Agribusiness Cartel Provides Lowest Possible Care for Birds, Extracts Highest Possible Profits from Consumers
WASHINGTON — Legal Petitions filed with the Federal Trade Commission and the United States Department of Justice today accuse the egg industry of engaging in a massive price-fixing scheme that has inflated egg company profits to historic highs.
The Humane Society of the United States (HSUS) filed the Petitions seeking civil and criminal penalties against the United Egg Producers (UEP)—the nation's largest egg trade association—and a dozen major egg factory-farming corporations.
The price-fixing conspiracy centers on a bogus animal welfare certification program that dooms hundreds of millions of egg-laying hens to suffer in tiny cages, while producers reap record profits. As a result of this scheme, between August 2007 and March 2008, egg prices nationwide skyrocketed by as much as 45 percent and at the fastest rates in 30 years—all at the expense of U.S. consumers.
All but one of the factory-farming companies named in the Petitions—including Cal-Maine Foods, Golden Oval Eggs, Michael Foods, Midwest Poultry Services, Moark, National Food Corporation, Norco Ranch, NuCal Foods, Pilgrim's Pride, Rose Acre Farms, and R.W. Sauder—have donated lavishly to the political campaign to defeat Proposition 2, a popular anti-cruelty measure on California's November ballot. Prop 2 will prohibit the most abusive factory-farming practices in California and ensure modest welfare standards for farm animals by allowing them simply to turn around and extend their limbs.
"It's no wonder these out-of-state factory farmers have so much cash to fight Prop 2—turns out they've been picking Americans' pockets for years while inflicting cruelty on the very animals laying their golden eggs," said Jonathan Lovvorn, vice president of Animal Protection Litigation at The HSUS. "No Californian should trust a word these people say. These agribusiness big shots have profound contempt for animals, consumers, the law, and voters."
The key element of the price-fixing conspiracy is the "UEP Certified" logo and misleadingly-named "animal husbandry guidelines." The petitions allege that UEP developed and promoted both primarily to monitor and cover up its price-fixing scheme, and to deceive consumers about the unavoidable and profound suffering that egg-laying hens endure crammed into tiny cages. Egg consumers willingly pay the asking price of eggs, so producers can conspire to raise prices with little fear of losing customers.
The Petitions allege that the cartel's effort to limit supply in order to artificially inflate prices, eliminate competition, and defraud consumers is a textbook criminal price-fixing scheme, in clear violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2, and the Federal Trade Commission Act, 15 U.S.C. §§ 45 and 52.
The Egg Industry in Its Own Words:
"If the supply of eggs remains in check, or favorable to the demand side, I think we will have minimum problems in raising prices. We have had no reaction from the consumer or the chain store operators as to price."
Cal-Maine Foods, Inc., president Fred Adams, Audio Recording: Presentation by Fred Adams for Cal-Maine Foods, Inc., Stephens Spring Investment Conference (June 4, 2008).
"It seems that the egg industry may find itself in a position of economic prosperity previously unmatched in its long, tumultuous history."
Sam Krouse and Bob Krouse, Infrastructure's Role in Keeping Egg Prices High, Egg Industry, Feb. 1, 2008, at 1, available here
"[The industry has] successfully held hen numbers down. No increases in [egg] production were made to compensate for a larger human population. Demand was especially strong as evidenced by the consumer's willingness to buy the same amount of product for significantly higher prices….[T]he industry would be wise to attempt to duplicate these conditions in the future. The result was: a huge improvement in industry revenue of ONE BILLION DOLLARS (or more)!!" (emphasis in original).
Don Bell, Don Bell's Table Egg Layer Flock Projections and Economic Commentary – 2004, United Voices (United Egg Producers, Alpharetta, GA), (Mar. 1, 2004)
"Never in my more than 40 years in the egg industry have I ever seen egg prices at the current levels. Consumers are still buying eggs and we have seen no resistance to price."
UEP president Gene Gregory, Egg Prices At Record Levels, United Voices (United Egg Producers, Alpharetta, GA), (Nov. 12, 2003)
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The Humane Society of the United States is the nation's largest animal protection organization — backed by 10.5 million Americans, or one of every 30. For more than a half-century, The HSUS has been fighting for the protection of all animals through advocacy, education and hands-on programs. Celebrating animals and confronting cruelty — On the web at humanesociety.org.
