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Pork Industry Struggles to Adapt to Rapidly Changing Regulations

These were supposed to be boom times for Pederson’s Natural Farms.

In the days following the Supreme Court’s decision to uphold a California law banning certain pork products made from pigs raised in small gestation pens, Pederson’s headquarters in Texas experienced a surge in demand. California grocery stores and restaurants were scrambling to secure supplies of bacon and pork chops that met the new state standards by the July 1 deadline. Pederson’s products were a perfect match, and the company was eager to help fulfill the high demand.

However, a few weeks later, some of the new orders were canceled as California regulators postponed full enforcement of the law, known as Proposition 12, to early next year. This sudden change created uncertainty and disruption in the pork industry as pig farmers, pork processors, and California businesses grappled with the evolving legal and regulatory landscape.

The pork industry is now facing challenges such as depressed hog prices, high feed costs, and the need to comply with stricter standards. Farmers in Iowa, for example, have been experiencing losses of $30 to $50 per hog this year, while the price of bacon has dropped from $7.60 to $6.20 per pound nationwide.

Meeting the new standards for California is proving to be costly for pig farmers. Dwight Mogler, a fourth-generation farmer in Iowa, invested $8.7 million to build and modify facilities to comply with the new regulations. He estimates that it will take him 10 years to recoup this investment. On the other hand, some farmers have decided not to modify their pig-raising practices due to the high costs and uncertain returns.

Meanwhile, retailers in California are grappling with questions about the availability and cost of bacon and pork chops. Some retailers have already raised prices to cover the expenses associated with meeting the state’s more stringent standards. As a result, there may be supply shortages and further price increases in the future.

The legal battles surrounding Proposition 12 have added to the confusion. The law, which was passed five years ago, requires that veal calves, breeding pigs, and egg-laying hens sold in California be housed in systems that allow freedom of movement. The implementation of the pork standards was initially delayed due to a lawsuit filed by industry groups. However, in May, the Supreme Court ruled in favor of Proposition 12’s legality. Now, the pork industry is fighting against pending legislation that aims to limit states’ ability to regulate agricultural practices in other states.

The uncertainty and ongoing legal battles have put businesses like Pederson’s Natural Farms at risk. As one of its pig suppliers received a better offer from a larger company, Pederson’s supply of pigs became uncertain, impacting their sales and potential growth.

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