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Beef Products Inc. and Tyson Foods hit by latest ‘pink slime’ fallout

By Mark Astley , 09-May-2012

‘Pink slime’ manufacturer, Beef Products Inc. (BPI), has confirmed the almost immediate closure of three of its four plants, in the latest wave of repercussions surrounding the product.

Within hours of the BPI announcement, US-based processor Tyson Foods reported “breakeven” results in its beef segment, which it attributed to recent “unwarranted” concerns about lean finely textured beef (LFTB) – now commonly known as ‘pink slime’.

Debate surrounding the use of LFTB stemmed from the claims of two former US Department of Agriculture (USDA) scientists that the product was approved for use in ground beef products for political reasons despite safety concerns.

As a result, several major US retailers have crumbled under pressure from consumers and ended their purchase of ground beef products containing ‘pink slime’.

Despite the closures, BPI remains defiant, having made “significant progress in setting the record straight.”

Plants closures

BPI’s latest statement has sealed the fate of its Amarillo, Texas; Garden City, Kansas; and Waterloo, Iowa facilities, with the plants set to close by 25 May 2012.

The announcement follows the temporary suspension of operations at the three plants in March 2012. BPI “made the difficult business decision” at the time, while it attempted to rebuild the market for LTFB.

“While we had hoped to be able to resume operation at those plants, that is not going to be possible in the immediate future and the temporary suspension of operations will in fact results in the elimination of those jobs effective May 25, 2012,” said the BPI statement.

BPI, which is the largest producer of LFTB in the US, initially agreed to pay full salaries to employees during the temporary halt in production. However, the latest announcement will see the loss of more than 650 jobs.

“During this same period, we have continued to operate our South Sioux City, Nebraska facility at reduced capacity. We intend to continue operations at this location and expand production here as the market activity allows.”

Unwarranted controversy

Within hours of the BPI announcement, meat processing giant Tyson Foods reported a “challenging” second quarter for its beef segment, which “essentially broke even.”

Tyson’s chief operating officer James V. Lochner attributed the Q2 results to an issue with demand.

“Since our last call the industry appeared to be headed toward a recovery and we briefly returned to normalised margins in late February and early March,” said Lochner.

“Then the unwarranted controversy over lean finely textured beef, temporarily destroyed demand for ground beef and beef in general virtually overnight. This caused a rapid decline of over $120 per head over a 4-week period.”

“Personally, I don’t recall a revenue decline that steep,” he added.

Irresponsible misrepresentations

Despite the closures and loss of jobs, BPI remains defiant – vowing to continue its fight against the “irresponsible misrepresentations” surrounding ‘pink slime’.

“We are making significant progress in setting the record straight and are encouraged by recent market research which shows that consumers are very interested in consuming high quality, safe lean ground beef – which is exactly what we have done for the last thirty years,” added the BPI statement.

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