Tuesday Talks With Dr. Patterson

October 14, 2014

CHICKEN AND EGGS
So what did come first, the chicken or the egg? In California, the chicken comes first, even before low income households.

On October 2, U.S. District Court Judge Kimberly Mueller dismissed a lawsuit filed by Missouri Attorney General Chris Koster challenging California law AB 1437. Mr. Koster was joined in this lawsuit by the Attorneys General in Alabama, Iowa, Kentucky, Nebraska, and Oklahoma. AB 1437 requires all states selling eggs in California to follow the production practices now required in California. The California production practice was established through a 2008 voter referendum (Proposition 2) and requires that laying hens kept in cages must have sufficient room to “lie down, stand up, fully extend their limbs and turnaround.” This will require larger cages for producers in California and other supplier states, thereby raising production costs. Judge Mueller ruled that since the Attorneys General were filing the suit on behalf of egg producers in their respective states and not all citizens of their states, they did not have legal standing in the case. This was the third legal challenge to AB 1437 and part of a long running discussion on laying hens and animal welfare. (Enoch)

About 95 percent of all eggs produced in the United States come from producers using cages (battery cages) for their laying hens. These cages typically provide about 64 square inches of floor space for each hen and typically six to ten hens are in a cage. The Humane Society of the United States (HSUS) has characterized laying hens as the “most abused animals in agribusiness.” The other five percent of production is from cage-free or free-range systems. The California law was eventually defined to require cages with 116 square inches of floor space for white hens and 134 square inches for brown hens by January 1, 2015. California Proposition 2 was initiated and supported by HSUS and was one of 24 state animal welfare propositions that went to the ballot between 2005 and 2010. (Greene and Cowan)

Ballot propositions are often a poor way of developing public policy, as the voters may not fully understand the issue and its full implications or they will cast their vote based on emotion or self-interest. Often, a deliberative legislative body can arrive at better policy decisions. For instance, there may be times when a tax increase is necessary for the good of a community. Left to a voter referendum, tax increases rarely pass. Similarly, with little thought on the implications of Proposition 2, voters would likely want to see laying hens have more room. Agricultural economists Will Allender and Tim Richards examined the implications of Proposition 2, assuming that production would move fully to cage-free systems. Under this assumption and a price increase of about 20 percent, due to higher production costs, consumer demand for eggs drops; notably, lower income households will stop buying eggs at this higher price. This is unfortunate, as eggs are an important source of low cost protein for low income households. The increase in price will also result in lower egg production in California, which will also have some implications for the economy. So, there are implications that voters probably did not foresee.

Allender and Richards suggest using labeling of production practices as an alternative to mandating one production practice and imposing that standard on all consumers. For instance, eggs could be labeled by their production practice – cage-free, free-range, enriched cages (larger battery cages), or conventional cages. Then, consumers could select the product that best fits their values and their wallets. In short, they can vote with their dollars. This labeling scheme is part of a proposal by a seemingly unlikely partnership between the United Egg Producers (UEP) and HSUS. UEP is a large producer cooperative accounting for 90 to 95 percent of egg production in the United States. The HSUS and UEP proposal also specifies a transition period over 15 years to establish enriched cage systems (124 square inches for white hens and 144 for brown hens) as a national standard. This proposal has been introduced as federal legislation as Senate bill 820 and House bill 1731 during the current 113th Congress. Neither bill is expected to see a vote during the remaining days of the 113th Congress. UEP entered into the partnership because its leadership felt that enriched cage systems were more tenable among its cooperative members than cage-free systems, as previously advocated by HSUS, and because HSUS agreed to end its state proposition initiative. Furthermore, some argue that public sentiment is shifting to require enriched cage systems. In 2009, Michigan passed a law that will restrict the use of conventional cages beginning in 2019. In 2010, Ohio agreed to place a moratorium on the construction of conventional cage houses. The European Union required all member countries to move to enriched cage systems in 2012. (Greene and Cowan)

Other farm organizations, notably animal agriculture groups, have opposed the proposed federal legislation on egg laying production systems. They argue that it sets a precedent for federal legislation on production practices. They also argue that the laying hen production standard is not based on science. To date, there is little research on laying hen welfare. This is not to say that animal agriculture organizations are opposed to efforts to improve animal agriculture. Indeed, some organizations have well established voluntary programs that address animal welfare, such as the Pork Quality Assurance and Beef Quality Assurance Programs. (Greene and Cowan)

The full implications of production standards related to animal welfare must be fully understood before they are imposed. Furthermore, all consumers would be better served through an effective labeling system and market determined production practices, rather than imposing a single production standard on all producers (and consumers). The labeling could be verified either by a government body, an industry group, or a third-party auditing organization. Ultimately, producers and consumers are generally better off when well-informed consumers have choices.

References

Allender, William J. and Timothy J. Richards. “Consumer Impact of Animal Welfare Regulation in the California Poultry Industry.” Journal of Agricultural and Resource Economics, 35(2010):424-442.

Enoch, Daniel. “Judge Tosses Lawsuit Challenging California Egg Law.” Agri-Pulse, October 3, 2014. (Accessed: October 12, 2014): http://www.agri-pulse.com/Judge-tosses-lawsuit-challenging-California-egg-law-10-03-2014.asp

Greene, Joel and Tadlock Cowan. Table Egg Production and Hen Welfare: Agreement and Legislative Proposals, CRS 7-5700, Congressional Research Service, February 14, 2014.

 

Dr. Paul Patterson is associate dean for instruction for the College of Agriculture and Professor of Agricultural Economics.