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Agriprocessors down, but not out
(MeatPoultry.com, December 03, 2008)
by Bryan Salvage


 
Related stories
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    (MEATPOULTRY.com, December 02, 2008)

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    (MEATPOULTRY.com, November 24, 2008)

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    (MEATPOULTRY.com, November 21, 2008)

Former Agriprocessors c.e.o. arrested for bank fraud
    (MEATPOULTRY.com, November 17, 2008)

Agriprocessors seeks bankruptcy protection
    (MEATPOULTRY.com, November 06, 2008)

CEDAR RAPIDS, IOWA – On Dec. 1, a bankruptcy court in New York approved a $2.5 million advance from First Bank Business Capital of St. Louis that will allow the reopening of the Agriprocessors Inc. kosher meatpacking plant in Postville, Iowa, according to The Associated Press. Production may begin this week, said Joseph Sarachek, a court-appointed bankruptcy trustee.

The money will allow Agriprocessors to resume processing its inventory of approximately 750,000 chickens through Jan. 9 and in the process could also help ease a nationwide shortage of kosher meat.

According to budget plans, 140 production employees will work 50 hours a week through Jan. 9. It also includes 10 administrative staff and four managers, plus 10 workers at the company's distribution center in New York. The budget also includes money for rabbis to supervise the slaughter to ensure it meets kosher standards, AP said.

In May, the plant was hit by an immigration raid and it has struggled to survive after nearly 400 people were arrested. Charges have been filed against the company and some of its officials and employees. Last month the company filed for bankruptcy, and in recent weeks production at the Postville plant had ceased.

When asked how kosher meat customers and consumers who buy kosher meat in the U.S. would be affected should Agriprocessors eventually go out of business, Dr. Joe Regenstein, a professor of Food Science in the Department of Food Science and Institute of Food Science at Cornell University, told MEATPOULTRY.com, "First off, please note that Agri is the largest glatt kosher [a standard of kashrut that requires an additional degree of stringency in the inspection of the lungs of cattle, to determine whether the lungs are free from adhesions] producer — but not the largest kosher producer. The fact is that because of their distribution, many non-glatt customers have to buy glatt meat. So the likelihood is that various glatt and non-glatt operators will fill large parts of the void.

"The real issue is distribution into the smaller communities – especially since many of those were tied to the Chabad communities in those towns and those folks only want meat by their own slaughterers," he added. "So it is fairly complex as to how the politics [as opposed to actual meat supply] will play out."

When asked to further expand on how a kosher meat void would be filled should Agriprocessors cease operating, Dr. Regenstein answered: increase production at the rest of the plants; develop more non-glatt retail distribution; select better cattle for going into slaughter; increase poultry production, which is easier, and switch to poultry until competition covers the market.

"Expect prices to rise, which will dampen demand — although some would argue that Rubashkin [Sholom Rubashkin, the former chief executive officer of Agriprocessors Inc.] used monopolistic power to actually raise prices," he concluded.