|The American Egg Board provided 14,000 eggs for the annual White House Easter egg roll this year. |
Photo Credit: The Guardian
( The Guardian) A US government-appointed agricultural body tried to crush a Silicon Valley food startup after concluding the company represented a “major threat” and “crisis” for the $5.5bn-a-year egg industry, according to documents obtained by the Guardian.
In potential conflict with rules that govern how it can spend its funds, the American Egg Board (AEB) lobbied for a concerted attack on Hampton Creek, a food company that has created a low-cost plant-based egg replacement and the maker of Just Mayo, a mayonnaise alternative.
In a series of emails obtained under the Freedom of Information Act (Foia), AEB staff, a US department of agriculture official and egg industry executives attempted to orchestrate the attack.
The documents were obtained by Ryan Shapiro, a Foia expert at the Massachusetts Institute of Technology, and Shapiro’s Washington DC-based Foia-specialist attorney, Jeffrey Light, and passed to Hampton Creek.
Among the efforts coordinated between the AEB, the USDA and the egg industry:
Outgoing AEB head Joanne Ivy advised Unilever on how to proceed against Hampton Creek after the food giant filed a false advertising lawsuit against its rival last year.
The Department of Agriculture’s national supervisor of shell eggs joined the AEB in its attack on Hampton Creek, suggesting Ivy contact the Food and Drug Administration (FDA) directly about Just Mayo with her concerns. The FDA later ruled Just Mayo must change its name.
The AEB attempted to have Just Mayo blocked from Whole Foods, asking Anthony Zolezzi, a partner at private equity firm Pegasus Capital Advisors and self-described “eco-entrepreneur”, to use his influence with Whole Foods to drop the product. (Whole Foods still sells Just Mayo.)
More than one member of the AEB made joking threats of violence against Hampton Creek’s founder, Josh Tetrick. “Can we pool our money and put a hit on him?” asked Mike Sencer, executive vice-president of AEB member organization Hidden Villa Ranch. Mitch Kanter, executive vice-president of the AEB, jokingly offered “to contact some of my old buddies in Brooklyn to pay Mr. Tetrick a visit”.
The AEB’s research arm, the Egg Nutrition Center (ENC), tested the strength of Hampton Creek’s patent for its egg replacer, Beyond Eggs, using a consultant, Gilbert Leveille. Leveille concluded that the patent was “not very strong and could be easily challenged with an alternate product”, he said in an email to Kanter. “Were I in your position I would focus on nutritional quality and on the emerging science, much of which ENC has sponsored,” Leveille wrote.
The emails, totalling 600 pages, show the AEB has become deeply concerned about Hampton Creek. The San Francisco-based tech company has attracted $120m in funding from some of tech’s biggest names, including the Founders Fund, started by Facebook backer Peter Thiel, and Vinod Khosla’s Khosla Ventures.
The AEB represents egg farmers across the US and its board is selected by the secretary of agriculture. This year the politically connected AEB provided 14,000 eggs for the White House’s annual Easter egg roll and Ivy was photographed with President Barack Obama.
Hampton Creek has recently signed a deal with Compass, the world’s largest catering company, and is pursuing contracts with other fast-food and food supply companies that have traditionally been held by the egg industry.
“Missy, I am getting a lot of emails about this product from egg producers,” Ivy wrote in an email to Missy Maher, an executive at the Edelman public relations company, in August 2013. She said it “would be a good idea if Edelman looked at this product as a crisis and major threat to the future of the egg product business”.
Hampton Creek Foods CEO Josh Tetrick holds a species of yellow pea used to make Just Mayo.
The Hampton Creek Foods CEO, Josh Tetrick, holds a species of yellow pea used to make Just Mayo. Photograph: Eric Risberg/AP
Unilever – maker of Hellman’s mayonnaise – sued Hampton Creek in November 2014, arguing Just Mayo was falsely named because it contained no eggs. Unilever dropped the suit last December. Emails show Ivy gave advice to people representing Unilever.
“I just got off the phone with a guy working with the Unilever case with Hampton Creek,” Ivy wrote in an email to Howard Magwire, head of government relations for the agricultural cooperative United Egg Producers.
“He wanted me to say that we supported Unilever in this lawsuit against Hampton Creek, but I told him that we could not take a position. However, since the regulation requires egg in mayo and the product does not, I said that they should make sure the FDA is aware to address this situation. I feel sure they are aware, but maybe they need to be pushed.”
The previous day, Ivy had written: “Oh, I believe I mentioned in an email yesterday that the counsel from Unilever called. If not, I am mentioning it now. I believe I provided him some basic information that was helpful but let him know that AEB cannot make statements that would support Unilever’s position.” Both emails were sent in November 2014, while the litigation between Unilever and Hampton Creek was ongoing.
Before the discussion with Unilever, the Department of Agriculture (USDA) had already suggested ways to put pressure on Hampton Creek. In January 2014, Roger Glasshoff, then the USDA’s head of shell eggs, told Ivy to contact the FDA about Just Mayo directly. “I would forward the information to the FDA District Office responsible for the location where the product was marketed,” Glasshoff wrote. “I believe that many labels currently in commerce do not comply with the FDA’s labeling policy.”
Last month the FDA ruled that Just Mayo could not be called mayonnaise because it does not contain eggs.
Tetrick, the Hampton Creek founder, said he found the emails “quite shocking”, but that they didn’t faze him. “I’m not entirely surprised that some industries that are lost in the past a little bit are fighting so hard,” he said. “Even though it was joking, some of those notes about putting a hit out – that’s some reckless stuff.”
With respect to the FDA’s instruction to change the name of Just Mayo, Tetrick said the product’s moniker was here to stay. “We don’t have any plans on changing the name,” he said. “Names matter, and they influence people. We want to connect to the everyday person who’s shopping at the Dollar Tree or shopping at Walmart.”
In a statement to the Guardian, Ivy said: “Anthony Zolezzi has never conducted any work on behalf of the American Egg Board; thus he was never paid for any services. The American Egg Board did not take a position on the Unilever and Hampton Creek lawsuit and did not contact the FDA regarding Just Mayo.”
Ivy further wrote: “At the American Egg Board, our singular focus is on supporting the American egg farmer and communicating the value of the incredible edible egg™. Eggs remain all-natural and are packed with a number of nutrients, including high-quality protein. In fact, the quality of egg protein is so high that scientists often use eggs as the standard for measuring the protein quality of other foods.”
With respect to Kanter’s joke about his Brooklyn buddies, Ivy said: “We are aware of the comments made by an American Egg Board employee. While these comments were clearly made in jest, they were inappropriate and do not reflect our organization’s values. We apologize for any offense.”
The law that created the Egg Board says that “no funds collected by the Egg Board under the order shall in any manner be used for the purpose of influencing governmental policy or action”. AEB is funded by a levy of 20 cents per case of eggs sold by its constituent members.
A USDA spokesman said: “By law, USDA’s agricultural marketing service [the division that employed Glasshoff, then the USDA’s head of shell eggs] is charged with providing oversight, ensuring fiscal responsibility, program efficiency, and fair treatment of participating stakeholders. AMS does not condone any efforts to limit competing products in commerce.
“The national shell egg supervisor in AMS regularly fields questions from those seeking regulatory and labeling guidance. The national shell egg supervisor has no role in the oversight of the American Egg Board. In this case, he fielded a call about a regulatory question and simply referred the inquirer to the correct regulatory authority. In reviewing documents, AMS has not discovered any inappropriate actions by the now retired national shell egg supervisor that would fall outside of his responsibilities,” he said.
• This story was updated on 3 September 2015 with a comment from USDA that was emailed after publication.
Article Source: http://www.theguardian.com/us-news/2015/sep/02/usda-american-egg-board-hampton-creek-just-mayo