Australia’s egg industry faces court action

Australia’s egg industry faces charges of market manipulation in court action by the Australian Competition and Consumer Commission.

The government accuses the Australian Egg Corporation Ltd. of cutting flocks to bolster prices.

The farmers who run the egg corporation countered in federal court testimony that they were simply trying to get rid of a “catastrophic” surplus, not boost prices. The trial is ongoing.

The competition commission has filed charges against the egg corporation, its managing director James Kellaway, and two directors Jeffrey Ironside and Zelko Lendich, as well as Ironside Management Services, trading as Twelve Oaks Poultry, and Farm Pride Foods.

The commission says the egg corporation told members in November, 2010, to kill hens two weeks earlier than usual until mid-2011 to avoid oversupply and a ''catastrophic'' commercial result.

It also alleges that, in early 2012, the corporation organized an oversupply crisis meeting with the top 25 egg producers, saying the industry must stop the ''worrying and disturbing trend threatening current profit levels'', as detailed by Mr Kellaway in an e-mail. Farmers were told production had peaked in September, 2011, at 33 million dozen eggs and would continue at record levels unless they lowered output in a ''co-ordinated and consolidated fashion''.

At the meeting, Mr Kellaway offered three short-term solutions: donating eggs to food charities; dumping or burying eggs, and culling hens earlier.

If a producer's output grew by more than five per cent over three years, Mr Kellaway said, they should cull birds up to eight weeks prematurely and donate eggs to Foodbank.

It was not known whether the attempt was successful. National retail egg sales were valued at $566 million in 2012.

''Detecting, stopping and deterring cartels operating in Australian markets remain an enduring priority for the ACCC, because of the ultimate impact of such anti-competitive conduct on consumers who will pay more than they should,'' its chairman Rod Sims said. ''Industry associations need to be conscious of competition compliance issues when they bring competing firms together.''

Bede Burke, chairman of the New South Wales Farmers' egg committee, said egg prices were never mentioned at the crisis meeting.

''We've had a terrible oversupply,'' he said. ''And we do this regularly, this is nothing un-normal. Since we were deregulated … in 1989 and beyond, there's no mechanism to remove oversupply.''

The egg corporation refused to comment on the allegations, but said it would co-operate in court.

Craig Hunter, recently retired from manager at Burnbrae Farms Ltd., Canada's largest egg producer, egg grader and egg processor, has been appointed to Australia's Center for Food Integrity. I wonder whether the Australians learned things from Hunter or vice versa.

Thanks to Dr. Doug Powell, food safety communications specialist, for sending along this bit of news from Australia.