The high cost of social guiltThe high cost of social guilt

Prices, not pork supply, is the problem in California.

Ann Hess, Content Producer

July 23, 2024

2 Min Read
Fresh pork grocery
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Since Proposition 12 took effect, the cost of retail pork in California has significantly increased compared to average price changes in the other 49 states. A “win for the interest groups,” Brett Stuart, Global Agri-Trends notes, however California consumers are now the ones paying higher prices for their “social guilt.”

“Loins up 41% across the board, average was around 20%,” Stuart says. “So, this is costing Californians about $320 million a year now for the same pork they bought before. And unfortunately, it's a big win for these interest groups.”

What does this mean in terms of supply and demand?  U.S. net pork supplies are down 1.6% versus a year ago. California historically consumed 13% of U.S. net pork supplies. Some traders estimate the U.S. is now moving half as much pork into California as it did before Prop 12 was implemented.
Some data suggests flows are down 20 to 30%.

“So, if we just assume hypothetically that pork flows to California are down 25%, that equates to 3.3% of net pork supplies nationally. That means the other 49 states have 3.3% more pork, but we net that 3.3% against the -1.6% which is where net supplies are. The reality is, instead of having net pork supplies down 1.6%, we really have net pork supplies up 1.7% in the other 49 states,” Stuart says

“What happens when you raise the cost of pork 20% in California with 38 million consumers? You reduce demand and that demand problem in California becomes a supply problem in the other 49 states.”
Stuart notes the issue isn't if there is enough pork to supply California. It’s about the prices being so high, consumers there are simply eating less.

While Proposition 12 is having a significant impact on California retail pork prices, Stuart notes “interests groups” are a risk often associated with U.S. pork exports. Other “normal” risks include disease, politics and potential export restrictions.

“U.S. pork remains very competitive globally. EU pork faces some serious threats. I think they're going to see production declines continue over the next decade. Mexico now buying 10% of production. How resilient? I think we're okay. I think it's good demand and I think we're going to hang in there,” Stuart says. “And so from that front, I think that 9% is a good number. That 9% export growth takes 2% off of our production numbers.”

About the Author

Ann Hess

Content Producer, National Hog Farmer

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