Preliminary data indicates that prices for California pork products impacted by Proposition 12 rose on average 20% since the July 1, 2023 partial implementation. Pork loins have seen the largest impact with a 41% surge in pricing. However, as expected, products not covered by Prop 12, did not see any significant price change, according to economists with the USDA’s Office of the Chief Economist.

“California’s pork loin prices remain significantly higher than the rest of the United States, exhibiting very stable spreads throughout January 2024. However, the price gaps for ribs and bacon appear to have slightly widened since full implementation, potentially indicating growing pressure from limited supply,” authors Hannah Hawkins, Shawn Arita and Seth Meyer noted.

The OCE economists also found only 2% to 4% pork being reported as Prop 12 compliant.

“Since approximately 53% to 60% of the volume of pork for all hogs slaughtered is covered under Prop-12 (including mature sows that tend to produce a low percentage of fresh cuts), we may expect that California Prop 12-compliant pork would be equivalent to approximately 5% to 6% of U.S. pork production,” the authors stated. “The high reported as Prop 12 compliant in the LMR (Livestock Mandatory Reporting) data, reached only 4%, before falling back down to 2%. Thus, the share still falls significantly short of California's typical demand for Prop 12-covered pork meat.”

The authors note several factors may be contributing to the current deficit, including a limited supply of compliant pork, data limitations and sampling impacting Agricultural Marketing Service’s LMR and Circana Weekly Retail data, and the possibility of non-compliant products in the market.

On average, Prop 12 compliance resulted in a 22% wholesale price premium, which the authors say aligns with the 20% retail price premium observed using Circana data.

However, California’s share of national fresh pork consumption has also dropped, from 10% to 8%, as of January 2024.

“Looking ahead, uncertainty remains regarding the long-term impact of California’s pork market. Initial market disruptions and potential supply limitations for compliant pork warrant further monitoring and analysis,” the authors concluded.

The National Pork Producers Council expected Prop 12 would increase pork prices for California consumers, when the initiative was first placed on the ballot in 2018. NPPC continues to work with members of Congress on a solution to the problems created by the law.  

“If pork producers want to continue selling products into the large California market, they must comply with Prop. 12. But for most producers, that means retrofitting existing barns or building new ones, a financial cost many cannot afford given the losses producers had – $30 per market hog on average – in 2023. Also, if Prop. 12 is allowed to stand, other states may approve similar laws, creating a patchwork of regulations across the country,” NPPC noted in their latest Capital Udate.