ACCC acts on egg industry

10 Sep, 2013 05:05 AM
Comments
4
 

THE competition regulator is investigating the $445 million egg industry after it obtained a letter from the head of the industry body that suggested big producers might be manipulating prices.

The Australian Competition and Consumer Commission (ACCC) has asked egg farmers to hand over details about their profitability and production.

It has also interviewed directors of the Australian Egg Corporation about a letter sent by its managing director, James Kellaway.

It is understood that in his letter Mr Kellaway discussed the supply of eggs at a meeting of Egg Corporation directors. Those directors are appointed via a one-hen, one-vote policy that cements control in the hands of the three biggest egg producers: Pace Farm, Sunny Queen Farms and the ASX-listed Farm Pride.

The ACCC wants to know what was discussed at the meeting. It has also asked egg producers to explain their moulting practices. Laying hens need to moult once a year, during which period they produce no eggs and after which they produce smaller eggs than normal.

A source in the egg industry said by changing food given to caged hens, it was possible to manipulate when they moult and hence withdraw eggs from the market and push up prices. Afterwards, producers could flood the market with smaller eggs and undercut competitors.

An ACCC spokesman said the regulator would not comment on matters that "may or may not be under investigation".

One egg industry source, who had been interviewed by the ACCC, predicted the regulator's investigation would amount to nothing and described as "fanciful" the idea that producers could co-ordinate the moulting of hens to reduce egg supply.

"They think there's something there but you could not get two chook farmers to agree on anything," the source said of the ACCC.

New rules mandating larger cages as well as increasing consumer preference for free-range eggs have forced up costs in the egg industry and pushed smaller players out of business.

According to IBISWorld, Pace Farm, Sunny Queen and Farm Pride control 54 per cent of the egg market, which turns over $445 million each year.

Prices have risen, as has total consumption of eggs, thanks to the popularity of cooking shows on television, IBISWorld said in a recent report on the industry, adding that there had also been high degrees of volatility in production levels.Free-range concerns and beyond

The ACCC's inquiry is understood to have grown out of its work on preventing misleading and deceptive advertising on whether eggs and poultry products can be properly be described as "free range".

In July, the Federal Court agreed with the ACCC that Baiada , which owns the Steggles and Lilydale brands, misled customers when it claimed its hens were "free to roam in large barns" in its marketing for Steggles. The court found that in fact the chickens were unable to move more than a metre.

Two of three companies that dominate the egg industry, Sunny Queen and Farm Pride, have common ownership links to a company called Hy-Line Australia, which is the major provider of chicks and ready-to-lay pullets to egg farmers.

Questions from the ACCC to smaller egg farmers who compete with the major players suggest the commission is also interested in how readily they are able to obtain chicks from Hy-Line.

Sunny Queen managing director John O'Hara left the board of the Egg Corporation early this year but he told The Australian Financial Review this had nothing to do with anything that the ACCC might be doing. He declined to comment further.

The AFR called but was unable to obtain com­ment from Pace Farms or Farm Pride, or the Australian Egg Corporation.

Page:
1
AFR
Date: Newest first | Oldest first

READER COMMENTS

what the
10/09/2013 8:28:43 AM

The words ACCC and acts don't belong in the same sentence.
Alanna F
10/09/2013 9:21:14 AM

The Aussie cage egg industry being shady and trading animal welfare for profit? How surprising!
Try to get by
11/09/2013 10:16:11 AM

If they want to talk to someone about manipulating prices they should start with the supermarkets. The last thing any farmer needs is another government department coming after them as an easy target.
Unbelievable
11/09/2013 11:21:17 AM

The Australian Egg Industry leads the world when it comes to Food Safety and Animal Welfare however certain groups within the industry continue to spread rumours to discredit farmers for reasons only they know. Cannot believe we are wasting hard earned taxpayers money investigating an industry that supplies a quality product at an affordable price to the Australian consumer. It is time to thank and support a farmer for putting food on the table for Australians otherwise we will be importing food from countries who will not have the same standards that Australian farmers have.

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 

COMMENTS

light grey arrow
I'm one of the people who want marijuana to be legalized, some city have been approved it but
light grey arrow
#blueysmegacarshowandcruise2019 10 years on Daniels Ute will be apart of another massive cause.
light grey arrow
Australia's live animal trade is nothing but a blood stained industry that suits those who