Another egg grading dispute headed for court

Tuesday, March 8, 2011

by BETTER FARMING STAFF

Thursday a judge in the Superior Court of Ontario in Oshawa will hear motions pertaining to a five and a half year old suit between Sweda Farms, the province’s third largest egg grader and Egg Farmers of Ontario, based in Mississauga.

Blackstock Ontario-based Sweda Farms Ltd., doing business as Best Choice Eggs, sued the provincial marketing board and two key employees for $21 million in May, 2005. The suit claims that egg board general manager Harry Pelissero and former operations manager Mark Beaven conducted themselves “outside the scope of their duties as employees" of the egg board in "an attempt to interfere with the contractual relationship between Best Choice and it's (sic) producers." In June, 2004, Egg Farmers of Ontario, as the board was then called, quit charging a 34 cent a dozen marketing levy for eggs that were cracked or leaked and didn’t grade A.

In court documents the egg board and those named deny the allegations. None of the claims made in this matter have been proven in a court of law.

In early 2005, Beaven, the egg board’s head of enforcement, checked egg receiving records and determined that 44 Ontario producers were shipping a higher than average percentage of cracked eggs to graders and were paying lesser amounts in levies to the board. Those producers included 15 Sweda suppliers. Egg Farmers issued invoices to the 44 producers for the difference. Thirty producers who were able to come up “a valid explanation” for the higher percentage of cracked eggs had their invoices cancelled by the board. According to the egg board’s statement of defense, some Sweda customers paid the invoices. Others did not, including Sweda Farms which was invoiced for $44,470.

The egg board asserts it acted within its delegated authority to exclusively control the production and marketing of eggs with in Ontario and establishes prices payable to producers. The egg board’s statement of defense says Best Choice suppliers shipping higher than average percentages also received an additional document from Best Choice, indicating a payment for "contract payment and marketing bonus" and there was no levy deducted.

According to the court documents, Beaven determined that the industry average for non-leviable eggs was 2.38 per cent, while grading reports for three-quarters of Best Choice suppliers indicated an average of 2.77 to 8.14 per cent.

"Once the invoices were sent, Mr. Beaven then threatens the producers and puts them in fear of losing their quota," says the affidavit of Svante Lind, owner of Sweda Farms.

Beaven denies threatening any producers.

Beaven and Pelissero say they operated with the knowledge and authorization of their board of directors. They deny that the invoices are "illegal and improper" or "an excess of OPE's jurisdiction."
The affidavit of Linde says; "it is interesting to note that all of the producers who sit as directors on the (egg farmers) board are suppliers of eggs to either Burnbrae or L & H Gray. It is also interesting to note that all contacts are initiated with producers after they have been visited by competitors, Burnbrae and/or L & H Gray.” Burnbrae and Gray grade the lion’s share of Ontario’s egg production.

According to court documents, Sweda Farms changed lawyers shortly before the case was to go to trial in June, 2009. A court document filed by Sweda’s new lawyer, Donald Good in May, 2010 also names Burnbrae Farms Limited, Burnbrae Holdings, owner Joe Hudson, Craig Hunter, L.H. Gray Limited, William Gray, Michael Walsh, Maple Lynn Foods, Johannes Klei and John Klei.

In June 2005, a letter from egg board chair Carolynne Griffith to producers described the Sweda claims as “totally without merit. OPE will be defending itself and its named employees vigorously.”

“Ontario Egg Producers has full confidence in its general manager Harry Pelissero and its field operations manager Mark Beaven. . . . Staff under the board’s directions and authority will continue with all appropriate administrative actions to achieve full compliance with the board’s policies and regulations.”

Since the lawsuit was initiated, Ontario Egg Producers has changed its name to Egg Farmers of Ontario. Beaven no longer works for the egg marketing board. BF