FOOD AND FUEL
Despite being 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 with the USDA’s Grain, Inspection, Packers and Stockyard Administration held to discuss the Feb. 4 closure of the coop’s Rantoul, Ill., hog slaughtering plant.
The few farmers who did comment, however, startled the two packers and stockyards 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 in that P&S has been investigating Meadowbrook for alleged wrongdoing since last fall.
In all likelihood, the East Peoria, Ill., 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 28 days. When checks finally arrived, most were missing 15 to 20 percent, gravy-skimmed to cash-flow the co-op.
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 co-op through a contract of adhesion that seemed to be voided only by burial – the dead-as-Caesar, six-feet-deep kind.
In short, the co-op 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 co-op 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, Ill., had welched on a multi-million dollar contract to cause the co-op to close.
Although 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 co-op’s operating bond from $740,000 to $5.97 million.
Hiding that fact proved costly, say farmer members, because the cooperative, with P&S’ blessing, continued to procure and slaughter members’ hogs for over three weeks despite the likely knowledge by both USDA and managers that the co-op 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.” Right on members’ heads.
Walk, who attended the Feb. 9 meeting, but remained silent, earlier claimed Meadowbrook was working with U.S. Rep. Tim Johnson 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, an estimated $80 million.
Second, when it comes to livestock producers, the P&S administration truly is as useless as teats on a boar.
It’s not a watchdog for livestock farmers, it a lap dog for packers.
Guebert is a syndicated columnist from Delavan, Ill. Reach him by e-mail at email@example.com
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