Meat Prices Could Go Up 30%

by Stewart Ain

Faced with mounting debts, civil and criminal charges and insufficient cash, Agriprocessors, one of the nation’s largest kosher meat producers, has suspended operations, causing shortages here and fears of soaring prices.

“New York has begun to see shortages and it’s going to get really bad later this week,” said Rabbi Seth Mandel, rabbinic coordinator in charge of meat for the Orthodox Union. “You will see shortages everywhere.”

Concern is already evident at some area kosher restaurants.

“People are getting nervous about whether I will have product,” said Jeremy Lebewohl, an owner of the Second Avenue Deli in Manhattan.

Steven Traube, the managing partner of two other city restaurants, predicted: “Meat prices could easily go up 20 or 30 percent.”

Rabbi Israel Steinberg, who provides kosher supervision at several area restaurants and stores, said that “chicken prices will also probably go up” because Agriprocessors slaughters chickens as well.
Should Agriprocessors go out of business, “it would be devastating for everybody,” observed Rabbi Luzer Weiss, director of the kosher law enforcement in New York.

“I hope for the sake of the kosher consumer that they straighten out their problems or go into receivership so someone else can come in and not have the place go under,” he added.

Rabbi Mandel said the meat shortage would be particularly acute for those seeking glatt kosher meat.

Agriprocessors, which was founded in 1987 by Aaron Rubashkin, produced both kosher and glatt kosher meat and had captured a little less than half of the kosher meat market in the U.S., Rabbi Mandel said.

He said the nation’s other major glatt kosher meat producer, Alle Processing in Maspeth, Queens, cannot possibly fill the void left by Agriprocessors, which has not slaughtered or processed steer at either its Postville, Iowa, or Nebraska plants since Oct. 17. Its products were sold under such brand names as Aaron’s Best, Rubashkin and Supreme Kosher.

“Butchers will get a shipment of meat from Alle, and when it sells out people won’t be able to get more,”

Rabbi Mandel said. “I’m afraid what will happen Thursday because most people buy on Thursdays for Shabbat. Stores that bought only from [Agriprocessors] will have people descending on them and they won’t have meat.”

Spokesmen for Agriprocessors did not return calls. A man at the company’s office at the Brooklyn meat market in Sunset Park said Monday that only a limited supply of meat had been shipped that morning. Four of the company’s trucks sat empty in a rear parking lot.

At Brooklyn Kosher, a wholesale kosher meat company in the Brooklyn meat market, Ira Fisher and Bruce Hirsch, the co-owners, said Monday that it was too early to gauge how severe the shortage would be. He said many stores were still working off a stockpile of meat they bought for the High Holy Days.

Fisher said they believed other companies would try to fill the void but that their company “is relatively new and our growth will be slow.” He noted that his company has already received calls from customers asking for certain cuts of beef because of Agriprocessors’ shutdown.

Those familiar with the company’s plight believe its future will be decided no later than next week because it defaulted on a $35 million loan and has no line of credit with which to buy steer.

The company is also facing nearly $10 million in fines for alleged wage violations, and Sholom Rubashkin, the son of the founder, has been arrested on federal conspiracy charges of harboring illegal immigrants and helping them to falsify their identities. On May 12, federal authorities conducted an immigration raid that netted nearly half of the company’s workforce.

Rabbi Menachem Genack, director of kosher supervision for the Orthodox Union, said Tuesday that although meat production has stopped, Agriprocessors has continued to slaughter and process chickens. But it was not known how long that would continue.

Those familiar with the kosher poultry business believe that although there may initially be spot shortages of chicken if Agriprocessors shuts down, there are enough other kosher poultry producers to largely fill the void.

The largest kosher poultry company, Empire Kosher Poultry, plans to evaluate its customers’ needs and then “make adjustments to the extent that our business allows us to fill those needs,” according to Elie Rosenfeld, a company spokesman.

“Empire will produce a certain percentage more and if everybody kicks in a few thousand more chickens, it should mitigate the void,” he said.

Rosenfeld declined to comment on reports that Empire was studying the possibility of acquiring Agriprocessors’ business. He has said in the past that the company was considering entering the kosher beef production business.

Rabbi Genack said that compounding the kosher meat shortage is the fact that a kosher meat plant in Minnesota is not operating because of a fire there. He said the facility would not be operating until all issues with the insurance company are ironed out.

Because of the company’s recent problems, the partial shutdown of Agriprocessors did not come as a surprise. And some retailers were said to have started shopping around for other suppliers after the company’s meat slaughtering practices were condemned in 2005 by People for the Ethical Treatment of Animals.

Several retailers have approached Weiss Kosher of Williamsburg asking it to provide them with non-organic kosher meat, according to Rachel Wiesenfeld, the company’s founder. The company distributes both organic and non-organic chickens and beef.

“For every pound of beef we get in, we have 25 to 50 customers — and that is an underestimation,” she said.

Although the glatt kosher market has been particularly hard hit, the much larger kosher meat market is expected to fare better because it has more suppliers. One of the largest is Hebrew National, which supplies many kosher restaurants.

Ronald Dragoon, owner of the Ben’s restaurant chain, said he buys his meat from Hebrew National and poultry from Agriprocessors.

“I have a yearly contract [with Hebrew National] and so we’ll get supplies of meat,” he said. “The truth is, before there was a Rubashkin we never had a problem. And there have always been spot shortages.”

Jeffrey Nathan, executive chef and proprietor of Abigail’s in Manhattan, said his restaurant has never bought from Agriprocessors and has had a contract with Alle for nearly 15 years.

“They take care of their main people and since I have been purchasing from them for so long, I hope I get a certain priority,” he said. “I’m sure demand will outweigh supply.”

Officials at Alle did not return repeated phone calls.

Nathan said that as demand for meat increases, he may try to make dishes with “underutilized meats” rather than just those in popular demand.

“If it’s good and creative, it can turn into mouthwatering delicacies,” he said.

Nathan added that the meat shortage comes at a time of an approaching recession and that he may add more fish and vegetarian dishes, which are less expensive, to the menu.

“I will be lowering my [profit] margins and not making as much in order not to pass increased costs on to the customer,” he said. “I prefer to have everyone coming in.”

Lebewohl of the Second Avenue Deli said he buys from multiple vendors in order to “keep them competitive and so that I know the correct pricing. And because I am not glatt, I have more options.”

He added that he is able to do that because of his volume of business.

“Stores can’t spread it if they have too small of an order,” Lebewohl said.

He noted that he had heard that a fresh kosher meat company in Canada might begin shipping meat to the United States to help fill the void.

“If there is a void, it is only a matter of time until someone steps in to fill it,” Lebewohl said.

Steven Traube, managing partner of the company that owns the Prime Grill and Solo restaurants in Manhattan, said he had few suppliers to choose from because his restaurants serve only USDA prime cuts of glatt kosher beef. All of his meat is bought from Alle.

“The biggest issue is that we are going to be paying more than we are already paying,” he said. “Restaurants like mine that are willing to pay top dollar know that I need the product and that I am going to buy it at any cost.”

Traube said that if there is a silver lining to the meat shortage it is that it occurred after the High Holy Days, when demand for kosher meat is at its peak.

“If they could manage to ramp up production in time for Passover [another time of peak demand], we would be fine,” he said.

-New York Jewish Week