Without swift Congressional intervention, US agriculture faces the risk of conflicting state laws nationwide, posing significant challenges, particularly for small and medium-sized farms, argue the US National Pork Producers Council (NPPC) and the American Farm Bureau Federation (AFBF).
In a letter to the US House Agriculture Committee, which was signed by over 900 other domestic farm groups, they highlight the damaging implications of Proposition 12, a California ballot measure that was passed in 2018 and which mandates that pork, veal, and eggs be sourced only from animals housed according to the state's specified standards.
Market chaos
During his recent testimony before the House Agriculture Committee, US agriculture secretary, Tom Vilsack, warned of the impending market disruption if this issue is not addressed promptly. He stressed the need for clarity and certainty, asserting that farmers require stable regulations.
"If we don’t take this issue seriously, we’re going to have chaos in the marketplace.
"When each state has the ability to define for itself and its consumers exactly what farming techniques or practices are appropriate, it does create the possibility of 50 different sets of rules and regulations," he said.
In May last year, the US Supreme Court upheld a lower court’s dismissal of a lawsuit aimed at invalidating the California law that was brought by NPPC and the AFBF.
Cost implications
Studies by economists at North Carolina State University and Iowa State University reveal the substantial cost disparity between constructing Prop 12-compliant barns and traditional facilities, notes the farm organizations’ letter.
Compliance could cost 40% more than traditional barns and 25% more than conventional group housing, not to mention the additional 15% in operating expenses due to decreased productivity, stress the NPPC and the AFBF.
The trade groups warn that if states can enforce their own regulations on out-of-state producers, compliance costs and regulatory uncertainties may drive many small farms out of business or into production contracts, leading to industry amalgamation and fewer, larger farms dominating the market.
Proposition 12 may be more financially attainable for large, cost-advantaged farms who benefit from higher profit margins, more favorable lending terms, and economies of scale, they add.
“Some mistakenly believe producers have a choice and can choose not to sell into the California market. However, when one state accounts for almost 15% of the national market, this is a clear misunderstanding of market segmentation and how agricultural markets operate,” reads their letter.
