ELK POINT, S.D. | Beef Products Inc.'s surprise settlement with ABC Wednesday brought a sigh of relief from Siouxland leaders who rallied to the Dakota Dunes-based firm's defense after the network aired a series of unflattering reports in 2012 about BPI's signature beef product.
"After five long years, today’s settlement provides BPI with a renewed foundation for the future," said Chris McGowan, president of the Siouxland Chamber of Commerce/The Siouxland Initiative. "The company can now refocus their efforts on growing their business and hopefully as they grow our community and our economy will continue to grow right along with them."
McGowan, who sat in on several days of a trial that started June 5 in Union County Circuit Court in Elk Point, was among the local leaders present in the courtroom Wednesday morning when Circuit Court Judge Cheryle Gering announced the case was over.
In a statement, Iowa Gov. Kim Reynolds' office also offered support for BPI, a family business started by Eldon and Regina Roth. The privately held company was forced to close its Waterloo, Iowa, plant and two other plants in 2012 after a consumer backlash driven by national media reports dried up more than 80 percent of its business.
"Governor Reynolds was proud to support BPI and the Roth family as they fought the smear campaign against their company," the statement said.
Reynolds was lieutenant governor when Gov. Terry Branstad invited governors and lieutenant governors from Nebraska, South Dakota, Kansas and Texas to tour BPI's South Sioux City plant, the only one still making LFTB, as a show of public support for the company weeks after ABC began airing its reports.
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Rod Koch, South Sioux City's current mayor, said Wednesday said he hoped the damage done to the company could be partially righted by the settlement. Terms were not disclosed.
"I hope that the settlement is what BPI was looking for, because I think they were wronged and damaged, in the comments that were made about them," Koch said.
BPI sued ABC in September 2012 for $1.9 billion in damages, claiming ABC defamed the company and LFTB by knowingly using false information and interfering with its business relationships with its customers. The reports in March and April 2012 regularly referred to the product as "pink slime."
An estimated 15 pounds is derived from BPI's patented process that separates bits of beef from trimmings after packinghouses cut the carcasses into steaks, roasts or other cuts. LFTB is mixed with regular ground beef to reduce the fat content.
The wave of negative publicity in March 2012 prompted supermarkets and food service companies to stop selling ground beef with LFTB, slowing BPI's orders to a crawl. That left packers with a growing inventory of trimmings -- a commodity that's suddenly less valuable.
"It just had a negative impact on our whole industry," said J.D. Alexander, a third-generation Pilger, Nebraska, beef producer who was president of the National Cattlemen's Beef Association in 2012. "When people started, I guess I'll call it 'slandering' the product, it just had a negative impact on the whole industry."
Since the industry is often volatile, it's hard to say whether it's fully recovered, he said.
"I would just say that, I'm pleased there was a resolution to it," Alexander said of the settlement. "We, you know, in the beef industry are always concerned about what information is put out. We felt all along that Lean Finely Textured Beef was a good, valuable product."