Egg packing row on Lion registration clause

Egg Packing companies have become embroiled in a simmering row over producer contracts and Lion registrations.

At a meeting earlier this year Lion subscribers voted to introduce a new procedure to allay suspicions that contractual disputes could be used to block the transfer of a producer's Lion registration from an existing packer to a new one. The procedure would have ensured that registration was transferred within seven days, but Lion subsequently decided to review this decision. It resulted in a lengthy row between packers during the latest meeting of Lion subscribers in May. The outcome is shrouded in confusion.

After the meeting the British Egg Industry Council (BEIC) refused to state the up-to-date position when invited to do so by the Ranger. It simply issued a statement saying, "The BEIC is unable to comment on specific recommendations discussed at the BEIC subscribers' meeting until the meeting minutes have been circulated." The same statement was issued to the Ranger in response to previous questions about the issue of registration.

One of those present at the subscribers' meeting said the BEIC intended to go away and explore all legal implications before coming up with a new resolution. Another one said that the arguments went on for some time at the meeting and occasionally became very heated, but they said they had no idea what the outcome was. A third said it seemed that leading figures at the meeting had decided the existing arrangements were perfectly satisfactory. "I don't know where we go from here, but producers must be completely confused about what happens if they want to move to a new packer. Is their registration going to be blocked or is it not? And who is going to decide?"

The issue has become heated with the emergence of new packers who are seeking to attract egg producers from existing packing companies. Some packers are concerned at the commercial consequences of what they see as producers being able to walk away with just seven days' notice. They want to ensure security of supply in order to fulfil their own contracts. Others believe that the Lion should not be used to police contractual disagreements between a packer and a producer. They feel that such disputes should be settled through normal legal procedures and that Lion registration should simply be transferred to a new packer at the request of a producer.

At the latest Lion subscribers' meeting, a representative of one packing company warned that the Lion should avoid becoming embroiled in contractual disputes between a packer and a producer. He suggested that the Lion could leave itself open to legal challenge if it did so. Another one told the Ranger he was worried that the Lion could be sued if it was seen to be preventing a producer from moving to the packer of his choice.

One packer who attended the meeting said the issue was something that producers, themselves, should be concerned about. "If a producer cannot move to a packer who is offering a better price for his eggs, then that simply keeps the price of eggs down." Another fear is that such controversy may well drive packers and producers away from Lion.

Tony Burgess of Birchgrove Eggs, who uses the alternative SALSA assurance scheme, told the Ranger that he had been contacted by a number of packers recently about the possibility of joining the scheme. "I have had several phone calls from regional packers asking about the benefits of SALSA. It is widely accepted as a credible standard, it has a very good name and it is much cheaper than Lion," said Tony. SALSA is supported by the National Farmers' Union, the Food and Drink Federation, the British Hospitality Association and the British Retail Consortium. Asked about the procedure for transferring from one packer to another under the SALSA scheme, Tony said there was nothing written into the rule book to constrain producers from selling their eggs to the packer of their choice. "They can move when they want."

David Spackman of Laid in Britain, another alternative assurance scheme, said that under the Laid in Britain code producers could sell their eggs to the packer of their choice without any restriction. "If they want to sell to someone else they are free to do so," he said. "One thing I do know is that there are a lot of packers, particularly in the South East, who are not particularly bothered any more whether producers are Lion coded or not."

Under the seven-day rule originally voted through by Lion subscribers, an egg producer and his new packer would both have needed to inform Lion in writing of the intention to switch production. Lion would then have informed the existing packer that the producer would be registered with the new packer within seven days.

The Ranger was told by someone who attended the original meeting that although there had been a show of hands on the issue, there was a feeling afterwards that the decision may have been rushed and that some people were not quite clear about what they were voting for. Lion had decided to look at the issue again.

The current position is unclear, but the issue is likely to be a topic of discussion once more when subscribers gather again for their next regular meeting.