AFA Foods has filed for Chapter 11 bankruptcy protection, allegedly due to the media nicknaming their cheap lean beef “pink slime” and creating an irreversible public disdain, as reported by the Associated Press for the Chicago Tribune and others.
The company is in the process of selling off all of its assets as of the April 2 bankruptcy announcement.
An AFA spokesman e-mailed an explanation for the bankruptcy detailing that the media frenzy and public outcry against the beef ammonia-treated filler, known as “pink slime”, has significantly lessened the demand for all of their ground beef products.
He also said that AFA only uses the boneless lean beef trimmings due to customer specifications. Those customers include both retailers and food service providers: Wal-Mart Stores Inc., Safeway Inc., BJ’s Wholesale Club, Burger King, Jack in the Box and Wendy’s.
Prior to the announcement of the bankruptcy AFA was known for processing over 500 million pounds of ground beef products every year.
The company, based in King of Prussia, Pa., sells its products under other brand names: Moran’s, Stone River Ranch and Miller Quality Meats.
Interim CEO, Ron Allen, noted in the bankruptcy affidavit that the filing was due to two years of struggling in an overly competitive market. Other factors included overcapacity, slim profit margins, decreased demand from retail outlets and competition from different kinds of meat.
Customer-made demands, for product testing, was also cited by Allen as contributing to the bankruptcy.
While during a time when the company was trying to increase its sales with new strategies, AFA was plagued by what Allen called the “unfounded public outcry” in its use of finely textured beef that had been unfairly named “pink slime.”
Customers are not expected to feel the bankruptcy, and service will continue as usual, as AFA has secured lender financing of $56 million for its operations.
The fallout from the public frenzy over “pink slime” has not affected AFA alone. BPI, a beef processor with plants in three states – Texas, Kansas and Iowa – has suspended its operations. The suspension will affect the future for 650 employees.
Texas Gov. Rick Perry, Brownback, Iowa Gov. Terry Branstad, Nebraska Lt. Gov. Rick Sheehy and South Dakota Lt. Gov. Matt Michels toured BPI and issued a joint statement supporting the beef industry and taking aim at the media.
The governors said, in part of their agreed-upon statement, that the beef was safe.
The politicians said that the beef had been unjustly maligned and mislabeled. The original blame falls on the shoulders of a federal microbiologist that was so disgusted by the beef processing that he called it “pink slime.”
Critics feel that the terminology is very distasteful to the public – because the beef is a necessary industrialized food product.
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