- The U.S. Department of Agriculture concluded it was inappropriate for the American Egg Board (AEB) to have commissioned pro-egg ads to appear alongside online search results for Hampton Creek’s Just Mayo to derail sales of plant-based egg substitute producer Hampton Creek, the Associated Press reported.
- The USDA dismissed other complaints of wrongdoing by AEB employees after the yearlong investigation.
- USDA will mandate that staff at all commodity checkoff programs, which collect funds to do research on and market a particular item, must undergo training on guidelines. The agency will also establish a new rule that enables the Agriculture Secretary to remove checkoff program employees for misconduct in a "consistent" way.
The AEB scandal illustrates the complications of commodity checkoff programs in the U.S. The questionable actions these groups might take using these funds, even with technical USDA approval, may lead some to ask whether these programs are necessary or appropriate.
Checkoff programs have been the source of major ad campaigns that have boosted their respective industries. They've included the egg industry's "Incredible, Edible Egg" slogan and the pork industry's "The Other White Meat" campaign.
But in this case, the USDA did officially approve the AEB's pro-egg industry ads, but was not aware that the group was using the ads as a way to target a specific competitor, in this case, Hampton Creek. The USDA deemed this an "inappropriate" use of checkoff funds, which should only promote the commodity as a whole rather than target the competition.
While this may be a win for Hampton Creek, the company has its own unrelated issues to resolve. In August, Bloomberg released the findings of its own investigation, which claimed that Hampton Creek had been buying up its own products from retailers. Hampton Creek CEO Josh Tetrick argued that the number of products bought was miniscule compared to total sales.
This prompted the SEC to launch an investigation into the matter later that month, as Hampton Creek could have been inflating sales and misleading investors in the process. Weeks later, the DOJ began its own criminal investigation to discern whether Hampton Creek committed fraud.