When a Midwestern poultry processor closed abruptly in early October, chickens were left without food. Banks and feed companies were left without money they were owed. Growers were left without a clear future. And state agriculture officials were left to pick up the pieces.
Farmers and agriculture departments in Iowa, Wisconsin and Minnesota have spent the past few weeks scrambling to figure out what to do with roughly 2 million chickens left behind by Pure Prairie Poultry, which stopped paying for feed on Sept. 30 amid financial struggles that ended with the plant being shuttered.
More than two and a half years ago, Pure Prairie took over the Iowa plant after a previous owner went bankrupt. Armed with $45.6 million in loans and grants from USDA, it embarked on an expansion it hoped would solidify business. But it filed for Chapter 11 bankruptcy last month only to ask for the case to be dismissed amid a lack of support from creditors.
Some 50 poultry growers held contracts with Pure Prairie, based in Charles City, Iowa. While documents filed in Iowa state court indicate at least one entity has expressed interest in buying the company, a deal would need approval from several lienholders.
The state of Iowa has taken custody of roughly 1.3 million birds, though Minnesota and Wisconsin officials lack legal authority to do the same for the estimated 800,000 within their borders. Some birds have been slaughtered by outside processors; others have been killed.
USDA spokesperson Allan Rodriguez told Agri-Pulse that the agency is in close contact with officials from the affected states. Growers that contracted with the company may be eligible for assistance under USDA’s mandatory poultry trust or state-level indemnity programs, he added.
“We encourage producers to reach out to their respective state department of agriculture to make use of these resources, if available, or otherwise file a written notice of a claim through USDA’s Agricultural Marketing Service,” Rodriguez said. He also suggested it may be possible to find a way for the facility to recover profitability with assistance from USDA and state agriculture departments.
Pure Prairie Poultry building. Photo credit: USDAMinnesota Agriculture Commissioner Thom Petersen said he understands that USDA will be “launching an investigation” into the closure.Pure Prairie, a Minnesota corporation, bought the Iowa plant in December 2021, Chief Financial Officer George Peichel wrote in a court filing. The previous owner, Delaware-based Simply Essentials LLC, declared bankruptcy in 2020 due to the company's inability to make timely payments to growers it contracted with, despite “extensive remodeling efforts” in 2016 and 2017, he said.
High poultry prices in July 2022 gave executives hope that selling whole chickens would provide short-term revenue while they sought loans to expand the facility to process 336,000 birds per week and produce a wider array of poultry products. Their expectations were dashed when prices dropped in October 2022. Still, they moved forward with plans to begin processing whole birds that November.
The company was making little revenue by January 2023, but a $6.9 million grant from USDA's Meat and Poultry Processing and Expansion Program provided “gap financing” as it awaited a $39 million Food Supply Chain Guaranteed Loan from the agency, which came in April 2023.
Over the course of 2023, Pure Prairie worked to expand the plant to process additional poultry products, which it intended to sell to grocery stores in Minnesota, Iowa, North Dakota, South Dakota, Missouri and Nebraska. It finished in November of that year. But despite the additional processing capacity, it has since seen $38 million in operating losses, Peichel said.
As of Sept. 16 of this year, the company had more than $2.6 million in unpaid feed costs, court documents show. It also owed $33.3 million to Community Bank and Trust in LaGrange, Georgia; $145,792 to Ford Credit in Dallas, Texas, and $95,744 to Union Bank and Trust in Lincoln, Nebraska. It filed the Chapter 11 request Sept. 20 but asked that the case be dismissed after creditors objected. A bankruptcy court granted the request.
By the end of September, poultry growers were running low on feed. Some had completely run out. Pure Prairie had no more money to pay for it, Peichel told Iowa State Veterinarian Jeff Kaisand on the morning of Sept. 30, according to documents filed in Iowa state court.
On Oct. 2, Iowa Attorney General Brenna Bird urged a county judge to allow the state’s agriculture department to take custody of the birds to prevent starvation. The judge granted the state temporary custody pending a hearing. The Iowa Department of Agriculture ordered additional feed from mills that previously supplied Pure Prairie, reimbursed growers for continuing to house the birds and added a poultry industry expert to its staff.
Meanwhile, Kaisand, the state vet, searched for a processor interested in purchasing the chickens, but conversations with Lincoln Premium, Petersburg Poultry, AgriStar and Miller Poultry were unsuccessful. Tyson Foods initially expressed interest in paying 50 cents per bird, but it dropped out of the deal after other parties in the case threatened to sue if the court granted the packer “clean title” to the animals.
As of Oct. 10, the Iowa Department of Agriculture had not yet found a place to send the chickens. It had received an offer from one processor, Pitman Farms, for fifty cents per bird. While the state considered the offer, officials also took steps to prepare for possible depopulation of the chickens.
“While [the Iowa Department of Agriculture] believes depopulation should be a last resort, given the lack of processing capacity and willing buyers for the chickens, combined with the ever-increasing feed and yardage costs for the chickens with no certain end-market, depopulation provides the state and everyone, with finality to this unfortunate circumstance and limits the costs to the citizens of Iowa,” state attorneys wrote in an interim plan for disposition.
After an Oct. 11 hearing, judge Patrick Tott told attorneys for the Iowa Department of Agriculture that the state could begin putting the chickens that had reached marketable weights on finishing diets. If it did not strike a deal with a buyer by Oct. 16, it could place smaller chickens on similar diets and begin depopulating.
State officials in Minnesota and Wisconsin were also grappling with how to deal with the incident. Both lack laws like Iowa’s that would have allowed them to take direct control of birds.
Thom Petersen
Minnesota Agriculture Commissioner Thom Peterson told Agri-Pulse that Pure Prairie had roughly 300,000 or so birds on around five farms in his state. Some have since gone on to processors; others have been killed. State officials helped where they could, urging feed companies to keep impacted chickens fed, finding processors willing to take birds and ensuring poultry were killed under American Veterinary Medical Association standards.
“I want to be very clear, what the state did is offer assistance,” he said. “We didn’t take control. We didn’t tell them what they had to do. We assisted in trying to find homes for those birds.”
While court documents indicate around 400,000 of the company’s birds were in Wisconsin, State Veterinarian Darlene Konkle said in an Oct. 7 letter that state officials had an “incomplete understanding” of the number of impacted birds and farms in the state. Konkle’s letter said three growers had not received feed by Oct. 7. One farmer, she wrote, “described conditions that are very concerning for the welfare of the birds.” She urged Pure Prairie to feed, process or euthanize the chickens.
On Oct. 11, People for the Ethical Treatment of Animals (PETA) urged Wisconsin authorities to step in, saying chickens at some farms had gone unfed for more than a week and were resorting to cannibalism. The Wisconsin Farmers Union warned the same day that growers likely would have to kill “tens of thousands of birds” they could not afford to continue feeding and urged federal and state governments to offer financial aid for processing and depopulation.
Samantha R. Go, communications director for the Wisconsin Department of Agriculture, Trade and Consumer Protection, said the agency pulled together a group of experts and is coordinating with the company, impacted growers and the federal government on potential paths forward.
“We will continue to work with partners on this issue in an effort to support the farmers and find potential federal or regional resources to support them,” GO said.
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