New Owner of Agriprocessors Faces Old Questions About Its Plans For Company

Fresh Start? Once the nation’s largest kosher slaughterhouse, Agriprocessors in Postville, Iowa,
has emerged from bankruptcy with a new Canadian owner who bought the firm for $8.5 million.
Nathaniel Popper
Fresh Start? Once the nation’s largest kosher slaughterhouse, Agriprocessors in Postville, Iowa, has emerged from bankruptcy with a new Canadian owner who bought the firm for $8.5 million.

By Rebecca Dube

Published July 22, 2009, issue of July 31, 2009.
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The new owner of the Agriprocessors plant in Postville, Iowa, whose bid of $8.5 million for the troubled kosher meatpacking plant was accepted by a federal bankruptcy court judge July 20, is stepping into a business, and an industry, that has weathered changes under a harsh spotlight in recent years.

Agriprocessors was bought at auction by SHF Industries, a company formed by Canadian plastics manufacturer Hershey Friedman and his son-in-law, Daniel Hirsch. Friedman owns Polystar Packaging Inc. of Montreal, which is a top maker of plastic packaging for meat. An observant Orthodox Jew, Friedman is also well known in the Montreal community for his philanthropy.

Those who have been watching the Agriprocessors saga have a lot of questions for Friedman — questions about what the ethical standards will be, how workers will be treated and how involved the Rubashkin family will be, if at all, in the future operation of the plant. The Rubashkins built Agriprocessors into the nation’s largest supplier of kosher meat, but they were forced to declare bankruptcy, and now they face criminal charges over their employment, and treatment, of undocumented workers.

It’s not yet clear whether, or how, Friedman will distance himself from the company’s legacy. He could not be reached for comment, but in an interview with Mishpacha, an Orthodox Jewish family magazine based in Jerusalem, Friedman described the Rubashkin family as “wonderful people” who “were victims of a massive witch hunt.”

Speaking with The Des Moines Register later, Friedman clarified his statement, saying that the former owners would have no role in upper management. “It’s a very large family,” he told the Register. “There are nice people in it and not-nice people.” He said that some members of the family might continue to work at the plant at lower-level jobs.

Critics of Agriprocessors are withholding judgment. “I hope, in the coming days, the Friedmans will understand the importance of speaking clearly about their plans for the company,” said Rabbi Morris Allen, leader of the Conservative movement’s Hekhsher Tzedek effort to reform labor practices in the kosher food industry. “I hope that there can be a restoration of kosher meat in this country that is not just ritually appropriate, but ethically appropriate, as well.”

The Forward’s exposure in 2006 of subpar working conditions at Agriprocessors, and the massive 2008 federal immigration raid of the factory, which resulted in nearly 400 workers being arrested, has sparked an international debate over to what extent kosher standards should include ethical treatment of workers. And since Agriprocessors shut down its beef production lines and declared bankruptcy last year, new competitors have stepped in to fill the breach.

The $8.5 million purchase price falls well short of the $22 million that Agriprocessors owes to unsecured creditors, including back pay and benefits to employees. Another bidder, Soglowek Nahariya Ltd. of Israel, was reportedly prepared to pay $40 million for the bankrupt company last March, but rescinded the offer before the auction took place. SHF was apparently the only bidder at auction for Agriprocessors, which in 2002 reported sales of $180 million to Cattle Buyers Weekly.

In the purchase agreement approved by the bankruptcy court, Friedman is not liable for any debts owed to Agriprocessors’ unsecured creditors, including Postville-area businesses, farmers who supplied animals to the plant and former workers who are owed back wages. While the sale of Agriprocessors is undoubtedly good news for Postville, a town of 2,500 that relied heavily on the meatpacking plant for jobs, it’s doubtful whether former employees will see any of the money they’re owed.

“I think not, and it breaks my heart,” Allen said. “A lot of people in Postville who did a decent day’s work for a decent day’s pay probably will never be made close to whole. Hopefully that’s something the Friedmans will address in the coming days.”

A coalition of Jewish and local leaders called the Postville Community Benefits Alliance is pressing to meet with the new owners to discuss issues such as improving wages for workers.

“We’re hoping a meeting will occur sooner rather than later, and the owners will attempt to build a relationship with the community and be more transparent in how they run the plant than the previous owners were,” said Vic Rosenthal, executive director of Jewish Community Action of St. Paul, Minn., and a member of the alliance.

Federal prosecutors have filed a 163-count indictment against Agriprocessors and former plant manager Sholom Rubashkin, son of company founder Aaron Rubashkin, with charges including labor law violations, bank fraud, mail and wire fraud, and nonpayment for livestock. Meanwhile, the Iowa Attorney General’s Office has filed more than 9,000 child labor charges against the plant and its owners and former managers.

Rubashkin intends to plead not guilty to all charges, his lawyer has said. Some lower-level managers already have pleaded guilty to immigration-related charges.

Allen said he hoped that none of the Rubashkin family would be allowed to continue in management roles at Agriprocessors under the new owners.

Before the immigration raid, the bankruptcy proceedings and widespread layoffs, Agriprocessors was the nation’s largest kosher meat producer, with a work force of about 800. The company distributed its meat under the labels Aaron’s Best, Rubashkin’s and Shor Habor. The number of employees has dwindled to about 100 as the plant has maintained production of a limited amount of poultry, but not beef, in recent months.

Also in his interview with Mishpacha, Friedman said he hopes to get the beef-processing plant up and running again by the High Holy Days.

Contact Rebecca Dube at dube@forward.com


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