Egg companies repay wage subsidies after questions over eligibility

Sunday, 12 July 2020

Consumer demand for eggs soared during lockdown.

Egg producers have repaid more than $400,000 in wage subsidies after questions were raised over their eligibility for the taxpayer-funded scheme.

Data from the Ministry of Social Development (MSD) showed large subsidies were paid to several egg producers, despite supermarket sales figures showing a surge in demand during the coronavirus lockdown.

According to the ministry, Horowhenua company Zealand Farms initially received $153,192 on behalf of 23 staff.

A total of $266,947.20 was also paid to three companies of which Andrew Davies is a director – Spray-free Holdings (trading as Drillers Poultry Farm), Green Acres Free Range and Braemar Poultry Farm.

* Coronavirus: 73 businesses fail after claiming wage subsidy

The Government has paid out $11 billion in wage subsidies to businesses that have suffered a loss of income as a result of the coronavirus crisis. (File video, first published in August 2020)

* New rules on hen cages and rising feed costs lift egg prices

Spray-free received $96,955.20, Green Acres was paid $64,636.80, and Braemar collected $105,355.20

Following a Stuff report on their use of the scheme, Zealand Farms, Spray-free and Green Acres no longer appear in results on MSD’s Covid-19 wage subsidy employer register.

Braemar Poultry Farm’s payment amount has fallen by about $100,000 to $4835.51.

MSD client service support manager George van Ooyen said the wage subsidy employer register is adjusted to take account of repayments.

“We remove the employer’s name if they repaid in full or we alter the level of payment if they partially repaid a subsidy.

“There can be a slight delay between a repayment being received and the website being updated.”

Supermarket sales figures from data analytics and research company IRI show consumer demand for eggs spiked during lockdown.

Davies did not respond to Stuff’s requests for comment. Attempts to contact Zealand Farms directors Ben Summer and Michael Schellkes were also unsuccessful.

MSD last week confirmed it had received a complaint regarding egg producers accessing the scheme and would be following it up.

Van Ooyen said the ministry has an audit process to identify cases that may require further investigation.

Random audits are being undertaken, as well as targeted audits based on data mining, he said.

The Government-funded wage subsidy launched in March. It was available for businesses that experienced a minimum 30 per cent decline in revenue over a month, when compared with the same month in 2019, and that decline was related to Covid-19.

More than $11 billion was paid out to support 1.7 million employees under the original 12-week scheme.

A further $1.2 billion has been paid under an eight-week extension for businesses which experienced a revenue drop of 40 per cent or more.

A total of $205 million has been repaid by 7100 businesses.

A Countdown spokeswoman says the supermarket chain sold 29 per cent more eggs during lockdown.

Peter Sandle, of Otaika Valley Eggs, previously questioned how egg producers could have experienced the 30 per cent drop in revenue necessary to qualify for the original scheme.

While his company had received a wage subsidy payment, the money was repaid after a surge in consumer demand meant it didn’t qualify.

“We were initially worried about losing large food service customers during the lockdown period.

“However, demand from supermarkets and any smaller retailers that remained open was very strong and more than compensated,“ Sandle said.

'The shelves were stripped bare, it was like the flour and yeast. We were buying in eggs from smaller producers who had lost their markets and we still couldn’t get enough.”

Zealand Farms’ brands include Animal Welfare, Eco Eggs and Zealand Farms, all of which are available in supermarkets.

Sales figures from data analytics and research company IRI show supermarket demand for the brands increased significantly during lockdown.

Demand for the New Day and Local Yokels brands supplied by Davies’s companies was also steady or stronger than usual at supermarkets throughout lockdown, according to IRI data.

A Countdown spokeswoman said the supermarket chain sold 29 per cent more eggs during lockdown.

'Through March and April we saw increased demand for a range of baking and cooking products. We sold 1.25 million kilos of flour, and also saw big spikes in products like yeast, herbs and spices, baking powder and of course, eggs.'

MSD has described the wage subsidy scheme as “a high trust system aimed at ensuring money reaches workers and businesses as soon as possible”.

Businesses found to have abused the system could face criminal prosecutions.