Co-op completes purchase
of Virginia turkey plant
By Michael Leach,
USDA Rural Development
he newly formed,
Virginia Poultry
Growers Cooperative
(VPGC) has acquired the
Pilgrim’s Pride turkey
processing operation in Hinton, Va., in
the heart of the Shenandoah Valley, for
about $35 million. The newly formed
co-op will keep the plant, which can
process 8 million birds annually,
operating under farmer ownership.
Also purchased as part of the deal
is a feed mill in Broadway, Va.
Producers are using a combination
of equity they raised among
themselves and outside sources,
grants and low-interest loans from
federal, state and local governments,
and financing from Farm
Credit of Virginia to buy the plant.
The remainder of the financing
was close to being finalized at press
deadline in late October, with
CoBank expressing strong interest
in the deal.
The plant was closed temporarily in
mid-September, but the co-op plans to
have it back in operation by the end of
November.
Last April, Pilgrim’s Pride
announced plans to close the facility
unless a buyer was found by Oct. 1,
which sent an economic tremor rumbling
throughout the region. If the
plant were shut down, it would have
left a $200-million dent in the economy
of the Valley. Lost annual wages
for the plant’s 1,300 workers alone
would have been about $38 million
annually, and up to 200 farmers were
faced with the prospect of bankruptcy.
While not all the jobs are being saved,
the co-op hopes to hire back more staff
in coming months as plant volume
increases.
Co-op President Sonny Meyerhoffer
says VPGC had to do in a few months
what typically takes at least 18 months
to accomplish. Organizers had to accelerate
the takeover process — including
forging a solid business plan in a matter
of weeks — because the window of
opportunity was so limited. “The
dream is alive,” Meyerhoffer said at a
co-op meeting.
“It’s almost a miracle that they were
able complete a fairly complex deal in
such a short amount of time, but it’s
also evidence of just how crucial this
plant is to the poultry industry and the
economy of the region,” says Norm
Hyde, a spokesman for the Virginia
Farm Bureau Federation. “It would
have been a crushing economic blow
had it closed.”
Rockingham County, Va., where the
plant is located, is considered to be the
birth place of the modern turkey industry,
Hyde noted. Additionally, in
recent years it has been the largest
turkey-producing county in the United
States.
Texas-based Pilgrims’ Pride said it
wanted to sell the plant, which
processes whole birds and turkey
breasts, to focus more on value-added,
deli turkey products. The co-op will be
phasing in de-boning operations to
produce more processed parts. A positive
sign of the co-op’s prospects
in the marketplace came when a
strategic partner in the high-end
meat processing business agreed
to purchase turkey breasts from
VPGC.
Cooperative members had
invested $2.6 million by early
August. USDA Rural
Development provided an $8
million grant — through its
Rural Economic Development
Loan and Grants program — to
the Shenandoah Valley Electric
Cooperative, which in turn made
a low-interest loan to the turkey
co-op. The state of Virginia’s
Department of Agriculture and
Consumer Services provided the co-op
with a $500,000 grant, and West
Virginia provided a $250,000 grant.
Rockingham County also chipped in
with a $100,000 grant.
When delivering the grant from
Virginia, VDACS Commissioner
Carlton Grant said the farmers who
formed the co-op “represent the true
spirit of American agriculture; they are
people who look adversity square in
the eye, brace harsh reality and then
band together to find a solution.”
