The launch of the producer-owned Meadowbrook Farms, and Triumph Foods' announced intentions to build a new plant in East Moline, have been hot stories in the Illinois pork industry.
In 2004, Belleville-based Meadow-brook opened the doors to a $39 million, state-of-the-art plant in Rantoul, IL, with big dreams. About 200 pork producers bought membership shares in the business, agreeing to deliver a specified number of pigs to the plant on an ongoing basis.
Yorkville pork producer John Kellogg saw an opportunity “to participate in some of the profits packers were making” when he committed to deliver all the market hogs from his 1,500-sow, farrow-to-finish operation. “We felt we could produce specialty products and get premium prices for them,” he says.
However, Kellogg says, results during the cooperative's first four years have been disappointing. “It has taken longer for Meadowbrook to become profitable than I had anticipated.”
Packer Faces Protests
The startup has not been without turbulence. Last year, several disgruntled Meadowbrook members stopped delivering hogs to the Rantoul plant in protest after receiving lower prices for their hogs than they could have obtained with cash spot market prices.
Meadowbrook's communications director Jim Altemus says the matter — which included legal proceedings and involved 37 of the co-op's original 200 members — was resolved last June. Litigation spelled out details of how co-op members can exit their contract in “an orderly fashion” while continuing to supply the pigs committed for 18, 24, 36 or 48 months, depending on their chosen exit timeline. During the exit period, members will be paid the cash price from a market of their choosing in return for turning in their co-op shares, Altemus adds. One hundred and fourteen members remain in the co-op today.
Kellogg and fellow Meadowbrook board member Bob Johnson, of DeKalb, both admit their hog operations would have been money ahead by selling pigs on the cash market. Yet they say there are positive signs the cooperative will do better in the future. They point to Meadowbrook's source-verified programs, including a premium product line for export to Europe and antibiotic-free pork, as positive efforts to increase member income. And, the co-op recently entered a strategic alliance with Triad Foods to supply antibiotic-free fresh pork for the brand Nature's Premium. Still, some other cooperative members remain disenchanted with Meadowbrook's performance.
New Plant's Setback
Illinois pork producers have also been keeping an eye on Triumph Foods' plans to build a 600,000-sq.-ft. hog processing plant in East Moline, IL. The company, owned by a consortium of large mid-western hog producers, plans to break ground in early 2009 and begin operating in mid-2010, according to Triumph's Chief Administrative Officer Patt Lilly. He says construction was delayed a year because of startup challenges and expansion projects at the company's existing plant at St. Joseph, MO.
The new plant is designed to process up to 18,000 hogs daily, the same capacity as the St. Joseph plant. Although some hogs will be purchased from Illinois producers, Lilly says most will be obtained from current producer-owners in Iowa and southern Minnesota.
Lilly says the East Moline site was selected for its available work force, proximity to owners' production facilities and to take advantage of Illinois' “good business environment,” including available tax incentives and funding for programs to train new employees.