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Farmer-owned pork processor files for bankruptcy

(Thursday, Dec. 18, 2003 -- CropChoice news) -- Associated Press via The Agribusiness Examiner: A farmer-owned pork processing plant that sought to provide small producers with a viable market and create good-paying jobs for its rural community has filed for bankruptcy protection.

Prairie Farmers Cooperative in Dawson, which is in southwestern Minnesota near Montevideo, filed for Chapter 11 bankruptcy protection on November 18 in U.S. Bankruptcy Court in Minneapolis. Creditors are now receiving notices.

The $6 million facility was opened in February 2002. But financial difficulties led it to cease production and lay off its remaining 11 employees before the end of last year. Ever since, the co-op has been seeking opportunities to resume production.

Prairie Farmers Cooperative has looked at ideas ranging from seeking new financing to leasing plant capacity to others.

The facility is considered state-of-the-art. The computer-driven operation allows meat to be custom processed to the unique needs of different customers. The plant was designed to process up to 300 animals a day with a full-time staff of 45.

The plant employed 22 people shortly after opening, but cash-flow difficulties led to the staff reductions. Wages ranged from $9.50 to $13 an hour.

Wayne Johnson of Dawson, chairman of the co-op, said he could not discuss the bankruptcy filing.

The Chapter 11 filing is designed to allow for the reorganization of the company, rather than its liquidation. The plan must be accepted by a majority of creditors.

More than 70 farm families created the co-op and were to supply it with pork.

Ever since the plant stopped production, the small producers have had to sell their animals on the commodity market, said Nolan Jungclaus, a Lake Lillian producer who was formerly on the co-op's board of directors. Market prices for live hogs remain low, so that means the producers are once again facing the problems they hoped to overcome by owning their own processing facility, he said.