Illinois hog co-op faces dissension amid profits

[December 15, 2008]    ST. LOUIS (AP) -- The Meadowbrook Farms Cooperative opened a $28 million plant in 2004 with fanfare and big expectations, figuring it might become a model for improving what then was the state's declining pork industry.

At the time, the Illinois cooperative hoped that by operating its own plant and taking hogs only from its members, farmers would be brought closer to consumers willing to pay premium prices for high-quality meat.

Four years later, that dream is in turmoil. Some members say they've been underpaid for their hogs -- some to the point of ruin.

A majority of the Belleville, Ill.-based cooperative's shareholders voted against a measure last week by critics who hoped to explore selling the 6-year-old enterprise, said member Don Voelker, who owns a dwindling hog farm near Waterloo, Ill., just southeast of St. Louis.

Of 698,250 total shares in the cooperative -- one for each hog delivered by a member each year -- a simple majority, or 349,126 votes, were needed to approve looking into selling the venture, Voelker said. But votes in favor of the measure only numbered 150,575, or about one-fifth of the total shares.

Backers of the measure publicly have accused the cooperative's board of mismanagement, pressing that they were not being heard. Members also have complained they're being paid $20 a head less than fair market value, costing them millions.

Voelker said the displeasure is reflected in the cooperative's membership -- 118 hog producers, down from the some 200 when the cooperative began in 2002.

But Jim Burke, the cooperative's president and chief executive, said Wednesday's vote convinced him the dissenters are a minority of the cooperative he says has managed $2 million more in profits this year over 2007, despite tight cash flow and credit markets.

"I can't make everybody happy at meetings, and I'm certainly not going to make them happy in the media. Nobody is happy about the world economy, about the fact that commodity pork prices have gone from record highs to almost record lows here in the last 120 days," Burke said.

The cooperative's farmers are paid according to the quality and quantity of meat their animals produce, not by total weight of a live hog, which is the traditional method.

Burke said a meatpacking plant wasn't necessarily what hog producers had in mind when they began searching for new markets after hog prices plummeted in the late 1990s.

Rather than buy an existing plant, Meadowbrook Farms asked its farmer-owners to put up $13 million in equity to help finance a new operation with the latest technology. The payoff, cooperative officials said, would come when customers consistently pay prices higher than industry averages for the meat the plant produces. It opened its meatpacking plant in Rantoul, Ill.

But Voelker, 49, says the lackluster prices he says his hogs have fetched through the cooperative have cost him dearly, pushing him to foreclosure's brink and forcing him to sell off his pigs at the bank's request. Of the roughly 3,000 pigs he once had, the hog producer since 1997 has only 200 left and expects to be out of the business by the end of this month.

"I see no future in it," Voelker said. "They tell us there's light at the end of the tunnel, but all we see is a freight train. That's the way we feel."

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On the Net:

Meadowbrook Farms: http://www.farms.coop/

[Associated Press; By JIM SUHR]

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