterinary clinics and consultants assisting with management of pork production systems. “That's only done on a very small scale in North Carolina,” he explains. “We'd be interested in helping others add value to their systems and to utilize our production management services more efficiently.”
The MFV swine production group, which has grown to 625 employees, now manages nearly 150,000 sows, roughly 3.2 million feeder pigs and nearly 375,000 market hogs annually in North Carolina and Missouri.
“North America has all the sows it needs,” says Wendell. “So, we will update our existing production facilities as needed, and focus on diversifying our investments.”
Beyond Hogs
Murphy Family Ventures provides support services to all businesses owned by the Murphy Family and others. MFV is currently comprised of eight divisions and about 800 employees. In addition to swine production services, MFV Support Services division provides management support to grain sales, hospitality services, golf and recreation, turkey production, land development (River Landing), portable storage (Pack-M) and investment management services.
While Wendell Murphy expanded the hog enterprise, his brother, Pete, concentrated on developing a private, gated community nestled on the banks of the Northeast Cape Fear River near Wallace, NC. Opened in 1996, River Landing boasts over 1,400 acres and features homesite options with prominent custom home builders offering multiple designs.
The meticulously planned community features walking and biking trails, a 36-hole Clyde Johnston-designed championship golf course, a tennis complex, junior Olympic-style swimming pool, regulation basketball and volleyball courts and an elaborate fitness center. Just outside the gate sits The Mad Boar Restaurant, an award-winning Holiday Inn Express & Suites and an upscale convenience market.
Dell assumed management of the land development division in late 2003. “We come from the commodity side of the hog business, where low cost is everything,” he explains. “To be flat honest, the amount of money we've spent on amenities — at one point, I thought we were out of our minds. But, without question, the quality and the marketing of what Uncle Pete originally set up has really made it successful. We have doubled sales each of the last three years.”
River Landing is located in Duplin County, the largest hog-producing county in the nation. Planned expansion will envelop an early Murphy Family Farms' pork production site, long since closed. “Never in the world would I have ever thought that property in rural Duplin County would sell like this,” admits Wendell.
Veering off in a totally different direction is MFV's Pack-M, a franchise under the parent company known as 1-800-PackRat. Pack-M deals in 12- or 16-ft. portable units that are delivered for on-site storage or removed to an environmentally controlled warehouse.
“When we started thinking about a new venture, that is not something I would have ever thought about,” admits Wendell. “But, around here, mini-warehouses are everywhere — and they're all full.”
MFV owns the franchise rights to 40 locations in the Southeast. Six locations are scheduled to open in 2006.
Reflections of '98
The 4-5 years prior to the Smithfield sale were rough years.
“It was awful,” remembers Wendell. “We had always been so conservative. From the time we opened our feedmill in 1962 until 1998, we had never had a losing year.
“When you see yourself losing that much money, like in '98, I guess I became paranoid,” he continues. “It suddenly appeared to me that the packer-processors were trying to use that as an opportunity to drive the producers out of the business so they could integrate. Clearly, I was wrong about that.”
In truth, Murphy expected the hog industry to go the route of the poultry industry, so he had been negotiating with Smithfield Foods' Joe Luter, off-and-on, for a decade. “Every time we would get close to a deal, the complexities would make me uncomfortable and it would fall apart,” he says.
Murphy investigated building or buying a packing-processing facility, but by the late-'90s, getting a permit was impossible, and attempts to purchase a plant were exhausted.
“I felt like we needed to own a processing plant if we were going to own all of these hogs,” Wendell explains. “We wanted to hedge our bet on the downside of the market. It would have helped offset some of the losses on our live hogs in '98 and '99. If we'd been successful in doing that, we probably would not have sold Murphy Family Farms,” he says.
“I do want to dispel one notion, however, because there were a lot of people that probably thought we were in a distressed situation. That absolutely was not true,” he assures. “Yes, we had lost millions. But, we had made and saved millions, too. We were a strong company when we merged with Smithfield.”
Beaten Down
“From the day we opened our milling business on Labor Day in 1962, with zero dollars in the bank, until February 1995, when the (Raleigh) News & Observer ran their so-called ‘Boss Hog’ series, nobody ever enjoyed their career like I did,” emphasizes Wendell. “My daddy, brother and brother-in-law were the labor force, the management, the financial officers. It was so much fun; you just can't imagine how much pleasure I got out of getting up and going to work every day.”
The Boss Hog articles focused on the supposed negative environmental impact of the substantial growth of hog production in North Carolina.
“When ‘Boss Hog’ came along, the pleasure went south,” he continues. “From 1995 until 2000, when the merger occurred, I spent almost zero time working and managing the business. I spent all of my time trying to deal with the political fallout that was coming as a result of that newspaper.
“When the News & Observer wrote the series, at first it was really painful. It was directed at the hog industry in general, but more specifically, it was directed at me. According to the series, I was the one who had served in the legislature and had gotten all of the laws passed that made it easier for farmers to raise hogs. And, I was responsible for all of the lagoons. Every hog that ever pooped in North Carolina was my responsibility!” he states.
For five years, Murphy withstood what seemed to be a daily barrage in the state's most influential newspaper. “In 1999, my craw was full, so I decided to go ahead with the merger. It was a conservative thing to do, but I had been beaten so hard by the News & Observer, and politically, that I just couldn't take it any longer. When we did the merger, it all went away,” Murphy says.
“I'm often asked, in hindsight, if it was the right thing to do,” he continues. “Financially, probably not. We probably would have made more money if we had kept the hogs, with the way the hog market's been the past several quarters. We probably would have made a lot more money than we got for the business. But, I'm pretty sure that I'm going to live longer. The fun was gone. So, yes, it was the right thing to do.”
Sustained by Family Values
Murphy family members profess to be conservative by nature, an attribute they inherited from family elder Holmes Murphy, a Depression-era survivor.
As Dell tells it, his grandfather's conservative values were impressed upon his father, and passed on to him. “I think that has been a major key to our family's success. It doesn't sound like a blessing, but in a way it has been. It makes you humble and appreciative.”
Another family attribute is a dedicated work ethic that has sustained the Murphys from the developmental years to the present. “The most important thing that my Dad taught me was to work, and to enjoy working. I think that was the greatest thing of all,” Wendell declares.
Also important was the emphasis Wendell's parents placed on education. “They made it clear, 12 grades were not it — you were going to college,” he notes. Holmes Murphy set aside an acre of tobacco for that purpose, and Wendell tended that acre. He treasures the education he gained at North Carolina State University as a result. Today, he serves as chair of the school's Board of Trustees.
Dell, too, credits his father for his work ethic. Outside the family, he recognizes Randy Stoecker, currently president of production operations for Murphy-Brown-West, and Jim Stocker, retired president of Murphy Family Farms.
“As the company grew and Dad was in the legislature, I was trying to get in the groove,” Dell explains. “They were my mentors — Jim from the conservative point of view, and Randy as a visionary. As the company grew, the support of such talented people as Jerry Godwin, and the scientific efforts of Terry Coffey, Jim Ludes and Jeff Turner, were invaluable.”
“We are proud that Smithfield Foods chose the Murphy Family Farms management team to manage their hog production assets nationwide,” adds Wendell.
“I try not to reinvent philosophy,” says Dell. “Everything that I learned from my Dad and Granddad is working: Treat people with respect; treat them like part of the family; and do things that are inconvenient at times, if that's what you need to do.”
Wendell reinforces the thought: “That's one thing I learned early on — if you're just going to do what's convenient, you're going to leave a lot of important things undone.”
