Egg Prices Could Rise As Much As 40 Percent When New State Regulations Take Effect In January
SAN FRANCISCO (KCBS)— New state regulations that take effect in January that require poultry farmers to provide more space in hen houses is expected to drive up egg prices and could eventually lower the amount of eggs farmers put up for sale both locally and elsewhere.
Daniel Sumner, director of the Agricultural Issues Center at UC Davis, said they are two closely-related sets of regulations. One is related to the rules on production of eggs in California.
"These are shell eggs, the type that are sold in the shell. That goes back to Proposition 2, something we all voted on seven years ago. Producers are supposed to meet standards that say there's more space for the hens. Nobody knows exactly how much space. It's still fairly vague and that's part of the problem," he said.
Sumner explained that a few years later, the state legislature said they'd apply that same rule to all eggs consumed in shell in California, meaning out of state shippers into California would have to meet this state's standards. The out of state shippers protested and there were lawsuits.
Some people have initially interpreted the law that goes into effect in January as applying to cage free eggs, but Sumner said that's not exactly the case and producers are now scrambling to meet the new standards.
"It's about a $1 billion investment to supply the egg market in California with new housing facilities. There are two or three more ways to meet it, which are all more expensive at the farm level. When things settle, there's no question that egg prices in California will be higher," Sumner said.
Sumner predicts egg prices will rise anywhere from 10 to 40 percent.
"Since nobody quite knows what the standards are supposed to be, they're meeting these standards with various kinds of stop-gap sort of measures. It's just not clear there will be enough eggs to satisfy California consumers and when that happens, the price will rise and we've seen the price jump already at the wholesale level getting ready for two weeks from now," he said.
As far as the vagueness of the laws and how they don't spell out how much space is necessary for the hens, Sumner says we voted on a proposition. "That's not a set of committees going through a bunch of process to get to something well stated."
Usually a goal is stated in the law, which is then turned over to regulators, according to Sumner. "These laws never said that, so it was left fairly vague and interpreted in different ways.
Other states see it as a trade barrier as to whether or not California has the right under the U.S. Constitution to tell other out of state egg producers how they should be operating.