What happened after a Minnesota company received tens of millions of dollars in taxpayer support to reopen an Iowa poultry processing plant but now can no longer afford to pay its bills or feed more than one million chickens? It is a situation that has ramifications on several levels.
The company tried to file for bankruptcy. The courts said no. Taxpayers may again pick up some of the bills, farmers may step in to help, and hundreds of thousands of chickens may be culled.
Finances were untenable for Pure Prairie Poultry, according to its court filings for Chapter 11 bankruptcy.
Assets: $50-$100 million
Debts: $100-$500 million
The company bought the chicken processing plant in Charles City, Iowa, in 2021. The plan was to restart the plant and create 400 jobs by the year, a sizeable commitment for this town of about 7,400 people.
But Pure Prairie Poultry announced that it would shut down the plant, despite receiving $45.6 million in funding from the USDA in 2022 to help expand processing capacity.
RELATED: Here is the USDA release detailing $38.7 million in loans and $6.9 million in grants for the expansion “to strengthen critical food supply chain infrastructure to create more thriving communities for the American people.”
The finances are so dire that chickens were starving and resorted to eating other chickens for survival. That presented an emergency for state agricultural officials in Iowa, Minnesota, and Wisconsin.
RELATED: KTTC-TV in Rochester, Minnesota, reported that Iowa Department of Agriculture officials received an emergency court order to take custody of the company’s chickens. See that story here.
Minnesota Agriculture Commissioner Thom Petersen told Minnesota Public Radio that farmers aren’t to blame for the perilous situation for the chickens; they weren’t getting paid by Pure Prairie Poultry to help feed and care for the chickens.
RELATED: Minnesota Public Radio reported that the USDA will investigate the circumstances of Pure Prairie Poultry’s financial failure. Read that story here.
A “substantial drop in poultry prices starting in the second week of October 2022” that was followed by a year of lower prices hurt the company’s finances and prevented it from reaching revenue targets, according to company Chief Financial Officer George Peichel in court documents as reported by Meat + Poultry.
That decline in chicken prices took place just one month before the company began operations at its Charles City Plant.
The plant employed 138 people. Numerous media outlets have reported that workers have not been paid since the company shut down last week.
Workers hope the company can find a new buyer, and they can return to their jobs. But right now, there is much turmoil spread across three states.
Charles City leaders also hope the facility attracts a new owner. The city did not loan money to Pure Prairie Poultry. But the company owes the city money, according to the mayor, for the land where the facility operated along with overdue bills like stormwater service.
