Recovering from the scare
- February 27, 2009
The Lynchburg based company that prompted one of the largest product recalls in U.S. history, Peanut Corporation of America, (PCA), is going out of business. Now, Virginia peanut growers and processors with no involvement in the recall are trying to assess how badly their industry may have been hurt by a consumer scare about peanuts.
The Food and Drug Administration identified PCA’s plant in Blakely, Ga., as the source of salmonella that by mid-February had sickened more than 600 people in 43 states (including 21 in Virginia) and may have contributed to nine deaths.
The FBI is conducting a criminal investigation of PCA, which has denied wrongdoing in statements posted on its Web site. The company, run by President Stewart Parnell from a small office behind his Lynchburg home, has closed its plants and filed for Chapter 7 (liquidation) bankruptcy. In February, Parnell and the manager of the Blakely plant cited their Fifth Amendment rights against self-incrimination in refusing to answer questions from a congressional subcommittee probing the salmonella outbreak.
The FDA’s Web site lists more than 2,300 food products recalled because they contained peanut paste from PCA. The list includes peanut butter, cookies, crackers and ice cream. The huge number of products has created confusion among consumers, some of whom are shunning anything connected to peanuts. None of PCA’s peanut products, for example, were used in national brands of jarred peanut butter. Nonetheless, their sales were down 22 percent in January and were expected to plummet even more when February’s sales were totaled.
Todd P. Haymore, commissioner of the Virginia Department of Agriculture and Consumer Services, stresses that Virginia peanuts generally are sold as shelled or in-shell peanuts, “and these products are safe to eat. They have not been implicated in the recent recall of manufactured products using peanut paste from a single supplier.”
Virginia growers harvested 23,000 acres of peanuts last year, bringing in cash receipts of $22 million, according to the Virginia Peanut Growers Association. Growers typically have contracts to sell their peanuts to shellers when crops are harvested in the fall. Many Virginia growers are waiting to see if they will plant a peanut crop this year. “Unfortunately, it’s looking pretty grim,” says Jeffrey Pope, who runs Cedar View Farm with his two brothers in Southampton County. “Normally, we would have a contract from shellers two months ago, but we’ve yet to see one.”
Complicating the situation for growers is the fact that there was an oversupply of peanuts last year. “I think some may get out of the business,” Pope says.
Virginia’s peanut industry also includes specialty-food processors making cocktail peanuts, peanut brittle and peanut-based candies. Peanut sales make up 80 percent of the business at the Virginia Diner in Wakefield, says Chris Epperson, the company’s president.
Virginia Diner employees have fielded a number of e-mails and calls from customers wanting to be sure the peanuts were safe before they order. Epperson has posted a letter about the “peanut salmonella scare” on the company’s Web site assuring customers that Virginia Diner gets none of its peanuts from PCA. Virginia Diner also has joined a growing number of Virginia companies on a list maintained by the American Peanut Council showing products not affected by the recall.
Epperson says that, before the recall, peanut sales already were slowing because of the economy. “It’s been a double-whammy, the economy and the scare,” she says. “They definitely have had an effect on us.