February 5, 2009

Meadowbrook Farms Inc., a farmer-owned pork cooperative in Rantoul, Illinois, shut down operations this week, a move the company says is temporary.

Market analysts and livestock market managers reported that the plant had halted its hog slaughter operations as of Monday (February 2), and that the company doesn't plan on processing any hogs this week. The facility has a daily capacity of around 4,000 head.

The cooperative has been the subject of rumours for several weeks over its financial stability and from tension between management and some producer-members, according to industry analysts.

James Burke, president and chief executive officer of Meadowbrook Farms, told Dow Jones Newswires in a phone interview that the cooperative was forced to shut down its operations temporarily due to a contractual default by one of its suppliers. The co-op has filed a US$3 million lawsuit against the supplier, Nature's Premium.

Burke said Meadowbrook Farm's core business made a profit of US$1.5 million last year but the Nature's Premium subsidiary lost US$5 million.

Management of the cooperative is working with the US Department of Agriculture and others in an effort to secure a bridge loan on which to operate, Burke said. The plant is temporarily not operating while management works with its lenders to restructure a financial package, he said.

Hourly employees have been instructed to call the company on Friday to check on the status of working next week.

"It's a week-by-week basis," Burke said.

Efforts to reach Nature's Premium for comment have been unsuccessful.