In January, the price of eggs exploded in California. USDA’s Economic Research Service (ERS) says in October, the price of eggs in Southern California was 12 cents above the price in New York City; by early January, the spread had widened to $1. ERS said the likely reason was California’s chicken cage size regulations, which took effect at the start of this year. Adopted by voters in 2008, it was amended in 2010 by the state legislature so the requirement would cover all eggs sold in California, including those brought in from other states.
Although California is the fifth biggest egg producing state with 5.5 billion as of 2012, it is an egg-deficit state and needs to bring eggs in from other states. Some agricultural interests in other states resented California imposing the cage size requirements on their own producers. In late 2013, the House amended its Farm Bill to prohibit states from imposing production standards on farm products from other states, but during the conference with the Senate the amendment was removed. That was followed by a lawsuit led by Missouri Attorney General Chris Koster and his counterparts in five other states, but it was dismissed last October by a federal judge who ruled the states did not have legal standing to challenge the requirement.
There is not a specified cage size in the law; it states hens must have enough space to turn around freely, lie down, stand up and fully extend their limbs. “Our concern is that other states will start requiring the same cage restrictions,” said Bruce Tencleve, assistant director of commodity activities and regulatory affairs for Arkansas Farm Bureau. He told Ozarks Farm & Neighbor the animal welfare organizations pushing for the cage restrictions “have been investigating to see what the pulse in other states” but not, to his knowledge, in Arkansas, which is a relatively small egg producing state with 3 billion a year.
Arkansas then-Attorney General Dustin McDaniel declined to join the lawsuit, explaining that Arkansas was already in compliance with the California law. Tencleve said the lone Arkansas company that ships to California “meets those standards or requirements already, so they really weren’t affected.” He doesn’t expect a mass movement nationally toward California’s standards and said, “There are so many people right now who when they go to the grocery store are looking at what they can get at the lowest cost; when you do a survey, people say, ‘I want everything done right,” but the bottom line is people buy what’s cheapest if it’s the same product.”
“There are producers in Missouri that will act quickly to meet the requirements and they will see some benefit,” predicted Blake Hurst, president of Missouri Farm Bureau. As of 2012, Missouri produced about 2.0 billion eggs a year. “Several Missouri producers have attempted to meet the new requirements, so I presume that they are selling into California,” he told OFN. “I know California actually has inspectors that will tour your facility. That hits me wrong, that in order to sell into one of the other 50 states, we have to be inspected by that state.”
Hurst, who farms in the northwest corner of the state in Atchison County, said similar restrictions could be imposed by other states; he said, “We haul part of our grain to Iowa, and part of our grain to Missouri; I won’t be very happy if we have to have an inspector come out and check every truckload before we can go across the line, 5 miles from my house.” He said a bill was introduced in the Missouri legislature that would have required all sellers of wine in the state to comply with the federal Social Security number matching system E-Verify, and offer assurance their employees were qualified to work in the United States. “That’s obviously aimed directly at California; I think it was introduced to make a point, but the point is a very good one.”
Hurst predicted the evolution of a two-priced market – eggs that can get into California, and those that can’t. “Missouri producers who do not meet those requirements are going to see a surplus of eggs,” he said. “As will the rest of the country, at the same time California has a shortage as evidenced by the increase in the prices there. That’s what will happen until the market stabilizes.” He also believes the litigation will continue, as will the attempts in Washington to reverse California’s rule. “Individual producers may see this as a market niche that can benefit them, but as somebody that’s trying to represent all agricultural producers – not only egg producers, but other commodity producers as well – we see it as a real danger,” Hurst said.
