Prop 12 ruling: What's next for pig farmers?

In 2014, northwest Iowa hog producer Dwight Mogler and his family built a new hog facility to house his family's 900 sows.

They used then state-of-the-art technology and animal welfare practices, including group housing for gestating sows in response to growing consumer demand and individual maternal pens for breeding and farrowing to protect the animals from other sow aggression, a problem when sows are not pregnant and are vying for attention and territory.

That type of facility is not compliant with California's Proposition 12, which bans the sale of uncooked pork in the state from offspring of sows kept in pens with less than 24 square feet of space per sow. According to Rabobank, the current industry standard is 14 to 20 square feet. The required pen size is to allow for the animal to turn around, lie down, stand up, and extend their limbs.

Mogler estimates it will cost between $10 to $20 per pig produced to add facility space, retrofit pens and feeding systems, and increase labor to "play playground monitor" to break up fights and protect animals. That doesn't factor in anticipated lower conception rates and decreased productivity from lameness and disease.

National Pork Producers Council (NPPC) estimates the cost at $3,500 per sow. A University of Minnesota study puts the cost of facility conversion at $1.9 to $3.2 billion industry wide.

California accounts for 15% of U.S. pork consumption, according to the NPPC.

None of Mogler's buyers will guarantee a premium on hogs he supplies, because the meat may not be sold in California. However, some have granted a grace period, not requiring compliance until their 2-3-year contract is due for renegotiation.

Mogler, who sits on the NPPC Board of Directors, fears this may be the straw that breaks the camel's back for many producers who have operated under stressful economic forces, including the high cost of feed, since last fall.

"These are the most challenging economic times the industry has seen for 20 years," says NPPC CEO Bryan Humphreys.

Prop 12

Proposition 12, or Prop 12 as it is known, was passed by 62% of California voters in 2018. The measure was promoted by animal rights activist groups.

NPPC and American Farm Bureau Federation filed suit to stop it, citing the Commerce Clause, which is a U.S. Constitution provision that courts have interpreted as empowering the federal government and not states to regulate interstate commerce.

But on May 11, the U.S. Supreme Court ruled 5-4 to uphold Prop 12. Justice Neil Gorsuch, penning the decision, said California voters overwhelmingly endorsed the "ethical pork" law in 2018 and have the right to decide what products appear on store shelves.

What now?

Some producers, like fifth generation Missouri pork producer and NCCP President Scott Hays, may choose not to comply.

"As of now, we will not be making changes to our operation," says Hays. "With the help from our veterinarian partners, we are experts in raising pigs, and we have decided that is not the way we want to do it. We like to give our animals individual care."

For others, the California standards are seen as a market opportunity, like some smaller producers who have never used individual maternal pens.

Large retailers and restaurant chains are demanding change in response to growing demand for humanely raised meat, and major pork producers like Hormel and Tyson are preparing to comply with at least parts of the law. Hormel says many of its products are already Prop 12 compliant.

"But the concern goes beyond pork," says Hays.

"Having the safest, most abundant, and most affordable food supply in the world is foundational to the American way of life," says Iowa Secretary of Agriculture Mike Naig. Iowa is the nation's leading pork-producing state, followed by Minnesota and North Carolina. "The Supreme Court's decision undermines that firm foundation. While the ruling is focused on agricultural production, it will certainly creep into other industries and sets the stage for a state-by-state patchwork of ever-changing and costly requirements that will increase the cost of production and drive higher costs for food and other consumer products."

Mogler, too, worries about the long-term implications as the goal post continues to move.

Prop 12 also applies to veal and eggs as those industries face changing consumer preferences. Center Fresh Egg Farm, located near Mogler's farm, recently constructed a 1.5-million bird facility to accommodate cage free egg production at a cost of around $50 per bird housed. Craig Rowles, General Manager of Cage Free Operations, says he hopes it is not outdated in 10 years.

The real cost

Ultimately, the increased cost of production is likely to fall on consumers.

"Pork is the most competitive source of safe and affordable meat," says Mogler. "Those who can least afford it, who live on the edge every day to feed their families, will feel this most." Along with animal welfare and sustainable farming practices, he considers producing an affordable food product to be a moral obligation.

According to the California Pork Producers Association, retail egg prices in California increased nearly 18% in the first year after the 2015 mandate for additional space for laying hens.

"We are disappointed in the court's ruling," says Humphreys. "We had hoped for a different outcome. But we didn't necessarily hope for a different outcome just for our producers and our farmers who are going to be impacted by this ruling. We had hoped for a different outcome for consumers and the burden this is going to place on them."

What comes next?

NPPC is continuing to assess the situation and plan future strategy.

"It's a highly charged legal and political environment and part of a longer-term fight to continue to defend the right to farm and raise food," says NPPC Chief Legal Strategist Michael Formica.

It's a fight that includes debate about the role of judges vs. the legislature.

Iowa Senator Chuck Grassley, for one, is looking at the upcoming farm bill to address state laws like Prop 12.

"California's burdensome regulations will have an overwhelmingly negative impact on Iowa pork producers," says Grassley. "The Supreme Court's decision to uphold Proposition 12 was disappointing, and I think it ought to be corrected by Congress. I plan to support legislative measures to prevent states from instituting laws that discriminate against agriculture production. I hope we can put together a bipartisan bill and get it included in the farm bill this year."

In the meantime, NPPC is working with California officials on the implementation timeline. "There is currently an injunction in place on enforcement of Proposition 12 until July 1. But what exactly does that mean?" says Formica. "What has to happen on July 1? Is that when product on the shelves needs to turn over? Or is that when sows need to be moved into Proposition 12 compliant housing? Is that when piglets need to be born by? There's a number of questions. We're in active discussions and communication with California trying to work through this, trying to get clarity, so we have minimal disruptions to the marketplace."

The measure also requires a certificate of compliance, involving distributors, packers, and producers. The state of California has approved five private firms to conduct third party audits and issue certifications. Some of those details are still unclear.

The one certainty in the Prop 12 picture is that U.S. pork producers are resilient.

"We have been dealt blows before," says Humphreys. "We will learn to navigate this and work our way through it as best as possible. We encourage any producers who haven't moved toward Prop 12 to study the issue and see what fits for their operation. Figure out what's best for your farm and your animals. And never underestimate the desire of the American pork producer to succeed."