The hen welfare agreement between the United Egg Producers and the Humane Society of the United States is supported by the majority of U.S. egg producers, but not all of them. In late July, owners of four egg companies testified before the Senate agriculture committee to express their opinions on S. 3239, the Senate version of the legislation based on the hen welfare agreement. Of the four egg producers testifying, three were in favor of passage of S. 3239 and one was against.
The case against S. 3239
Amon Baer, owner, Mendelson Egg Company, testified on the behalf of the Egg Farmers of America in opposition to S. 3239. Egg Farmers of America is a group of small- and medium-sized egg farms in the Midwest claiming “over a dozen” members, including some cage-free operations. Baer is a member of the United Egg Producers board of directors, and he and his wife operate their 300,000 layer farm. Baer also has other family members who are egg farmers. He presented a list of five reasons why Egg Farmers of America believes that S. 3239 should not be passed (see Table 1).
Baer stated that the 180 largest U.S. egg farms produce approximately 95 percent of the country’s eggs, and that there are approximately another 1,800 egg farms that produce the remaining 5 percent of non-hatching eggs. He argued that the bill and its requirement to convert to enriched cages favors the 180 largest farms to the detriment of the small producers. His argument is based on a presumption that small producers would have more difficulty obtaining financing for the required conversion of houses and enclosures than would large producers.
Enriched cages will increase costs
Baer stated that converting U.S. egg production from conventional to enriched cages could increase egg prices to consumers by up to 55 percent. Baer based this increase in the cost of eggs for consumers on the EU experience of the first few months of 2012 when the egg supply was reduced, as many egg producers scrambled to convert their operations out of conventional cages. This increase in egg prices does not reflect the long-term operating costs of egg producers in the new hen housing systems; it reflects short-term supply and demand in a chaotic scenario mandated by the EU legislation.
S. 3239 lays out an orderly, gradual transition of the U.S. egg industry from conventional cages at 67 square inches per bird to enriched cages at 124 square inches per bird. In the EU, there was no requirement for producers to convert or to give birds more space prior to January 1, 2012, and this led many producers to wait until or even after the deadline to convert. This resulted in a short-term shortage of eggs and a dramatic rise in egg prices. If S. 3239 is enacted, then this type of scenario should be avoided.
Also, EU egg producers did not all convert from conventional cages to enriched enclosures. Some EU countries have enacted legislation that prohibits use of the “EU standard 116 square inch per hen” enriched cage, and many retailer groups have announced that they will only buy cage-free eggs. In response to these laws and retailer demands, many EU egg producers have not switched from conventional to enriched cages but rather to cage-free or larger enriched colony enclosures. Based on survey data collected by the International Egg Commission, production costs are higher in both the larger enriched colony enclosures and cage-free systems than they are in enriched cages like those mandated in S. 3239. This means that the long-term increase in the cost of producing a dozen eggs in the EU will increase more based on changes in housing than would be the case in the U.S. if S. 3239 is enacted. The United Egg Producers has estimated that the cost of producing eggs in enriched cages will be only 1 cent per egg higher than the cost of production in conventional cages.
Is S. 3239 necessary?
Baer stated that S. 3239 is unnecessary because he believes that the free market can sort out what type of egg production systems consumers are willing to pay for and that the vast majority of consumers are unwilling to pay more for eggs from hens not housed in conventional cages.
Unfortunately, as a result of voter referendums in several states, the free market has already been bypassed, and housing systems for hens in these states will not be determined by consumer preferences. When it comes to eggs, Adam Smith’s “invisible hand” has already been effectively amputated in states like California, Michigan, Ohio and others.
Baer said, “I am sympathetic to the unfortunate situation faced by egg farmers in California as a consequence of Proposition 2 passed in 2008. But, the problems of one state or even a handful of states does not justify a federal mandate on all 50 states.” Baer is also opposed to the California legislation that will require that all eggs sold in California, not just those produced in California, meet Proposition 2 requirements.
Greg Herbruck, Herbruck’s Poultry Ranch, in Michigan, countered Baer’s argument on the necessity of federal legislation to override the patchwork of state requirements for housing hens. “The future for our industry, on the current path, is a patchwork of state animal welfare laws that are inconsistent, contradictory and ultimately unworkable. In many, if not most cases, the law will not just affect the producers in a particular state; they are written to apply to all eggs sold in that state, no matter how they are produced. This means that a farmer in Iowa will have to comply with California state standards because some 30 percent of all eggs sold in California presently come from Iowa,” Herbruck said.
“Virtually all states are either in surplus, meaning they produce more eggs that their population consumes, like Michigan, or in deficit, consuming more than farms in their state are capable of producing, like New York or South Dakota. Our farms can’t maintain a separate hen house standard for every state where we want to sell eggs. Yet that is pretty much what would be required if the current patchwork of state laws keeps expanding.”
Eric Benson, JS West, California, discussed the impact of the so-called King amendment to the house version of the Farm Bill, which prohibits states from enacting laws that set standards for the means of production of agricultural goods that are sold within its own borders but are produced in other states. This amendment would prohibit states like California from banning eggs that are not produced in housing systems that meet Proposition 2. Benson said, “If JS West has to produce to a certain safety or welfare standard and everyone else in the country can sell at a lower standard in our market, this will constitute an economic death sentence for us and similarly situated producers in Michigan, Oregon, Washington, Ohio, Arizona and other states where there are such standards.”
“What does make sense is a national production standard that is fair to everybody—one that treats everyone the same and that reflects our country’s ideas of fairness and humanity. That is what is required here. That is what S. 3239 provides,” Benson said.
Setting a precedent
Baer thinks that S. 3239 sets a precedent for federal legislation regarding welfare for other forms of livestock. David Lathem, United Egg Producers chairman and owner of Lathem Farms in Georgia, said, “The slippery-slope argument says that if you approve this bill for egg, you will inevitably follow up with similar laws for pork and beef. Eggs have always been regulated differently from other animal products. The U.S. Food and Drug Administration has on-farm food safety inspection authority for our farms, but not for beef, pork or turkey operations. The U.S. Department of Agriculture has civil penalty authority for eggs, but not for other livestock species. By contrast, USDA’s Packers & Stockyards Act applies to beef, pork and broilers but not to eggs. The reality is that Congress and federal agencies have always made distinctions among commodities.”