American Egg Board to get 'ethics training' after USDA uncovers 'inappropriate behavior' over Hampton Creek

By Elaine Watson

- Last updated on GMT

American Egg Board: 'There were no findings of violation of the Act or Order.'
American Egg Board: 'There were no findings of violation of the Act or Order.'

Related tags Hampton creek Board of directors Egg

The American Egg Board (AEB) engaged in “inappropriate conduct” in a bid to counter the threat of egg-free mayo maker Hampton Creek, although evidence to support more serious allegations of misconduct is lacking, concludes a review from USDA’s agricultural marketing service.  

As those following the fortunes of Hampton Creek - which is itself facing allegations of misconduct over its mayo buyback program ​- will know, emails uncovered by Freedom of Information Act requests in late 2014 suggested that the AEB had engaged in a concerted attempt ​ to undermine Hampton Creek via actions that went beyond its official remit ​(which is “to increase demand for eggs and egg products through research, education and promotion”).

The emails suggested the AEB paid someone to call Whole Foods to attempt to block the distribution of Hampton Creek's flagship egg-free brand Just Mayo and lobbied the FDA to look into Hampton Creek's labels in the wake of a Unilever lawsuit​ alleging it violated food labeling rules – allegations the AEB strongly denied.

AEB boss engaged in inappropriate discussions over Just Mayo listing at Whole Foods 

The USDA review, which you can read HERE​, found that former AEB chief executive Joanne Ivy had accepted an offer made by a consultant to contact Whole Foods to stop the sale of Just Mayo and then followed up with an email inquiring as to whether contact had been made.

However, Whole Foods - and the consultant in question - both provided sworn statements affirming that contact was never made.

USDA concluded: “The AMS review documented inappropriate discussions about an action that, if acted upon, would have significantly exceeded the provisions of the Egg Research and Consumer Information Act The sworn statements obtained during the AMS Review indicate that the inappropriate discussions did not result in any actual conduct detrimental to “Just Mayo” being marketed by Whole Foods.”

"The AMS Review did not find any documentation to show that AEB-hired bloggers made any disparaging comments about Hampton Creek Inc., or any other company or specific product. In accordance with AMS policy, AEB required all bloggers to disclose that their posts were sponsored by AEB. This is an acceptable and common activity to promote products."

USDA review​, October 2016

No evidence to support allegations re. Unilever litigation, FDA labeling

As for the Unilever lawsuit, it said: “The AMS Review determined that AEB did not intervene in the Hampton Creek, Inc., litigation with Unilever​. The documentation reviewed shows that AEB’s CEO was contacted by a Unilever representative requesting a statement of support for Unilever in a lawsuit against Hampton Creek, Inc. The information obtained in the AMS Review shows that AEB’s CEO informed the Unilever representative that AEB could neither support the litigation, nor make a statement.”

USDA also found no evidence that the AEB tried to get the FDA to go after Hampton Creek for alleged labeling violations [in 2015 the FDA sent Hampton Creek a warning letter​ alleging it breached the standard of identity for mayonnaise because it failed to use eggs, although it later softened its position​].

eggs in basket istockphoto credit angelsimon

Research & Promotion programs, authorized by Congress, are requested, funded, and driven by industry, and overseen by the USDA's agricultural marketing service (AMS). They are funded through fees (a 'check off') on producers of eggs, beef, pork and other agricultural products over a certain size. 

The programs establish a framework to pool resources to develop new markets, strengthen existing markets, and conduct important research and promotion activities. AMS provides oversight, ensuring fiscal responsibility, program efficiency, and fair treatment of participating stakeholders. 

AMS oversees more than 20 research and promotion boards that empower farmers, ranchers, and agricultural businesses including the American Egg Board (AEB), the Fluid Milk Processors Promotion Program, and the National Peanut Board.

Inappropriate comments

However, USDA did find that AEB used its funds to target Hampton Creek  products instead of promoting eggs, albeit through indirect means, such as developing pop-up ads promoting positive messages about eggs that would display when audiences used online search engines to search for terms related to 'Beyond Eggs' such as 'Hampton Creek, Inc.,' 'Josh Tetrick' and 'Just Mayo.'

It also found that the PR firm Edelman had targeted a specific company – Hampton Creek – in its research, although the AEB’s public campaigns did not single out Hampton Creek, and that staff emails joking about putting a ‘hit’ on Hampton Creek founder and CEO Josh Tetrick were “inappropriate​” and “raised concerns​.”

It also found that former CEO Joanne Ivy had deleted emails relating to Hampton Creek, and had instructed staff to do likewise, although AEB staff did not follow her advice.

Corrective actions include training on ethics

Corrective actions the AEB must now engage in include training on “proper email etiquette and ethics​,” and training on “AMS Guidelines on acceptable research and promotion activities and business operations.”

USDA will also require annual management reviews of AEB by the AMS Compliance and Analysis Program, Compliance Branch for at least three years and will conduct a program evaluation of the Livestock, Poultry and Seed Programs’ Research and Promotion oversight activities to ensure adherence with applicable laws and USDA’s policies and procedures.

It will also initiate rulemaking to standardize all Research and Promotion order provisions regarding the removal of Research and Promotion Board and staff members when necessary.

New Just Mayo label

“Over the past 13 months, USDA conducted a review of the activities of the American Egg Board (AEB) based on allegations of alleged misuse of AEB funds, which the Board collects through assessments of the egg industry. While the USDA review did not find evidence to substantiate all nine allegations, the review did reveal several instances of inappropriate conduct by AEB staff and board members. AMS takes these findings very seriously and has begun immediate corrective actions to ensure the integrity of the AEB and all 22 research and promotion programs and boards.”

USDA spokesman

AEB: We didn't break the law

The American Egg Board - which parted company with Joanne Ivy on Sepember 30, 2015 under a confidential severance agreement - did not acknowledge any wrongdoing in a statement issued this morning by chairman Blair Van Zetten: 

"The American Egg Board (AEB) has received the USDA report addressing allegations made by Hampton Creek against AEB. There were no findings of violation of the Act or Order. AEB has cooperated fully and has no further comment at this time." 

Hampton Creek founder and CEO Josh Tetrick said: "This final result says a lot about the strong, principled leadership at our USDA. It's an awesome result to see more transparency come from our experience." ​  

Read the full USDA report HERE.

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