Farm Progress

Closed peanut plant instructed to dump nearly 25 tons of bottled peanut butter in a landfill in southeastern New Mexico.

Logan Hawkes, Contributing Writer

April 7, 2014

4 Min Read

As eastern New Mexico and Texas Panhandle peanut growers prepare their fields for another crop year of sweet Valencia peanuts, confusion, frustration and growing concerns are hanging over what will become of the Portales, New Mexico, plant that is currently under the control of the U.S. Bankruptcy Court.

The peanut processing plant, operated for years by Sunland, Inc., was once the main buyer of Valencia peanuts grown across the region. But for the second straight year growers must start the new season not knowing whether the peanut plant will be revived under new ownership, remained shuttered for an extended period of time or if the plant will be disassembled and all equipment and peanut operations moved to another state, another town or completely out of the country.

The plant was shuttered in 2012 after a nationwide salmonella outbreak that sickened 41 people in 20 states was traced back to the plant. FDA inspectors cited the company after a month-long investigation, saying salmonella had been discovered in 28 locations and in several peanut butter samples.

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Sunland was the nation's largest producer of organic peanut butter at the time. They produced organic peanut butter under different labels for a number of retailers nationwide.

Shortly after the court-ordered closing, company officials announced they were working to remedy problems discovered by FDA inspectors with plans of re-opening as soon as a re-inspection by a third party could determine that federal violations had been addressed.

The swift action by FDA was criticized by some at the time, especially growers who supplied peanuts to the plant, many of whom said they believed the federal agency was looking for a way to demonstrate new federal powers granted as a result of the then-new Food Safety Modernization Act.

Confusion reigns

By mid-2013, Sunland's biggest buyer and one of three major creditors, Costco Wholesale, provided additional capital to purchase raw peanuts in anticipation of the plant re-opening. Costco officials seemed anxious for the plant to re-open, in fact, to process the new peanuts purchased and begin deliveries as soon as possible.

In addition, Roosevelt County economic development officials agreed to extend financial aid to Sunland in the amount of $150,000, primarily to save more than 100 jobs the plant offered for local and area residents and to further help the plant conform to federal food safety standards.

But in early October last year creditors and local officials were shocked to discover Sunland officials had filed for Chapter 7 Federal Bankruptcy protection and the court had promptly assigned a bankruptcy trustee to assume full control of the plant and its assets.

Earlier this year, that trustee, Clarke Coll, recommended that the plant be sold to California-based Ready Roast who had offered to purchase the plant and many of its assets for $18.5 million. Coll said after numerous notifications, the California company was the only firm to express an interest in the plant.

But before the court could award the sale, court officials say additional interest had been expressed by a second company and the court ordered a March 20 auction with intent to award a sale to the highest bidder. Hampton Farms of North Carolina was apparently the only high bidder at the auction, a bid of $20 million, and the judge in the case set a hearing for the following day to announce the court's decision.

At that hearing the court reported that a third company had emerged and was interested in placing a bid. The court set a new auction date for the following week. Under protest, Hampton Farms agreed to rebid but were beaten by Canadian peanut producer Golden Boys Food.   

The latest development to stir the waters of controversy was a decision by the court last week, apparently at the insistence of Costco Wholesale, a creditor of the defunct plant and owner of the peanuts used to make that peanut butter, to dump nearly 25 tons of bottled peanut butter in a landfill in southeastern New Mexico.

Costco Wholesale officials had initially agreed to accept shipment as part of a settlement on their investment in the Portales plant, but after early shipments were found to be leaking what Costco called peanut oil, the company sent the shipments back and refused additional deliveries.

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Though the peanut butter had been tested and found safe for consumption, the court said the product could not be given away to a New Mexico food bank because Costco officials did not want the liability of giving away peanut butter that had been stored in a defunct warehouse for a period of time and in jars that were apparently leaking oil.

Nearly a million jars of the peanut butter have now been dumped amid public outcry over food waste and the court now scrambles to unravel the growing puzzle over what happens next in the ongoing saga of the troubled peanut operation.


Also of interest:

Peanut butter controversy not over yet

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About the Author(s)

Logan Hawkes

Contributing Writer, Lost Planet

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