An egg farmer who admitted duping consumers by passing off 2.47 million eggs from caged hens as free-range has claimed the practice is widespread.
But an industry body rejects this, although it concedes it ultimately comes down to the honesty of farmers to provide correct labelling on their products.
John Garnett, owner of now-defunct Northland egg producer Forest Hill Farm, was sentenced to 12 months' home detention and 200 hours' community service in the Whangarei District Court yesterday.
Between April 2010 and November 2011 Garnett and his company falsely packaged and sold more than 206,000 dozen eggs as free-range or barn-laid. The chickens were actually kept in cages.
The 38 retailers that sold the eggs, including several large supermarkets in Auckland and Northland, believed they were genuine, and sold them to about 200,000 customers as free-range.
A Commerce Commission spokeswoman said affected brands included Select, sold at Countdown, and Pams, sold at New World and Pak'nSave. New Day was also a free-range label used by an egg producing co-operative of which Forest Hill Farms was a member.
Countdown said last night it immediately suspended its relationship with the farmer after being alerted to the case in late 2011, and removed affected eggs from sale.
"We have strict standards for traceability, labelling, animal welfare and auditing. This farmer broke the law and we were one of a number of retailers that he deceived," a Countdown spokesperson said.
Foodstuffs - owner of New World and Pak'nSave - said it also removed the supplier as soon as it became aware of the illegal behaviour. "We took action by working with the [Egg Producers Co-op Ltd] to ensure our own brand egg suppliers are audited," a Foodstuffs spokeswoman said.
The Commerce Commission estimated that Forest Hill Farm made an additional $376,000 from the sale of the falsely labelled eggs - with a retail value of more than $1 million.
In sentencing, Judge Duncan Harvey noted what he described as a "disturbing comment" by Garnett that such conduct was common in the egg industry. He said the court needed to hold Garnett accountable for deceiving the businesses he supplied and the public at large.
He said Garnett decided to embark on massive fraud in order to save his business and its 20 employees. His actions were likely to hurt public confidence in the egg industry.
Judge Harvey said had it not been for Garnett's guilty plea, his voluntary return from Australia and co-operating with the commission's investigation and health issues, he would have gone to prison.
Claire Paterson, representing the Commerce Commission, said Garnett embarked upon a serious and sustained deception of an important grocery item for commercial gain.
The offences were committed after business hours or at Garnett's home to conceal them from his staff.
He told his farm manager that such conduct was profitable, and justified it by saying that others in the egg industry were doing it, she said.
Garnett's lawyer, Julie Young, said her client had had a long-standing business reputation in the community and was remorseful.
Poultry Industry Association executive director Michael Brooks said his organisation was very pleased to see Garnett prosecuted.
It was the association that initially found out about Garnett's operation, he said, and raised it with the Commerce Commission.
He said this was a rare case, with the last reported case in 2001, and sent a very clear message to farmers that they would not get away with any similar operations in future.
Mr Brooks said that while the Ministry for Primary Industries (MPI) audited every farm for food safety once a year, it was the farmer's responsibility to label eggs correctly.
"Fundamentally farmers must label correctly and honestly, otherwise they run into the situation we have here." But he said MPI would notice if a cage-farm operation was labelling eggs as free-range.
Mr Brooks said he was disappointed that the "stupid" actions of a "rogue farmer" may dent customers' faith. "Consumers can be confident that this sort of thing isn't happening."
Garnett's sentence "sends a clear message to consumers, but also to anyone who is stupid enough, frankly, to think they can try and dupe consumers in this way".
The Countdown spokesperson said its auditing programme included a requirement for suppliers "to identify any known or potential risks to the integrity of their products through a food fraud policy".
A matter of trust
• There are no regulations that control the definition of a free-range egg, and consumers are reliant on the honesty of egg farmers to identify eggs correctly.
• Chickens that have the ability to go outside are defined as free-range.
• There are 130 egg farms in New Zealand, 70 of which are free-range.
• Free-range eggs make up 12 to 13 per cent of the market.
• Brands affected through Garnett's operation included Select, which was sold at Countdown, and Pams, which was sold at New World and Pak'nSave across Northland and Auckland.
- With the Northern Advocate