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There’s a lot of uncertainty in 2024 for pork producers as California’s Proposition 12 takes effect on Jan. 1, 2024.
“I don’t know that there is a lot to be done with regard to Prop 12. The fact that it takes effect on January 1 leaves so many people asking questions and very little to do to prepare for it,” says Bernt Nelson, Economist with American Farm Bureau Federation.
He says Prop 12 becomes California state law during a time of already great uncertainty in the pork market.
“We’ve got some bearish fundamentals going on in the pork market,” according to Nelson. “We just had USDA’s Quarterly Hogs and Pigs Report released. We found out that we’ve still got quite a few hogs in the inventory. The breeding inventory was up three percent from this time last year, so what this means is we have more hogs in the market than we have demand.”
Nelson adds that California’s Prop 12 is about to throw another wrench into the market.
“California possesses about 13 percent of the demand for U.S. pork, and when Prop 12 goes into effect, we lose that 13 percent of demand from the conventional marketplace,” he says. “Now that we’re facing a decreased inventory in the beef market, that leaves us asking when will consumer demand start to pick up for pork products, or will they, as pork is a very close substitute to our beef prices.”
He also says there’s still a lot of uncertainty about how the market will adjust in early 2024.
“When this takes place, the only pork that will be allowed for sale in that California market will have to be compliant with Prop 12, so that automatically removes many of our conventional producers from that marketplace. And so, until we see some increased demand domestically and continued demand in our export markets, we’re going to be at the mercy of whatever comes into play here,” he says.
California’s Prop 12 was upheld by the U.S. Supreme Court in May 2023 in National Pork Producers Council v. Ross.
“While the Constitution addresses many weighty issues, the type of pork chops California merchants may sell is not on that list,” said Justice Neil Gorsuch writing for the majority in the U.S. Supreme Court’s decision, which leads many to believe that the court felt that this was a legislative concern, not a judicial concern.
Since the court’s decision, those within the pork industry have been pushing lawmakers in Washington to include language in the next Farm Bill that would override California’s Prop 12 and no longer allow states to pass laws that impact interstate commerce.
Source: NAFB News Service.