The plant closures were hailed as a victory by activists who had argued that the product was unappetizing, but tempered their jubilance due to the temporary loss of about 650 jobs at a time when the economy was showing signs of recovery.

Rich Jochum, corporate administrator for the South Dakota-based company, said that the temporary closure could become "a permanent suspension."

"This is a direct reaction to all the misinformation about our lean beef," Jochum told Reuters.

The company shut down operations on Monday at its plants in Amarillo, Texas; Finney County, Kansas; and Waterloo, Iowa. As of Monday afternoon, the company was still informing employees in Iowa about the closure.

The closures are because of the recent outcry by food activists over its lean finely textured beef, Jochum said.

The Department of Agriculture (USDA) and industry experts say the meat was safe to eat. Jochum said the company would continue to address the public's concerns, and blamed media reports and an organized campaign for "bullying" retailers into discontinuing the use of the beef product.

"In the end, today's developments are a sad day for the families of those who lost their jobs," said J. Patrick Boyle, president of the trade association American Meat Institute.

"Other American families will also pay the price at the checkout counter as they see the price of ground beef begin to rise while we work to grow as many as 1.5 million more head of cattle to replace the beef that will no longer be consumed due to this manufactured scare."

Nancy Huehnergarth, executive director of New York State Healthy Eating and Physical Activity Alliance, a statewide group aimed at promoting healthy eating and changing food policy practices, said:

"It's never a happy victory when you hear people are losing their jobs. But if BPI had been transparent about the process of their products, we would not be at this point right now."

Two of the biggest U.S. supermarket operators, Safeway Inc and Supervalu Inc, have said they will stop buying the ammonia-treated beef.

McDonald's Corp. stopped using USDA-approved ammonia-treated meat in its hamburger products last summer.

Also known as lean finely textured beef, the product has drawn criticism from food activists because of the use of ammonia hydroxide in its manufacture.

"The demand in the market will hopefully resume," Jochum said.

Altogether, the plants employ 650 people. The company's facilities in Iowa and Kansas produce approximately 350,000 pounds of product a day, while the Texas plant puts out nearly 200,000 pounds.

The company's largest plant, based in South Sioux City, Neb., will remain open and in operation, Jochum said. Before Monday's closures, BPI employed nearly 1,500 people at its plants and its headquarters in Dakota Dunes, S.D.

Live cattle futures at the Chicago Mercantile Exchange shrugged off news of the plant closures, but traders have been closely monitoring developments for signs if there would be any impact on demand for beef.

"If they stop using that it's going to take more cows per burger. So if anything it has a bullish tint to it," said Domenic Varricchio, a commodities broker at Schwieterman, Inc, implying that higher quality beef may be used for hamburger.

BPI, founded in 1981, began as a processor of frozen beef products. In 2001, the company emerged as a key player in the nation's ground beef industry after federal regulators approved the firm's process of using ammonia in the beef processing to remove food-bourne pathogens such as salmonella and E.coli O157:H7.

The product is made out of scraps and fatty trimmings that, for years, typically had been sold off to make pet food or cooking oils because it was too difficult to remove the meat and was somewhat susceptible to contamination.

In general, BPI uses a heat and centrifuge process to melt the fat, collect and mash the meat, and spray ammonia hydroxide on it to remove possible bacteria and pathogens. The final product -- which is formed into blocks, frozen and shipped in boxes -- is relatively low in fat and often used as a cheap filler.

The phrase "pink slime" was first used by a former USDA microbiologist, Gerald Zirnstein, who used the term in a 2002 email to co-workers after having toured a BPI plant. The email was later released to the New York Times as part of a Freedom of Information Act request.

"Hamburger is not a completely safe product, but the BPI product is as safe, if not safer, than other parts of hamburger," said Seattle-based food safety lawyer William Marler. "BPI has gotten crushed by public sentiment that this stuff is icky."

Questions over BPI and its product have been raised in the media for years, including a Pulitzer Prize-winning series of stories written by the New York Times in 2009. The current debate, which has been brewing for months, began after celebrity chef Jamie Oliver drew attention to the practice.

(Additional reporting by Meredith Davis and Theopolis Waters. Editing by Bob Burgdorfer)

• A Permanent Economic Emergency