The potential disruption of Prop 12

It’s time for the pork industry to lead the discussion and shape its own economically viable animal welfare and sustainability targets nationwide. That’s one of the conclusions of a new RaboResearch report, “U.S. Pork Supply Chain Locked in Limbo as Producers Await Legal Ruling.” According to the report, California’s Proposition 12 raises many issues that could continue to challenge the supply chain if end-users institute more, un-uniform standards.

The report outlines how the U.S. pork supply chain faces significant disruption in 2022, when California’s animal welfare regulations go into effect.

·        California produces less than 2% of its internal pork needs, so the burden to comply with Proposition 12 regulations will fall on producers outside the state.

·        Less than 4% of U.S. sow housing currently meets the new standards.

·        RaboResearch estimates that compliant pork supplies could fall 50% short of California’s needs on January 1, 2022.

·        California will experience a severe pork deficit and high prices. Meanwhile the rest of the country would have a surplus, which would be a downward force on hog prices.

The report discusses the reluctance by hog producers to make the costly investments needed to comply with the new regulation while the legality of Proposition 12 has continued to be challenged in courts.

“With a shrinking number of legal options available and the deadline for compliance now less than a year away, however, the industry is faced with a daunting challenge,” writes Christine McCracken, senior animal protein analyst with Rabobank.

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