DES MOINES, Iowa – Iowa Agriculture Secretary Mike Naig has proposed new legislation to address the recently bankrupt Pure Prairie Poultry, Inc., that left the state with over a million unsold chickens after the company closed its Charles City, Iowa, processing plant last fall.

The Iowa Department of Agriculture and Land Stewardship said the chickens had to later be destroyed, costing the state $2.3 million. Naig said the new legislation would allow the state to sell or process livestock it takes into custody, and to prevent similar situations in the future.

Last October, the department was granted an emergency court order to take immediate care, custody and control of approximately 1.3 million broiler chickens, owned by Pure Prairie Poultry, Inc.

Don McDowell, Iowa Department of Agriculture and Land Stewardship director of communications, told Farm World the department’s final report on Pure Prairie Poultry, Inc.’s bankruptcy was filed in Iowa District Court for Sioux County.

“Our department bill, which will touch on a wide range of topics and areas of focus, will have a section related to clearing up questions about the title for livestock within our custody,” he said. “However, the bill has not yet been introduced,” adding that the department anticipates the bill will be introduced soon, but said it could not provide further comment on the bill at this time.

Headquartered in Fairfax, Minn., Pure Prairie Poultry, Inc., operated a Charles City, Iowa, chicken processing plant and contracted with farmers throughout Iowa to grow broilers. On Sept. 30, Pure Prairie Poultry, Inc., notified the department that, due to their financial position, they were unable to purchase feed for these chickens located at 14 Iowa farms.

Upon notification, the department coordinated with state and federal agencies, as well as industry partners, to seek a possible solution. With no immediately available solution and citing significant potential animal welfare concerns, the department, under its authority in Iowa Code Chapter 717, sought an emergency court order to take over the care, custody and control of the birds located within Iowa.

On Oct. 2, the department’s emergency petition was granted, which authorized the department to immediately provide for the feed and care of the birds. According to Iowa Code, a hearing was then scheduled for Oct. 8 in order for the Iowa District Court to approve a plan for the final disposition of the birds.

On that same day, Pure Prairie Poultry, Inc., also ceased operations at its Charles City processing plant and laid off its workers. With no processor readily available for the birds, the department said it actively pursued numerous other processors and markets, and solicited offers for the purchase of the birds. Due to the structure of the broiler industry, however, the department said large-scale processors had limited ability to increase their processing capacity utilizing the open market.

The department said it was able to secure an initial offer to purchase all 1.3 million birds, and had a tentative agreement in place for all birds to be processed as they reached market weight, pending court approval. The department provided notice to the interested parties of the potential agreement.

On Oct. 7, the day before the scheduled hearing, attorneys for some of the other interested parties notified the department that they would assert their lien rights and security interests in the chickens, including against the buyer’s proceeds from the sale of the post-processed meat. Citing costs surrounding potential litigation due to the lien claims, the buyer backed away from their offer.

In accordance with the Iowa District Court’s order, depopulation started Oct. 17 of last year. The department said the depopulation was overseen by licensed veterinarians employed by the department, with depopulation of all Pure Prairie Poultry, Inc., birds located at Iowa farms concluding Oct. 25 of last year.

The department said it will seek reimbursement of the taxpayers’ costs from responsible parties, including through possible legal remedies, and had also notified relevant local law enforcement of the situation.

When asked about the newly proposed legislation, Jennifer Williams Zwagermann, director of the Agricultural Law Center and agricultural law professor at Drake University in Des Moines, Iowa, told Farm World, “Overall, I think it is important that whenever we have financial issues with livestock operations, such as bankruptcy, that we consider a number of factors.

“One is, of course, the welfare of the animals, and ensuring that no matter what, they continue to receive appropriate feeding and care,” she said. “Another is the impact on the overall industry, and economic and other aspects that trickle both up and down from the impacted operation.

“The costs to taxpayers is, of course, another area to consider,” she added. “I think there are many citizens that do not like the idea of euthanizing birds when the only reason is that the state could not find a buyer that was willing and able to step into this particular situation, given a variety of interests and challenges to ownership.”

She said, “I have confidence that there are ways the state and the legislature can work with the livestock industry, and those involved, to negotiate and find agreeable financial resolutions. Overall, these are not common situations, and I hope it remains that way moving forward.

“That being said, it should be possible to ensure that if the state steps in to feed and care for livestock until either a new buyer is found or until they are ready for processing, reimbursement for those basic costs seems like a reasonable expectation. I can envision then that proceeds from the sale beyond that would be directed to other creditors of the operation.”

Naig said, “This is an incredibly unfortunate situation and raises serious questions about the USDA’s oversight of taxpayer dollars. Congress should exercise its oversight authority to ensure that something like this does not happen again, and that those responsible are held accountable.”