Update Sept. 17: DeCoster has been definitely linked to Hillandale Farms, making him indeed the king of the U.S. egg roost.
According to a ranking list provided in its “investor report” [PDF], Cal-Maine Foods rules the roost in the U.S. egg market. It keeps a jaw-dropping 28 million laying hens — 8 million more than its closest competitor, Rose Acre Farms. (According to the USDA, a total of 340 million hens sit caged in U.S. factory farms for the egg market.)
By these standards, the two firms responsible for the half-billion egg recall — DeCoster Family Farms (owner of Wright County Egg) and Hillandale Farms — are rather modest in size. Hillandale keeps 14 million hens, and DeCoster just 9 million. The man behind DeCoster, of course, is Austin “Jack” DeCoster, denounced by the Iowa Attorney General as a “habitual violator” of the state’s environmental laws and by me as “one of the most reviled figures in industrial agriculture.”
Photo courtesy of Moff via FlickrDeCoster evidently views paying fines for his companies’ misdeeds the way most folks see keeping up with insurance premiums or taxes: as a necessary evil, one of life’s inconveniences. In other words, his companies just keep on breaking laws, and DeCoster pays up when he has to. Americans might take some small comfort in knowing that this unsavory character, with his long history of abusing workers, the environment, animals, and public health, keeps “only” 9 million hens, making him just the ninth-largest U.S. producer.
In fact, however, DeCoster might be the industry’s top rooster — the magnate who controls the most hens and supplies America with the most eggs. At the very least, he stands at the nexus of several tightly linked companies that, together, produce more eggs even than Cal-Maine.
To see what I mean, let’s explore the interlocking ownership of the two recall-tainted firms and that of two others, Ohio Fresh Eggs and Quality Eggs of Maine. Before we plunge in, let me emphasize up front that figuring out who owns what in the egg industry is an extremely vexing exercise. Most of the major players are privately owned and thus tight-lipped. And as we’ll see, they tend to go by multiple, similar-sounding names, and the corporate ownership chains zigzag like a headless chicken. So bear with me here.
First, consider the intimate relationship between the two companies involved in the recall, DeCoster and Hillandale Farms. Decoster’s feed mill — the likely source of the salmonella outbreak — goes by the name Quality Egg. Not to be confused with Maine-based Quality Egg, of which more below, Iowa-based Quality Egg supplies feed and pullets (young laying hens) to Hillandale’s Iowa operations. And Wright County Egg and Hillandale also apparently send eggs out under each other’s brands. As The New York Times reported August 20, “One complication for consumers is that some of the Wright County firm’s eggs were sold in cartons bearing the Hillandale name.”
The two companies’ ties go even deeper. Hillandale Farms and Jack DeCoster appear to share ownership of Ohio Fresh Eggs, whose 7.6 million laying hens (according to Cal-Maine’s list) make it the nation’s tenth-largest egg producer. DeCoster essentially bought Ohio Fresh Eggs in 2003 but tried to hide his ownership, perhaps from concern that his reputation would draw unwanted scrutiny from Ohio regulators.
From a Forbes story published last month:
[I]n 2003 DeCoster bought Ohio Fresh Eggs, which has operations at several locations in farmland outside of Columbus, Ohio. Or at least, he furnished all but $10,000 of the $67 million needed to buy it, although neighbors didn’t originally know he was involved.
After putting up the money to buy the company, DeCoster kept name out of the documents — he was listed as a “silent” investor who wished to remain anonymous. But soon after the purchase, Ohio authorities began to ask hard questions, because “bad smells,” “clouds of flies,” and, yes, salmonella began to show up in the company’s massive egg factories, Forbes reports. And soon enough, the Ohio Department of Agriculture “moved to revoke the company’s operating permits — not for environmental violations but on the grounds that DeCoster controlled or had the right to control the new company, and should have, but didn’t, disclose that fact.”
According to Forbes, a state judge ruled in favor of the Ohio ag department’s bid to strip Ohio Fresh of its license; but a review board reversed the decision. Today, Ohio Fresh Eggs remains “backed by DeCoster and with a close associate of his … now at the helm,” Forbes reports.
Searching over Hillandale
OK, so DeCoster is Ohio Fresh’s controlling investor. So how does Hillandale Farms fit in? (See Sept. 17 update.) According to Forbes, one of the two men listed on the documents for DeCoster’s stealth 2003 buy of Ohio Fresh Eggs was Orland Bethel — the founder and owner of Hillandale Farms. And Hillandale Farms now co-owns Ohio Fresh with a man named John Glessner, a long-time lieutenant in the DeCoster empire, The Cleveland Plain-Dealer reports.
In some marketing material, Hillandale and Ohio Fresh Eggs behave as if they’re a single entity. In a 2009 press release, Ohio-based Shared Harvest thanked “Hillandale Farms/Ohio Fresh Eggs” for a donation of eggs:
“Having wholesome, safe food to put on the dinner table should be an expectation, not a luxury, for Ohio’s families,” said John Glessner of Hillandale Farms/Ohio Fresh Eggs.
Glessner’s activities aren’t always so sunny. In 2003, Glessner and his boss DeCoster were convicted together of violating immigration law. Glessner, it seems, ran a firm called Iowa Ag that supplied undocumented workers to DeCoster’s egg factories. DeCoster had to shell out $2 million to settle the case, while Glessner got a four-month prison sentence and had to cough up $300,000.
Glessner’s role as a kind of fixer for the DeCoster empire goes back years. The Plain-Dealer pithily describes the Glessner/Jack DeCoster relationship lik
e this: “In several court filings over the past decade, Glessner shows up as either DeCoster’s employee or as someone buying farms from him.”
Glessner appears to be deeply involved with Iowa-based Quality Egg, the DeCoster-owned firm that sold supplied salmonella-tainted feed to both Hillandale and Wright County Egg. In a Google search, I found an Iowa-based company called J. Glessner Management, which lists Jack DeCoster as its owner. When I called the listed phone number, I got the automated answering service for Quality Egg.
Glessner’s Environ becomes DeCoster’s Wright County Egg
Indeed, Glessner played a key role in helping DeCoster build out his egg empire in Iowa. Remember that back in 2000, DeCoster was slapped with “habitual violator” status by the Iowa Attorney General for egregious pollution violations on his factory hog farms. Under the terms of the punishment, DeCoster was “prohibited from any new construction of confinement feeding operations” through 2004.
DeCostner was prohibited … but his henchman wasn’t. Not to be deterred from his plan to dominate the egg market, DeCoster set up a shell company (yes, pun fully intended), headed by Glessner, designed to allow DeCoster to covertly build out an Iowa confined-hen empire, according to an Aug. 27 Associated Press article. “Just weeks after DeCoster accepted habitual violator status, his associates founded a company called Environ Egg Production LLC,” the AP reports.
From the start, it was clear to anyone who cared to look that Environ was a DeCoster operation in disguise. Says AP:
State environmental officials were aware that Environ “appeared to have the same address, same phone number, same agent and attorneys as DeCoster Farms of Iowa,” according to records. What’s more, a consultant who studied the soil where the confinement facility would be built listed “DeCoster Farms of Iowa” as his client in a report sent to county supervisors. Glessner listed as Environ’s official representative on forms to Iowa’s Department of Natural Resources (DNR).
And get this: “the DNR granted the permit [for a giant egg factory] under the name of Glessner’s wife.” Eventually, Environ morphed into DeCoster-owned Wright County Egg, AP reports.
The Maine thing about Quality Egg
Still with me? Now let’s ponder the remnants of DeCoster’s egg properties in Maine, where DeCoster got his start as an industrial agriculturalist. Recall that way back in 1996, working conditions were so atrocious at DeCoster’s egg operation there that OSHA fined him $3.6 million and the U.S. labor secretary declared the facility an “agricultural sweatshop.”
That rebuke ruined Glessner’s reputation in Maine and spurred his move into Iowa. It also inspired him to change the names of his Maine operations, speciously declare them to be under “new ownership,” and install Glessner as the public face.
Today, the old operation appears to have split into two entities called Quality Egg of New England and Maine Contract Farming. They share an address (see here and here); from what I can tell, Maine Contract officially produces the eggs and Quality Egg officially sells them. The companies continue the DeCoster tradition of racking up fines — in July, Maine Contract Farming paid out $134,000 after being caught in egregious animal-welfare violations. In an August 27 article, the Boston Globe identified DeCoster as the owner of Maine Contract Farming.
Cracking the case
So what we’ve got here is four large egg producers — DeCoster Family Farms (Wright County Egg), Hillandale Farms, Ohio Fresh Eggs, and Quality Eggs of Maine — all of which are controlled by or have extremely intimate links with Jack DeCoster. The Cal-Maine list of the largest U.S. egg producers puts the hen flocks of Decoster Family Farms, Hillandale, and Ohio Fresh at 9 million, 14 million, and 7.6 million, respectively. It doesn’t list Quality Egg of Maine, but the Boston Globe says it keeps 5 million hens.
All told, that amounts 35.6 million hens under management by companies owned by or tightly linked with DeCoster — more than 10 percent of the nation’s total flock (340 million) and more than putative heavyweight champ Cal-Maine.
Now, I’m still sifting through the details of this complex story — particularly on the links between Hillandale and Wright County Egg. I’m intrigued, for example, that DeCoster’s feed mill in Iowa went uninspected by state regulators for years because it ostensibly qualifies for an exemption allowing farms to make feed for their own livestock. It continued to insist on this exemption even after the outbreak, Associated Press reports. Yet we know that the entity provided feed to Hillandale’s Iowa operations. Was DeCoster’s operation simply breaking the law by selling feed to a third party — or does DeCoster have a direct ownership stake in Hillandale’s Iowa operation that would make feed sales from an unregulated mill legal?
I’m also processing the information that Cal-Maine bought at least some of Hillandale in 2005; and that there’s an ongoing class-action lawsuit, which started in 2008, alleging an “industry-wide, price-fixing conspiracy that raised the price of shell eggs and egg products in violation of the Sherman Antitrust Act.” The entities involved in that suit include several DeCoster-related companies discussed above:
Cal-Maine Foods Inc., Michael Foods, Inc., Rose Acre Farms, Inc., Ohio Fresh Eggs, LLC, Hillandale Farms Inc. (comprised of Hillandale Farms of Pa., Inc., Hillandale-Gettysburg, L.P., Hillandale Farms East, Inc., and Hillandale Farms, Inc.), Daybreak Foods, Inc., as well as trade groups United Egg Producers, United States Egg Marketers, and United Egg Association.
More soon, as I continue to sift through the legal documents and track down lawyers who can help untangle the chain of ownership.
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