News

Economist says pork supply chain could be impacted by California’s Prop 12

A new study from RaboResearch suggests the US pork supply chain could face serious disruption in 2022 if California’s animal welfare regulations are implemented as written.

Christine McCracken, senior analyst for animal protein with Rabobank says California accounts for 14 percent of US pork consumption, but produces less than 2 percent of its own pork needs. “Roughly 20 percent of US pork would need to be compliant,” she says.  “As a result you’d seen an inability to reach sufficient quantities by the deadline and a shortage of pork in California.”

Which, she tells Brownfield, would likely result in increased costs for consumers.  “We’ve seen a similar trend in cage-free eggs,” she says.  “When there was a shortage of cage-free eggs, you saw a pretty big price spike with the implementation of that rule. We’d expect to see something similar for pork as we get closer to that deadline.”

Less than 4 percent of US sow housing currently meets the new standards.  She says producers have been reluctant to make the costly investments needed to comply with the new rules as Proposition 12 continues to be challenged in courts.  “There are very few people who are breaking ground until they know more and have some premiums offered by packers to ensure they are going to be able to cover those additional costs,” she says. 

McCracken says if the regulations go into place January 1 as written, the disruptions wouldn’t likely occur until later in the year.  “Suppliers that are selling into California might see a bit of a disruption,” she says.  “And then the rest of the United States would have a surplus of non-compliant pork assuming those changes were made.” And, she says, US pork producers would see a significant drop in hog prices.

California’s Proposition 12 establishes specific minimum requirements for confinement of laying hens, breeding pigs and veal calves. Beginning in 2022, sows will need a minimum of 24 square feet of usable space per animal.