A bicameral group of lawmakers sent a letter to USDA this week questioning the department’s lending and oversight practices related to the recent closure of Pure Prairie Poultry, a broiler producer that was based in Minnesota with additional operations in Iowa and Wisconsin.

Senator Chuck Grassley (R-IA) and Rep. Brad Finstad (R-MN) led the letter, which was also signed by Senate Agriculture Committee Ranking Member John Boozman (R-AR), House Agriculture Committee Chairman GT Thompson (R-PA), and Reps. Ashley Hinson (R-IA), Randy Feenstra (R-IA), Derrick Van Orden (R-WI), and Michelle Fischbach (R-MN).

“On September 20, 2024, Pure Prairie Poultry, a Minnesota-based company, filed for Chapter 11 bankruptcy,” the letter said. “Consequently, the company’s plant in Charles City, Iowa, ceased operations on October 2. In addition to laying off dozens of employees, this resulted in up to 50 farmers and more than 2 million chickens throughout Minnesota, Iowa, and Wisconsin being left without feed or any processing option.”

“In 2022, Pure Prairie Poultry was awarded a guaranteed loan of $38.7 million from USDA Rural Development’s Food Supply Chain Guaranteed Loan Program (FSCGLP) and a grant of $6.9 million from USDA Rural Development’s Meat and Poultry Processing Expansion Program
(MPPEP). According to Pure Prairie Poultry’s bankruptcy court filings from the week of September 22, the company reported liabilities between $100 million and $500 million, with $50 million to $100 million in assets. Additionally, the company projected a negative cash flow of $1.8 million per week over the following six weeks. Further, it is our understanding that growers and feed mills affiliated with Pure Prairie Poultry have not been paid for months. Given this fact pattern, we remain deeply concerned about the lack of oversight USDA has provided in this case.”

The letter continued on to detail other loan guarantees and resources USDA has distributed with the goal of expanding meat processing capacity, and concluded by asking the following questions of the department:

1. On what date did the USDA receive notice from Pure Prairie Poultry’s lender regarding the company’s default on its loan obligations and its inability to continue providing feed and processing for birds under its ownership? Additionally, please provide the statutory and/or regulatory requirements that obligate the lender to timely notify the Department of a defaulting entity utilizing the Department’s programs and funds.

2. What metrics did the USDA utilize to approve Pure Prairie Poultry with over $45 million in taxpayer funds? Please provide details on the scoring criteria and metrics used for MPPEP along with information about the USDA’s approval process for the loan guarantee under the FSCGLP and financial institutions’ ability to service the loans.

3. What, if any, consideration does USDA give to previous bankruptcy filings when awarding loans and/or grants? Was USDA aware of the previous closures that took place at the location of the Charles City, Iowa processing facility?

4. Did the USDA have any indications at the time of Pure Prairie Poultry’s approval for both the loan guarantee and grant that the company would face financial peril less than 24 months after the awards were announced? What steps did the USDA take to salvage the plant in Charles City, Iowa?

5. What steps did the USDA take in the immediate aftermath of the plant closure to assist the relevant stakeholders, including growers and state departments of agriculture, in the care, processing, and depopulation of affected birds? What additional steps does the USDA plan to take to assist affected producers?

6. What are the USDA’s current oversight mechanisms for grants and loan guarantees to ensure taxpayer dollars are not being wasted? Additionally, what oversight actions were taken by USDA in the case of Pure Prairie Poultry?

7. What steps will the USDA take moving forward to ensure proper guardrails are in place to prevent similar outcomes for both the current recipients of the FSCGLP and MPPEP loans and grants, as well as similar funding opportunities in the future?

8. Have any additional lenders notified the USDA of potential defaults within the loan portfolio for the FSCGLP? Is the USDA aware of any other potential cases of default based on its own analysis? Have any prior defaults occurred, not including Pure Prairie Poultry?

9. Does the USDA maintain a preferred lender list for programs under the Rural Development Mission Areas? If so, please provide a copy.

10. Is the USDA aware of any other projects financed by the lender(s) of Pure Prairie Poultry through the FSCGLP? If so, please provide details on those projects.

The full letter can be found here.