(Associated Press) IOWA CITY, Iowa – A ruthless entrepreneur who built one of the nation's largest egg production operations from scratch even as he racked up environmental and labor violations is quitting the business after one scandal proved too much to overcome: a nationwide salmonella outbreak caused by his products.
Austin "Jack" DeCoster, 77, and his son, Peter, have given up control of egg operations in Iowa, Maine and Ohio, they said in a statement Monday. Their farms produced salmonella-tainted eggs that sickened an estimated 1,900 people and led to a recall of 550 million eggs. Later, federal inspectors uncovered filthy conditions at the farms, including dead rodents and towers of manure.
Steve Boomsma, chief operating officer for Centrum Valley Farms in Alden, Iowa, said in a telephone interview that his firm had signed a nine-year lease with an option to purchase six DeCoster operations in Iowa, including the Wright County Egg farms responsible for the outbreak.
A division of Minnesota-based Land O' Lakes announced earlier in November that it is taking over DeCoster's Maine egg farms. And Boomsma said a deal could be announced before November ends, involving Iowa investors' takeover of DeCoster's egg operations in Ohio.
The salmonella outbreak resulted in big retailers like Wal-Mart (WMT)dropping DeCoster products, a congressional hearing where DeCoster struggled to defend his record, and a bitter legal feud with DeCoster's longtime top associate, John Glessner, in which each accuses the other of mismanagement. The DeCosters recently reached financial settlements with about 40 people who were sickened during the outbreak, and attorneys involved in the litigation say they are seeking compensation for more than 100 others.
"While we are committed to working to address outstanding issues related to the outbreak, it is important to note we no longer operate any of the farms involved and are no longer in the business of egg production," the DeCoster family's statement, sent to The Associated Press, said.
Republican Iowa Gov. Terry Branstad, a longtime DeCoster critic, said: "The DeCosters should have been out of business a long time ago. This is good news for the entire state of Iowa," which produces more eggs than any other state, he said. "The DeCosters have been consistent and habitual violators who have given Iowa egg producers a bad name," Branstad added.
Boomsma, coo of Central Valley Farms, agreed that the personnel change was good for the industry. He said Centrum Valley is owned by three families who have a good track record and have been in the business for generations.
"The egg industry has taken a black eye on some of this stuff and we need to just really help the consumers realize that their eggs are safe," Boomsma added.
Improved maintenance, cleaning and testing is being done at two of the six Iowa operations before his company will seek approval from the Food and Drug Administration to reopen them, while the others are back in business, Boomsma said.. To win back customers, he said the company would have to "step up our food safety program and our environmental testing programs."
DeCoster was a child in Maine when his father died, leaving him 200 hens. He built a vast egg empire with hard work and cutthroat tactics. He expanded his egg farms even as they were often cited and charged with immigration, safety, environmental and labor violations. Although he regularly clashed with regulators, he won others over by generously donating money to local municipal projects.
The DeCoster business survived raids that led to the arrests of dozens of undocumented workers, DeCoster's 2003 conviction for knowingly hiring illegal immigrants and fines totaling millions of dollars for everything from animal cruelty to workplace discrimination. A member of former President Bill Clinton's cabinet once compared working conditions at a DeCoster farms to a sweatshop, and Iowa state officials labeled DeCoster the one and only "habitual violator" of its environmental laws as part of a previously unsuccessful effort to stop his company's expansion.
After the salmonella outbreak, federal agents descended on DeCoster farms in Iowa. No charges have been filed, and a spokesman for the U.S. Attorney's Office in Cedar Rapids declined comment Monday on whether a federal investigation will be continued.
A spokeswoman said neither Jack nor Peter DeCoster would be granting interviews. At the congressional hearing on the subject last year, Jack DeCoster said he was horrified to learn his eggs were the source of the outbreak and his farms' conditions bothered him "a lot."
Peter DeCoster, who ran day-to-day operations, promised Congress the company would make "sweeping biosecurity and food safety changes" after the recall.