United States-Pork plant stays closed.
UNITED STATES-PORK PLANT STAYS CLOSED.
The Meadowbrook Farms pork cooperative in Illinois
remains closed after temporarily shutting down operations on Jan. 30 due to
financial difficulties.
The Meadowbrook Farms’ pork plant in Rantoul, Ill., can process about 4,000
hogs daily. Industry analysts and shareholders said the cooperative had been
running at a reduced rate for several weeks because of its financial problems
and a squeeze in its cash flow.
The cooperative has filed a $3 million lawsuit against a customer, Triad
Foods Group, for an alleged contractual default. James Burke, president and
chief executive officer of Meadowbrook Farms, told Dow Jones Newswires in a
phone interview last week that management of the cooperative is working with
the U.S. Department of Agriculture and others in an effort to secure a bridge
loan on which to operate.
There have been reports that the farmer-members of the cooperative have had
payments for the hogs delayed well beyond the timelines originally agreed to in
their contracts with Meadowbrook.
Several members have reportedly filed claims with the USDA’s Grain,
Inspection, Packers and Stockyards Administration, or GIPSA. Some members left
the cooperative in recent months, and a few have exited the hog business
altogether.
Late last week, GIPSA released a notice that representatives of the agency
would hold a public meeting on Monday evening in East Peoria, Ill., "to inform
hog producers who have done business with Meadowbrook Farms Cooperative of
their rights under the trust and bond provisions of the Packers and Stockyards
Act."
A copy of a letter from USDA-GIPSA to Richard Klene, Meadowbrook Farms’ chief
financial officer, dated Jan. 15, was attained by Dow Jones Newswires. The
letter, signed by Alan Christian, acting administrator, stated that the
"current bond," of $740,000, "is not adequate" because Meadowbrook had extended
payments to livestock sellers "significantly past the time payment is normally
due." In addition, the GIPSA administrator said "I have reason to believe
Meadowbrook has been unable to meet even those extended payment terms."
The GIPSA letter also stated that "a bond of $5,970,000 is necessary to
secure the performance of Meadowbrook’s obligations." The cooperative was given
30 days from the receipt of the letter in which to file the bond increase or a
new bond.
Industry analysts and some shareholders have said the reason the plant shut
down on Jan. 30 was because it was unable to raise enough money to meet the
bond and continue to operate.
The hog supplies that had been going to the cooperative are now being
absorbed by other packers in the region.
