Hampton Creek targeted by USDA-controlled egg industry program

Potential legal violations uncovered in secret PR effort to damage egg-free competitor

Hundreds of pages of disclosed communications from the American Egg Board reveal a coordinated two-year plan to undermine and attack Hampton Creek, the San Francisco-based food company, seen as a “threat” and “major crisis” to the egg industry.

Image result for usda logo

One of the most important ways that industrial animal agriculture promotes its products is through Congressionally-mandated “checkoff” programs. Each industry member pays into a collective fund that is controlled and managed by the U.S. Department of Agriculture. The American Egg Board is the egg industry’s checkoff program. Very specific rules govern how it operates, all supposedly overseen by the USDA. The Egg Board’s stated mission (which stems from federal law) is “to allow egg producers to fund to carry out proactive programs to increase demand for eggs and egg products through research, education and promotion.”

And yet, USDA’s recent response to a Freedom of Information Act request reveals a number of highly questionable activities that likely violate federal law. The documents (summarized here) are mostly email exchanges between Egg Board executives and others in the egg industry, or with PR consultants, and reveal a disturbing pattern of attacks on Hampton Creek over a two-year period from 2013-2014. (There’s no indication that the campaign has stopped.)

As I documented last fall, Hampton Creek’s early success has touched a nerve in the industrial food industry. These documents show that the lawsuit by Unilever over the start-up’s Just Mayo product was child’s play compared to the Egg Board’s activities. Below is a summary of the most egregious communications.

Engaging in inappropriate and possibly illegal activities

Checkoff programs like the Egg Board are legally required to stay within the boundaries of advertising, promotion, consumer education, and research. Specifically not allowed are lobbying activities. The statute says that no funds shall “be used for the purpose of influencing government policy or action”.

However, several email exchanges indicate this provision was violated. For example, one Egg Board executive asks Roger Glasshoff, USDA’s National Supervisor of Shell Eggs (now retired) how to make a complaint to the Food and Drug Administration regarding Just Mayo’s labeling. This Egg Board exec asked: “I just saw this label for Just Mayo, a non-egg mayo, and they claim to be “non-GMO.” If FDA doesn’t permit this language, who can we alert regarding this “violation”? And USDA’s Glasshoff replies: “I would forward the information to the FDA District Office responsible for the location where the product was marketed.” He goes on to opine about non-GMO labeling.

It’s highly inappropriate and likely illegal for a USDA staff person to be coaching the Egg Board on how to complain to FDA about Hampton Creek. Moreover, the Egg Board is simply not allowed to even make such a complaint. That explains why, in another email exchange, an Egg Board executive suggests that the United Egg Producers (the private egg industry lobbying group) take up that charge instead.

Also going beyond the scope of its legal mandate is this email in which Egg Board CEO Joanne Ivy is reporting on a phone call she had with an attorney at Unilever.


She explains that while the Egg Board cannot take a public position on the lawsuit (because the law would not allow it), instead, she advises this attorney on filing a complaint with the FDA regarding the Just Mayo label. In other words, Ivy is fully aware of the boundaries of her legal mandate, but chooses to ignore it, behind the scenes. She admits in the email that she was “helpful” to Unilever regarding its suit against Hampton Creek.

Authorizing interference with Whole Foods sales, threats of bodily harm

In this jaw-dropping exchange, the Egg Board’s CEO Joanne Ivy green lights hiring one Anthony Zolezzi, who boasted that he could “make a single call” to Whole Foods to stop the retailer from putting Just Mayo on its shelves:

Wholefoods

 

It’s not clear from the documents if this deal was finalized, but even just asking Zolezzi to do such a task clearly violates more than one section of the Egg Board’s enabling statute. And if the call was made, additional civil laws were likely violated such as interfering with a contract. The contact info from Mr. Zolezzi apparently came from Chad Gregory, head of the United Egg Producers. In that email exchange, Gregory agrees with Ivy that asking Zolezzi to make that call is a good idea, saying: “I think this is exactly the kind of activity you hire [him] for. Maybe this is a good first step for AEB with these “junkyard dogs’”?

If that’s not appalling enough, here are what appears to be two separate death threats against Hampton Creek’s CEO Josh Tetrick:

DeathThreats

Even if these were meant in jest (there are no joke indicators in the messages), it’s still extremely disturbing. One of the threats is made by Mitch Kanter, the executive director of the Egg Nutrition Center, which is an arm of the Egg Board. The other is made by an egg industry member.

Contracting for aggressive and questionable PR tactics

The egg industry panic started in earnest in August 2013, when Egg Board CEO Joanne Ivy sent her PR firm this email:

AEBpanic

Edelman, the world’s largest PR and crisis management firm, is notorious for its underhanded tactics, and these documents demonstrate why. The overall Edelman budget for the Egg Board in 2013 topped $1.3 million. For the year 2013 alone, the Egg Board appears to have paid Edelman $43,000 (other documents indicate more than $60,000, possibly $70,000 in total) for a host of activities aimed at Hampton Creek, including:

  • Crisis counsel and op-ed letters
  • Media monitoring and additional media outreach
  • Blogger relations ($33,000)
  • Placing Letters to the Editor in the Wall Street Journal and Huffington Post

Also, Edelman was putting some of its highest level executives on the Egg Board contract, providing what they called “ongoing strategic council” and “corporate involvement”, charging $460 and $345 per hour (totaling $8,500) for such top-level engagement. A memo from Edelman in November of 2013 recommends the following “immediate action”:

Submit an op‐ed/letter to the editor to both the Huffington Post and Wall Street Journal from egg farmer Bob Krouse that addresses the misconceptions about the egg industry… This brings the industry to life through a hard‐working egg farmer, while putting facts in front of readers that help correct the misconceptions. We can help draft this piece.

Edelman also conducted a “consumer survey to test penetration of Beyond Eggs and gauge consumer sentiment.” One of the questions asked, “Which of the following are you familiar with?” And the options were: “Beyond Eggs,” “Just Mayo,” “Hampton Creek,” and “Josh Tetrick”. And then there was this somewhat leading question: “What is your feeling towards food that is mostly artificially produced by scientists in a laboratory and not entirely by nature?” Another exchange reveals additional “Beyond Egg Consumer Research”. This time, the aim was clearly to attack Hampton Creek, and they were even researching the most effective forms of attack:

Conduct qualitative/quantitative consumer research to pinpoint and prioritize areas of focus. For example, research will, ideally, provide actionable intelligence on what attacks are gaining traction with consumers and which are not so as to help industry calibrate level of communications response (if any) to ensure a consistent response strategy moving forward.

But the largest expenditure was to pay bloggers to write positive stories about eggs. The Egg Board paid Edelman at least $33,000 to conduct “blogger outreach”, an effort to pay bloggers to use industry talking points about how wonderful eggs are, and specifically counter the facts that Hampton Creek was getting into the media about the widespread cruelty and unsustainability of egg production. For example, Edelman was recommending, in their words: “paid, sponsored posts which can be highly effective. We would reach out to some of the same, but some new bloggers with high reach and more targeted messaging.” They would “engage five to ten food and registered dietitian bloggers to publish content on the many benefits of eggs to generate buzz and awareness for all-natural eggs versus egg replacers.” Here is part of the blogger plan:

Bloggershort

 You can see the entire blogger plan, along with those they reached out to, here. These efforts achieved some favorable blogs for the Egg Board. For example, in one email, Edelman proudly reports:

We are happy to share that two of our Beyond Eggs blog posts have gone live on Recipe Girl and Ingredients, Inc. this week. Both bloggers did a great job of highlighting the benefits of eating real foods, such as eggs, and they included several of our key messages within their posts. The posts also link back to the 30-year sustainability study.

The paid bloggers essentially cut and pasted the industry talking points. For example, these two posts, one called “10 Health Benefits of Eggs” and the other “10 Reasons to Love Eggs” are strikingly similar. The latter is posted by Hemi Weingarten, the creator of the popular app called Fooducate, and occasional critic of the junk food lobby. Some of Hemi’s followers were not pleased by the sponsored post, calling it “terribly irresponsible” and asking to be removed from his list. (You can see Edelman’s email celebrating getting the Fooducate placement here.)

Another blogger posted this image with talking points from the egg industry about alleged high quality care that hens receive, and a reduced environmental footprint.

You can also spot these talking points from the Egg Board by every time she uses the word REAL (in caps):

I … decided to make a commitment to dumping processed foods for more, real, fresh foods… REAL ice cream, REAL cheese, no more light sour cream or mayonnaise, and REAL, whole, fresh eggs. The American Egg Board shares that eggs are packed with vitamins/minerals and antioxidants, and they have a ton of healthy protein- 6 grams per egg (that’s 13% of the recommended daily value)… and nearly half of that protein is found in the yolk.  So it’s beneficial for you to eat the whole egg!  One egg = 70 calories.  Check out their environmental footprint studies > HERE.

Regarding the study cited, the Egg Board spent $75,000 on an “environmental study” comparing egg production with other animal proteins and plant-based versions, specifying Beyond Eggs. The paid-for research results are summarized on the Egg Board’s website here, without any hint of the conflict of interest in the funding. The disclosed documents reveal email exchanges with the study’s author, Hongwei Xin, Ph.D., Iowa Egg Council Endowed Professor and Director, Egg Industry Center.

This study is referenced often, and the Egg Board’s CEO, in an effort to prove how well she was responding to the threat, explained they were: “Leveraging paid search on Google, Bing and Yahoo. When consumers search for terms related to Beyond Eggs, they will also see a link to IncredibleEgg.org's section on the 50-Year Environmental Study.”

Mostly ineffective PR efforts

Despite Edelman’s best efforts, it’s clear they were losing the media wars and were frustrated and impotent on how to deal with it, except to just keep monitoring the coverage. As one Egg Board executive notes: “yet another love letter to our friend Josh, this one from Bloomberg TV. He continues to kick our a_ _ in PR.”

Edelman was obsessed with monitoring the media, often comparing Hampton Creek coverage with eggs in general, celebrating when eggs were covered more. Daily emails from Edelman include reports on single news items including a “small high school blog.” They even sent emails just saying there have been no news items.

At one point, The Egg Board’s CEO Joanne Ivy admits that it’s best not to publicly debate Hampton Creek CEO Josh Tetrick because the egg industry would likely look bad. She says: “I think we all agree that it is best not to engage Josh in a debate particularly since we know they will be concentrating their discussion around egg production and animal cruelty.” She goes to say: “This is a very controversial and emotional area, and I feel sure Josh would welcome this as an opportunity to pick a public fight.” In other words, the egg industry realized it could not win on the basic facts regarding the cruelty of egg production, so decided to avoid the conversation altogether.

Where is USDA oversight?

The Egg Board’s annual budget tops $23 million, and that money is federally required to be spent on egg promotion, not taking down a competitor’s product. The documents uncovered here paint a picture of a government program that has strayed far from its mission. More than just a few egregious examples of legal violations, the entire campaign aimed at obstructing Hampton Creek’s products is out of bounds. In addition, USDA’s guidelines for overseeing the checkoff programs clearly state funds may not be used for disparaging competitors:

[USDA] will disapprove any advertising (including press releases) deemed disparaging to another commodity or competitor or in violation of the prohibition against false and misleading advertising contained in the legislation.

USDA defines “disparaging” as “those that depict other commodities in a negative or unpleasant light”. This description fits many of the uncovered Egg Board activities.

All of this raises serious questions about the oversight role of USDA. With a few exceptions, missing from the email exchanges are the legally-required approvals from USDA; for example, over the Edelman contract and promotional plans. Lack of proper oversight of checkoff programs has previously been identified as a problem by the USDA’s office of the Inspector General. A 2012 report concluded that USDA needs to “develop and implement standard operating procedures and provide instructions to its staff members responsible for conducting board oversight.”

This is also not the first time the Egg Board specifically has been caught engaging in illegal activities. During the 2008 Prop 2 ballot campaign for humane animal practices in California, USDA was sued over the Egg Board’s misappropriation of funds by actively lobbying against the measure. The judge granted the preliminary injunction in that case, finding that “the public interest is plainly served by ensuring that federal officials do not illegally interfere with the state legislative process in California.” It appears that the stunning lack of oversight by USDA over the Egg Board back then has not changed.

It’s time to call into the question the very nature of these federally-mandated funds. Checkoff programs have been described by New York University Professor Marion Nestle in her seminal book Food Politics, as “federally sanctioned and administered public relations enterprises to benefit certain food commodities.” This places companies trying to compete with those commodities at a fundamental disadvantage.

It’s time to shed some light on these federal programs. Here are a few suggestions:

1) Congressional hearings into the misappropriation of funds by the Egg Board specifically but other animal commodity checkoff programs as well. For example, the USDA is being sued over the Pork Board’s illegal use of funds for lobbying purposes, and a federal court recently ruled that the case has merit and should proceed;

2) A lawsuit against USDA over the Egg Board’s funding, similar to that over the Pork Board; some egg producers may not be happy about how their funds are being spent;

3) The Secretary of USDA should exercise his oversight authority to assess fines for legal violations and make referrals to the Attorney General’s office as appropriate;

4) An investigation by the USDA’s Inspector General into the practices of the Egg Board to determine if laws were broken and the extent of lack of oversight by USDA.

You can see Hampton Creek’s slides summarizing the documents here.

3 Responses to “Hampton Creek targeted by USDA-controlled egg industry program”

  1. Charzie says:

    I wish I could say this is unbelievable, but unfortunately the scummy underhandedness of industry is a given, just sad how pathetic they are. Even if I ate chicken ovaries, I would give them up on principle. So sick of the BS and deceptions!

  2. Tom says:

    Fascinating to see the details, the day-to-day underhandedness of Big Biz. But I’m in no way surprised. Im amazed new products, that challenge the status-quo, make it to market these days. The hoops one has to jump thru just to get a product produced for market, compounded by Corporate bullies lurking everywhere…it truly shows the tenacity of food entrepreneurs these days. Kudos to those who do it!

    More amazing is how “dumb” allegedly “smart” people remain re; Email content. Take a hit out? Not only is that just dumb, I doubt the guy claiming old “Brooklyn friends” ever had such friends. Lol! Just another wanna-be tough-guy.

  3. The egg industry is not alone regarding apparent misuse of federal checkoff dollars. The same appears to be true regarding misuse of pork checkoff dollars. In a recent article entitled “Raising a Stink” in the publication, Minnesota Lawyer, there is finally an acknowledgment that the “Minnesota Pork Producers Association has kicked in some funds” for litigation costs in a Todd County, Minnesota legal proceeding involving a large swine feedlot. Not only are the Pork Producers using checkoff dollars as a slush fund to finance Big Ag lobbying efforts (See, “Slush Fund Finances Big Ag Lobbying Schemes,” A Humane Nation, Wayne Pacelle’s Blog, The Humane Society of the United States), it also appears that checkoff dollars are being used to pay legal fees to defend swine feedlot operatives. The average farm family does not have the financial resources to challenge these large swine CAFOs which have ready access to federal checkoff dollars. My parents, Lowell and Evelyn Trom, are challenging the 11th hog confinement feedlot within a 3-mile radius of our family farm in rural Dodge County, Minnesota. Not surprisingly, Jack Perry, the attorney representing the large swine operator in Todd County, also represents the large swine operator my parents are suing in Dodge County. When we tried to work with local citizens to adopt local planning and zoning at the township level to control development of large CAFOs earlier this year, the township officers (who are tied to the swine operators and have manure easement with them) hired Jack Perry. So, is the Minnesota Pork Producers Association using pork checkoff dollars to fund legal activities in Minnesota – an inappropriate use of checkoff dollars? Is the Minnesota Pork Producers Association using checkoff dollars as a slush fund to pay for legal activities in Dodge County and other Minnesota counties? It’s David v. Goliath as local farm families challenge Big Ag. Please, we need your help.

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