The U.S. Department of Agriculture has published the first consumer price analyses resulting from California’s notorious Proposition 12, which bans the sale of pork born to sows raised anywhere in housing that fails to meet the state’s arbitrary and non-science-based standards.
We always knew it would be expensive for farmers to make the costly on-farm compliance modifications that expert veterinarians agreed were neither necessary nor desirable. Few anticipated how much the mandates would hurt consumers, too.
Now, we know exactly how much pain is being inflicted upon consumers’ wallets.
According to USDA researchers, Prop. 12 has resulted in an average price premium of 22% for compliant vs. non-compliant wholesale pork cuts, with premiums for loins and bellies around 30%. Since September, the average premium packers have paid for Prop. 12-compliant market hogs is $5.50 per hundredweight, or about $12 per head, assuming a carcass weight of 210 pounds.
At retail, groundbreaking market data collected by the Chicago-based research firm Circana shows prices for Prop.12-compliant products are now 20% higher in California than before the law went into effect.
What’s more, USDA economists report that for bacon, ribs, and loins (the three most purchased products on a volume basis), the price increases attributed to Prop. 12 were 16%, 17%, and 41%, respectively. And, not surprisingly, California’s share of national fresh pork consumption, which does not include bacon, has significantly declined, falling from its typical 10% to 8% as of January 2024.
Some of these price increases resulted from shortages of compliant pork, as observed by researchers at the University of California, Davis, who report that the “supply of pork meat to California consumers was relatively scarce from July 1, 2023, through early 2024 and has expanded only gradually.” Researchers also acknowledge that the delayed enforcement of Prop. 12 allowed large reserves of non-compliant pork products to be sold in California until the end of 2023, potentially reducing the impact at the state’s retail counters, at least for a limited time.
Using exclusive data from the Agricultural Marketing Service (AMS), USDA economists determined that Prop. 12-compliant pork sales currently account for 2% to 4% of all pork products sold. These findings support claims that Prop. 12 has led to much higher prices for California consumers and that current supplies of compliant pork are not sufficient to meet California demand.
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No one doubted that California’s transition to Prop. 12 would lead to higher prices, but price spikes as high as 41% were in nobody’s playbook. Certainly, some of the increase can be blamed on short-term disruptions, but to the extent that higher prices are driven by increased costs across the supply chain, they are likely here to stay. While uncertainty remains around the long-term impact on retail prices, producers may be forced out of the pig business if they cannot offset the significant costs of not only Prop. 12 but also any future, potentially conflicting regulations imposed by other states.
Congress now has the opportunity — and obligation — to fix this.
The Prop. 12 narrative is being presented as a strictly partisan issue, but this is false. The Biden administration joined industry groups to oppose Prop. 12 at the U.S. Supreme Court. That’s because it opens a Pandora’s box of state regulatory overreach that will have impacts far beyond regulating farms in our states and communities.
This is a states’ rights issue. It goes to the very heart of our federal system. The Supreme Court has made it clear that only Congress has the power to stop one large state from imposing regulations on other states.
Secretary Tom Vilsack continues to warn of the dangers of Prop. 12 in the marketplace and the lack of choice producers face when complying with California’s whims. Before the House Agriculture Committee in February, he testified, “If we don’t take this issue seriously, we’re going to have chaos in the marketplace.”
Congressional Democrats and Republicans must come together to include a solution in the farm bill to prevent this chaos and price increases from spreading across the country and industry.
Lori Stevermer is President of the National Pork Producers Council (NPPC) and is also a pork producer in Easton, Minnesota.