UC Davis Professor Says Impact of Proposition 12 Won’t Be Catastrophic
How much will Proposition 12 cost the U.S. pork industry? It’s a question many are trying to find answers for right now.
AgriTalk host Chip Flory brought this up on Monday during an interview with Richard Sexton, University of California, Davis distinguished professor of agriculture and resource economics, who recently completed an economic study to answer that question about California’s animal welfare proposition set to be implemented on Jan. 1, 2022.
In an opinion article in The Hill on Aug. 20, Sexton wrote that he believes “both sides are wrong” when it comes to the impact of Proposition 12 on the U.S. Opponents predict meat counters devoid of pork products and skyrocketing pork prices. Advocates of Proposition 12 downplay these concerns as they chastise the industry for being slow to implement Proposition 12, and claim it will bring great improvement in animal welfare.
According to Sexton, Proposition 12 will cost California consumers about 8% more for the uncooked pork products regulated by the proposition such as bacon and pork chops. He believes this will result in 6% less fresh pork products consumed in California as result.
His study points to a 25-cent-per-pound increase due to higher costs at the farrowing stages of the production cycle. The other source of higher cost is mainly in the primary processing stage, he told Flory.
“The impact is much less catastrophic than some studies had suggested. The impact for pork consumers outside of California is negligible,” Sexton said.
Sexton’s study suggests 30% of sows in the U.S. and Canada were in group housing in 2020. However, Flory acknowledged that just because they're in group housing doesn't mean they're in compliance.
But Sexton said what it does mean is those sows are closer to compliance and the transition could happen fairly inexpensively.
“We estimate that the current group housing gives about 20 square feet, not the mandated 24. They are going to have to move a couple of sows out of the pens as a starting point to becoming compliant. But that should be able to happen relatively quickly as well,” he said.
One of the big impacts pricewise will take place when the animals go to market. Sexton said processors will basically have to clear their processing lines in order to process the California-compliant hogs in a batch.
“It's a tricky logistics operation as to when you're going to process the California-compliant hogs. Our sense from talking to people in industry is that they would do it on multiple days of the week, but then you’ve got to shut it down, clean it out and restart it for the California-compliant hogs. That will result in a lot of extra costs that are going to hit the processing sector,” Sexton said.
The National Pork Producers Council estimates California represents approximately 15% of the U.S. market for pork. Sexton said he believes that’s too high. His study looks at the U.S. and Canada as an integrated market. When combining U.S. and Canada, he says California is about 9% of the market.
“The impact on pork producers and the pork industry will be relatively minor because the people who convert to becoming Prop 12 compliant are going to have to be compensated for their higher costs,” Sexton said. “It won't have dire implications for pork producers.”
He said the big problem – and it’s not just a pork issue – is that regulations in the food supply chain in general are inconsistent.
“It's very hard for producers to comply with a myriad of different regulations that the states are imposing. I think that's where the greater risk lies,” he said.
If an operation is close to being Prop 12 compliant, Sexton said producers might be able to make some extra money by coming fully compliant.
“If you're not close to the requirements now, it's best to just stay where you are and not chase that little share of the market,” he said.
