Will California pork producers follow state poultry/egg farmers expansion here?
-January 6,2022-
Is there a California bacon shortage? Not yet, even though Prop 12 rules requiring more space for breeding pigs are in effect in California this new year. Besides worry about supply, there are fears that bacon will be going to $9 plus per pound. My one pound of bacon, bought at a local store after Jan 1, cost me $7.95. Other area grocers have bacon on sale for $5.98/lb. So far so good.
The 2018 animal welfare voter referendum passed statewide by 63%, requires egg-laying chickens, veal calves and pigs be given more room to stand up and turn around in farmer’s barns. For pigs, the rules ban the use of gestation crates. The rules apply to any producer who wants to sell pork in California ,even companies from out of state.
Despite the popularity of the proposition statewide – Kings County voted 57% no.
Regardless of the January 1, 2022 deadline and a 4-year wait to implement the law, most pork producers both in the state and outside have yet to comply with the new standard – a minimum of twenty-four square feet per pig. Rabobank estimates that just 4 to 5% of pig producers have done the construction work on the enhanced space mandate.
Producers argue that final rules by California have not been published.
California Pork Producers representative Jill Damskey notes that “final regulations are not yet approved and U.S. pork producers have been reluctant to make changes until they know exactly what is required.”
Even as they make that argument, opponents are lobbying the Supreme Court to throw the regulation out although they have declined to do so in the past. The industry insists adoption “could potentially mean limited availability of pork products for Californians which could lead to dramatic impacts on prices paid by consumers.”Some estimates expect an increase of 50% to 60% in California.
Others disagree. “There may be a brief period of disruption [when the regulations start Jan. 1], but nothing like the apocalyptic predictions of significant long-term shortages or drastically higher prices,” Richard J. Sexton, report co-author and distinguished professor of agricultural and resource economics at UC Davis, told CNN Business.
Corcoran’s Farmer John’s hog ranch owned by Smithfield Foods maintains a “we’ll see” attitude. ”As you may know, the California Department of Food and Agriculture is more than two years late in providing final Prop 12 regulations, so there are no definitive rules with which to comply at this time.” says company spokesman Jim Monroe.
No shortage for now
CDFA’s spokesman Steve Lyle says comments on new state rules are expected to be completed by mid-January, 2022. The agency says optimistically “we have had many discussions with pork producers who are planning not only to be compliant, but to expand their operations. Additionally, we believe there is sufficient product already in the supply chain to carry through for a number of months.”
The state consumes 15% of all U.S. pork so it is an important market for all the US pork industry that is concentrated in the corn belt.
Pressure to comply with California standards comes not just from California voters but major food companies like McDonald’s and Whole Foods who are backing the standard as are European countries where the US industry wants to export.
The California pork industry is small by comparison to other state crops generating just $26 million in annual revenue compared to $1.3 billion in the poultry/egg sector, $3 billion for cattle or the top crop, at $7 billion – milk.
The idea that animal welfare rules in California would lead to skyrocketing egg prices turned out to be true for a few months a couple of years ago. Today, California eggs fetch a slight premium but adoption of the cage free standard is now nationwide and a dozen large eggs at the grocers this week in my town was $2.50.
There are plenty of egg ranches in California numbering about 6500, says CDFA. That includes ranches, some very large, in the Central Valley they continue to operate after the new rules were put in place.
Implementation of welfare rules for meat chicken has led to expansion of poultry ranches right here in Kings County with both Pitman Farms and Foster Farms expanding their ranches in the county and adding millions of birds of capacity – many free range operations.
The operators say they plan to continue to meet consumer demand. Will the state pork producers do the same?
Covid case spike hits California & Kings
A sudden increase in new cases of Covid-19 is being seen in both California and Kings County after the new year. New cases reached an average of 52,855 in California – a 552% increase in the 14-day average.In California, the number of patients hospitalized with Covid has increased 73% but deaths statewide are down 17%. In Kings County there was also a spike as of January 4 of over 500 new cases,up from an average of 58 in mid December. Kings Country has recorded 389 deaths in the past year of which 371 were unvaccinated, says the county health department. At nearby Kaweah Health there are 35 Covid cases but just 3 in the ICU as of January 3, reflecting the idea that as of yet, the Omicron variant is less lethal.
New home permits up in 2021
Permits for single family homes in Kings County climbed to 328 in 2021 according to figures from Construction Monitor. The homes were valued at $98 million. In 2020 just 208 new homes were permitted for $50 million. The pace in home construction in 2021 still lags 2019 when 441 single family homes were permitted for $196 millions but ahead of 2018 when they permitted 292 new homes.
The top home builders in the county in 2021 were number-one Lennar followed closely by San Joaquin Valley Homes, each with over 200 homes.
Mortgage rates creep up
Mortgage rates had been drifting modestly higher in general in the past 2 weeks, but the pace is accelerating in the new year ,say the Mortgage Bankers. The net effect is an average conventional 30 yr fixed rate that is now closest to 3.375. For most of the past 2 months, the range has been 3.125-3.25%.
John Deere tractor leaves out the farmer
Look Ma, no farmer! John Deere has announced a “set and forget” autonomous tractor coming to a field near you later this year. With this technology, farmers will not only be able to take their hands off the wheel of their tractor or leave the cab — they’ll be able to leave the field altogether, letting the equipment do the work without them while monitoring things remotely using their smartphone.