A self-professed non-traditional thinker, Bob Christensen has guided Sleepy Eye, MN-based Christensen Farms through three bold acquisitions and a partnership in the newest pork processing facility in North America.
Raised on a diversified cattle, hog and crop farm, Christensen's formal education ended with high school. Dubious about cattle and crops, he chose to focus on hogs. His “informal” education was kicked into high gear during a tour of North Carolina and Georgia pork operations in the mid-'80s, which he describes as “pivotal” in his early, hands-on education.
In a span of just over 20 years, the meager, yet optimistic company that began with two bred sows owned with his brother, Glen, has grown to rank Christensen Farms amongst the top five in the nation.
Through intensive study, observation and application of the principles that worked for others, Christensen recognized and grasped opportunities as they presented themselves.
“In the Midwest, you'd build a building this year and then another one next year, but the people's work processes and the pig flow never fit together very efficiently. When I saw what it was like to build a 1,200-sow farm all at once, to have things fit and flow, it was very striking to me how much you could change the way things would work.”
Christensen tends to mark time with pivotal moments in his life. “Substantial changes in the scope of the business have corresponded with times where the agriculture sectors — typically, in the swine sector, as well — were in periods of some chaos,” he says.
The farm crisis hit in 1985. Virtually no new capital assets were constructed for several years, and many of the confinement facilities in the Midwest sat empty. “Bankers weren't even willing to lend money on a group of feeder pigs,” he remembers.
As his non-traditional thinking kicked in, Christensen saw the vacant buildings as an opportunity, and began paying area farmers to finish pigs. “That worked so well, we quickly outstripped the availability of pigs, so we began purchasing pigs and placing them. That's what lead us into contract production,” he explains. “And, we learned how to move pigs a long distance without suffering any substantial production challenges.”
Soon, feeder pigs were more difficult to find, and more expensive. “We kept increasing our sow base, and by the late '80s, I could see the handwriting on the wall — if we didn't learn to create our own supply of pigs, this business was going to be too volatile,” he says.
Drawing on his knowledge of large buildings, tunnel ventilation and other Southeast standards, Christensen Farms built their first 1,200-sow farm in 1990. “We set ourselves up to create large groups of single-source, high-health pigs,” he says.
In the early '80s, the Christensens also took a non-traditional course for a southern Minnesota pork production system by constructing their own mill to handle their largest input cost — feed.
Growth by Acquisition
A pivotal point for many producers came in the dismal months closing 1998 and early in 1999. “The whole industry was reeling with the shock of hogs under 25-30¢, then down to 10 cents,” he remembers.
Particularly hard hit was National Farms in Nebraska, struggling with inefficiencies, inadequate genetics and herd health issues. Christensen's evaluation of the assets was relatively simple: What is it today? What can we change? How fast can we change it? What will those changes mean?
“National Farms was a good, solid asset. It had some age to it, but it also had a well-trained, stable staff with a tremendous amount of pigmanship,” he explains. The herd health was not so good, however. “It was simpler to list the diseases they didn't have.”
Top on the list was the dreaded porcine reproductive and respiratory syndrome (PRRS). “We didn't want 15,000-20,000 sows in one location that were PRRS-naïve, so we populated it with PRRS-positive females,” he says. “We'd look at it differently today, but at that point, it was the right thing to do.”
Built as farrow-to-finish sites, any significant finishing activity was discontinued and many of the production processes were streamlined.
Purchased in late 1999, the firm also faced considerable litigation with neighbors, largely dealing with manure handling issues. “In most cases, if you go out and meet these people and understand what's happening, the requests of the vast majority were very legitimate — odor and how the effluent was being handled,” he says.
Manure management and handling practices were revamped, bringing more “simple awareness” to the process, he explains.
About two years later, always up for a challenge, Christensen took a look at another hog operation under duress — the much-maligned, 15,000-sow ValAdCo operation near Renville, MN.
“It had a long history of difficulty with neighbors, to the point where the attorney general had been involved prior to our agreement to buy it,” he says.
Substantial changes were made with the waste handling — managing the lagoons better and differently.
“Today, a good share of the manure is going on the land operated by the people that were pretty upset with ValAdCo,” Christensen adds. “Most problems can be solved by standing back and determining, ‘what is the right thing to do?’ The solution is rarely the easiest or most economical, but it's an approach that has generally served us well.”
The most recent and sizeable acquisition occurred in 2004, with the purchase of Heartland Foods' pork production, which expanded Christensen Farms' sow count by about 40%.
“Unlike our prior two acquisitions, where there had been a tremendous amount of difficulties with neighbors and regulatory agencies, Heartland had a clean environmental record. It was a well-positioned asset base, but the industry had been through almost six years with very little profits,” he says.
Looking beyond that meager stretch, Christensen reminds: “Always remember, the cure for low prices is low prices. Eventually, it creates demand.
“I was optimistic about the market, but clearly not to the extent that we've experienced the last 10 quarters,” he adds. “I knew it was a system that could raise a high-quality product at a very right cost. Having gone through the previous acquisitions, I was comfortable that we could make some changes, very rapidly, to enhance the results of the asset base and the people there.”
From Christensen's high school graduation in 1980 to today, Christensen Farms has increased their sow herd over a thousand-fold, now holding at about 160,000 sows.
Then Came Triumph
Christensen says candidly that joining the more integrated systems by investing in the packing side was not a high ambition.
“Honestly, given a blank sheet of paper and 100% freedom of choice, I really would not have gravitated that way. I really enjoy the live pig side,” he says.
“At the same time, when you look at the asset base here, we're 75-78% of the way towards completing the food chain. When you combine that with the volatility we experienced in '98 and '99, and the age of the processing assets out there, we needed to consider it.
“And, with the operating efficiencies and the advantages that come with a bare piece of land and building a plant correctly — in terms of product throughput, labor, quality of workplace, and most importantly, for food safety and lowest bacteria count — it's an opportunity that's awfully difficult to beat,” he adds.
The new Triumph Foods' plant, with a single-shift capacity of 1,000 hogs/hour, is capable of slaughtering about four million hogs annually.
“Our strategy with marketing has always been to stay fairly diversified,” explains Christensen. “Developing the Triumph Foods' plant in St. Joe is another marketing option to us, and many others. It changed our situation in terms of live supply-to-shackle space, which is extremely important to anyone in live production.
“I believe if you've got the pig ownership to match up to a new plant, it will be an extremely successful investment,” he continues. “But, to build a new plant and procure 4.5 million hogs on the open market — that is extremely risky.”
Success in Business
Christensen credits many people from all facets of business for his ongoing education in the pork production and processing business. “I tapped into a lot of different places, then balanced what one expert said against another,” he says.
“As we transitioned to a hired workforce, we had to make sure the system was set up in a way that was executable by the people in the field. We sometimes find ourselves with the grandest plan, but we forget about the people and what they have to do, day-to-day, to make happen what we've decided should happen,” he cautions.
Christensen closes with this sage advice: “You clearly have to be on the leading edge; but first and foremost, you need to understand the difference between the leading edge and the bleeding edge. Sometimes that's a real fine line. Take the time to understand the cause and effect all the way through. Good times never last and bad times never last. Be proficient enough at what you do so that you're there towards the end.”