California will have a ‘very active black market for pork’

As of early July, all pork products sold in California must meet Proposition 12 requirements unless efforts to delay them, which are already underway, are successful. If not successful, Steve Meyer, principal economist at Partners for Production Agriculture, told attendees at the Global Pork Industry Virtual Conference (GHIVC) that two pork carcasses will likely emerge in the state: one that is compliant and one that is compliant. other than not

“It all depends on how effective they are in enforcing the law,” he said. “There is going to be a very active black market in California for pork. It has a big rim, and you can probably get it at small retailers.”

Since low-income residents will be hit the hardest by the law, “they have every incentive not to report someone who violates this because they can buy products at better prices,” Meyer added.

Currently, sellers can self-certify, but that will change on January 1, 2024, when certification will be required and audits will take place.

Less than half of the sows currently comply

As for the current state of the industry, Meyer believes that only half of the bristles needed to meet California’s requirements are currently in production, but a law in Massachusetts, which has similar requirements, will also go into effect in mid- June.

“You have to have another 90,000 sows to feed Massachusetts. If that is the case, then we have a little less than half the number of compliant sows to go to California,” he said.

When Prop. 12 goes into effect on July 2, the amount of product that can be legally sold in California will be reduced by 50%, maybe a little more, Meyer said. The challenge for the US pork industry is that the rest of the product has to find a home elsewhere. “The immediate market impact of this is that we don’t have enough things going.”

Meyer said that 5-8% of US production will have to find another market, as California accounts for about 10% of US production. “That has some implication on prices.”

However, the US will not be the only country affected, as Canada will also be subject to the same law. Meyer said the country probably doesn’t have as many Proposition 12-compliant sows as the US, in percentage terms.

California citizens to pay the price

While there are still many unknowns, Meyer said California citizens should pay more for pork. “They did this. We have to make sure they pay the price.”

To producers, Meyer warned: “Don’t make a bad deal by supplying hogs for this stream. If it’s not a good deal, walk away from it.”

This, he said, means he will be paid for the additional costs in the buildings, as well as the productivity losses, since breeding cages will not be allowed and further death losses are expected.

Let the packer worry about how to cover the increased costs, Meyer suggested. “Ideally, they’ll cover it on every pound of pork that goes to California.”

The full National Hog Farmer GHIVC Market Outlook session can be viewed here.