MENU

‘Free range’ may not be so free

Two egg producers are in trouble and are being taken to court for misleading consumers over the wording ‘free range’.

The Australian Competition and Consumer Commission (ACCC) has filed proceedings against two egg producers, one from WA, the other from NSW, for making false, misleading or deception representations on their egg cartons and websites.

Free range means that hens are farmed in conditions so that laying hens are able to move about freely on an open range every day, and/or on most days. The ACCC alleges that the eggs supplied by Snowdale Holdings in WA and Pirovic Enterprises in NSW were produced by hensmost of which did not move about freely on an open range on most days.

“Credence claims such as free range, organic, place of origin or country of origin are all powerful tools for businesses to distinguish their products,” ACCC Chairman Rod Sims said. “But misleading consumers who may pay a premium to purchase such products damages the market and is unfair to competitors.

The ACCC says its role is not to decide which particular farming practices are appropriate, and is not debating the merits of cage, barn or free range systems. The regulator is simply concerned that labelling reflects the farming practices of the producer and the expectations of the consumer.

Snowdale is one of Western Australia’s largest egg producers. The company provides cage, bard-laid and free range eggs to various retailers. Likewise Pirovic is one of New South Wales’ largest independent egg producers supplying a range of eggs and egg products to retailers across Australia.

Labelling of foods is a major issue for producers as well as supermarket operators and their private label brands. Coles – owned by Wesfarmers (ASX: WES) drew the ire of the ACCC in Jun this year over bread marked freshly-baked, but was in fact frozen and made in Ireland. Woolworths (ASX: WOW) has come under fire for labelling its private label products in almost identical designs to the branded label products.

Foolish takeaway

The ACCC will be hoping to get a win in either both or at least one of its cases. The regulator has been under fire, much like the Australian Securities and Investment Commission (ASIC) for being a toothless tiger.

Interested in our #1 dividend-paying stock?

Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

Motley Fool writer/analyst Mike King owns shares in Woolworths. You can follow Mike on Twitter @TMFKinga

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.