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Tonsor: it’s unclear how implementation of Proposition 12 will impact the pork industry

Kansas State Ag Economist Glynn Tonsor says it’s unclear how the implementation of Proposition 12 will impact the pork industry.

“Whether it responds to just changes in California, or if it proceeds to change a bigger share of the industry than would just need to be adjusted to meet the population base in California versus the rest of the country, is still uncertain,” he says.

Under the ballot initiative, pork sold in California must be raised under strict guidelines.

He says the ruling comes at a time when profitability in the pork industry has been challenged.

“There were signs of contraction in hog production before this announcement, and anything that increases the cost of production in an environment where you’re contracting is likely going to push some additional votes towards contracting production. I think we’ll see some of that along with this,” he says. “There’s debates about the higher production costs that come with the change in production practice. There is certainly traceability and there are liability and legality aspects that are not free. So, the economist term, there is no free lunch applies here. The net effect will be likely a lower number of sows in production than we would have had otherwise. Now, exactly how much lower is, you know, the devils in the details exactly how this is implemented and how the broader very integrated system adjusts.”

Tonsor says it’s going to impact prices for the consumer and raise costs of production. 

“Maybe a 10 percent increase in pork prices that follows leads to about a half of a percent reduction in total hog production according to some of the past work we’ve done,” he says. “…it’s expensive but won’t run everybody out of production. We’re talking marginal increases and costs. It’s not zero, but it’s not the same, for example, as a $2 increase in corn price.”

In a statement provided to Brownfield, American Farm Bureau President Zippy Duvall said, “AFBF is disappointed in the closely divided Supreme Court ruling on California’s Proposition 12. At the heart of this argument is whether one state can set the rules for the entire country. The arbitrary standards take away flexibility to ensure hogs are raised in a safe environment. Prop 12 will cause further consolidation in agriculture nationwide and lead to higher pork prices at the grocery store for America’s families. This law will ultimately harm consumers, farmers and animals.”

On Thursday, the US Supreme Court announced it would uphold California’s Proposition 12, which bans sales of pork, veal, and eggs from animals whose confinement does not meet minimum space requirements.

Audio: Glynn Tonsor