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COLES is now discovering the ephemeral nature of the support of animal rights and consumer advocates.
Having wooed them with populist policies imported from the UK such as no hormone growth promotants in beef and no sow crates for pigs, it has blown it with its policy on free range eggs.
Free range eggs account for over a third of the total egg market. Coles wants to retain what it regards as the appropriate moral ground and has replaced cage eggs with barn-laid eggs in its home brand range. It now wants to establish its own standard for free range eggs.
The problem is, there are widely varying opinions about what free range ought to mean. Moreover, some of those with a different view from Coles have little tolerance for those with whom they disagree.
And whereas the cost of producing eggs under Coles’ definition would not cause a dramatic increase in prices, prices would rise enormously if produced under other definitions.
Currently there is no national standard for free range egg production. There is a voluntary standard that specifies 1,500 hens per hectare, and a couple of states have legislated this level, but it is widely ignored. In practical terms, eggs sold as free range may originate from hens housed at densities anywhere between 750 and over 30,000 per hectare.
Last year the Australian Egg Corporation (AEC) sought to introduce a certification trademark for free range eggs based on 20,000 hens per hectare. It based this on consumer market research that indicated the public viewed it as consistent with what free range means.
Following concerted opposition by consumer and animal rights groups, and in the wake of a highly prejudicial opinion from the ACCC, the proposal was dropped. Thus nothing changed except that there was now a well organised lobby continuing to insist that free range should mean 1,500 hens per hectare, with some groups (including the NSW Greens) preferring 750.
Now Coles has told its egg suppliers that they must stock their hens at no more than 10,000 per hectare if they want to sell their eggs as free range through its stores.
In economic terms, this is eminently practical. A free range density of 750 or 1,500 hens per hectare would force egg prices up to as much as $12.80 per dozen, according to an independent economic assessment for the AEC. While a density of 10,000 means production costs are higher than cage production, many consumers are willing to pay a small premium for eggs labelled as free range.
But the free range lobby is not interested in consumers and egg prices. Its ranks comprise boutique producers who sell their eggs at premium prices (in local markets, not supermarkets) and do not want large producers competing with their business; consumer groups that claim consumers don’t care about the price of free range eggs; and animal rights advocates who fundamentally disagree with using animals for commercial purposes.
These people will not allow Coles to implement its free range strategy without serious opposition. Being a big company is usually enough to set them off, but a big company that challenges their values so profoundly is guaranteed to become a target.
That will be more than a little ironic. After all, Coles has been attempting to win customers with its animal-friendly, farmer-unfriendly policies. Instead, the company can look forward to adding to an already substantial list of antagonists.
David Leyonhjelm has been an agribusiness consultant for 25 years. He may be contacted at email@example.com