Flickr / Donna Benjamin
Supply dropped when farmers couldn't produce in accordance with California's animal-welfare laws. Six states sued. Prices rose. Now, more states are taking the egg-regious dilemma to the high court.

Farm News

Back in June, I reported on the long, strange trip California’s ethical farming laws had taken from the state’s 2008 approval of Proposition 2 (otherwise known as the Farm Animal Cruelty Act)—a measure that prohibited confining egg-laying hens, breeding pigs, and veal calves in any way that didn’t allow them to stand up, turn around freely, lie down, and fully extend their limbs—to the Ninth Circuit Court of Appeals.

Proposition 2 marked the first time voters had specifically been asked to eliminate the practice of confining chickens in battery cages (small wire cages used by factory farms that typically give egg-laying hens between 67 and 76 square inches of space). And nearly 65 percent of them voted in favor of the measure.

Farmers had until January of 2015 to comply.

California produced around 3 billion eggs in 2016, a drop from 5 billion in 2012.

But—and this is the cribbed version of what happened next, which, believe me, you and I both want—California egg farmers complained that investing in compliance with Prop. 2 would put producers in other states at a competitive advantage. In response, the state legislature passed the “egg sales law,” which required that all eggs sold in the state be Prop. 2-compliant (including those imported from other states).

Playing (or producing) field leveled? Not so much. In 2014, six states, including Missouri and Iowa (the country’s largest egg producer) banded together to file a federal suit, claiming the law would adversely affect consumer prices. The district judge wasn’t buying that. “It is patently clear plaintiffs are bringing this action on behalf of a subset of each state’s egg farmers,” Judge Kimberly J. Mueller of the United States District Court wrote in the decision to dismiss the case, “not on behalf of each state’s population generally.”

But according to a recent analysis by two agricultural economists, consumer wallets did take a hit. More on that in a moment.

“Another unintended consequence is that California now has to import more eggs from other states”

California produced around 3 billion eggs in 2016, according to USDA data—a drop from 5 billion in 2012. And lower egg production, said Maurice Pitesky of the UC Davis Cooperative Extension in a 2016 interview with UC Food Observer, was one of the unintended consequences of Prop 2. The measure, he said, “has had a huge effect on commercial poultry production…. A lot of small farms couldn’t pay for the new infrastructure, or they were unable to survive economically with their current infrastructure and half the number of birds. Another unintended consequence is that California now has to import more eggs from other states.”

And when the supply of California-produced eggs went down, well, you know the drill: prices went up.

Last week, 12 states banded together to ask the U.S. Supreme Court to block the “egg sales law.”

Now, bear with me as we get into Ag-Ec 101 for a moment. Promise it’ll pay off (though perhaps not if you’re buying eggs).

Jayson Lusk, head of Purdue University’s department of agricultural economics, and Conner Mullally, assistant professor in the Food and Resource Economics Department at the University of Florida, looked at 16 years of egg production data for a paper published in June in the American Journal of Agricultural Economics. Their finding? Prop. 2 did cost consumers. “Out-of-state eggs were able to compensate for falling California production until around the time of implementation of the new rules, at which point imports of eggs into California fell…” they wrote. And “we find that the average price paid per dozen eggs was about 22% higher from December 2014 through September 2016 than it would have been in the absence of the hen housing restrictions.”

Lusk and Mullally estimate that “California consumers can expect to experience annual welfare losses of at least $25 million in future years from higher retail egg prices alone.”

Back to the courts we go.

Better make that back to the court we go—and this time with a bigger posse: Last week, 12 states banded together to ask the U.S. Supreme Court to block the “egg sales law,” alleging that it cost consumers upwards of $350 million in higher egg prices and is unconstitutional because it violates the interstate commerce clause—meaning that it’s preempted by federal law.

Missouri Attorney General Josh Hawley called the regulations discriminatory against farmers

This suit cites a study from a University of Missouri economist, which, the L.A. Times reported in a December 4 article, had found that “the national price of a dozen eggs has increased between 1.8% and 5.1% since January 2015 because of the California cage requirements.”

Missouri Attorney General Josh Hawley (who is seeking the Republican nomination in Missouri’s 2018 senate election), called the regulations discriminatory against farmers, announcing in a December 4 press release that they are “a clear attempt by big-government proponents to impose job-killing regulations on Missouri.”

In addition to Missouri—which was part of the 2014 complaint—Alabama, Arkansas, Indiana, Iowa, Louisiana, Nebraska, Nevada, North Dakota, Oklahoma, Texas, Utah, and Wisconsin have joined the challenge.

Kate Cox

Kate Cox is The New Food Economy's editor. In her former life, she was a freelance health policy reporter for radio and text. Follow her @thekatecox