Capital Update – For the Week Ending January 12, 2024

California Prop. 12 now in full effect as NPPC continues to look for solutions | NPPC comments on FDA antibiotics proposal | U.S. pork exports could top 2021’s record amount

Prop. 12 Now in Full Effect; NPPC Continues to Look for Solutions

What happened: California Proposition 12 (Prop. 12) has come into full effect as of Jan. 1, mandating that all covered pork shipped to California must abide by the state’s arbitrary production standards. Pork producers across the country continue to voice their concerns over how California’s overregulation could negatively impact family farms and are looking to Congress for a solution.

Three Illinois pork producers, including former NPPC board member Phil Borgic, have weighed in on Prop. 12, with a letter to the editor that ran in The Pantagraph of Bloomington, IL. In the letter, the producers highlighted: “If we want to continue farming, Proposition 12 will undoubtedly raise the cost of producing pork for us and other hog farmers, which jeopardizes an Illinois industry that contributes $3.3 billion in economic value and supports nearly 34,000 jobs.”

Prop. 12 requires pork to be from hogs born to sows that are provided both a minimum of 24 square feet per sow and are not housed in individual pens. In the United States, the industry average for sow breeding pens is 16 to 18 square feet.

NPPC board member Todd Marotz, a pork producer from Sleepy Eye, MN, in an interview with the Minneapolis Star-Tribune, estimated only 20% of his farm’s barns meet the California standard. He also pointed out some of the consequences of Prop. 12, including higher prices for pork and a larger carbon footprint for the pork industry as producers use more energy to heat larger barns in the winter and cool those barns in the summer.

Prop. 12 applies to uncooked cuts of whole pork meat, including bacon, ham, chops, ribs, riblet, loins, shanks, roast, brisket, steak, sirloin, or cutlets. California regulations exclude products that are cooked, or otherwise ready to eat, in addition to sausage and ground pork.

Why it matters: Pork producers across the country interested in selling to California’s massive 40-million-person marketplace must comply with Prop. 12. With producers facing average losses of $30 — sometimes exceeding $40 to $60 — on each hog marketed in 2023, most can’t afford the often significant costs of complying.

NPPC’s take: NPPC — which has fought against ballot initiatives such as California Prop. 12 and Massachusetts Question 3 for the past decade, including challenging these laws before the U.S. Supreme Court — is working with members of Congress on a solution to the problems created by the law and the rapidly emerging complex web of conflicting state laws.

NPPC Voices Concerns Over FDA Antibiotics Proposal

What happened: NPPC last week submitted comments critical of the U.S. Food and Drug Administration’s (FDA’s) draft guidance on the duration of use of certain antibiotics in food animals. NPPC said the proposed guidance would “deny the ability for a veterinarian to prescribe antimicrobials appropriately … burden pharmaceutical companies, and may jeopardize access to antibiotics.”

Why it matters: Antibiotics are used judiciously under veterinary supervision to maintain livestock health and ensure safe food products. Over the past three decades, the U.S. pork industry has implemented measures, including FDA directives, to responsibly use antibiotics. This includes prohibiting the use of antibiotics important to human medicine for promoting animal growth and that requires feed and water uses of those same antibiotics to be under a veterinary prescription. Pork producers actively participate in pork industry-developed programs promoting responsible antibiotic use and support federal initiatives to track antibiotic resistance in foodborne bacteria from humans, retail meats, and food animals.

NPPC’s take: In its comments, NPPC emphasized that veterinarians are responsible for deciding what antimicrobials to prescribe, when products should be used and administered, and which animals to medicate and for how long. The draft guidance interferes with the veterinarian’s decision-making process by mandating a duration of use.

NPPC also criticized the guidance’s inclusion of statements on antimicrobial resistance mitigation, which it said could affect veterinarians’ decision-making ability and lead to confusion about when a product can and cannot be used.

NPPC urged the FDA to work closely with drug manufacturers to provide a simple process to include duration of use to continue availability of products – and allow veterinarians to maintain their role in the decision-making process, supporting the judicious use of antimicrobials.

U.S. Pork Exports Could Top 2021’s Record Amount

What happened: Continuing a robust trend, U.S. pork exports are on pace to break the record amount set in 2021. November marked another strong month, with pork exports reaching their highest in nearly two-and-a-half years, topping 258,500 metric tons (mt) and $737 million. Those amounts were up 5% and 2%, respectively, from a year ago.

• For the first 11 months of 2023, pork and variety meat exports totaled more than 2.6 million mt, up 8% from a year ago, valued at nearly $7.4 billion, an increase of 5% over the same period in 2022.
• With December’s export data yet to be finalized, the U.S. pork industry is poised to equal or top 2021’s record $8.1 billion.

Top destinations for U.S. pork:

• Mexico imported a record $221.3 million of U.S. pork on volume of 100,313 mt in November and remained the No. 1 destination for U.S. pork. For the January-November period, exports were $2.1 billion, up 15% over 2022, and volume was 995,524 mt, an increase of 13% from the same period a year prior.
• South Korea also saw significant growth in U.S. pork exports for November, with volume of more than 17,400 mt, a 19% increase from a year ago, and value at almost $58 million, up 18%. January-November exports to the Asian country totaled more than 167,000 mt, up 4% from the same period in 2022, valued at $551.5 million, down 2%.
• Other regions experiencing robust exports in U.S. pork exports in November and for the January-November period include the Dominican Republic and several Central American countries, including El Salvador, Guatemala, and Honduras; the South American nations of Chile, Colombia, and Peru; and Australia and New Zealand.
• Challenges and trends: Traditionally strong markets, such as China and Japan, saw a slight decline over the first 11 months of 2023 compared with 2022. Exports to China dipped 6% in value to 4% in volume and Japan experienced a 7% decrease and 5% in volume.