May 8, 2012 / 12:20 AM / 6 years ago

"Pink slime" label forces beef plant closures

(Reuters) - The top U.S. producer of ammonia-treated beef that critics called “pink slime” said on Monday it will close three of its four plants after sales dropped and did not recover following recent attacks on the product.

Beef Products Inc (BPI) will close plants on May 25 in Amarillo, Texas; Garden City, Kansas; and Waterloo, Iowa. Its South Sioux City, Nebraska, plant will continue to operate at a reduced capacity.

More than 650 people will lose their jobs when the plants close, the South Dakota-based company said.

“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,” the company said in a statement.

In March, public outcry erupted over the filler for ground beef, which is made from fatty trimmings that are more susceptible to contamination than other cuts of beef. The trimmings are therefore sprayed with ammonia - more often associated with cleaning products - to remove pathogens such as salmonella and E.coli.

Sales dropped when consumers became aware of the common practice in the industry, despite U.S. Agriculture Department and industry experts saying the beef was safe to eat.

In late March, BPI suspended production at the three plants for 60 days. At that time, BPI spokesman Rich Jochum had said the closure could become permanent.

“This is a direct reaction to all the misinformation about our lean beef,” Jochum said then.

Iowa Governor Terry Branstad on Monday called the closings a “sad day for the state of Iowa.”

“The fact that a false, misleading smear campaign can destroy a company’s reputation overnight should disturb us all,” Branstad said in a statement.

The “pink slime” controversy also hurt beef sales at Tyson Foods Inc, the company said when it reported quarterly earnings on Monday.

Two of the biggest U.S. supermarket operators, Safeway Inc and Supervalu Inc had said they would stop buying the ammonia-treated beef. Grocery sellers Wal-Mart Stores Inc and Kroger Co also dropped it.

AFA Foods, one of the largest ground beef processors in the United States, filed for bankruptcy in early April, citing the uproar over pink slime.

Reporting by Bob Burgdorfer; Editing by Gary Hill and Lisa Shumaker

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