Egg farmer charged with duping consumers
*Watch: Newsroom's Melanie Reid speaks to Frank Chen in the video above*
A West Auckland egg farmer has been charged with illegally selling millions of cage eggs as free range eggs.
The Commerce Commission has laid eight charges against Xue (Frank) Chen, the owner of Gold Chick Poultry farm in Henderson Valley.
He faces four charges of obtaining by deception under the Crimes Act and four charges, in the alternative, of making misleading representations under the Fair Trading Act.
Chen is also due to reappear in the Waitakere Court soon on charges of perverting the course of justice.
Police charged Chen last December accusing him of threatening his employee Feihing (Johnny) Hu after Hu made a complaint to the Commerce Commission.
In March, Newsroom revealed that the Commission had begun investigating Chen after Hu told it that caged eggs were being put into ‘Farmer Brown’ free-range cartons at the Gold Chick farm.
Farmer Brown is one of the brands controlled by New Zealand’s biggest egg producer, Mainland Poultry, which sources eggs from farms around the country as well as its own facilities.
Mainland was caught up in last year’s scandal when another of its brands, Woodlands, was withdrawn from supermarket shelves after it was found that caged eggs were being sold as free-range.
Farmer Brown eggs are sold in both Countdown and New World supermarkets.
The Commerce Commission said today “while Mr Chen produced and sold some free range eggs at his company’s farm, the Commission alleges that between September 2015 and October 2017, Mr Chen sold millions of caged eggs as free range, by arranging for caged eggs to be purchased and packaged into egg cartons labelled 'free range'.”
Newsroom understands that large quantities of eggs were being driven up from a caged egg producer in the Waikato and then repacked into the free-range cartons.
The Commission alleges that falsely labelled free-range eggs were sold to retail and wholesale customers who believed they were receiving free range eggs and were paying higher prices than for caged eggs.
When Newsroom’s Melanie Reid interviewed Chen in March this year, he said he was innocent of any wrongdoing.
He said Hu was a disgruntled employee who he had caught stealing eggs from him.
Chen told Newsroom he had gone to see Hu at his home with two other employees after he heard about the complaint but denied threatening him.
He confirmed that between 10,000-15,000 caged eggs a week were driven up from a farm in the Waikato in one of his trucks.
Chen told Newsroom all the caged eggs he bought were sold to bakeries and dairies, “because all these people want cheap eggs”.
Chen’s egg farm was listed for sale on Trade Me on January 12 with an asking price of $1.65 million.
The advertisement stated that the business had a turnover of $1 million and produced a cash surplus of $300,000. When Newsroom put it to Chen that the business was for sale he said it wasn’t true.
Hamish Sutherland, General Manager of Zeagold, a subsidiary of Mainland that buys eggs for the Farmer Brown brand, said the company had assisted the Commerce Commission with its investigation.
In 2017, 4 percent of Farmer Brown’s free-range eggs came from Chen’s operation.
“We have supplied all the information that the Commission has asked for. We believed every egg we got from him (Chen) was free-range and came from that farm.”
Sutherland told Newsroom Zeagold had cancelled Gold Chick's contract in October that year, before it became aware of the Commerce Commission’s investigation.
“We terminated the contract for reasons that were completely unrelated to the eggs themselves. Mr Chen had defaulted in payments to the packaging supplier.”