Choice makes ‘super-complaint’ about free-range egg market

Posted by AFN Staff Writers on 2nd October 2013

Australian consumer group CHOICE has asked NSW Fair Trading to investigate potentially misleading “free-range” egg claims after finding that consumers in NSW are paying double the price of cage eggs for products that are “unlikely to meet their expectations”.

In a submission under its super-complaint trial with NSW Fair Trading, CHOICE said it provided evidence that dodgy free-range eggs “appear to be a major rip-off for consumers”. According to CHOICE, despite commanding a significant price premium, there are no enforceable standards governing free-range claims in NSW.

The super-complaint process allows CHOICE to bring forward evidence of issues harming NSW consumers, and requires the regulator to publicly respond within 90 days, which CHOICE said provides a “powerful avenue for consumer groups to focus attention on systemic problems in markets”. This is the second super-complaint CHOICE has submitted under its trial with NSW Fair Trading.

“Cracks are beginning to appear in the free-range egg market, which accounts for around 40 per cent of eggs sold in Australia, with considerable variation in the conditions in which supposedly free-range chickens are kept,” said Angela McDougall, CHOICE Lead Campaigner.

“CHOICE research has shown that consumers purchasing free-range eggs expect that the layer hens have access to the outdoors and space to move around with limits on the number of birds on the outdoor range – but the Australian Egg Corporation itself has admitted there is huge variation in the conditions in supposedly free-range operations,” Ms McDougall said.

Food labelling consistency important

CHOICE said its super-complaint recognises “that food labeling is an important means of communicating product information to consumers”. With credence claims like ‘free-range’, the consumer group said consistency and truth in labelling were “critical” because consumers pay a premium in the belief that products meet their expectations.

CHOICE has recommended that NSW Fair Trading further investigate free-range egg claims and take action where it finds evidence these claims are likely to mislead NSW consumers. A response from NSW Fair Trading is expected before the end of the year, in accordance with the super-complaint trial agreement.

“We commend the NSW Government and Minister Anthony Roberts for their ongoing commitment to the super-complaints trial, which has the potential to become a powerful tool in protecting consumers’ interests,” Ms McDougall said. “CHOICE hopes that NSW Fair Trading will agree with the concerns outlined in the super-complaint, and take action to give consumers confidence around free-range claims in NSW,” she said.

Free-range standards

At the national level, there is a model code that defines “free-range” by a stocking density of no more than 1,500 birds per hectare. However, Australian Food News reported in November 2012 that the Australian Egg Corporation Limited (AECL) was pushing for a stocking density of 20,000 birds per hectare.

In July 2013, the Queensland Government increased the stocking density for free-range eggs in that State from 1,500 to 10,000 birds per hectare. In June 2013 the South Australian Government announced an industry code that would see eggs certified free-range only if they met a maximum stocking density of birds per hectare.

Enforceable standard welcomed by ‘free-range’ farmers group

An enforceable standard for the label ‘free-range’ would be welcomed by Victorian egg farmers group, the Free Range Farmers Association Inc (FRFA).

“However, any enforceable standard would need to consider the standards of pre-deregulation days,” Dianne Moore, President of FRFA told Australian Food News.

Ms Moore said these standards included “no mutilation of birds, no forced moulting of birds, relatively small flocks of birds, and access to pasture during daylight hours with ready access to water, food and shade”.

Birds can not be called free-range unless the standards include these things, according to FRFA.

CHOICE egg price comparison

CHOICE said it compared the prices and claims of eggs for sale in Coles in Leichardt in Sydney’s inner west on 24 August 2013.

According to CHOICE, the average price per 100g of eggs from each production method was:

  • Cage eggs: 43 cents per 100g
  • Barn eggs: 80 cents per 100g
  • Free-range eggs: 93 cents per 100g

Egg sales in Australia

According to market research organisation Nielsen’s ‘Retail World Grocery Guide 2012’, the ‘free-range’ egg category accounted for 39 per cent of value share in 2012 and 28.4 per cent volume share, compared with 47.6 per cent value share and 61.6 per cent volume share for cage eggs.

Barn eggs accounted for 10 per cent value share and 8.2 per cent volume share, and organic eggs accounted for 2.6 per cent value share and 1.2 per cent volume share in 2012.

Major players in the $209.6 million ‘free-range’ category in 2012 included Pace Farm (18.3 per cent value, 16.5 per cent volume), Manning Valley (12.5 per cent value, 11.3 per cent volume), and Novo (11.2 per cent value and 10.5 per cent volume).

CHOICE has asked NSW Fair Trading to investigate 'free-range' eggs