Capital Update – For the Week Ending March 22, 2024

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In this week’s National Pork Producer’s (NPPC) Friday recap: As predicted, Prop. 12 raising prices for pork; House Ag Chairman Thompson again calls for ‘fix’ to Prop. 12; House Appropriations panel debates fiscal 2025 ag funding. Take a deeper dive below.

As Predicted, Prop. 12 Raising Prices for Pork

What happened: After being in effect a little more than six months, California’s Proposition 12, requiring pork sold in the state to be from hogs born to sows raised in housing that meets specific space standards, already has raised pork prices for California consumers and decreased pork sales volumes in the state, according to data compiled by economists with the U.S. Department of Agriculture’s Office of the Chief Economist (OCE). 

The OCE economists found prices for pork products affected by Prop. 12, including loins, ribs, and bellies, have seen an average 20% price increase in California since before July 1, 2023 – when the initiative was partially implemented – with loin prices averaging 41% higher than before Prop. 12 implementation. Pork not covered by the initiative has not seen a significant increase. The paper’s authors also pointed out that California’s share of fresh pork consumption has “significantly declined.” 

Looking at wholesale pork sales data, the economists found Prop. 12-compliant products accounted for just 2-4% of total pork sales in the United States, short of the state’s typical demand for covered products, which is expected to account for 5-6% of total production. OCE also found the price premium end-users paid for Prop. 12-compliant pork compared with non-compliant products at the wholesale level was 22% higher on average, with compliant loins and bellies 30% higher.  

NPPC’s take: NPPC has fought against California Prop. 12 since 2018, when it was put on the state’s ballot for approval, arguing among other things that it would increase consumer prices for pork. Along with the American Farm Bureau Federation, NPPC even challenged Prop. 12 in federal courts, including the U.S. Supreme Court. NPPC continues to work with members of Congress on a solution to the problems created by the law.  

Why it matters: If pork producers want to continue selling products into the large California market, they must comply with Prop. 12. But for most producers, that means retrofitting existing barns or building new ones, a financial cost many cannot afford given the losses producers had – $30 per market hog on average – in 2023. Also, if Prop. 12 is allowed to stand, other states may approve similar laws, creating a patchwork of regulations across the country. 

House Ag Chairman Thompson Again Calls for ‘Fix’ to Prop. 12

What happened: At a House Agriculture Committee Wednesday, panel Chairman GT Thompson (R-PA) reaffirmed his push to fix California’s Proposition 12 and Massachusetts Question 3, which ban in those states the sale of pork from hogs born to sows raised in housing that does not meet their arbitrary standards.

Thompson highlighted the U.S. Supreme Court’s acknowledgment last May that Congress can address the “interstate commerce chaos” caused by Prop. 12 and Question 3.

“Any state or local laws that control production outside of their jurisdiction are inherently harmful to interstate commerce,” Thompson said.

The committee chairman met with more than 30 pork producers, who asked Congress to address the issues caused by Prop. 12 and Question 3.

NPPC’s take and why it matters: In addition to the corresponding sections in the previous story, if Prop. 12 and Question 3 are allowed to stand, other states may approve similar laws, creating a patchwork of regulations across the country.

House Appropriations Panel Debates Fiscal 2025 Ag Funding

What happened: Agriculture Secretary Tom Vilsack testified on the fiscal 2025 House appropriations bill that funds the U.S. Department of Agriculture (USDA), the Food and Drug Administration, and related agencies.

Vilsack endorsed the USDA spending proposal offered last week in President Biden’s fiscal 2025 budget plan. The White House asked for $29.2 billion in discretionary spending for agriculture programs, a $2 billion increase over fiscal 2024. That included $4.7 million for swine health programs and $6.5 million for the National Veterinary Stockpile, which includes animal vaccines and equipment for responding to animal diseases. The Republican-controlled House is expected to approve slightly smaller spending levels.

Two weeks ago, the House approved legislation funding programs in six agencies, including USDA, for fiscal 2024, which runs through Sept. 30.

NPPC’s take: NPPC backs funding in the agriculture appropriations legislation for programs that support farmers, including ones that improve preparation for and prevention of foreign animal diseases (FADs).

Why it matters: The annual agriculture appropriations law funds federal programs that support farmers, including farm loans, agricultural research, as well as programs to prevent and prepare for FADs.