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 $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 Centre-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 per cent of its yearly egg volume commitments have been affected by the bird flu. Two company-owned chicken flocks in Nebraska were affected by the viral illness that has affected 48 million birds, mostly chickens and turkeys, nationwide. In Iowa, 31.7 million birds have been lost, mostly egg-laying 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 $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 per cent from a year ago and 21 per cent in a month as bird flu swept through flocks.
The state produced 1 billion eggs in May, the lowest monthly number since February 2005.