An academic research study of egg production and pricing data in California found that consumers initially paid 33% more for eggs after stricter animal welfare laws went into effect in 2015. The price hike has moderated closer to about 9% more since then.
Between January 2015 and July 2016, the number of egg-laying hens and eggs produced in California dropped by about 35%, according to the study by Jayson Lusk, head of Purdue University’s Department of Agricultural Economics, and Conner Mullally, an assistant professor in the Food and Resource Economics Department at the University of Florida. Soon after the law went into effect, California retailers started importing less-expensive eggs from other states to supplement local eggs.
“Egg prices compared to other places increased pretty dramatically,” Lusk said in a statement from Purdue University. “Over time, that price impact diminished a little bit, but it hasn’t gone away completely. Californians initially paid quite a bit more for eggs, and now they’re paying more, but not as much as right when the law went into effect.” The researchers added that lower prices at the end of the study may have come from a boost in supply following the avian flu epidemic.
The animal welfare law known as Proposition 2 requires that egg-laying hens, veal calves and pregnant pigs have sufficient room to lie down, stand up, fully extend their limbs and turn around freely in their enclosures. In 2010, the California State Assembly extended its provisions by mandating that all eggs sold in California, regardless of origin, had to meet the same requirements.
Agribusiness groups opposed the regulations. A coalition called Californians for SAFE Food called Proposition 2 a "risky, dangerous and costly measure banning almost all modern egg production in California."
Lawsuits filed against Proposition 2 asserting that it is unconstitutional have so far been unsuccessful, although one filed by six states against California in 2014 is being appealed.
California egg producers anticipated Proposition 2's impact and began implementing provisions of the new rules years before they had to by taking out one or more hens from battery cages that often house multiple birds. Even before 2015, there were fewer hens, so production in the state started to drop and prices began to rise, according to the study.
According to data cited in the study from the U.S. Department of Agriculture’s National Agricultural Statistics Service, California produced more than 5 billion eggs every year from 2008 to 2013. By 2014, that number had dropped to about 4.6 billion. In 2015 and 2016, California hens produced fewer than 3.5 billion eggs, the researchers noted.
It's not clear exactly where the tipping point may be for California consumers as far as egg prices go. The public may be willing to pony up 22% to 33% more for a dozen eggs if they know there's a shortage and the price hike comes from the cost of providing better conditions for laying hens. However, they may balk and cut back on egg purchases if they suspect supplies are being manipulated just to keep prices high.
When the 2015 avian influenza outbreak caused nationwide egg prices to soar because of a sudden shortage, many companies looked to less expensive alternatives. Many have stayed with the alternatives, even though egg supplies are up — causing nationwide prices to hit their lowest point in a decade.
Still more restrictive animal welfare laws may be in California's future. The Humane Society of the United States is working toward bringing a 2018 ballot initiative in California to require that all pork and veal sold in the state be produced without using crates restricting movement and that all eggs produced and sold in the state be cage-free. If the initiative becomes law, it would make California the only state besides Massachusetts to have stringent regulations regarding farm animal welfare.
California egg, pork and veal producers may want to keep in mind that the existing California animal welfare law, passed in 2008 with more than 63% of the vote, was at the time the most votes ever received on a U.S. ballot measure. However, these initiatives are forcing consumers to vote with their wallets every time they go to the grocery store. It will be interesting to see if many find that more regulations — especially in a state already known for many requirements on food products — are still worth the cost.