28 • URNER BARRY'S REPORTER / VOL. 18, NO. 4 / FALL 2023
May 11
US Supreme Court
backs California's
Proposition 12
in a 5-4
decision.
June
The CDFA
announces
they will
hold multiple
seminars
throughout the month to
explain how this new law
will be handled.
Pork demand
is dismal.
Items such as
skinless pork
bellies trend at
nearly all-time
lows in addition to product at
a 52-week high in the freezer.
November
2018
2022
2023
Proposition-12 is
initially passed into
law in California.
January
Proposition-12
is implemented.
February
Law paused due to a
significant amount of
uncertainty on how to
handle the
logistics.
Proposition-12 regulates that any whole
meat pork sold in California must be
from a sow that had 24 square feet to
live and give birth in,
with the previous
housing having
averaged roughly
12 square feet.
January - June
Proposition-12 in California has created
what can be considered one of the largest
shakeups that the pork industry has ever
witnessed. From small-time traders to the
major packers of the U.S., everyone has felt
some effect of this new law whether they
transact directly with California or not since
mid-June. For non-pork parties reading this,
Proposition-12 regulates that any whole
meat pork sold in California must be from a
sow that had 24 square feet to live and give
birth in, with the previous housing standard
between 14 to 20 square feet. Ready
to eat pork can be sold into and within
California even if not compliant, this law
refers directly to whole meat that is either
fresh or frozen. With California consuming
between 12-13% of all pork produced in
the U.S. but only producing 3-4%, this has
resulted in producers in other states feeling
"handcuffed" if they sell into California,
which a large majority of companies have
some business either directly or indirectly,
within the state.
The law was initially passed in 2018 but
wasn't implemented until January 2022.
At that time, the law was put into effect but
only for a month until it was paused due to
a significant amount of uncertainty on how
to handle the logistics. Fast forward to June
2023, and this is where the fun began.
The California Department of Food and
Agriculture (CDFA) announced they would
hold multiple seminars throughout the
month explaining, in waves, how this new
law would be handled.
The initial understanding of the law was
that as of July 1 any whole meat pork
being sold in California was to be "prop-12
compliant." It is important to note that
compliant pork pricing in early June
2023, which was generally two to three
multiples above commodity pork cuts,
was extremely difficult to obtain due to
the lack of compliant hog housing around
the U.S. Sellers that did have product
available largely reserved it for their
already established contractual obligations.
In other words, spot market availability was
genuinely as short as you can imagine.
Around the time of the first seminar, it
became widespread information that any
pork brought into California prior to July 1,
compliant or not, could be sold until the
calendar struck 2024. As you may expect,
this resulted in significant pork demand
Prop-12: A comprehensive
account from the view of a
pork market analyst
From regulation to ripples…
© Lukas Gojda / Shutterstock.com
"Participants
freely mentioned
that it seemed if
there was a truck
available in the
U.S., it was going
to California
with pork!"