Proposition 12, California’s animal welfare proposition, passed in 2018 is set to be fully implemented on January 1, 2022, and it is causing an uproar. Opponents of California’s Prop 12 predict meat counters devoid of pork products and skyrocketing pork prices that will hit the poor and minorities hardest. Five Republican senators have proposed the Exposing Agricultural Trade Suppression (EATS) Act to halt implementation of Prop 12.
Advocates of Prop 12 meanwhile downplay these concerns, while they chastise the industry for being slow to implement Prop 12, and claim it will bring great improvement in the welfare of America’s 75.7 million hogs.
Both sides are wrong. Our economic study finds that the price of the fresh pork products covered under Prop 12 (about 60 percent of the pork on a hog) will rise by about 8 percent in California. Prices of cooked pork products or pork mixed with other ingredients are not covered by the law and will be largely unaffected. Economic losses from higher prices and lower consumption are about $8 per Californian.
The problem for Prop 12’s cheerleaders is that it will affect less than 1 percent of American hogs and any benefit even for those hogs will be minimal.
Prop 12 will require 24 square feet per breeding sow, but less than 10 percent of American sows (about 700,000 in total) are needed to supply California’s pork demand. And, since the law applies to mother sows, not to the hogs actually grown for meat, less than 1 percent of America’s hogs are impacted.
The pro-Prop 12 crowd depicts sows in stalls so small that they cannot even turn around. However, Prop 12 won’t help those hogs. About 30 percent of breeding sows are already housed in group pens which generally have about 20 square feet each — not enough to meet the 24-foot requirement. These farms will remove a few sows per group pen in order to comply with Prop 12 rules.
It makes no economic sense to shift from stalls to California-compliant group housing when there are plenty of sows already in group houses that are close to meeting the California standards. So, about one-third of the already group-housed sows will get a bit more space in the pen and will farrow the piglets destined to produce pork for California a few months later. The sows housed in stalls will stay there for now, and if they get out eventually, it won’t be due to Prop 12.
Those who chastise farmers for not complying already with Prop 12 ignore that the regulations are still not finalized, and litigation is just now winding down. Any farm that converted early to the unique Prop 12 rules faced the risk of high costs with no opportunity to cover those costs if the courts struck down Prop 12.
So, what will be the impact of these added costs as the pigs move through supply chain to California consumers? We estimate $5 of added costs per weanling pig leaving the farrowing barn. But that is not the only cost.
Processing operations face added costs to make sure that meat from California-compliant hogs is kept segregated so that it can be properly certified. Compliant hogs will need to be processed in separate batches so that non-compliant pork is not commingled with the pork destined for California. Then companies along the supply chain will need separate SKUs and labels for each California-regulated product. All these distinct pork packages destined for California must be strictly segregated and traced to comply with the regulations.
Our research indicates, based on pending California regulations to implement Prop 12, that the segregation, identity preservation, traceability and other compliance costs will be about $0.21 per pound of Prop 12-compliant pork products.
When these added costs are traced though the supply and demand relationships in the North American pork market, competitive pressures ensure almost no change in the price of hogs or pork sold outside California. Speculation about losses for consumers nationwide are based on faulty economics as are projection of major losses for the national hog industry.
Within California, however, the average price of uncooked cuts of pork would rise by 7.7 percent or about $0.25/lb. — hardly the 60 percent increase some have predicted. California consumers will likely respond by eating about 6 percent less of the regulated uncooked pork cuts and their economic loss from paying more and consuming less will be about $320 million annually.
Is it worth $320 million (or $460 per hog) so that 1 percent of North American hogs can have four square feet more space on average? California’s most expensive urban real estate is in San Francisco where annual rents are about $50 per square foot. California pork consumers will pay more than twice as much — $115 per sow for each extra square foot of space Prop 12 provides. Is this what voters intended when they passed Prop 12?
Richard Sexton, Ph.D., is a professor of agriculture and resource economics at UC Davis.
Daniel Sumner, Ph.D., a professor of agriculture and resource economics at UC Davis.
Some of their research was supported by grants from the National Pork Board and the California Department of Food and Agriculture. However, neither have any affiliation with either entity, and the funding support played no role in the research which supports their opinions.