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'Pink slime' maker to close three plants

A South Dakota beef company said Monday it will close processing plants in three states because of the controversy surrounding a product that critics have dubbed "pink slime."

Beef Products Inc. spokesman Rich Jochum said Monday that 650 jobs will be lost when it closes its plants in Amarillo, Texas; Garden City, Kansas; and Waterloo, Iowa, according to KSNW-TV. The closures will be effective May 25.

A plant in South Sioux City, Neb., will remain open.
 
The company blames what it calls unfounded attacks over a product that it calls "lean, finely textured beef." The product, added to some ground beef, includes beef trimmings treated with ammonia to kill bacteria.

The company suspended operations last month at the three plants. BPI has declined to discuss financial details, but has said it took a "substantial" hit after social media exploded with worry over the product and an online petition seeking its ouster from schools drew hundreds of thousands of supporters.

"We are making significant progress in setting the record straight and are encouraged by recent market research which shows that consumers are very interested in consuming high quality, safe lean ground beef - which is exactly what we have done for the last 30 years," the company said in a news release.

"While we had hoped to be able to resume operation at those plants, that is not going to be possible in the immediate future, and the temporary suspension of operations will in fact result in the elimination of those jobs effective May 25, 2012."

"This is a sad day for the state of Iowa," said Iowa Gov. Terry Branstad. "The fact that a false, misleading smear campaign can destroy a company's reputation overnight should disturb us all." 

The Republican governor said the workers will "go home to their families and will soon be without a job, all because some media on the coasts decided to unfairly and viciously smear the product they so proudly produced."
 
The phrase "pink slime," coined by a federal microbiologist, has appeared in the media at least since a critical 2009 New York Times report. Celebrity chef Jamie Oliver has railed against it, and it made headlines after McDonald's and other major chains discontinued their use last year.
 
Nebraska Gov. Dave Heineman called the plant closings "unfortunate and needless," and said the product BPI produced is safe for consumption. 

"BPI is a good family-owned business, and we will continue to work with them in an effort to continue to promote their safe and healthy beef," Heineman said. 

Several politicians who toured one of the plants in March -- including Branstad, Texas Gov. Rick Perry, Kansas Gov. Sam Brownback, Nebraska Lt. Gov. Rick Sheehy and South Dakota Lt. Gov. Matt Michels -- all agreed with the industry view that the beef has been unfairly maligned and mislabeled. 

The Associated Press contributed to this report.

Heather Jones, BB&T Capital Markets, discusses the state of supply and demand for chicken and beef.