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November 6, 2008

Troubles at meat plants prompt increased fear of kosher beef shortages

http://www.jewishjournal.com/food/article/troubles_at_meat_plants_prompt_fears_of_kosher_shortage_20081104

Agriprocessors and local energy officials are working 
on a plan to maintain the electricity at the firm's plant 
in Postville, Iowa. (Ben Harris)

Agriprocessors and local energy officials are working
on a plan to maintain the electricity at the firm's plant
in Postville, Iowa. (Ben Harris)

NEW YORK (JTA) -- With the kosher meat producer Agriprocessors facing mounting financial problems, and a fire-related shutdown at another major kosher producer, industry insiders say major supply disruptions are inevitable, and kosher consumers should brace themselves for some rough times.

Agriprocessors in the past week or so has endured a cascade of awful news. First, Iowa's labor commissioner hit the company with nearly $10 million in fines for alleged wage violations. Then, the son of the company's founder was arrested on charges that he helped purchase false identification for the company's illegal workers. And on Oct. 31, news broke that a St. Louis bank had initiated foreclosure proceedings after Agriprocessors and its owners defaulted on a $35 million loan.

Kosher industry insiders are predicting that the company will not pull through. Company officials did not respond to multiple requests for comment.

Meanwhile, production at the nation's third-largest slaughterhouse, North Star Beef in Minnesota, has ground to a halt after a fire, the Forward reported Monday. Also according to the newspaper, a smaller Agriprocessors plant in Gordon, Neb., stopped operating in October.

Short-term disruptions in the supply of kosher meat, particularly kosher and glatt kosher beef, are now virtually guaranteed. Rabbi Menachem Genack, the head of kosher supervision for the Orthodox Union, said he already has heard from communities that have no supply.

"There is going to be a sharp decline in availability immediately," said Genack, adding that the company is trying to survive but that the situation is grim.

Some kosher markets have not felt the crunch, among them Daryl Schwarz, owner of Kosher Club on Pico Boulevard in Los Angeles, a full-service kosher supermarket under RCC supervision. "I'm not having any problems yet," Schwarz said. "It's a little early to see what happens. I have plenty of product."

Farzad Kohanzadeh, co-owner of Livonia Glatt Mart, has so far experienced a steady flow of meat, in part because he deals with a variety of suppliers who meet the approval of their kashrut supervising body, the Rabbinical Council of California (RCC). "Eventually it will affect us, but right now it has not."

Those who have stricter kosher supervision have been more hard hit. Albert Zadeh, one of three owners at Pico Glatt Mart on Pico Boulevard in Los Angeles, has experienced some shortages, particularly with special cuts of beef. "We've been in business for 17 years, but it has never been like this. The cases were always full of meat.

"Because we are under Kehilla [kashrut] supervision, we can't get a different brand of meat," he said, adding that Agriprocessors has raised the prices three to four times in the last five months. Last week, to keep up, Pico Glatt raised the price of every meat and chicken item by 29 cents per pound.

Avraham Shamoil, owner of Little Jerusalem on Pico Boulevard and La Peer Drive for 30 years, has also experienced a shortage. His meat falls under Crown Heights kashrut supervision, which he says is even stricter than Kehilla. Quantities don't reach Los Angeles as they used to.

"Basically we cannot get enough meat, chicken, turkey," Shamoil told The Journal. "It's been very difficult for us. We've been dealing with [Rubashkin] for years, and now we cannot get."

Agriprocessors representatives have had virtually nothing to say publicly over the past week as they faced a succession of ominous developments. But Bernard Feldman, the New York tax attorney hired in September as the company's new chief executive officer, offered one stark prediction to the Des Moines Register.

"I don't believe we're going to have substantial production of any kind in the near future," Feldman said in Monday's edition.

Agriprocessors has been reeling since May 12, when federal authorities conducted what at the time was the largest immigration raid in U.S. history in Postville, arresting nearly half the company's workforce. The company's troubles have only intensified in the last week.

In addition to the foreclosure by First Bank of St. Louis and the arrest of Sholom Rubashkin, the staffing company responsible for approximately half of the labor at the Postville plant suspended its contract. Beef production has been shut down for several days. And reports out of Postville suggest that the company lacks the resources to slaughter and process the chickens in its possession, though some chicken slaughtering reportedly is taking place.

A federal judge placed the company in temporary receivership after First Bank filed a lawsuit alleging that Agriprocessors and its owners defaulted on a $35 million loan. The lawsuit demands the return of the bank's collateral -- a category that includes "virtually all" of the owners' personal property as well as the company's accounts receivable, inventory and proceeds.

Agriprocessors also has received a power disconnect notice, the Des Moines Register reported. The company's electric utility, Alliant Energy, reportedly is working with the company to work out a payment plan. Meanwhile, a relative of the company's owners has issued a call for the Jewish community to donate funds to help save the company.

Kosher industry insiders, including Agriprocessors' competitors, uniformly believe that the company's collapse would be a disaster for the country's kosher meat supply. Agriprocessors has been a pioneer in the industrial-scale production of kosher beef, and in many smaller Jewish communities its products are the only kosher ones available.

"For the kosher marketplace, there's no question there's going to be short-term shortages of kosher and glatt kosher meat and poultry," said Elie Rosenfeld, a spokesman for Empire Kosher, a poultry producer. "The industry overnight cannot pick up the decreased level of volume that Agriprocessors has been doing over the last couple of months."

Rosenfeld said his client continues to see growing demand for its product, but he would not comment on reports that Empire has been exploring opportunities to begin producing kosher beef.

Harris reported from New York for Jewish Telegraphic Agency. Jewish Journal contributor Orit Arfa contributed to this article.

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