NEW YORK 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 rough times.
Agriprocessors in the past week or so has endured a cascade of awful news. Iowas labor commissioner hit the company with nearly $10 million in fines for alleged wage violations.
Then, the son of the companys founder was arrested on charges that he helped purchase fake identification for the companys 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 nations 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 the situation is grim.
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 companys new CEO, offered one stark prediction to the Des Moines Register.
I dont believe were going to have substantial production of any kind in the near future, Feldman said in Mondays edition, Nov. 3.
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.
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 banks collaterala category that includes virtually all of the owners personal property as well as the companys accounts receivable, inventory and proceeds.
Agriprocessors also has received a power disconnect notice, the Des Moines Register reported. The companys electric utility, Alliant Energy, reportedly is working with the company to work out a payment plan.
Meanwhile, a relative of the companys 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 companys collapse would be a disaster for the countrys kosher meat supply.
Agriprocessors has been a pioneer in the 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, theres no question theres 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.
Sholom Rubashkin was arrested Oct. 30 by immigration officials and was due to appear in federal court later that day.
Documents filed with the court allege that Rubashkin conspired to harbor illegal immigrants at the Agriprocessors meatpacking plant in Postville, Iowa.
They further charge that he aided and abetted in the use of fake identification documents and identity theft.
Rubashkin is the highest-ranking Agriprocessors official to face criminal charges stemming from the May 12, 2008, federal immigration raid at the companys Postville meatpacking plant. More than one-third of the companys workforce was arrested.
According to the criminal complaint filed last week, Rubashkin provided funds that were used to purchase new identification for workers at Agriprocessors who were found to have bad papers.
The complaint further alleges that Rubashkin asked a human resources officer to come in on a Sunday to process the new employment applications of several such workers.
Company representatives did not immediately respond to requests for comment.
Nathan Lewin, an attorney who represents Rubashkins father and the company owner Aaron Rubashkin, dismissed the arrest as unnecessary and motivated by federal law enforcements desire for good publicity.
The arrest of Mr. Sholom Rubashkin today was a wholly unnecessary and gratuitous act by federal prosecutors apparently engaged in an unseemly competition with State of Iowa officials to capture headlines in a vendetta against Agriprocessors, Lewin said.
Rubashkins arrest comes a day after Iowa Workforce Development announced it would levy nearly $10 million in fines against the company for alleged labor infractions.
In response to the action by the state labor agency, Agriprocessors CEO Feldman told The New York Times that he had grave doubts as to the appropriateness of the claimed violations, and we also take issue with the intended sanction imposed per claim.
The largest of the claims is for charging employees for frocks the regulation agency claims the company is guilty of more than 90,000 such incidents, assessed at $100 per infraction.
Once again, Agriprocessors has demonstrated a complete disregard for Iowa law, said Dave Neil, the states labor commissioner. This continued course of violations is a black mark on Iowas business community.
According to Iowa Workforce Development, the company has 30 days to contest the penalties in writing before they become finalized.
The department has an additional wage investigation under way that could lead to further penalties.
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