eggs in a pile of straw

The New Zealand Commerce Commission has charged a West Auckland poultry farm for marketing and selling his caged eggs as free range.

Xue (Frank) Chen’s farm has been laid with eight charges, including four charges of obtaining by deception under the Crimes Act 1961 and four charges, in the alternative, of making misleading representations under the Fair Trading Act 1986.

The Commission claims that Chen produced and sold millions of caged eggs as free range between September 2015 and October 2017. He did this by purchasing caged eggs and re-packaging them into cartons labelled free-range.

Chen’s farm, Gold Chick Poultry Farm, has allegedly sold these falsely labelled eggs to both individual and wholesale customers. The customers believed they were receiving free range eggs and therefore paid higher prices.

The Fair Trading Act charges are in the alternative, meaning Chen can be convicted on only one set of charges and not both, so will face a maximum of four convictions. He is the sole shareholder and director of Black Water Trading Limited, the trading name for Gold Chick Poultry Farm, and is the sole person charged in this case.

The case is significant because regulation surrounding terms like organic and free-range is increasingly contentious. There is little legal structure surrounding terms like free-range, so to clear things up the Commission has issued guidance about false, misleading, or unsubstantiated claims.

The Egg Producers Federation (EPF) has announced its full support of the Commission’s investigation into Gold Chick Poultry Farm. “The EPF has zero tolerance for such activity,” stated EPF executive director Michael Brooks. “The majority of egg producers are extremely good operators, and the poor judgement of a rogue few must not continue to discredit the integrity of the main.”

The EPF also confirmed that Chen did not supply his mislabelled eggs to any major supermarkets, only to some small regional egg suppliers.

The EPF has been working closely with the Ministry for Primary Industries to strengthen the reporting process egg producers must follow, resulting in Mass Balance Audits (MBAs). This is a comprehensive auditing system introduced in November 2017 that requires much more detailed reporting from egg producers. MPI independently audits the reports. Since MBAs were introduced there have been no allegations of mislabelling. The allegations against Gold Chick Poultry Farm precede the introduction of MBAs.

An egg traceability initiative is also underway, with producers beginning to stamp their eggs with a label to visually reassure customers of their origin. Each egg has a unique code that will verify the region, the farm, and the production system the egg comes from.

Egg stamping is costly for smaller producers, but the industry is working to make it affordable for them. The stamping programme will operate alongside a traceability website that authenticates the code stamped on eggs.

The Commerce Commission encourages these initiatives.