USDA Works With Farmland on Meat Supply

June 3, 2002

USDA is working with Farmland Industries in an effort to make sure Farmland's pork and beef divisions continue "orderly" operation in the wake of a Chapter 11 bankruptcy filing announced Friday. Farmland said it planned to maintain its operations throughout reorganization but said its work force would be reduced.

THE ASSOCIATED PRESS reported the cooperative's third quarter ended Friday, the same day a $10 million payment was due on a $500 million loan it received in February. Smithfield, the world's largest hog producer and pork processor, had offered to buy all or part of Farmland to help it cover the loan payment. The offer was made in a letter Smithfield executive vice president Richard J.M. Poulson sent on Thursday.

However, no agreement with Smithfield was reached, and Farmland proceeded with Chapter 11 protection. Farmland officials did not say how the negotiations broke down.

Agriculture Secretary Ann M. Veneman said USDA "will do everything in its power to protect the interests of individual pork producers during the reorganization of this farmer-owned cooperative."

She said auditing teams from Grain Inspection, Packers and Stockyard Administration were on site at Farmland's three packing plants as well as at corporate headquarters in Kansas City. Auditors will review Farmland's payment practices and the assets available for payment if trust claims are filed under the Packers and Stockyards Act.

The corporation also has a bond as required by law to ensure that it can meet its payment obligations. USDA has received no producer complaints regarding Farmland's payment practices. "Farmland has assured us that they will continue to purchase hogs during this reorganization, and that their beef operation, Farmland National Beef, is not affected by this filing," Veneman said.