After receiving an emergency court order, the Iowa Department of Agriculture has taken over the care of 1.3 million chickens owned by Pure Prairie Poultry, a Minnesota company that filed for bankruptcy last month after trying to restart a Charles City poultry processing plant.
Pure Prairie Poultry notified Iowa ag officials Sept. 30 it could no longer buy feed for chickens on 14 farms, mostly in northwest Iowa's Sioux County. Under contract with Pure Prairie Poultry, the farmers feed, house and care for the chickens destined for the company's processing plant in Charles City.
In an Oct. 2 affidavit, state Veterinarian Jeff Kaisand said he or other state ag officials visited all contract chicken operators and found they were either out of feed or close to it. He also contacted local feed mills and found they hadn't been paid and couldn't provide additional feed to the operations.
With the court order, the state agency said it's working with farmers to feed and care for the birds.
Fairfax-based Pure Prairie Poultry announced two years ago it would restart the Charles City plant, thanks to $46 million in financial support from the U.S. Department of Agriculture.
The federal agency said Pure Prairie would receive a $38.7 million loan guarantee and a nearly $7 million grant to reopen and expand the northeast Iowa operation, which was partly owned by independent chicken producers.
On Sept. 20, the company filed for Chapter 11 bankruptcy in Minnesota, saying it owed $100 million to $500 million to between 200 and 999 creditors. The company said it had $50 million to $100 million in assets.
The company warned the bankruptcy court it would have to destroy up to 2 million chickens if not allowed to seek $15 million in financing from a New York investment fund.
The company, however, struggled to get large creditors to agree to taking a subordinate position on the existing debt. It owed about $36.3 million to Community Bank & Trust of La Grange, Georgia, which provided its loan to the company through the USDA guarantee, and about $8.4 million to Bremer Bank of Lake Elmo, Minnesota, court documents show.
A Minnesota bankruptcy court dismissed the case Sept. 27, saying Pure Prairie Poultry lacked the financial ability to fund its immediate operating requirements. The company anticipated $10.8 million in "negative cash flow" over the next six weeks, court documents show.
Pure Prairie Poultry told Iowa ag officials at least one group was interested in purchasing the company, but it was unclear if that would include the chickens.
"Or even if there was interest, whether the various financial institutions with security interests … would approve of the purchase," according to the state's petition for an emergency order.
The state agency said it would seek reimbursement of the taxpayers’ costs, and it had "notified relevant local law enforcement of the situation." The ag department declined to answer additional questions, given possible legal action.
Before the Minnesota company sought to restart the Charles City poultry plant, it had been idle for three years. Pure Prairie Poultry was among about 30 companies or groups nationally in 2022 to receive $223 million in loans, guarantees and grants.
The initiative seeks to lower prices for consumers by creating added meat processing capacity and increasing competition for the nation's pigs, cattle, chickens and other livestock in an industry dominated by four giant processors.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at [email protected] or 515-284-8457.