Creditors Force Broiler Depopulation

OMAHA (DTN) -- Roughly 1.3 million healthy broiler chickens in Iowa were depopulated rather than processed for food after creditors for Pure Prairie Poultry forced a potential buyer to back out of an offer to buy and process the birds.

The Iowa Department of Agriculture and Land Stewardship (IDALS) late on Friday issued a news release detailing its attempts to feed and manage the 1.3 million chickens after Pure Prairie Poultry shut down its operations of a processing facility in Charles City, Iowa, at the end of September.

Based on average prices for five-pound whole chickens in Iowa grocery stores, somewhere between $9.5 million to $12.2 million in retail value for the chickens was lost as they were depopulated rather than processed and sold for food.

Pure Prairie Poultry had as many as 50 growers in Iowa, Minnesota and Wisconsin, though Iowa had the lion's share of farms and chickens affected when Pure Prairie Poultry closed its doors.

Pure Prairie Poultry shut down at the end of September when its federal bankruptcy case was dismissed by a federal judge. The Minnesota-based company received a $38.7 million guaranteed loan from USDA and a $6.9 million grant to reopen a processing plant in Charles City, Iowa, in 2023.

IDALS went to court on Oct. 2 and secured an emergency order to feed and care for the birds on 13 Iowa farms. A court hearing was set for Oct. 8 to approve a final plan to handle what would happen to the chickens.

According to details from IDALS, the department had an offer to buy all 1.3 million chickens and have them processed as they reached market weight, pending court approval. On Oct. 7, the day before the hearing, attorneys for Pure Prairie Poultry's creditors notified IDALS "that they would assert their lien rights and security interests in the chickens, including against the buyer's proceeds from the sale of the post-processed meat. Citing costs surrounding potential litigation due to the lien claims, the buyer backed away from their offer."

At the court hearing on Oct. 8, the parties agreed to find another option for selling and processing the birds with another hearing set for Oct. 11.

IDALS stated the department pursued other potential buyers and "even explored whether the broilers could be processed and donated to help Iowans facing food insecurity." But the liens and claims from Pure Prairie Poultry's creditors complicated that situation. "After exhaustive efforts, no credible offers or proposals materialized."

A state judge on Oct. 11 granted IDALS authority to begin depopulating the broiler operations, beginning with the largest and least marketable chickens "in the unlikely event that a credible last-minute market solution could be found for some of the younger broilers."

IDALS noted, "Though the Department believes depopulation should always be a last resort, it provides finality to this unfortunate circumstance, limits the ever-increasing costs to the taxpayers of Iowa and prevents any potential animal welfare issues."

The state began culling the chickens on Oct. 17 using methods approved by the American Veterinary Medical Association. By Friday, Oct., all of the chickens on Iowa farms had been depopulated and each farm is now composting the chickens to dispose of them. IDALS stated the department will now pursue avenues to recoup taxpayer costs, though IDALS did not state how much it cost to cull the birds.

Iowa Secretary of Agriculture Mike Naig questioned USDA's oversight for providing funding to Pure Prairie Poultry.

"This is an incredibly unfortunate situation and raises serious questions about USDA's oversight of taxpayer dollars," Naig said. "Congress should exercise its oversight authority to ensure that something like this does not happen again and that those responsible are held accountable."

A spokesman for IDALs told the Iowa Capital Dispatch that the department spent more than $1 million feeding the birds and dealing with the situation, but the total costs could reach $2 million once culling and disposition of the chickens is completed.

Pure Prairie Poultry was one of 200 independent meat and poultry processing facilities nationally that received USDA funding to open or expand starting in 2022. The Biden administration had set a goal to invest $1 billion in local processing plants following food disruptions during the pandemic.

USDA had stated the department is collecting claims from Pure Prairie Poultry to determine if there are valid claims for growers under the Packers and Stockyards Act.

Wisconsin Sen. Tammy Baldwin, a Democrat and member of the U.S. Senate Agriculture Committee, had called on USDA to provide assistance to farmers impacted by the closure.

A group of Republican lawmakers mainly from Iowa, but also Minnesota and Wisconsin, also wrote a letter to Agriculture Secretary Tom Vilsack complaining about the lack of oversight for loans and grants awarded to Pure Prairie Poultry. The lawmakers had a list of ten questions about USDA's handling of the situation. House Agriculture Committee Chairman Glenn "GT" Thompson, R-Pa., signed on to the letter along with Sen. John Boozman, R-Ark., ranking member of the Senate Agriculture Committee.

Also see "USDA Looking Into Claims Poultry Growers Weren't Paid in Failed Broiler Plant" here: https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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