California Law Has US Pork Industry Bracing for Excess Supplies

The US Supreme Court’s backing late last week for California’s Proposition 12 animal welfare rule looks set to restrict pork and pork product supplies in the state beginning in 2024, while potentially bloating supplies and depressing prices in the rest of the country.

The California law, which mandates increased space requirements for sows giving birth, is set to take effect July 1, unless the state changes the timeline. That effectively will require pork sold in California be compliant with the new regulation as of January 1, 2024, given the time it takes for the piglets to grow to market weight. 

California accounts for about 15% of the country’s pork consumption, while less than 5% of the US pork supply is currently compliant with the state’s new regulation. The 10% difference, representing excess pork supplies that would be barred from California, could need to be added to market supplies outside of the state, further squeezing the industry’s already tight profit margins.

The US hog industry already has scaled back operations — and further cuts to herd sizes are planned — in anticipation of the new California restrictions and in response to soft consumer demand. Pork processors for the most part have indicated they aren’t willing to pay to retool their barns to comply with the California law without evidence that consumers will accept paying higher meat costs. 

View this Gro display showing US hog inventories and locations, as well as farrowing and slaughter rates. 

Smithfield Foods, the largest US player, phased out its only California pork processing plant over the past two years, citing the high costs of operating in the state. Last week, Smithfield announced it was closing more than 30 sow operations around the country, again citing competitive costs. 

Other hog producers also are cutting back. The USDA’s latest Quarterly Hogs and Pigs report, released in March, showed the US breeding herd is at the lowest level since 2017. Farrowing intentions for the remainder of 2023 — or producers’ plans to raise new piglets — showed a 3% decline, which would drop farrowing rates to the lowest level since 2015.

Even those cutbacks may not be enough to offset excess supplies currently sold in California, and further industry reductions could be forthcoming. Not all pork products will be affected by the California law — hot dogs and sausage, for example, are exempt. But bacon shortages are widely expected in the state beginning in 2024. 

Adding to the uncertain industry outlook — many questions remain outstanding about the new California law, which first passed in 2018 and has long been delayed. For one thing, it’s unclear if California will bar noncompliant product from entering the state or impose a fine. How the state will enforce the law also hasn’t been made clear, leading to speculation that clandestine sales of noncompliant meat could proliferate.