‘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.

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

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