Pink Slime Bankruptcy: Beef Processor AFA Foods Files For Chapter 11 Amid 'Pink Slime' Uproar

* Cites "changes in the market" for ground beef products

* Says plans to sell some or all of its assets

* Industry may not recover from the controversy - expert

By Tanya Agrawal and Andrew Stern

April 2 (Reuters) - Ground beef processor AFA Foods filed for bankruptcy protection on Monday, citing the impact of the uproar over a meat filler dubbed "pink slime" by critics.

Meat processors have faced a backlash over the use of an ammonia-treated beef filler they call "finely textured beef." Food activists have campaigned to have it banned, but supporters say the product is safe to eat.

AFA is one of the largest ground beef processors in the United States and produces more than 500 million pounds of ground beef products annually, the company said in documents filed in U.S. Bankruptcy Court in Wilmington, Delaware.

In filing for bankruptcy, it cited "recent changes in the market" for its products and media coverage related to the filler, and said it was seeking a sale of some or all of its assets. AFA owner Yucaipa Companies, the investment firm founded by Ron Burkle, could not immediately be reached for comment.

The backlash over "pink slime" has prompted companies such as Beef Products Inc (BPI) to halt production at some of its plants and has led some big U.S. supermarket operators, including Safeway Inc and Supervalu Inc, to say they will stop buying the ammonia-treated beef.

The impact of the controversy is far-reaching, said Gary Acuff, director of the Center for Food Safety at Texas A&M University in College Station.

"The public view of this product is pretty damaged at this point," Acuff said. "I'm not sure they'll recover from something like this."

Jeremy Russell, of the National Meat Association, said "this is certainly going to have an economic impact on the industry" from cattle ranchers to meat processors, affecting thousands of jobs.

Ground beef makes up a "big part" of the overall meat market, and prices are sure to rise, he said.

The phrase "pink slime" was first used by a former USDA microbiologist, Gerald Zirnstein, who used the term in a 2002 email to co-workers after having toured a BPI plant. The current debate began after celebrity chef Jamie Oliver drew attention to the product.

Some politicians have rallied to the industry's side, including Iowa Governor Terry Branstad, who blasted the celebrity critics.

"This to me is outrageous," Branstad said. "I want to expose the people who are behind this. I don't think Americans need to be misled by a smear campaign."

AFA, based in King of Prussia, Pennsylvania, has plants in California, Georgia, New York, Pennsylvania and Texas. It has about 850 full-time employees. As of December 2011, it posted annual revenue of $958 million.

The company expects to idle the California facility this week to conserve cash and cut unneeded processing capacity under current market conditions, according to a court filing.

AFA said it has $219 million in assets and $197 million in liabilities. AFA also said it has secured a commitment for $56 million in debtor-in-possession financing from its lenders GE Capital and Bank of America.

"An orderly sale through Chapter 11 will unlock value and provide a smooth transition for employees, customers and other business partners," Ronald Allen, interim chief executive of AFA Foods, said in a statement.

The case is In re: AFA Foods Inc, U.S. bankruptcy court, District of Delaware, No: 12-11128.

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Comments

[NNNora]

07:57 PM on 04/06/2012

I'm not sure why people are so bothered by this. If you are really worried that your meat is gross, just don't eat meat. Cuz...meat is pretty gross when you think about it. Or are people just bothered by eating rendered fat, tails, etc? I just makes you a spoiled westerner to think that you are so superior you can only eat muscle. If you are going to eat an animal, why not eat the whole thing?

[GRLev]

05:55 AM on 04/05/2012

This is exactly what would have happened if they labeled lean ground beef containing this inferior quality bi-product, anyone aware of it would probably pass. Let this be a lesson to all others cutting corners and the backwards FDA which allowed this bi-product to be used in the first place. Should have just put it on the label and been upfront with people.

[NeverWrongEither]

06:02 PM on 04/04/2012

The worst of all is that the lower the fat content of the ground beef you were buying, thinking it was a better mix of hamburger, not only cost more, but just had that much more pink slime mixed in. In other words, the more pink slime that was in your purchace, the more you paid.

[GRLev]

05:56 AM on 04/05/2012

We paid more for lean thinking it was healthier, meanwhile it was just a bunch of inferior cuts re-rendered and treated with chemicals, they should have just labeled ground beef containing this bi-product.

[Eric L Long]

01:28 PM on 04/04/2012

Good riddance

[brians898]

10:58 AM on 04/04/2012

Iowa just passed legislation that “criminalizes investigative journalists and animal protection advocates who take entry-level jobs at factory farms in order to document the rampant food safety and animal welfare abuses within,” according to the Atlantic’s Cody Carlson.

[viriatus]

06:23 PM on 04/04/2012

Good luck with that in court.

[French Toast]

05:21 AM on 04/04/2012

Good to hear it. Burn baby burn.

[Janet Weeks]

12:58 AM on 04/04/2012

Go Vegan = No Worries.

[johnpet]

09:11 AM on 04/04/2012

Right. It's not like people got sick from ecoli in spinach or anything like that.

[MizK]

07:13 PM on 04/04/2012

Or sprouts, or cantelope....

[jonnyfrog]

11:30 PM on 04/03/2012

Governer Branstad, what is "outrageous" is that American consumers have been fleeced for who knows how long- purchasing ground beef laden with filler without full disclosure from the manufacturer. The USDA allowed this practice. Instead of pointing fingers at whomever exposed a bitter truth, the industry should take heed- consumers will not lighlty take being lied to about what they purchase. There is an obvious market for ground beef or other products that contain fillers or additives- natural or engineered, but those products should be labeled as such and priced accordingly.

[MizK]

07:14 PM on 04/04/2012

Well said! A lot of people didn't know this was a hard fought labeling issue! This company was trying to sell this crap under the guise that it was "finely textured beef"!!

[Gary Chandler]

11:24 PM on 04/03/2012

In My Opinion: Mad Cow Risk Is the Real Pink Slime.

My father was a butcher and I worked for the National Cattlemen's Association. I've seen the insides of the industry from many sides. Turning my back on this heritage is not easy.

Let's take the debate to a new level. Ask the BS artists where BGH and rBGH (growth hormone) come from. Aren't they both at least partially derived from the pituitary gland of dead cattle? Isn't such brain material supposedly regulated as specified risk material (SRM) to minimize BSE risk to humans? Is this really a good idea just to add fast, cheap pounds on cattle and to boost milk production in dairy cattle. Foolish feed made from dead cows was step one. Foolish growth hormones made from dead cows to boost profits could be the next boot to drop.

Who is smearing who and who is really putting the cattle industry (and consumers) at risk? The mad cow crisis cost Canada/U.S./global producers billions. Beef producers may have met the enemy and it isn't the media, food safety advocates, or concerned consumers. Ask some tough questions of the industry insiders and regulators.

With this mentality generating millions of pounds of beef for human consumption, asking tough questions about pink slime and other greedy practices are well justified. Reform the industry for the good of everyone. Corporate favoritism in agriculture is killing the spirit of free enterprise, free markets and free speech.

@gary_chandler

[rcmfla]

10:44 PM on 04/03/2012

I could care less this business is hitting rock bottom. Maybe they should have thought harder about the ramifications of producing dog food for human consumption. Screw em!

[Eric L Long]

01:29 PM on 04/04/2012

They've made their haul, and could care less. They've been feeding this gloop to America for the last decade.

[cedy]

09:49 PM on 04/03/2012

CAn't say what the real argument is, but lets look at this way. People like sour cream, whoop de too. I can go to the local grocer and have my choice of sour creams, most of them contain a lot of ingredients, mainly cream and bacteria and a lot of thickeners like carageen (?), gaur gum and other things. OK Whatever.

When I buy the Daisy brand sour cream, it contains basically cream and bacteria, not all that other stuff.

The question is, why is all that other stuff necessary?

The same goes for Pink Slime, its not necessary, why do we need it?

The answer is exactly the same as for sour cream, its cheaper, more efficient and allows more profit. That is the only answer. Its not about more food, better food, its all about profit. Regardless of whether its bad for you is a moot point, its not a necessary thing, and does nothing to improve the product, its only there to improve the companies bottom line.

[Bread n Circus]

07:52 AM on 04/04/2012

It's like cutting cocaine with white powder, looks real, no one really notices and it increases profit margins.

To play devils advocate one could say they are being resourceful and using the unusable. Let nothing go to waste.

That being said I don't want to eat it and anyone who does can call the company and order some I'm sure.

[Eric L Long]

01:30 PM on 04/04/2012

Now that is an analogy that Huff readers can understand.

[MizK]

07:16 PM on 04/04/2012

Well done!

[Anti Warrior]

08:17 AM on 04/04/2012

i think in this case without this stuff they would have to throw away parts of the meat that are close to the organs
which I guess is what will happen now

[Helen Rome Meager]

07:45 PM on 05/07/2012

No it becomes dog food

[ZetaReticuli]

09:10 PM on 04/03/2012

The produces of so-called "pink slime" are terrorists of the meat processing network.

[dewey13]

08:17 PM on 04/03/2012

When my son was four, he was eating boneless chicken and he asked "where did this piece of chicken come from"?. His older brother quickly replied "from the chickens butt". He wouldn't eat chicken for a year.

I am sure this pink slime will show up again. I wouldn't feed it to our dogs

[HazelPethigFan]

07:31 PM on 04/03/2012

Let the backl.ash begin:

The price of hamburger now goes up or down for poor people? Up

Is hamburger now safer and more "nutritious" without pink slime? No

how many people got sick from eating this pink slime: 0

How many people got very ill from eating organic bean sprouts in Europe last summer: thousands

How many ill organic dairy calves suffer and perish each year because they can not be treated with antibiotics on organic dairy farms: hundreds.

How many of you sanctim.onious cityiots want me to continue my list?

[ChickenMcTest]

07:41 PM on 04/03/2012

But pink slime has an icky name and I can't be bothered to do any actual research on food safety!!

[TheBlueCoyote]

09:39 PM on 04/03/2012

If it is so foul that it has to be detoxified with ammonia before it's safe to eat, I'll pass.

[Stephen Thorpe]

07:21 PM on 04/03/2012

I'll just grind my own now.