SALEM, Ohio – The Ohio Department of Agriculture, backed by proof Ohio Fresh Eggs operators left out pertinent information on permit applications, shut down the egg farm Nov. 30.
The farm’s 16 permits to install and operate in Licking, Hardin and Wyandot counties were revoked based on testimony from farm operators, state personnel, experts and attorneys during nine days of hearings in June.
Without the permits, the farm cannot legally operate under the rules mandated by the department of agriculture’s Livestock Environmental Permitting Program.
Like a bank. Farm and Dairy reported more than a year ago that egg farm owner-managers Don Hershey and Orland Bethel told ODA an anonymous investor held an option to purchase the company.
They maintained the investor provided only financial backing for the farm’s purchase and operation.
That anonymous investor turned out to be Austin “Jack” DeCoster, a farm operator labeled a “habitual” and “chronic” violator of Iowa’s environmental laws.
Investigation also showed DeCoster was involved in daily farm operations, and should have been identified on the farm’s permitting paperwork.
DeCoster’s name appearing on permit applications would have made the state run a background check on him and think twice before granting the permits.
Ohio Revised Code requires farm permits to include names and addresses of anyone who controls or has right to control farm management, selection of officers, directors or managers.
Hiding details. Ronald Flory, who began providing Buckeye Egg Farm with feed in the early 1980s and has been involved with the farm off and on ever since, most recently worked with Ohio Fresh Eggs overseeing permit applications.
Flory testified that in a March 2003 meeting, Livestock Environmental Permitting Program executive director Kevin Elder said there were two people not to be involved in the purchase of Buckeye Egg Farm: Anton Pohlman and Jack DeCoster.
Anton Pohlman was the owner of the now-defunct and notorious Buckeye Egg Farm, which plagued farm neighbors
with complaints on manure, rodents and flies.
Flory also said that as late as May 2003 he was directed by DeCoster not to divulge the man’s involvement with the farm on ODA permit applications.
Flory said he advised DeCoster and Hershey to be truthful with the state, but that DeCoster instructed him to keep that information hidden.
Flory said Hershey’s lawyers took over the permit applications.
Taking over. Ohio Fresh Eggs filed with the state in November 2003 for permits to take over Buckeye.
At that time, Don Hershey was a manager at Buckeye Egg, and the farm owed him millions for work another of his companies did to rebuild laying barns after a tornado damaged them.
Hershey said it was “a personal challenge to restore Buckeye Egg Farm to its original reputation,” according to state documents.
Speculation. William Smith, an Iowa attorney who has been working with DeCoster since the early 1990s, testified if DeCoster’s involvement had been revealed to the state, the “permits would have been delayed but the permits would eventually have been issued.”
Smith said DeCoster’s five-year status as a habitual violator of Iowa environmental law was coming to an end, but that DeCoster “would nonetheless have been a lightning rod for bad publicity.”
Testimony showed at one time, DeCoster questioned ODA personnel as to whether the farm could be permitted in his son’s name. His son, Peter DeCoster, has no record of environmental noncompliance.
It was also revealed that DeCoster’s motivation for buying into the egg farm “was grounded in federal tax law.”
After violating Iowa environmental law, DeCoster sold his hog farm there and was required to invest the proceeds from that sale to avoid paying hefty capital gains taxes on that money. The egg farm purchase was his solution to avoiding the taxes.
Funding. Hershey testified that DeCoster had provided all funds for the purchase of Buckeye Egg Farm.
He estimated DeCoster had invested $126 million to date, and both he and Orland Bethel said there is no promissory note and no schedule of repayment between the egg farm and DeCoster.
According to state records, Hershey testified neither he nor Bethel were willing to assume any personal financial risk in the farm’s purchase. Both men offered up only $10,000 as an initial investment.
Even with that said, Hershey said he owns 30 percent of Ohio Fresh Eggs and Orland Bethel owns 70 percent.
Very involved. In testimony, retired University of Iowa economist Neil Harl said the way the option to purchase agreement was set up, with DeCoster paying the bulk of the money to purchase the farm up front, indicated DeCoster would have much more input in company operations than Ohio Fresh Eggs initially let on.
In fact, the purchase agreement would let DeCoster oust Hershey and Bethel and buy Ohio Fresh Eggs for just $10,000 more than he’d already pumped into the company.
Harl, who is also an attorney, said though DeCoster said he wasn’t in managerial control of the company, other documents pointed out that he was.
And for that, his name should have rightfully appeared on the farm’s permits to install and operate.
Ohio Fresh Eggs maintains DeCoster was merely an investor and had a limited role that would have not required his name be revealed on any permits.
Out in the wash. The department of agriculture also says that “Hershey’s purpose in the purchase … was to recoup the $2 million owed to the Hershey Equipment Company and the $5 million owed to Big Dutchman,” a European firm that sold equipment to the egg farm but was never paid. Hershey was the U.S. distributor for Big Dutchman at that time.
ODA says Hershey is paid $4,000 per week as recoupment and to serve as general manager of Ohio Fresh Eggs’ facilities.
The state also maintains Bethel’s incentive for his agreement with DeCoster is that Hillandale Farms “would continue to receive a supply of eggs for distribution” from the farm.
Through Hillandale Farms, Bethel distributes half of Ohio Fresh Eggs’ production directly to major grocery store chains from the Dakotas to the East Coast.
In testimony, Bethel said he “participated in the purchase of Buckeye Egg Farm … to protect his source of eggs” for his egg distribution business.
Not standing for it. “Ohio has a very stringent large livestock permitting program, which exceeds U.S. EPA’s requirements in at least 10 regulatory areas,” Assistant Director of Agriculture Howard Wise said.
“We expect compliance from all farms, regardless of size, and while the majority of Ohio farms are managed with honesty and integrity, Ohio law is very clear that permits based on false or misleading information must be revoked.”
The order includes revocation of all permits issued for the Croton egg farm, which includes four layer sites, four pullet sites, and a hatchery and breeder pullet site.
It also includes revocation of all permits issued for the Mount Victory egg farm and Goshen pullet farm located in Hardin County, and the Marseilles egg farm in Wyandot County.
At the farm. The state’s proposed order says the operation must close one barn every two business days, starting in Croton.
No date for the barns to begin closing has been set, but all barns must be closed by July 6, 2007.
Barn closures include removal of all poultry, dismantling of feed bins and conveyor lines, and shutting off water service to the barn.
The order also says operators may not temporarily move poultry from one barn to another during the closure.
Ohio Fresh Eggs is proceeding with business as usual, according to spokesperson Harry Palmer.
Palmer said the farm would continue operations while the state finalized its order to shut the farms down. Palmer also said the farm is filing for a stay on the order to revoke the permits.
(Reporter Andrea Myers welcomes reader feedback by phone at 800-837-3419 or by e-mail at amyers@farmanddairy.com.)
Related stories:
Egg farm may have permits yanked (11/30/2006)
Ohio Fresh Eggs ordered to destroy 4.3 million eggs at Croton facility (3/9/2006)
State threatens to yank permits from Ohio Fresh egg farm (10/6/2005)
Ohio Department of Agriculture proposes fines for Ohio Fresh Eggs (6/23/2005)
Ohio Fresh Eggs marks new beginning at Buckeye Egg (2/12/2004)
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