The price of eggs may be the key to who is telling the truth in the Countdown free range egg controversy.

A Newsroom investigation revealed Monday the Serious Fraud Office was investigating the Palace Poultry brand over allegations it was selling millions of caged as free range eggs.

Palace Poultry’s owner Terry Fletcher has spoken for the first time since the story broke and told Radio New Zealand on Tuesday that he “never” sold caged eggs as free range.

His business was deceived by a “lying” egg wholesaler, he said.

The wholesaler, Eco Foods Ltd owner Robert Hehewerth, responded to Fletcher by saying Fletcher was the one lying, and that the price of eggs would prove it.

“If he thinks he can get around the paperwork he could never be able to [successfully] make the assumption that he could buy free range eggs at that price,” he said.

Fletcher told Radio New Zealand he paid a “free range price” of about $7.75 per tray (30 eggs) for the size 7 eggs purchased from Eco Foods.

“We are paying around $7.75. That’s a free range price.”

He said the caged egg price was “around the $6 mark”.

“Our side of our conscience, we are clear we have bought the product in good faith and we have sold the product in good faith,” said Fletcher.

In response to those claims Hehewerth told Newsroom $7.75 was the price of wholesale caged eggs.

Free range eggs were not sold in sizes, they were sold as mixed grade, and were usually between $10 and $11 per tray, he said.

Egg industry sources said the prices given by Hehewerth were “in the ball park” with market rates.

Hehewerth said the SFO had seized about seven years of hand-written dockets signed by Terry Fletcher and his son Aaron Fletcher, who used the names “TK” and “Stu” when dealing with Eco Foods.

The men also used the company name “TK Produce Supplies” which is not a registered entity in New Zealand.

Radio New Zealand did not ask Terry Fletcher about this in the radio interview.

Hehewerth said the dockets all had “caged” on them, as did the electronic invoices TK Produce Supplies were sent and paid.

A copy of a Xero invoice from Eco Foods Ltd showed stock clearly listed as caged. Fletcher said he had never seen the invoice.

“This man has concocted [the invoice] out of thin air for some reason. We have never seen them, John, we have never even seen the invoice that has surfaced on Newsroom.”

An invoice showing the sale of caged eggs from Eco Foods to TK Produce Supplies.

Fletcher said that he did not know where Hehewerth sourced the eggs from because it was commercially sensitive but also a common practice.

If he knew, he could undercut Hehewerth and purchase directly from the supplier.

Hehewerth agreed.

However, today he had sent a list of all his free range suppliers detailing each farmer’s accreditation to his free range customers.

None of his customers had stopped trading with him since news of the controversy broke, he said.

Fletcher also said the Hehewerth was “a liar” because Hehewerth said he had never met Fletcher.

“He has known me for 20 years,” said Fletcher.

However, what Hehewerth said was the he did not know Terry Fletcher by his correct name, he knew him only as “TK”.

Countdown send in auditors

In another development Tuesday, Countdown announced it would be sending independent auditors into all its suppliers of free range eggs.

The supermarket chain removed Palace Poultry brand eggs from its shelves on Monday after a Newsroom investigation revealed that millions of those eggs were caged and not free range.

The audit will be carried out by AsureQuality and is expected to take several weeks. It will include Countdown’s own labels as well as other free range brands.

Brands caught up in the scandal are, Woodland, Farmer Brown and Countdown’s own brand, Select. Palace Poultry sourced and packaged eggs for these brands, as well as its own, but ceased providing eggs for Select in 2014.

Spokesman for Countdown, James Walker, said “We want to know what’s happening here and we want to know now. All our egg suppliers will be audited by a third party.”

Walker confirmed that changes were made to its quality assurance programme (WQA ) last year to make it easier for free range egg suppliers after they complained it was imposing too much of a burden.

“This now needs to be completely looked at again, and we may decide that WQA will come back in its entirety.”

Walker told Newsroom that Countdown has not audited Palace Poultry since 2014. This was when it stopped sourcing free range eggs from Palace for its Select brand.

He said Palace would have been audited between 2008 and 2014 but couldn’t say how many times. “Changes in the filing system and technology make that difficult.”

Where to find out more

Consumer NZ (2012)

SPCA’s certification

SAFE’s free range egg advice

MPI regulations

Fair Trading Act and consumer rights

Victoria University of Wellington paper (2015)

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