Investigate Midwest | With California’s Prop 12 Now Law, Pork Producers Adapt while Lobbying Groups Continue to Fight

Reposted from:

March 6, 2024

In 2021, two years before California enacted new hog confinement standards for pork to be sold within its borders, Seaboard Foods said it would “no longer sell certain whole pork products” in the state. 

Passed in 2018, California’s Farm Animal Confinement Initiative, often referred to as Proposition 12, required pork producers to give sows, or mother pigs, at least 24 square feet of space per animal. 

Nearly 5% of Seaboard’s 7 million hogs produced each year are sold in California but the company said the coming Prop 12 standards would significantly decline how much business it would do moving forward in the nation’s most populous state. But when the new standards went into effect on Jan. 1, 2024, Seaboard was listed as a Prop 12-compliant distributor with the California Department of Food and Agriculture. 

“In our connected food system, our farms raise market hogs born from sows in various housing types based on customer requirements, including … for Prop 12 group housing compliant for California,” David Eaheart, a spokesperson for Seaboard, told Investigate Midwest when asked about the company continuing to sell into California. “Because of this, we can flex between different sow housing requirements to produce pork products based on customer demand.”

Seaboard did not say how its business this year compares to years past. But it’s an example of how many of the nation’s largest pork producers, who once said the new standards would limit or end their business in California, are adapting to the new standards.

Investigate Midwest reviewed financial statements from more than a dozen of the largest pork-producing corporations and California’s new Prop 12 pork distribution lists, along with speaking to several hog farmers to better understand the impact Proposition 12 is having on their industry. 

Two months into the new Prop 12 standards, the picture that emerged is one where the nation’s largest pork producers are largely adapting to the new rules in an effort to continue sales in a state that consumes about 15% of the nation’s pork, the highest rate in the nation, according to consumption estimates from the National Pork Producers Council

The Biden administration is also concerned that Prop 12 could create a 50-state patchwork of legislation for hog producers. In 2022, the administration asked the Supreme Court to strike down California’s animal confinement legislation. At a February Senate Agriculture, Nutrition, and Forestry Committee hearing, U.S. Department of Agriculture Secretary Tom Vilsack said he supported the federal government stepping in to clarify these regulations. “Farmers don’t need the chaos,” Vilsack said. “They need clarity and certainty.”

While many of America’s largest pork producers and distributors have said they plan to comply with the new law, some have blamed the additional hurdles for recent plant closures and layoffs. More than 230 out-of-state distributors already have been licensed to sell pork in California by the state’s Department of Food and Agriculture, according to the agency’s latest registered distribution list. 

Some local hog farmers with compliant pens have found an opportunity to sell into a new competitive market, while those with non-compliant operations have balked at the new standards, claiming it would be too expensive to comply with or is against their principles. “I don’t like California telling me (that) to be able to sell in this state, I have to raise these pigs this way,” said AV Roth, who owns a 3,000-sow farm in Wisconsin. Roth, who is also vice president of the Wisconsin Pork Association, said none of his hogs will ever go to California because he’s against another state regulating his business. His sows are housed in 14-square-foot gestation crates. “If they want to tell their farmers in California how to raise pigs that’s totally fine by me, but this is the great country of the United States and I should be able to sell in all 50 states,” Roth said. 

Dan Sumner, a professor of agriculture economics at UC-Davis, said that sentiment is common among many hog farmers.  “Frankly, a bunch of know-nothing Californians who’ve never been on a hog operation think they can tell these guys what’s better for their pigs,” Sumner said. “If I was a hog farmer I’d be pissed off. It’s just insulting.”

Anti-Prop 12 groups, including the National Pork Producers Council, claim hog farmers would have to spend $3,500 per sow to become compliant. The council, along with the American Farm Bureau, has vowed to continue pursuing legal and legislative avenues to overturn Prop 12.

But animal welfare organizations have called the cost estimates overblown and said new confinement standards are the ethical thing to do. “I don’t think anyone needs to be a rocket scientist to understand that having space to lie down and stretch your legs is necessary for mental and physical well-being,” said Allison Molinaro, U.S. campaigns manager for the nonprofit organization Compassion in World Farming. “Living in a gestation crate is like having a human live in a telephone booth.”

Where’s the Pork?

California is the nation’s largest consumer of pork products but pinpointing exactly where the state’s pork supply comes from is not clear. According to the California Department of Food and Agriculture, before Prop 12, no public data tracked how much pork comes from specific states or companies. To see which states could be impacted the most by Prop 12, Investigate Midwest analyzed U.S. Department of Agriculture data to locate where most baby pigs are born. Iowa, North Carolina, Illinois, Minnesota and Missouri had the most pigs born in the country from 2013 to 2023, accounting for roughly half of the nation’s pork supply.

Local chapters of the National Pork Producers Council located in these major states declined multiple requests to comment, but economist Steve Meyer, a consultant with the National Pork Producer Council, told the Des Moines Register in 2022 that less than half the pork sent to California met Prop 12 standards, at that time. In January, Meyer told Investigate Midwest he estimates there still isn’t enough compliant pork supply in the U.S. to meet demand based on what California consumers have eaten in the past. 

While many of America’s largest pork producers and distributors have said they plan to comply with the new law, some have blamed the additional hurdles for recent plant closures and layoffs. More than 230 out-of-state distributors already have been licensed to sell pork in California by the state’s Department of Food and Agriculture, according to the agency’s latest registered distribution list. While there aren’t available data points to support this claim, Meyer said he was confident the nation is short roughly 250,000 complaint sows to meet California’s historic demand, which would lead to either a price increase or a lack in availability for cuts of pork. “I believe the covered products are in short supply, and California consumers are substituting exempt pork products and other proteins,” Meyers said. Premade pork products are exempt from Prop 12 standards, including sliced ham, salami and deli meat. 

Most of the nation’s major pork producers have taken steps to become compliant with the new California law, some starting the transition more than a decade ago. Smithfield Foods, the nation’s largest pork producer and owner of some 885,000 sows, has spent years transitioning to group housing that meets the standards of Proposition 12. The company owns more than 400 pork production farms in Colorado, Idaho, Illinois, Missouri, North Carolina, Oklahoma, South Carolina, Utah and Virginia, according to Smithfield spokesperson Ray Atkinson. According to the company’s 2021 Sustainability Report, all of the company-owned farms are compliant with large, group housing for sows. The company contracts out pork production to more than 2,000 contract farmers across the county, and information about the compliance of these farms was not made available. “We have established supply agreements for Prop 12-compliant pork and will continue to engage customers to expand the availability of compliant products,” Atkinson said in an email. 

Still, the company has openly complained about the new Prop 12 standards, and said it was one reason it recently closed meatpacking plants in California. Atkinson said Smithfield continues to sell into California but its sales numbers are confidential. “We fully support a federal legislative solution that will resolve a growing patchwork of state-by-state regulations that make it increasingly difficult to keep food affordable,” Atkinson said.  

Other major pork producers and grocery chains have said they are compliant with Prop 12 as of the beginning of 2024: 

  • Tyson Foods did not respond to repeated requests for comment. However, in a 2021 earnings call, Tyson CEO and President Donnie King said that the company is ready and able to provide compliant pork products. “It’s not something we were excited about, but we can align suppliers, and we can certainly provide the raw material to service our customers in that way,” King said. 
  • Clemens Food Group, a major pork producer based in Pennsylvania, has been Prop 12 compliant since the beginning of 2023. The company has “fully transitioned to group housing for all our sows,” said Brad Clemens, the company’s president, in a statement. 
  • JBS, the nation’s fifth largest pork producer, purchased an Iowa pork producer in 2022 to expand its Prop 12-compliant sow housing. According to a translated transcript of a November 2023 corporate earnings call filed with the U.S. Securities and Exchange Commission, the Brazil-based company said it took steps to begin transitioning into Prop 12 compliance when there was still “uncertainty” about the legislation becoming successful. The company did not respond to repeated requests for comments. 
  • The top five grocery retailers in California — Walmart, Albertsons, Grocery Outlet, Kroger and Trader Joe’s — are all complying with the state’s confinement legislation to varying degrees. Albertsons’ website notes that some of their suppliers have decided not to comply with Prop 12 standards, which could limit the pork products sold on store shelves. Walmart’s website notes that it has asked its suppliers to “implement solutions to address concerns regarding housing systems that lack sufficient space, enrichment, or socialization, such as sow gestation crates.” According to Kroger company documents, the chain aims to have all of the pork they sell come from sow group housing by 2025. Trader Joe’s spokesperson Nakia Rohde said the grocery chain has provided gestation crate-free pork since 2018, which is clearly labeled in California and Massachusetts stores. Rodhe said in an email that the company sources its pork from the Midwest, but didn’t further clarify the sourcing. Grocery Outlet did not respond to a request for comment. 

While California is the largest pork-consuming state in the U.S., a growing amount of the nation’s pork is being sent overseas, lessening the impact of Prop 12 on many large producers. Until 1995, less than 5% of American pork production was exported. Today, 27% of U.S. pork is exported, a higher rate than beef or poultry. There were some concerns that Prop 12 could have an impact on exports because much of America’s pork destined for Asia passes through California ports. But several weeks into Prop 12, export officials said they haven’t seen any problems. “The bottom line is that so far exports transiting California for shipment out of the West Coast ports seem to be flowing smoothly,” John Herath, a spokesperson for the U.S. Meat Export Federation, told Investigate Midwest.  

Pork industry says it will continue to fight Prop 12

National agriculture groups and major pork producers originally hoped a legal challenge would end Prop 12 before it ever started. But the American Farm Bureau and the National Pork Producers Council’s lawsuit was struck down by the U.S. Supreme Court, where a 5-4 ruling last year upheld the law.

Despite the loss, the groups said they continue to look for ways to overturn Prop 12. “If we are going to have a patchwork of 50 different rules, that is going to make it very difficult … to produce livestock efficiently in this country,” Jack Irvin, vice president of public policy for the Ohio Farm Bureau, said from the American Farm Bureau’s national convention in Salt Lake City in January. 

Prop 12 was a major discussion topic at the convention, Irvin said, where members passed a resolution asking the farm bureau to continue its opposition against the measure, including pushing for a federal law banning state-level confinement standards.

The Ending Agricultural Trade Suppression Act, also known as the EATS Act, is a proposal in Congress that would prevent states from enacting laws similar to Prop 12. But a Harvard Law School analysis of the EATS Act warned it could have consequences beyond just regulations on animal confinement and jeopardize more than 1,100 state laws related to invasive plant disease protection, food safety regulations, horse slaughter laws and some narcotic laws. 

Supporters of Prop 12 believe lawmakers should focus more on helping farmers retrofit their operations. U.S. Rep. Angie Craig, a Minnesota Democrat, told the Brownfield radio network in January that her office was looking into federal grants to help pork producers adhere to Prop 12 standards. In Oklahoma, Senate Bill 1325 would create a $4 million fund to provide grants to pig farmers to remove gestation crates and build new structures that meet California’s standards. 

Prices still leveling out while producers see new market

Economists are also watching the impact Prop 12 might have on consumer prices, with some estimating the new law will increase the price of pork in California by roughly 25 cents per pound, according to a study by the University of California. A California Department of Finance analysis estimated that consumers of egg and whole pork products would pay $1.1 million more for the newly regulated commodities in the first year of Prop 12. 

Data for the price increases since Prop 12 became law is sparse. In November 2023, the USDA began tracking the average premium paid to producers for hogs sold under California’s confinement legislation. The amount paid to producers for being compliant with the law is negotiated between processors and producers. The average premium given to compliant producers was $6.30 per hundred pounds in the first month of the year, in addition to the base price paid for their hogs.

For some producers, the price increase and growing interest are seen as an opportunity to expand into new markets. In Clear Lake, Iowa, Chris Petersen has operated a hog farm since the 1970s, raising thousands at a time up until the Iowa hog market crashed in the late 1990s.  

Now, he raises a few hundred hogs a year with 30 sows on his farm. None of his animals are in gestation crates or confinement, and they never have been. “I don’t believe in totally confining any type of livestock down to a small cage,” Petersen said.

Rather than going through large packing companies, he raises a premium breed of hogs known as Berkshires. He said it’s likely that some of his meat wound up in California before Prop 12 was finalized through the supply chain, but now that the ruling is in place, he sees California consumers as a new revenue stream. “Absolutely I’ll sell to them,” Petersen said. 

For some producers, the price increase and growing interest are seen as an opportunity to expand into new markets.