Nearly a million jars of peanut butter deemed safe to eat were dumped in a landfill in Clovis, N.M. Friday to expedite the sale of a bankrupt peanut-processing plant that was at the center of a 2012 salmonella outbreak and nationwide recall.
Sunland Inc. dumped peanut butter valued at an estimated $2.6 million into the Curry County landfill in Clovis after Costco Wholesale refused to take shipment of the product.
Bankruptcy trustree Clarke Coll said Sunland had no other choice after Costco also declined requests to let it be donated to food banks or repackaged or sold to brokers who provide food to institutions, such as prisons.
“We considered all options. They didn’t agree,” said Coll.
Court filings indicate that the peanut butter was made with $2.8 million worth of Valencia peanuts owned by Costco, and had been sitting in a warehouse since Sunland shut down and filed for bankruptcy last fall.
After extensive testing, Costco agreed to a court order authorizing the trustee to sell the company the peanut butter. After receiving eight loads of the product, Costco rejected it as “not merchantable” because of leaky peanut oil.
“All parties agreed there’s nothing wrong with the peanut butter from a health and safety issue,” said Coll.
Court records show that on a March 19 conference call Costco said “it would not agree to any disposition … other than destruction.”
The company paid about $60,000 to have 950,000 jars of peanut butter, roughly 25 tons, delivered to the landfill in 58 truckloads. The last of the deliveries were scheduled for Friday, the same day Golden Boy Foods of Canada was to close on its $26 million purchase of the plant.
The plant was shut down in September 2012 after its products were linked to 41 salmonella cases in 20 states. Sunland made peanut butter under several different labels for retailers including Costco, Kroger and Trader Joe’s, along with products under its own name.
The plant later reopened for about five months, but shut down in October after the company filed for Chapter 7 bankruptcy protection.
Sonya Warwick, spokeswoman for New Mexico’s largest food bank, declined to comment directly on the situation. Warwick did note that rescued food accounted for 74 percent of what Roadrunner Food Bank distributed across New Mexico last year.
“Our fleet picks up rescued food from hundreds of locations weekly and brings it back to the food bank,” Warwick said.
“Before distributing it, volunteers help label, sort or repack it for distribution to partner agencies across the state. Access to rescued food allows us to provide a more well-rounded and balanced meal to New Mexicans experiencing hunger,” Warwick continued.
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