Pork prices appear volatile following implementation of Prop 12
California’s Proposition 12 (Prop 12) could have a negative impact on future pork prices.
On May 11, the U.S. Supreme Court ruled in favor of Prop 12, banning the sale of pork in California from farms anywhere in the U.S. where breeding pigs or their immediate offspring are confined.
The law further states female pigs kept for the purpose of breeding, who are at least six months old or pregnant, must have at least 24 square feet of usable floor space per pregnant pig, according to the U.S. Supreme Court website.
Prop 12
Prop 12 bans the in-state production and sale from any source of meat not produced to the law’s specifications, which defines not only the type of animal production systems allowed, but also the technical details required for compliant systems.
The California law is not new – it was enacted on Jan. 1, 2022. However, it will be enforced by Dec. 31, as the California Department of Food and Agriculture (CDFA) agreed this week, to postpone the change from July 1 to Dec. 31, to allow for a smoother transition for the entire pork industry.
Those who propose Prop 12 claim the law was pushed by animal rights groups, not because they wanted compliant pork sold in California, but because they don’t want any pork sold in California.
CDFA acknowledges some products procured before July 1 will still be in circulation and there will be a transition period throughout the rest of the year.
Darcy Fitzgerald, executive director of Alberta Pork, stated, “There’s a lot of uncertainty and confusion as the law comes into effect on July 1, and it is unclear what this means in terms of what pork will be allowed into California and what will be banned.”
This raises the concern pork will become limited in California while supplies intended for California will pile up across the U.S. in need of a buyer.
Hours after the Supreme Court’s decision, U.S. Sen. Chuck Grassley (R-IA) proclaimed the decision was “an attack on our breakfast” and declared the judgment was a “major blow to the pork and ag sector.”
Pork outlook
On June 7, at the World Pork Expo in Des Moines, Iowa, Partners for Production Agriculture Economist Steve Meyer, PhD, conveyed a bleak message, “Don’t expect 2023 to be a profitable year, and 2024 is likely to be difficult as well.”
“Production costs have entered a new era, and they aren’t likely to go back,” said Meyer.
He noted he believes the upcoming U.S. Department of Agriculture Hogs and Pigs Report, published at the end of June, will reflect reduced supplies.
Meyer added, “Half of the current pork products going to California can’t go there, so it’s going to have to go somewhere else.”
“Prices will soar in California, while the surplus in the rest of the U.S. will hammer values, creating prices to fall in order to clear the market,” he continued, further stating it is a fundamental market principle.
Meyer estimated pork cut-out values – the price of the meat leaving the packing plant – will fall in the U.S. $10 to $15 per hundredweight. This is an alarming position for hog farmers, who already took a loss on the hog market.
“While prices don’t look terrible compared to recent years, cost of feed, grain and labor have soared in the past two years, causing an enormous squeeze on farmer profitability,” Meyer reiterated.
On a positive note, for producers, there is potential for growth in Central and South America.
“Exports are up eight percent already for 2023, this is encouraging for the industry, but it won’t be enough to get producers to strong profitability levels,” Meyer concluded.
Industry pushback
According to Scott Hays, National Pork Producers Council (NPPC) president and Missouri pork producer, “We are very disappointed with the U.S. Supreme Court’s ruling, allowing state overreach. It will increase prices for consumers and drive small farms out of business, leading to more consolidation.”
However, he further noted NPPC will continue to fight for U.S. pork farmers against these misguided regulations.
Other advocates, including Pro Farmer Policy Analyst Jim Wiesemeyer, stated, “The ruling could force pork producers to implement costly changes to keep selling in the country’s most populous state.”
Some out-of-state producers who choose to comply with Prop 12 may incur new costs, and the cost to comply with the new ruling could cost the pork industry $290 million to $350 million, according to Wiesemeyer.
The U.S. Supreme Court’s decision to uphold Prop 12, regulating space given to breeding pigs and their offspring, could create hardships for both pork producers and consumers and possibly have a negative impact on animal health.
Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
