January 1, 2015, the date that California’s Proposition 2 takes effect, is still over two years away, but the impact of this ballot initiative will be felt by egg producers long before this date. Gene Gregory, president of United Egg Producers, told the audience at the United Egg Producers Area 5 meeting, “If you have sold eggs in California in the past, if you have a customer in California now or if you hope to ship eggs to California sometime in the future, this thing is coming at you rather quickly.”
Interpreting Proposition 2
Proposition 2 requires that hens be able to turn around freely, lie down, stand up and fully spread their wings without touching the side of an enclosure or another hen. But, Proposition 2 does not specify a type of enclosure nor the space required per bird.
After the referendum passed, the California legislature enacted A.B. 1437. After January 1, 2015, A.B. 1437 prohibits the sale of shell eggs for human consumption if they are the product of an egg-laying hen that was confined on a farm or place that is not in compliance with Proposition 2 animal care standards. Violations of these provisions would be a crime.
In July of 2012, the California Department of Food and Agriculture announced proposed regulations to enhance egg safety beyond the Food and Drug Administration’s Egg Safety Rule and to identify housing standards and space per bird that they believe comply with Proposition 2. These proposed standards were still in the comment period at press time.
The food safety aspects of these standards take effect for hens producing shell eggs for sale in California after January 1, 2013.
Surprise Farm Bill Amendment
In a late night session, Iowa Congressman Steve King successfully attached an amendment to the House version of the Farm Bill that says a state cannot impose standards or conditions of production, manufacturing or sale of any agricultural product in interstate commerce. This amendment would negate California’s ban on sales of eggs in California that are produced in other states that are not compliant with Proposition 2.
Gregory said that in his opinion it is questionable whether King’s amendment will survive when the House completes its version of the Farm Bill or in conference committee with the Senate. He was also critical of the impact the King amendment would have on the egg industry.
Gregory said, “King’s amendment does nothing to address the laws in the states of California, Michigan, Ohio, Oregon and Washington where producers within those states will be required to comply with laws that will likely make them uncompetitive with producers in other states.” Producers in these states currently have 67 million laying hens.
“King’s amendment would allow eggs to be produced in states with possibly lower animal welfare and food safety standards and sold into states with higher standards. His amendment speaks only to the sale of eggs, not the production. King’s amendment does nothing to address national standards or to end a patchwork of unworkable state laws,” said Gregory.
“Without passage of the Egg Products Inspection Act Amendments (H.R. 3798 and S. 3239) for national standards, then all egg producers selling eggs into California will need to comply with the proposed regulations by January 1, 2015. If the proposed California Department of Food and Agriculture regulations are not enacted, then we are left without clarity on Proposition 2 standards, which could be identified as cage-free.”
California egg producers in peril
Richard Jenkins is one of the owners of Pleasant Valley Egg Farm, a California producer with around 800,000 hens. Jenkins said that Pleasant Valley has about 150,000 hens in cage-free systems to service niche markets with the remainder of the farm's hens housed in conventional cages.
Uncertainty over whether or not any cage systems are acceptable under Proposition 2 and at what cage densities, not knowing the fate of H.R. 3798, and the possibility the King amendment survives have California egg producers frightened and paralyzed. Jenkins said, “If the King amendment stands, then Proposition 2 could kill us [in California] as far as being an egg-producing state. That is why everyone here is sitting and waiting. There are too many things that can put us out of business.”
California egg producers’ biggest fear is that they are forced to comply with standards to produce eggs that push up their costs, while at the same time competing with eggs trucked in from out of state that are produced under less costly standards. Currently, around 40 percent of the eggs consumed in California are produced in other states.
William Cramer, a California egg producer who is not a member of the Association of California Egg Farmers, filed a federal lawsuit challenging the validity of Proposition 2. In early August, the Association of California Egg Farmers filed a motion to intervene in this lawsuit. The association states that its challenge to Proposition 2 is focused on the claim that it is unconstitutionally vague and does not inform egg farmers how to confine their hens so as to avoid the criminal penalties that are part of the law. The association said in a press release that the lack of clarity regarding hen enclosure standards has become dire because it will require an investment of $400 million from the state's egg farmers and three years to construct new facilities in California.
"Passage of the King Amendment will devastate California's fresh egg industry by removing all quality and safety standards and enable out-of-state egg producers to avoid having to comply with Proposition 2," said Arnie Riebli, president of the Association of California Egg Farmers. He added, "Consumers need to realize that the availability of safe, fresh California eggs they have come to expect may no longer exist. Given the risk of criminal prosecution for violating Proposition 2 and the risks created by the King Amendment, we have no choice but file this motion to enable our industry to survive."
"We simply cannot wait until Association of California Egg Farmers members are criminally prosecuted to find out what Proposition 2 means and we cannot live with the King Amendment which would effectively put California egg farmers out of business," said Debbie Murdock, executive director of the Association of California Egg Farmers.
U.S. District Court Judge John F. Walter on September 12 upheld the constitutionality of Proposition 2 and dismissed the Cramer lawsuit with prejudice. He said that the language of Proposition 2 is not vague and that the plaintiff failed to demonstrate burdens on commerce.
Forced to wait
The clock is ticking for egg producers, retailers and foodservice outlets. Pending the outcome of the Cramer lawsuit, they will need to have Proposition 2 compliant eggs on retail shelves and in restaurants on January 1, 2015.
Jenkins said, “Our biggest problem is not knowing what to do. We would have already started building [new houses] if we knew the standards. How do you go to a bank right now and say I want to borrow $4 million to put in a new system? Then they ask you, is it legal? If you are going to put up all of your own money, you can do it.
“It is frustrating that people will put so many laws on the books without any clarity.”