PUBLISHED: 12:09 EST, 2 April 2012 | UPDATED: 12:41 EST, 2 April 2012
A company that makes ‘pink slime’ products has filed for bankruptcy as the backlash against the controversial beef filler continues.
AFA Foods has announced that it is filing for Chapter 11 bankruptcy protection and selling its assets after the public outcry over the beef substance derailed its efforts to save its already struggling business.
The Pennsylvania-based company processes more than 500 million pounds of ground beef products a year and distribute to retailers including Wal-Mart and Safeways – both supermarkets that no longer sell beef containing ‘pink slime.’
AFA Foods, which also sells products under the brand names Moran’s, Stone River Ranch and Miller Quality Meats, provide beef to customers including Burger King, Wendy’s and Jack in the Box.
The bankruptcy comes a week after Beef Products Inc, another company which sells ‘pink slime’, announced they were suspending operations at three of four plants where the beef ingredient is made.
Beef Products Inc. have stopped operations at its plants in Texas, Kansas, and Iowa – a move that will affect 650 jobs.
The company’s South Dakota headquarters will continue operations.
Last week the governors of three states toured a Beef Products’ plant to demonstrate their support of the product.
Former GOP candidate Rick Perry was pictured chomping down on a burger made with the chemically-treated left-over bits of meat during the tour with Kansas Governor Sam Brownback and Iowa’s Terry Branstad.
Federal regulators say the ammonia-treated filler, known in the industry as ‘lean, finely textured beef,’ meets food safety standards.
But critics say the product could be unsafe and is an unappetizing example of industrialized food production.
The low-cost ingredient is made from fatty bits of meat left over from other cuts. The bits are heated and spun to remove most of the fat. The lean mix then is compressed into blocks for use in ground meat.
The product is exposed to ammonium hydroxide gas to kill bacteria, such as E. coli and salmonella.
The product has been used for years, but it wasn’t until earlier this month that social media suddenly exploded with worry and an online petition seeking it to be ousted from schools garnered hundreds of thousands of supporters.
The U.S. Department of Agriculture decided to allow school districts to stop using it and some retail chains have pulled products containing it from their shelves.
In the affidavit filed as part of AFA Foods’ bankruptcy, interim CEO Ron Allen said the company’s profits have suffered because of decreasing retail demand, costly customer demands for product testing and growing competition from different types of meat.
AFA Foods had had been pursuing a turnaround strategy to increase sales to retail customers, but Allen said that the ‘unfounded public outcry’ over the use pink slime, known in the industry as lean, finely textured beef strained those efforts.
AFA Foods said it secured $56 million in financing from its lenders to fund operations and expects to continue serving customers throughout the process.