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On my recent visit to the Midwest Poultry Federation Convention, the supply of eggs for California in 2015 was a hot topic of conversation. There seems to be two schools of thought on what will happen in California after the January 1, 2015, implementation of Proposition 2. One group projects that California authorities will not be able to enforce state laws requiring that shell eggs brought into the state must meet Proposition 2 standards and this will result in a California marketplace with an ample supply of shell eggs and with California producers operating at a competitive disadvantage.
Another group thinks that California retailers and foodservice outlets will want to purchase Proposition 2-compliant eggs, but that there will be a shortage of Proposition 2-compliant eggs. In this scenario, if retailers and foodservice outlets hold the line and don’t buy eggs that aren’t Proposition 2-compliant, then egg prices in California would rise and California egg producers would be able to recover their additional production costs. The estimates that I have seen are that the shortage of Proposition 2-compliant hens to serve the California market could range between 3 million and 5 million head early in 2015, or between 12 and 20 percent of the current number of hens needed to serve the shell egg needs of California.
If someone pays, someone sues
When U.S. egg producers voluntarily gave hens more room in conventional cages as part of the United Egg Producers (UEP) Certified animal welfare program, egg prices rose temporarily until houses were built to offset the production lost when egg producers put fewer birds in existing cages. Class action lawsuits were filed on the behalf of wholesale egg purchasers against egg producers because of the increase in the wholesale egg price. The theory was that UEP members had decided to adopt the scientific advisory committee’s recommended housing density standard of 67 square inches per bird not to improve bird welfare, but rather to restrict production of eggs and raise prices. Some egg producers have decided to settle, rather than fight these lawsuits. Most notably, Cal-Maine agreed to pay $25 million as part of a settlement agreement.
The Humane Society of the United States (HSUS) was the driving force behind the campaign to secure passage of Proposition 2 and was involved in crafting the proposition’s vague language. If there is a shortage of eggs in California next year and prices go up, this round of lawsuits shouldn’t target egg producers. This time, the class action crusaders should go after the group who is ultimately responsible for the isolation of the California egg market from the rest of the country, the reduction in the number of hens and the instigator of what could be a substantial jump in egg prices, HSUS.
I’m not a lawyer, but my understanding is that you should always go after the party with the deepest pockets, and a quick look at the financial statements of HSUS shows that it can afford to pay - a lot. I don’t want egg prices to go sky high in California next year, but if they do, it sure would be nice if HSUS, the group that is the real culprit, got the blame and not egg producers. Whether the blame is adjudicated in the courtroom or just in the court of popular opinion, I'd like to see HSUS get what it deserves.