Beef Products Inc reopens plant as 'pink slime' lawsuit proceeds

CHICAGO (Reuters) - Beef Products Inc will reopen a Kansas processing plant on Monday to boost production of “lean finely textured beef,” which critics call “pink slime,” as wholesale beef prices soar with a shrinking U.S. cattle herd.The reopening of the Garden City, Kansas, plant comes more than two years after it was shuttered following a national media controversy about the BPI product.

The Beef Products Inc (BPI) facility is pictured in South Sioux City, Nebraska November 19, 2012. REUTERS/Lane Hickenbottom

The plant will collect raw chunks of meat and fat beef trimmings from a neighboring Tyson Foods TSN.N slaughterhouse, package them into large bins, and then ship the refrigerated containers to BPI's processing facility in Dakota City, Nebraska, BPI said on Tuesday.

The company aims to hire 40 to 45 people for the Kansas plant, which had more than 230 employees prior to its closure.

BPI is the leading maker of the low-fat product made from chunks of beef, including trimmings, and exposed to tiny bursts of ammonium hydroxide to kill E. coli and other dangerous contaminants.

And until the spring of 2012, the company had four state-of-the art plants, more than 1,300 employees and was expanding aggressively. Few Americans realized the product was a mainstay of fast-food burgers, school lunch tacos and homemade meatloaf.

But the meat processor shuttered most of its plants and its revenues plummeted that year - a collapse that company officials blame on a series of ABC News broadcasts in 2012 that repeatedly called BPI’s product “pink slime.”

The company is embroiled in a sweeping defamation lawsuit in Union County Circuit Court in South Dakota against the network, star anchor Diane Sawyer and other defendants, and is seeking at least $1.2 billion in damages. Attorneys for both BPI and the network have proposed a trial date of February 2017.

The company is growing again, Craig Letch, BPI’s director of food quality & food safety, said in a statement.

“Although business conditions are not yet at the point where we can resume lean beef production operations in (Kansas), this is certainly a step in the right direction,” Letch said.

The size of the U.S. cattle herd has fallen to its smallest in 63 years after years of drought.

Cargill Inc [CARG.UL], one of the nation’s largest beef processors, last month closed a plant in Milwaukee, Wisconsin, due to the scarcity of cattle. The company shuttered a Texas beef plant last year.

Beef prices have been climbing as the herd shrinks. The retail price for extra lean ground beef in June hit a record high $5.48 per lb, surpassing the previous record of $5.42 in April.

The case is Beef Products Inc et al v. American Broadcasting Cos et al, First Judicial Circuit Court of South Dakota, Union County, No. 12-292.

Additional reporting by Tom Polansek and Theo Waters in Chicago; Editing by Richard Chang