Sup­plier sues egg farm al­leg­ing breach of con­tract


A food sup­plier claims an Iowa egg farm breached a con­tract af­ter bird flu dis­rupted the sup­ply of eggs.

Michael Foods Egg Prod­ucts Co., a sub­sidiary of St. Louis-based ce­real-maker Post Hold­ings Inc., filed a law­suit in fed­eral court in Des Moines on Mon­day al­leg­ing Hawk­eye Pride Egg Farms in Cor­with is in breach of a Jan. 27, 2014, con­tract.

“Hawk­eye’s breach of the con­tract will cause Michael to suf­fer sub­stan­tial harm,” the law­suit says. “Un­der the present cir­cum­stances, such harm will be ir­repara­ble.”

Michael Foods pri­mar­ily sup­plies ex­tended shelf-life liq­uid and pre­cooked egg prod­ucts and eggs used in food in­gre­di­ents.

Court doc­u­ments say de­tails of the con­tract are con­fi­den­tial but that losses ex­ceed US$ 75,000, the thresh­old a case must meet to be filed in fed­eral court. Michael Foods seeks a court or­der stop­ping Hawk­eye from breach­ing the con­tract, a judg­ment against the egg sup­plier and dam­ages “in an amount suf­fi­cient enough to com­pen­sate Michael for Hawk­eye’s breach.”

Hawk­eye Pride is a di­vi­sion of Sioux Cen­ter-based Cen­ter Fresh Group, which owns Iowa egg farms that lost 7 mil­lion chick­ens, in­clud­ing 5.5 mil­lion egg-lay­ing hens. A spokes­woman de­clined to com­ment Tues­day on the law­suit, and the com­pany’s at­tor­ney, Jan Mohrfeld Kramer, did not re­spond to a mes­sage.

A spokesman for par­ent com­pany Post Hold­ings did not im­me­di­ately re­spond to a mes­sage seek­ing com­ment.

Post said last week that about 25 per­cent of its yearly egg vol­ume com­mit­ments have been af­fected by the bird flu. Two com­pa­ny­owned chicken flocks in Ne­braska were af­fected by the vi­ral ill­ness that has af­fected 48 mil­lion birds, mostly chick­ens and tur­keys, na- tion­wide. In Iowa, 31.7 mil­lion birds have been lost, mostly egglay­ing chick­ens.

“As a re­sult of ag­gres­sive cost man­age­ment, dis­con­tin­u­a­tion of cer­tain prod­uct lines and pric­ing ac­tions,” Post said it ex­pects to keep the losses to US$20 mil­lion for 2015.

The U.S. Depart­ment of Agri­cul­ture said in a re­port re­leased Mon­day that Iowa, the na­tion’s egg leader, saw May egg pro­duc­tion fall 28 per­cent from a year ago and 21 per­cent in a month as bird flu swept through flocks.

The state pro­duced 1 bil­lion eggs in May, the low­est monthly num­ber since Fe­bru­ary 2005.

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