Actually, the Orcs were produced (not by yanking them out full-grown wrapped in goo from the ground, as in the movie) by the evil Valar Melkor (Sauron's Boss) in the time after the creation of the Elves in Middle-Earth, but before Men were created.
Sauron captured Elves and experimented on them, torturing and deforming them until they produced the Orc "race." Orcs mate and produce little Orcs in the (presumably normal, for them) way. If they are black, it's because they were made that way by Melkor.
They apparently like to go on abducting sprees, capturing Elf women, and at least one Human character in the book (Bill Ferny in the town of Bree) is said to look as if he might have some Orc in his ancestry.
I find this very curious because Tolkien was apparently almost entirely ignorant of the current science of the day (1930s or so) and yet was able to work into his story a point that even most science fiction of the day didn't even approach, with perhaps the exception of HG Well's Island of Doctor Moreau. Of course in today's atmosphere, with scientists creating human/pig and human/mouse hybrids, it's even creepier.