The U.S. Department of Agriculture has analyzed the consumer price impacts of California’s Proposition 12, a law that bans the sale of pork from sows raised in housing that doesn’t meet the state’s standards.
The law’s enforcement has led to a spike in the price of compliant pork products compared to non-compliant ones. USDA researchers found an average price premium of 22% for compliant wholesale pork cuts, with premiums for specific cuts like loins and bellies reaching 30%.
The average premium packers pay for compliant market hogs is $5.50 per hundredweight or about $12 per head—retail prices for Prop. Since the law took effect, the number of 12-compliant products in California has also risen by 20%.
The price increases are particularly suitable for popular pork products like bacon, ribs, and loins, with price spikes of 16%, 17%, and 41%, respectively. This has resulted in a decline in California’s share of national fresh pork consumption from 10% to 8% as of January 2024.
NPPC New President Expects Pork Exports To Rise (Credits: Supermarket Perimeter)
Researchers from the University of California, Davis, reported that the scarcity of compliant pork contributed to these price increases. The delayed enforcement of Prop. 12 allowed non-compliant pork to be sold until the end of 2023, mitigating immediate impacts at retail but leading to subsequent price hikes.
USDA economists estimate that Prop. 12-compliant pork sales currently represent 2% to 4% of all pork products sold, indicating insufficient supply to meet California’s demand.
This situation has raised concerns about the long-term sustainability of pork production under Prop. 12 and potential challenges for producers in covering increased costs.
The issue is seen as a matter of state rights, and there is bipartisan opposition to Prop. 12 due to its implications for interstate commerce and regulatory overreach.
The U.S. Department of Agriculture (Credits: Investopia)
The Biden administration and industry groups have opposed the law, recognizing its broader impact on the agricultural sector. Secretary Tom Vilsack has highlighted the need for congressional action to address the challenges posed by Prop. 12 and prevent further market disruptions and price escalations.
The National Pork Producers Council, represented by President Lori Stevermer, has urged Congress to address this issue in the farm bill to avoid chaos and widespread price increases in the pork industry.
