AMES — An Iowa State University economist says there was a whole lot of uncertainty in the hog market well before last week’s Supreme Court opinion on pork production.
The court ruled California may require that any pork sold in California must come from pigs that are the offspring of sows that had enough room to turn around in a livestock barn. ISU Extension livestock economist Lee Schulz says some producers have already retrofitted or built new confinements. Others may not be able to afford it.
“Pork producers are having some of the largest losses in 25 years. You have to go back to 1998 to see losses this large,” Schulz says. “…We’re already seeing contraction in the industry.”
There could be an opportunity for businesses that make and install the metal enclosures for sows, but Schulz says given the labor market, finding enough employees to do the work will be challenge.
“Not only the availability of labor, but the cost of labor also is kind of a prohibitant when we think about having to make large changes on farms to both buildings and equipment,” Schulz says.
California produces just 1% of U.S. pork. However, Californians consume 15% of all the bacon and other pork products sold in the country. “The adjustments will have to take place outside the state of California. Where those exactly take place are still to be determined,” Schulz says. “Certainly there will be an impact here because of the size of Iowa’s pork production.”
Nearly a third of the nation’s hogs are raised in Iowa. Schulz says Iowa swine operations that have already adjusted to California’s new rules will get higher premiums for their pigs in the near term. “Likely they are the lower cost producers that would enable them to do that,” Schulz says. “A lot of times it’d be the larger producers. There are economies of scale in pork production, so if I have per unit lower costs, I am able to make some of those transitions a bit quicker.”
A court injunction that has prevented pig production rules for pork sold in California from taking effect will expire July 1t. The U.S. Humane Society says the Supreme Court made it clear preventing animal cruelty is a core function of state governments and California will have the strongest animal welfare law in the country.