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Farmland ponders future of pork, beef processing

By Eric Palmer

The Kansas City Star

KANSAS CITY, Mo. -- For bankrupt Farmland Industries, the meat of the issue is quickly becoming meat.

Having put its other large assets up for sale, the lingering question for the nation's largest farmer-owned cooperative is what it will do with its pork and beef processing operations, among the largest in the country.

On Tuesday, Farmland discussed hiring an investment banking firm to put a price tag on those businesses and see what appetite there is for them in the marketplace.

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"Putting a value on those businesses is a natural part of the process. We need to do that as we file a bankruptcy (reorganization) plan," said Sherlyn Manson, Farmland's director of corporate communications.

Farmland executives have said that the pork and beef businesses are Farmland's most valuable assets and that they don't want to sell them. They have suggested that those businesses could become the centerpiece of the cooperative's bankruptcy reorganization plan.

But as part of the process of creating a strategy to again become profitable, Farmland must find out what its pork and beef businesses are worth and how much interest there would be in buying them, Farmland officials and attorneys said Tuesday.

Farmland's pork business is part of the bankruptcy. Its beef business, which it holds in partnership with another company, is not.

"It is just like anything else: When somebody is in this situation, they have to consider everything and determine the value. In the end, a sale may or may not make sense," said Daniel Flanigan, an attorney for holders of Farmland bonds.

At least one potential buyer, Smithfield Foods, announced its interest in buying Farmland's meat businesses when Farmland sought Chapter 11 bankruptcy protection from creditors May 31. Farmland rebuffed that offer.

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