The move by the Australian Government Treasury and the Australian Competition and Consumer Commission to define what constitutes ‘free-range’ egg production sets a dangerous precedent for Australian agriculture, but also provides the sector with a wake-up call in relation to the need for industry leadership and unity.
The Treasury has recently released a consultation paper, seeking the views of stakeholders (egg producers and consumers) on a range of different options available to regulate the use of the term ‘free-range’ when selling eggs. The intervention by the government has arisen as a consequence of the ACCC prosecuting egg producers who it was claimed were in breach of consumer laws for selling eggs that were labelled ‘free range’ but which were not produced under conditions that consumers would perceive to be compliant with that claim.
These cases have highlighted the fact that the egg industry and state government have been unwilling or unable to develop an agreed definition of what constitutes ‘free range’, and are now facing the consequences of that in potentially having regulations imposed that are based on consumer perceptions. The implications extend beyond the market for free-range eggs, however, because the major retailers have already committed to either phase-out all caged eggs by 2018, or no longer offer caged eggs in their home brand egg lines. The adoption of a free range definition by the government could effectively regulate the production practices of a large proportion of the entire Australian egg industry.
The risk to the industry arises as a consequence of a potential standard definition based on consumer perceptions, rather than anything to do with the reality of efficient or safe egg production. As the Treasury consultation paper notes, ‘Many consumers favour eggs labelled as ‘free range.’ An increasing number of consumers are prepared to pay more for eggs that have been laid by freely ranging hens — owing to ethical, animal welfare and health preferences — than ‘barn’ and ‘cage’ laid eggs.’
While consumer perceptions of what constitutes free range are undoubtedly influenced by anthropomorphic projections and fictional, idyllic depictions of farming, it is highly questionable whether those conditions actually result in improved animal welfare or health outcomes for the animals in question. As recent outbreaks of avian influenza in central NSW have highlighted, the disease risk is highest in free-range situations where it is very difficult to prevent contact between farm animals and wild birds, which are carriers of diseases. The problem of cannibalism can also be more difficult to manage under free-range conditions, and in the absence of some form of shelter or shade, hens offered open range conditions can be reluctant to leave their sheds, presumably due to fear of predation. Trials indicate that as few as 9% of hens offered free-range areas actually venture out of their shelters. Consumers are also likely to be unaware that mortality rates in free range production systems can often be double those in barn or cage production systems.
There is no doubt that consumers who are willing to pay more for eggs that they believe are produced under preferred conditions should have confidence that they are getting what they paid for, so the implementation of a standard makes sense. However, the failure of the egg industry to reach agreement on a workable standard based on good production and animal welfare principles, and the related failure of the industry to adequately communicate to consumers about hen health and welfare issues has left it exposed to the whims of activists and retailers.
For a sector like egg production this will have consequences in terms of additional costs and the need for capital investment, but in the absence of competition from imports, these costs can largely be passed on to Australian consumers. However, the implications of this precedent for other parts of agriculture are much more concerning. The pork industry, for example, faces very strong competition from imports, and has already experienced the disadvantage of having production standards in Australia that are not applied to imported pigmeat products. There is also no reason that activists and governments will not target labels such as ‘pasture-fed beef’ or ‘range-fed lamb’ at some stage in the future, and impose production standards on the industries that will make them less competitive in export markets.
This development highlights the importance of the livestock sectors in particular reaching agreement on production standards, especially in relation to issues such as animal welfare, rather than having those standards imposed on the basis of consumer perceptions (influenced by activists). This was highlighted in the recommendations of a recent research report on farm animal welfare by the Australian Farm Institute.
To achieve this will require strong industry leadership, because there are still many farmers who are content to ignore these issues, in the hope that activists will eventually direct their attention elsewhere. However, as the egg industry example has highlighted, this ‘do nothing’ response is starting to look like a high risk strategy.