Norpac

Frozen peas head to the bagging machines at NORPAC Foods in Salem.

The layoff notices last year were dramatic: The farmer-owned cooperative NORPAC was bankrupt and eliminating more than 1,000 jobs at fruit and vegetable processing plants in the Salem area.

Meanwhile, Willamette Valley farmers watched the bankruptcy unfold and tallied its impact on their wallets, their loans and their farms.

“It’s pretty devastating,” said Gary Cook of Cook Family Farms, a member grower who also serves on NORPAC’s board. He estimated the cooperative owes him more than $200,000 for the crops he harvested in 2019 alone.

Now those farmers are watching a Portland bankruptcy court, to see if NORPAC will be sold in the coming days — and, if so, what that means for them.

“We have entered into an agreement with a company named Lineage (Logistics) that is a cold storage company,” said Al Kennedy, a lawyer with Tonkon Torp representing NORPAC in its Chapter 11 bankruptcy proceeding. “They have agreed to purchase the Brooks facility, the Salem facility and the Stayton facility for a purchase price of $49 million.”

The sale hearing is scheduled for Tuesday. Competing bids were due Friday.

It’s unclear which facilities would continue to process fruits and vegetables if the sale goes through. The Capital Press reported last month that agribusiness entrepreneur Frank Tiegs planned to temporarily lease one plant from Lineage, while buying another and gutting a third. Tiegs’ Oregon Potato Company recently agreed to pay more than $100 million for a NORPAC subsidiary in Quincy, Washington, in addition to bulk inventory and intellectual property.

Farmers are watching the current pending sale closely.

NORPAC was one of the biggest food processors in the region, freezing and bagging fruits and vegetables produced by more than 200 growers. Many of those farmers were member growers, holding what amounts to an equity stake in the now-bankrupt cooperative.

Their names are at the bottom of a long list of creditors.

“Big chunk of change I’m not getting paid,” said Terry Beilke of Beilke Family Farm in Brooks. “Painful, but we’ll survive.”

Beilke declined to say how much he was owed, but said he didn’t expect to be compensated in full.

Because member growers rank low on the list of NORPAC creditors waiting to be repaid, they’re watching the price tag of the sale to Lineage Logistics, one of the largest cold storage companies in the world.

“Most of the proceeds will go to CoBank, who is the secured lender for the company and was owed approximately $125 million,” said attorney Al Kennedy.

He said nonmember growers, who sold produce to NORPAC on a contract basis, should also be paid in full, due to protections under state and federal law.

What’s left over for NORPAC’s member growers depends on the cooperative’s net revenue, according to Kennedy. While that figure is still uncertain, he said it could conceivably be nothing.

“I think it is unlikely that they’ll get any further payment,” he said.

Gary Cook of Cook Family Farms said he’d been a NORPAC member grower since 1982. He’s not expecting those decades of ownership to yield another dime.

“It’s gonna take some time to build our financial footing to what it was,” he said.

Cook is watching NORPAC’s pending sale for more than its price tag. It’s important to him that farmers in the Willamette Valley have a place to sell their vegetables down the road.

“We’ve lost everything else,” he said.

He’s hoping at least one of the processing plants will continue to operate under new owners.

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