We’re always keeping up with current events that have the potential to affect the food production and services industries. Whether it’s market demand or new regulations put into place, consequences that might be intended or unintended are important to take note of so that we can adapt accordingly – minimizing or avoiding any fallout that could occur as a result. This week we’re discussing a California law known as Proposition 2 that recently went into effect requiring grocers to carry eggs produced from henhouses that provide more living space to chickens. It’s something that’s presenting a sizeable challenge to the poultry industry and the stores who carry their products. So without further ado, let’s go into detail and answer any questions you may have on the subject:
How must California grocers comply?
Cartons of eggs at stores in the Golden state must now be marked “California Shell Egg Food Safety Compliant” – distinguishing that they meet new regulatory standards passed by California voters back in 2008. Despite the law’s passage nearly six years ago, the law didn’t go into effect until January 1st of this year. Specifically the law requires that henhouses feature enough space where chickens are able to move around with a sizeable amount of space that allows them to spread their wings.
What’s the law’s intention?
It’s intended to look out for animal welfare but transitioning to it is proving costly on both sides – requiring both poultry producers and the grocers who buy from them to spend more in the meantime. As it stands currently, standard henhouses feature cages limited in size where multiple hens are packed into small living quarters. But some contend that providing hens with expanded space could simply result in more injuries for the chickens.
Are any companies okay with the change?
Yes, but they’re mostly big names. Some companies in the services industry, including Whole Foods, Starbucks and Burger King, have voluntarily agreed to comply with the law, not just in California but outside the state as well.
How is the poultry industry adapting and where are the increased costs coming from?
Poultry producers nationally have had two options when complying with Proposition 2: Either construct new cages or reduce the amount of chickens they keep in each – requiring new manufacturing costs or forcing them to cut down on poultry production due to having less chickens. Meanwhile, poultry producers have raised pricing on those eggs to help cover the transition – hurting grocers in the process and the American shoppers who buy them (grocers are raising egg prices as well).
“You’re talking about millions upon millions of dollars,” commented Centrum Valley Farms CEO Jim Dean, according to a report from the Washington Post. “It’s not anything that’s cheap or that can be modified easily, not in the Midwest.”
What are the long-term consequences?
While it’s expected that the industry will eventually meet the new demands and stabilize financially after some time, it’s quite possible that egg prices in California will remain high for the foreseeable future. Ultimately those who could hurt most from the law are consumers. Egg prices at stores in California have experienced no less than a 35% increase, Ronald Fong of the California Grocers Association recently stated, according to NPR.