Supplier's Woes Causing Shortages of Kosher Meat

ARYEH ZEV NARROW

Agriprocessors, the nation's largest kosher meat supplier, is slowly recovering from a federal raid at its Postville, Iowa, plant in May. And while the company has made negative headlines in the past for environmental violations, labor disputes and charges of animal cruelty, never before have Agriprocessors' internal issues affected the nation's kosher meat supply so drastically.

At present, the availability of kosher meat nationwide is at its lowest level in two decades, according to Menachem Lubinsky, president of Lubicom Consulting and Marketing, a firm that works in the kosher trade and sometimes represents Agriprocessors. Many observers wonder what's in store for kosher meat.

With the abrupt loss of nearly 400 skilled workers over immigration issues in May, Agriprocessors' production fell to about 30% of capacity. Lubinsky said that production varies from day to day according to the company's ability to fill vacancies, and that the company has been hard pressed to replace about a third of its workforce. The result: spot shortages of kosher meat. At full capacity, the company processed some 40,000 chickens and 600 livestock daily — accounting for about 60% of the kosher beef in the U.S., and about 40% of the country's kosher poultry.

Since roughly 85% of Agriprocessors' production came from Postville, the shortfall from that plant leaves a gap of about half the nation's kosher beef supply and a third of its kosher poultry supply.

While the shortages have affected supermarkets even in Jewish enclaves like Brooklyn, N.Y., kosher consumers in major markets like New York and Chicago generally have not had difficulty finding alternative sources for kosher meat.

However, Agriprocessors' products, sold under the trade names Rubashkin, Aaron's Best and Shor Habor, are the primary source of kosher meat for consumers in many smaller Jewish communities that cannot support a local kosher butcher. They often have no kosher meat available besides the supply of Agriprocessors products in their supermarket meat department.

Reports from some supermarkets show signs of chaos in supply, with prices spiking amid unreliable shipments. The kosher butcher in a Houston Randall's said Agriprocessors is filling less than half of the store's beef orders, but is close to meeting its chicken orders. He said prices have increased about 15% since May.

“We can't raise prices fast enough,” said John Gillespie, store director of an Albertsons in Seattle. He said Agriprocessors has raised prices about 5% a month for three months. Even after increasing orders from other vendors, including New York-based Alle and Minneapolis-based Solomon's, Gillespie said he is left with a shortfall of about 30% of the store's demand for kosher meat and poultry. He said his store will decrease its reliance on Agriprocessors in the future. “I don't want to find myself in this situation again,” he said.

One winner in the shuffle is Dallas-based Rosenblatt Kosher Meats. Chief Executive Officer Jacob Rosenblatt called the turn of events “exciting” for his company.

“Stores want more than one or two sources,” Rosenblatt said. “They want to be leveraged, not relying so much on one large player. We're trying to create more competition.” Rosenblatt's meats are distributed wholesale in Los Angeles, New York, Baltimore, Chicago and Florida.

Rosenblatt started producing kosher poultry four years ago. The company entered the kosher beef market only six months ago, just in time to exploit the supply disruption at Agriprocessors. Business has been brisk.

But even as other kosher meat manufacturers are increasing production, Lubinsky said that Agriprocessors' market share cannot be snatched up so quickly by competitors. “No other company can match Agriprocessors' capacity or technology for vacuum packing,” he said. Lubinsky said the company is the only viable kosher meat supplier for supermarkets outside major Jewish population centers.

But while Agriprocessors' ability to meet demand may have taken a hit, demand for kosher meat remains robust. Even among non-Jewish kosher consumers, the scandal is seen as a decidedly secular issue, according to Marcia Mogelonsky, a senior research analyst at Mintel, a Chicago-based research organization. A Mintel study shows that non-Jews may account for over 70% of kosher consumers.

“People see kosher as a higher quality standard. They believe it's more pure, and Agri hasn't hurt that perception,” said Mogelonsky. “Consumers know this is not a kosher-related issue.”

And while many supermarkets report consumers are particular to buy only Rubashkin or a competing brand, preference for or against an Agriprocessors brand is not necessarily a vote for or against the company. Kosher consumers may prefer one kosher agency over another if, for example, they believe it to have higher standards or more reliable supervision.

Mogelonsky said she feels the kosher industry as a whole won't suffer unless something undermines the integrity of the kosher supervision in general. Mogelonsky cited as an example a scandal in upstate New York in August 2006, when a kosher meat supplier was discovered selling non-kosher meat as kosher. Should such an incident occur on a national level, Mogelonsky said, consumer confidence in kosher could take a hit.

In May, the Rabbinical Assembly and the United Synagogue of Conservative Judaism, two Conservative Jewish groups, introduced a “Hechsher Tzedek” [certification of righteousness] as a seal of approval for kosher manufacturers that meet their ethical standards, including such factors as work conditions and the wages paid to workers. The concept has found support among some observers, but not necessarily those most committed to keeping kosher.

Mogelonsky called the concept “fascinating,” but she worried it may create confusion among consumers who are less educated about (or committed to) kosher religious law. The Hechsher Tzedek certification makes no claim about the kosher status of the food. If it is mistaken for an actual kosher symbol, it might, ironically, mislead the kosher consumer. Lubinsky called it “unnecessary and confusing.”

The kosher meat industry's reputation seems to have remained more or less untarnished by recent events at Agriprocessors, but the industry's primary supplier has been badly bruised. Kosher consumers in secondary markets have been hardest hit by Agriprocessors' production cuts. In the long run, the industry's health may hinge more on Agriprocessors' ability to resume and maintain production than on its success in staying out of the news.

70%
Percentage of kosher meat consumers who purchase kosher products for non-religious reasons.
Source: Mintel, Chicago