The packers’ lap dog
Despite over-promised and underpaid by millions of dollars, the 100 or so producer-members of Meadowbrook Farms Cooperative said little during a recent public meeting the U.S. Department of Agriculture’s Grain, Inspection, Packers and Stockyard Administration held to discuss the Feb. 4 closure of the coop’s Rantoul, IL hog slaughtering plant.
The few farmers who did comment, however, startled the two Packers and Stockyards (P&S) guys manning the podium at the Feb. 9 gathering. Don’t give Meadowbrook one cent more of USDA money, they cautioned, because its management can’t be trusted with a dull butter knife let alone a sharp boning knife.
The P&S boys had some startling news of their own for the broken producers: Packers & Stockyards has been investigating Meadowbrook for alleged wrongdoing since last fall.
In all likelihood, the East Peoria, IL meeting was the opening scene of the final act of a value-added, producer-financed packing plant that had tragedy written on it before it opened its $28 million doors in 2004. From the get-go, Meadowbrook’s hired hands creatively used member money, hogs and loyalty to make a bad idea worse.
And worse it got, as this space detailed three times in 2007 and 2008. Payment for pigs was stretched beyond the P&S’ mandated two days to – good grief – 28 days. When checks finally arrived, most were missing 15 to 20 percent, gravy skimmed to, hopefully, cash-flow the coop. Stock that cost $900 per share at start-up dropped, first, to a penny then, in 2008, to nothing.
Worse yet, stock or no stock, members were super-glued to the coop through a contract of adhesion that seemed to be voided only by burial – the dead-as-Caesar, six-feet-deep kind.
In short, the coop was a disaster. In late-2007 interviews with me, a dozen members echoed the same lament: It’s the worst decision I ever made in my farming career.
The final blow came Feb. 4 when coop management closed the Rantoul plant and furloughed its 600 employees. Roger Walk, chairman of Meadowbrook, explained the shuttering to the press that day as “simply a cash flow problem.” Elsewhere, Walk claimed a Meadowbrook customer, Triad Foods Group of Northfield, IL, had welched on a multi-million dollar contract to cause the coop to close.
True or not (Triad Foods’ Chief Operating Officer Brian Brucker, in Feb. 10 interview, said Walk’s “allegations are totally unfounded”), one fact is true: No one at Meadowbrook or USDA told shareholders that on Jan. 15 P&S had raised the coop’s operating bond from $740,000 to $5.97 million.
Hiding that fact proved costly, say farmer members, because the coop – with P&S’s blessing – continued to procure and slaughter members’ hogs for more three weeks despite the likely knowledge by both USDA and managers the coop couldn’t pay for them.
“You guys are supposed to protect us,” one farmer angrily told the P&S folks at the Feb. 9 meeting. “You dropped the ball.” Indeed, and right on members’ heads.
Board Chairman Walk, who attended the Feb. 9 meeting but remained silent, earlier claimed Meadowbrook was working with Rep. Tim Johnson, the area’s congressman, to secure new USDA funding to reopen the plant. Johnson’s office said Feb. 10, however, that Meadowbrook “has serious management issues.”
Whatever happens, the lessons of Meadowbrook are clear. The two biggest are the two clearest. First, farmer-owned, value-added processors have an almost perfect record of failure. The reasons are as many as the lost dollars; in Meadowbrook’s case, that’s an estimated $80 million.
Second, when it comes to livestock producers, the Packers and Stockyards Administration truly is as useless as teats on a boar. It’s not a watchdog for livestock farmers, it lap dog for packers.
© 2009 ag comm