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Food-processing co-op's bankruptcy creates uncertain terrain for area agribusinesses.

PMG PHOTO: JUSTIN MUCH - NORPACs food processing facility in Brooks is among several that stand to be purchased by Oregon Potato Company.NORPAC's bankruptcy filing and subsequent entrance into a roughly $149.5 million purchase agreement with Oregon Potato Company has left many area farmers mum with uncertainty.

The struggling food-processing co-op, which was founded in 1924 and represents more than 200 Willamette Valley growers, announced on Aug. 22 that under its chapter 11 proceedings Oregon Potato Company "will acquire substantially all of the Company's assets."PMG PHOTO: JUSTIN MUCH - NORPACs food processing facility in Brooks is among several that stand to be purchased by Oregon Potato Company.

"The news of NORPAC filling chapter 11 bankruptcy was a blow to all Oregon agriculture," Marion County Farm Bureau President Dylan Wells said Farm Gram, the bureau's quarterly publication. "I sincerely hope things turn out okay for all farmers involved with the pending sale!"

The sale was initially shadowed by ambiguity. The initial agreement indicated OPC planned to purchase all of NORPAC's facilities, except the Stayton plant. A NORPAC document sent to Stayton plant employees dated Aug. 30 stated:

"Since that initial filing last week, OPC has now also agreed to purchase the Stayton plant. This means the Stayton plant will be included in the auction in October with the other NORPAC plants as one complete package. Please note however, that OPC's indication at this time is not to continue operations at the Stayton plant."

NORPAC subsequently announced that the Stayton facility would close permanently by the end of October, laying off 485 employees. OPC President Frank Tiegs indicated to the Capital Press that some of the plant's equipment could be relocated and used elsewhere.

Tiegs farms more than 100,000 acres and holds multiple agribusiness entities and processing facilities.

In 2017 after purchasing the Pratum area's Willamette Valley Pie Company and Rader Farms of Lynden, Wash., Tiegs expressed a propensity for investing during times of uncertainty, telling the Capital Press "My own experience has been to plant what's not the hot thing."

Tiegs has exhibited an equally sanguine outlook with the NORPAC transaction, in which other interests could potentially outbid OPC during the October auction. Pursuant to the bankruptcy code , an auction is required even with a deal in the making between OCP and NORPAC. PMG PHOTO: JUSTIN MUCH - NORPACs food processing facility in Brooks is among several that stand to be purchased by Oregon Potato Company.

"We intend to work as quickly as possible through the forthcoming process. We are excited about bringing the growers, employees, partners and various assets of NORPAC together with our family of companies," Tiegs said. "The combined businesses will enhance the offerings and service, to customers across all business channels."

That could issue grounds for guarded optimism from area farmers, especially if they've previously done business with Tiegs.

"Frank Tiegs has a company called National Frozen Foods. Many farmers have sold to National. I cannot say if all are familiar, but I would tend to think that most know of National," said David Henze, president of Gervais/St. Paul area's Coleman Agriculture.

"The new owner of the Norpac facilities is the same owner that many people already work with. However, right now, the is some uncertainty on what will need to be grown and what the pricing will be," Henze said.

That wasn't the case with the regionally situated NORPAC operation, which afforded more predictability.

"The big change will be going from a cooperative model to a straight contract sale or open sale," Henze explained. "NORPAC was very predictable on what they wanted grown and how they paid. We just do not have a history yet on a larger scale with National.

"I think there is both optimism and uncertainty right now," Henze added. "Frank Tiegs knows how to run and grow a business."

The hope of regional growers is that they grow with that business as well, though it's circumspect.

"This bankruptcy filing will have a profound impact on hundreds of Oregon farm families," Oregon Farm Bureau Executive Vice President Dave Dillon said in an written statement. "In the immediate term, getting paid for delivered or contracted crops is a huge concern. In the near-term future, the potential write-down of growers' retained earnings could drastically change farm balance sheets and affect operating loans.

"NORPAC has been a vital marketing mechanism for Oregon producers for many decades," Dillon added. "The viability of many family farms will be severely tested in this reorganization process. If we don't have a viable co-op, it will drastically change the ag landscape in Oregon.

"Oregon Farm Bureau is greatly concerned with the well being of our member families. We are marshaling resources we hope can be helpful to those affected by this bankruptcy."


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RELATED STORIES

- Bankrupt Oregon food processor, NORPAC, sold for $150M

- NORPAC files for bankruptcy


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