Peanut Corporation of America

Peanut Corporation of America (PCA) was a peanut-processing business which is now defunct as a result of one of the most massive and lethal food-borne contamination events in U.S. history.

PCA was founded in 1977 and initially run by Hugh Parnell, father of Stewart Parnell, with him and two other sons. The company was sold in 1994–1995 with the senior Parnell retiring, and with Stewart Parnell and others remaining with the new company as consultants. In 2000, PCA returned to Stewart Parnell via a private sale. Over this history, PCA came to operate processing facilities in Blakely, Georgia, Suffolk, Virginia, and Plainview, Texas, providing peanut and peanut butter products primarily to the "institutional food" market (schools, prisons and nursing homes), to food manufacturers for use in cookies, snacks, ice cream, and dog treats, and to other markets.

By 2007, prior to closing its doors, PCA had grown to 90 employees and was doing $25 million in annual sales. It has been estimated to have been manufacturing roughly 2.5% of processed peanuts in the U.S. at that time.

PCA permanently halted its operations after it was found to be the source of a massive Salmonella outbreak in the U.S., during late 2008 and early 2009. The 2008 contamination followed a long history of food quality issues. There had been concerns about sanitation at the company since at least the mid-1980s, when the company was run by its founder, Stewart Parnell's father, Hugh Parnell. In addition, in the years just prior to its sale and Hugh Parnell's retirement, PCA was sued: by American Candy Company in 1990, and by Zachary Confections Inc. of Frankfort, Indiana in 1991, after discovery that PCA's peanut products exceeded the FDA tolerance level for aflatoxin, a mold-derived toxin common to peanuts. Moreover, as a result of the coming contamination event, investigations would show that some PCA processing was being done without FDA knowledge and oversight, and other food handling and processing areas had gone long periods without federal inspection.

In late 2008 and early 2009, as a result of the Salmonella contamination event, nine people died and at least 714 people fell ill, all from food poisoning after eating products containing contaminated peanuts. This contamination triggered the most extensive food recall in U.S. history up to that time, involving 46 states, more than 360 companies, and more than 3,900 different products manufactured using PCA ingredients. The contamination and recall had immediate major ramifications for the market of this set of farm products. On February 13, 2009, Peanut Corporation of America ceased all manufacturing and business operations, and filed for Chapter 7 bankruptcy liquidation. As of February 2009, a federal criminal investigation was continuing, and at least a dozen civil lawsuits had been filed. In September 2015, Stewart Parnell was sentenced to 28 years in federal prison for his role in the nationwide outbreak. Stewart's brother, Michael Parnell, was sentenced 20 years in prison.

Scope of business
Hugh Parnell Sr. founded Parnell's Peanuts, in Gorman, Texas in 1977 selling to consumers, bakeries and manufacturers (candy, ice cream, and snacks). In 1990 the FDA found PCA distributing peanuts with high levels of aflatoxins, caused by mold that grows in nuts and seeds. In 1992 the American Candy Company sued PCA for lost inventory that had used PCA nuts contaminated with aflatoxins. The company was sold in 1994–1995, with the senior Parnell retiring, and with Stewart Parnell and others remaining with the new company as consultants. In 2000, control of PCA returned to Stewart Parnell via a private sale. Over its history, PCA came to operate processing facilities in Blakely, Georgia, Suffolk, Virginia, and Plainview, Texas, providing peanuts, peanut butter, peanut meal, and peanut paste to an institutional food market—to schools, prisons, and nursing homes—as well as to low-budget retail outlets such as dollar stores and to food manufacturers for use in cookies, snacks, ice cream, and dog treats. It has been estimated to have been manufacturing roughly 2.5 percent of processed peanuts in the U.S. at its height, with 90 employees and $25 million in annual sales in 2007. The company filed for Chapter 7 bankruptcy and permanently halted its processing and sales operations, after being found to be the source of a massive Salmonella outbreak in the United States beginning in 2008.

Owner
Peanut Corporation of America was founded and originally owned by Hugh Parnell, father of Stewart Parnell, but by the time of the contamination scandal had passed to Stewart as sole owner, and as president and CEO of the company.

Hugh Parnell started in the peanut business with Stewart Parnell and his two younger brothers in 1977; they took a struggling, $50,000-a-year peanut roasting operation and turned it into a $30 million business before selling the business in 1994–1995, after which Stewart Parnell continued on as a consultant until re-buying the Gorman, Texas, plant in 2000. In 2001, he bought the Blakely, Georgia, operation, when its operations consisted only of roasting and blanching peanuts. Parnell tripled revenue at the Blakely plant by 2004, turning its first profit in 15 years, with production regularly surpassing 2.5 million pounds of peanuts per month. However, the FDA did not know that the plant manufactured peanut butter until the 2008-2009 outbreak.

The Parnells ran PCA on a very tight budget. The company under Hugh Parnell operated a bare-bones front office and used minimum-wage labor, a style that was continued by Stewart Parnell, who ran PCA from a converted garage behind his home in an upscale suburb outside of Lynchburg, Virginia, and continued to rely on minimum-wage labor.

Despite more than 12 tests between 2007 and 2008 that showed Salmonella contamination in his company's products, Parnell wrote an email to company employees on January 12, 2009, that stated, "We have never found any salmonella at all. No salmonella has been found anywhere in our products or in our plants." Parnell ordered products identified with Salmonella to be shipped and complained that tests discovering the contaminated food were "costing us huge $$$$$." In a June 2008 email exchange, Parnell complained to a worker after being notified that Salmonella had been found in more products. "I go thru this about once a week," he wrote. "I will hold my breath ... again." After the company was identified as the source of the outbreak, Parnell pressed federal regulators to allow him to continue using peanuts from the tainted plant. He wrote that company executives "desperately at least need to turn the raw peanuts on our floor into money."

Media
In 2015, Food Republic produced and aired Food Crimes: "P.B. & Jail."

On July 3, 2017, CNBC aired an episode of American Greed: "From Peanuts to Sick Millions” [Documentary / Crime]. Season ll, Episode AG 141.