North America’s hog industry is grappling with multiple issues these days, but is presently feeling better than some of the other livestock industries. That doesn’t mean that everything’s great, but not yet having to deal with avian flu infections is keeping hog farmers in a cautiously optimistic mood about their challenges.

Top of the challenges this year, as it was last year, is the impact of Proposition 12, the California law that tightly restricts how much room each gestating sow is required to have in a barn, an amount that only a minority of the North American sow herd can satisfy. According to the National Pork Producer Council’s Brian Humphreys, California pork consumption has fallen 20 per cent while prices have risen 20 per cent.

“This is hitting people back in the state of California,” said Humphreys.

It isn’t just a California situation. Numerous states are considering their own laws to control the gestation spaces for pigs that end up on their states’ grocery store shelves.

Humphreys said farmers aren’t sure what to do. Some states have no set requirements. California has its specific rules. Other states might producer a hodgepodge of rules and regulations.

“How do you separate (pigs) within a barn?” posed Humphreys.

Producers are anxious about the outbreak of H5N1 in poultry and dairy herds, worried that they could see the same species jump that has afflicted dairy herds.

Farm Bill expectations are also top of mind for American producers, but since I get very confused by all the complexities of the Farm Bill, I’m not going to say anything at all about it until I figure it out.

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Proposition 12, which requires pig confinements to be large enough for animals to turn around, was passed by ballot initiative in 2018 and was upheld by the U.S. Supreme Court in 2023.

The U.S. pork industry has said the law burdens pork producers and would not improve animal welfare. It has called on Congress to repeal Prop 12 through federal action.

The Canadian hog sector has expressed concerns that–as Canadian swine housing standards may not meet the letter of Proposition 12–it and similar laws will have negative effects on Canadian producers. Canadian producers export millions of pigs to the U.S. each year.

The Biden administration had supported the industry’s position before the Supreme Court.

“If we don’t take this issue seriously, we’re going to have chaos in the marketplace,” Vilsack said.

“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.

Prop 12 was fully implemented as of Jan. 1, 2024.

Economic effects muted

Earlier this year, agriculture economist Dan Sumner from the University of California Davis agreed with Vilsack’s assessment that state-specific regulations could complicate the sector.

“It becomes a real mess and then it starts to really have national implications or North American implications,” Sumner told a Jan. 10 agricultural outlook webinar organized by the North American Agricultural Journalists.

However, he suggested Proposition 12 would have minimal economic impact on the North American hog sector.

“California consumers like me are going to pay, I don’t know, five or 10 per cent more for pork that’s covered by the policy, which means a pork chop, but not a cooked ham or lunch meat or sausages,” Sumner said.

“This covers about eight per cent of the sows in North America. The baby pigs that come from those sows that comply are going to cost more. And then I, as a California consumer, will pay.”

“The other 92 per cent of the sows [or] the farms that raise those sows really won’t notice much,” he added.

–with files from the Glacier FarmMedia network.

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Earlier this week, MacAulay travelled to Washington to meet with his American counterpart, U.S. Secretary of Agriculture Tom Vilsack, MacAulay’s office said in a Jan. 18 news release. He also met with other officials and agri-food industry members.

“During the meeting, Minister MacAulay raised proposed changes in voluntary “Product of USA” labelling regulations for meat and livestock and California’s Proposition 12,” the release said. “The Minister reaffirmed Canada’s concerns that these rules have the potential to restrict trade and disrupt supply chains.”

VCOOL and California’s Proposition 12, often called ‘Prop 12’, have been sources of concern in Canada.

Prop 12, which took full effect at the start of the year, imposes animal welfare regulations on certain meat and animal products sold in the state of California, including imported products.

The hog industry in particular is concerned that, given its integration with the U.S. industry, this will have a chilling effect on pork and live hog exports. The Canadian Pork Council has likened Prop 12 and other similar state regulations to non-tariff trade barriers and has insisted the Canadian government speak out about them. The actual effects of the rule are still unknown.

The sector has also asked the government to take a stand against proposed VCOOL regulations.

In early 2023, the Biden administration proposed rules that would require any meat, poultry or eggs labelled as a U.S. product to be derived from animals raised and slaughtered in the country, not just processed there, as current rules allow. Canadian meat producers fear this will hamper exports to the U.S.

MacAulay met with representatives from the National Cattlemen’s Beef Association and the Canadian Cattle Association to “discuss reducing trade barriers and the important integrated nature of our beef supply chains,” the release said.

MacAulay’s office said he and Vilsack also discussed  the importance of sustainable agriculture.

“Canada and the U.S. are working together to accelerate global agricultural innovation on climate change through increased research and development,” the release said. “This includes efforts to identify innovative tools to support decision making, monitoring and measurement of enhanced sustainability and resiliency in agricultural landscapes.”

—Geralyn Wichers is associate digital editor of AgCanada. She writes from southeast Manitoba.

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“No one will be spared the change in market pressures,” wrote Pam Lewison, director for the Washington Policy Center Initiative on Agriculture in a November policy brief.

“What those market pressures do to the overall higher cost of pork, however, won’t be known until the next marketing cycle after implementation,” she added.

Proposition 12, or “Prop 12,” was a California ballot initiative, passed in 2018. It said that meat and eggs could not be sold in California unless they came from animals raised in compliance with the state’s welfare regulations.

This includes foods imported into the state.

While egg and veal producers quickly fell in line, the policy brief said, pork producers—of which 99 per cent live outside California—challenged the law. This included taking the battle to the U.S. Supreme Court, which ultimately upheld Prop 12.

Pork distributors have until the New Year to submit third-party certification of compliance.

According to the brief, the hog industry estimates that the cost of retrofitting penning to comply with Prop 12 will be about USD $3,500 per sow. Proposition 12 specifies that each breeding sow much have at least 24 square feet of space, and have enough space to turn around, extend limbs, etc.

“For an average hog farm of 1,000 pigs, that represents a cost of $3.5 million,” Lewison wrote.

This with a projected average net cash hog farm income of $330,000 in 2023—down 28 per cent from 2022.

Pork producers have struggled this year with high costs in the midst of lowering demand and hog prices.

“Given the downturn in net income, the stark choice facing many small- to medium-sized farm owners may be to sell to larger farms,” Lewison said. “Consolidation in the meat production industry has long been a source of concern for producers, consumers, and even lawmakers.”

“Certainly, pork will become more expensive as both supply constricts and the actual cost of compliance is revealed,” she added.

Canadian concerns

The Canadian hog sector has been eyeing Prop 12 with concern. Canadian producers exported nearly 6.7 million hogs to the U.S. in 2022, including millions of weanlings.

The fear is that if Canada’s national swine housing standards don’t meet California’s regulations, American producers and processors may not want to purchase Canadian animals. However, there has been little clarity as to what the actual effects of Prop 12 will be for Canadians producers.

Also of concern is other states that have similar animal welfare laws in the works.

“We don’t negotiate separate trade agreements with 50 states. We need to be able to have a North American market that’s integrated, allows for the free flow of product and isn’t different in every different state,” said Manitoba Pork Council general manager Cam Dahl in a June interview with the Manitoba Co-operator.

The Canadian Pork Council has said its sees Prop 12 and similar laws as akin to non-tariff trade barriers and has pressed the Canadian government to take up the issue with the U.S.

In late September, the Canadian government told the Manitoba Co-operator it was analyzing the situation and, “considering the U.S.’ obligations under the World Trade Organization (WTO) and Canada-U.S.-Mexico Agreement (CUSMA).”

—Geralyn Wichers is associate digital editor of AGCanada.com. She writes from southeastern Manitoba.

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