When it comes to work, Murphy-Brown goes 'whole hog.' The livestock production business is the world's largest hog producer. Murphy-Brown maintains some 850,000 breeding sows (more than 90% of which are genetic lines that produce the leanest hogs possible) and brings to market more than 17 million hogs annually. It operates about 450 company-owned farms in a dozen states. The company extends its hog production through partnerships with more than 1,500 independent farmers and contract growers in the US. Murphy-Brown is part of meat maker John Morrell, itself a subsidiary of pork-processing giant Smithfield Foods.
Stationed in Warsaw, North Carolina, the company has a dozen facilities in Colorado, Illinois, Iowa, Missouri, North Carolina, South Carolina, Oklahoma, Pennsylvania, South Dakota, Texas, Utah, and Virginia.
The company is part of Smithfield Foods' Pork segment, which accounted for 84% of its parent's revenue in 2013. Sales for this segment declined slightly in 2013 as high pork supplies contributed to lower average fresh pork sales prices. Fresh pork sales volumes increased as a result of higher slaughter levels and hog weights.
Packaged meats sales volumes increased across all trade channels. Lower average unit selling prices of private label products were largely offset by higher sales prices in our core brands. Fresh pork operating profit decreased to $6 per head from $8 per head due primarily to lower sales prices.
Murphy-Brown's profit or loss has traditionally been tied to the market price for live hogs and the cost of animal feed. (The higher the price and lower the cost, the better its results.) Ownership of its hog supply is intended to help Smithfield Foods reduce its exposure to the swings in price and cost, usually passed onto pork processors through higher prices. Nonetheless, following a consecutive three-year operating loss in hog production, which put a dent in Smithfield Foods' results, the parent announced plans to place Murphy-Brown on a cost savings initiative.
In fiscal 2011 hog production managed to regain profitability, in part due to the parent's sale of its interest in a Butterball joint venture, formerly accounted for under hog production. Hog production farms in Oklahoma, Iowa, and Texas, which did not supply Smithfield Food pork processing plants, were also sold.
Among other areas addressed in the cost savings initiative, Smithfield intends on reconfiguring and converting farms, axing high-cost, third-party hog-grower contracts and breeding stock sourcing contracts. In 2011 about 65% of its market hogs were bred on contract farms.