The kosher industry seemingly was in agreement earlier this week that a kosher meat shortage isn’t on the way – it’s already here.
With Agriprocessors effectively shut down last week, the company’s competitors were scrambling to pick up the slack. But there just isn’t enough stock, and insiders predict a rise in prices soon.
The Associated Press reported that Agriprocessors filed for bankruptcy protection on Tuesday, citing $50 million to $100 million the company owes to creditors. The move appears to be an effort to pre-empt foreclosure by a St. Louis bank, which sued Agriprocessors for defaulting on a $35 million loan. Filing for bankruptcy protection is the latest in a series of recent events that have placed a gigantic question mark over the future of America’s largest kosher meat producer.
“We’re in uncharted territory now,” said Rabbi Menachem Genack, head of the Orthodox Union’s kashrut division. Genack, who lives in Englewood, predicted an immediate sharp decline in the availability of kosher meat and a rise in prices.
“For the kosher marketplace, there’s no question there are going to be short-term shortages of kosher and glatt kosher meat and poultry,” said Elie Rosenfeld, a spokesman for poultry producer Empire Kosher who lives in Teaneck. “The industry overnight cannot pick up the decreased level of volume that Agriprocessors has been doing over the last couple of months.”
Rosenfeld noted that Empire has seen an increased demand for its poultry but he would not comment on reports that the company planned to enter the meat market.
“It’s like an oil shortage,” said Joey Bodner, co-owner of Main Event Caterers in Englewood.
Since Agriprocessors’ problems began, Main Event has received catering requests not to use Agriprocessors products and some specifically requesting them. About 20 percent of Main Event’s meat supply comes from the company.
“It’s been less since this whole incident occurred,” said co-owner Eddie Izso, noting that the company has cut back since June.
Noam Sokolow, owner of Noah’s Ark in Teaneck, said that since the immigration raid at Agriprocessors’ Iowa plant in May, his restaurant has reduced its orders from the company to just chicken products – less than 10 percent of the restaurant’s meat supply, down from about 20 percent of total supply before the raid.
Noah’s Ark can hold out a week or two using what it has in stock but then may have to raise prices if its suppliers cannot keep up with the demand, Sokolow said.
“It will affect us tremendously,” he said, “in terms of having enough products and having to pay a premium for the products, and in terms of prices we charge.”
As restaurants and markets raise their prices, kosher consumers will have no choice but to absorb the price hikes, he said.
“What’s happening now is people who were buying meat are now going to other suppliers, and there are a limited number of suppliers available,” he said. “When they start taking on additional customers, they start facing shortages.”
Animal rights group PETA has been criticizing the company’s slaughter practices for several years. Mitch Fox, owner of Blue Ribbon Glatt Kosher in Fort Lee, said he’s never used Agriprocessors’ meat products because of the company’s reputation.
“I always had a bad feeling about Agri,” he said. “I never heard good things about them. It’s about time they were caught.”
With its immigration scandal making headlines across the country, the company put “a black eye on the kosher industry,” Fox said.
He said that the kosher food industry “at one point meant quality and cleanliness…. They just violated every aspect of the kashrut laws, and that’s just a shame,” he said.
Ma’adan in Teaneck doesn’t use Agriprocessors products either, but co-owner Yossi Markovic said that is because the company doesn’t market appropriate products for the store. He didn’t blame Agriprocessors for that, he said, because the company marketed itself to consumers in areas where it was more difficult to get kosher products.
“They made sure to go to all the out-of-place areas to make sure that whoever wanted kosher should be able to get kosher,” he said. “They never had merchandise for me but made sure the other places that really needed it got it.”
Markovic has already seen price hikes take effect. Usually, he said, prices go up just before the holidays in anticipation of increased demand. Since the end of the holiday season a few weeks ago, he has not seen the price of poultry come down.
“You took out a major player from the game,” he said. “There’s not too many people to step in and the demand is there.”
Glen Shorr, co-owner of Harold’s Kosher Superette in Paramus, said he’s seen the price of poultry increase 5 percent to 10 percent. Harold’s carries Agriprocessors’ poultry but not its meat products.
PETA has been targeting Agriprocessors for the company’s slaughtering practices and the United Food and Commercial Workers union has cited its refusal to allow workers to unionize. The company’s troubles increased in May when federal agents raided the plant, arresting more than 300 illegal immigrants.
Iowa’s labor commissioner hit the company with nearly $10 million in fines for alleged wage violations. Then, former CEO Shalom Rubashkin, the son of the company’s founder, was arrested on charges that he helped buy fake identification for the company’s illegal workers.
In addition, 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. And 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.
The lawsuit filed by the First Bank of St. Louis demands the return of the bank’s collateral – a category that includes “virtually all” of the owners’ personal property as well as the company’s accounts receivable, inventory, and proceeds.
Agriprocessors also has received a power disconnect notice, the Des Moines Register reported. The company’s electric utility, Alliant Energy, reportedly is working with the company to work out a payment plan.
Ben Harris of JTA contributed to this report.