Animal welfare laws may lead to higher egg prices, lower production
A study published in the American Journal of Agricultural Economics suggests that California’s animal welfare laws have led to higher egg prices and lower production.
A study published in the American Journal of Agricultural Economics suggests that California’s animal welfare laws have led to higher egg prices and lower production. The 2008 Prevention of Farm Animal Cruelty Act, approved by 63% of California voters, requires animal producers to increase the amount of space available to animals in chicken battery cages, veal crates, and sow gestation crates. Taking effect in January 2015, the law required that confined spaces be large enough to allow animals to “turn around freely, lie down, stand up, and fully extend their limbs.” The law banned production and sale of products that didn’t meet these requirements, and another law required products imported from other states follow the same rules.
Jayson Lusk, a distinguished professor and head of Purdue’s Dept. of Agricultural Economics, and Conner Mullally, an assistant professor in the Food and Resource Economics Dept. at the University of Florida, analyzed 16 years’ worth of egg production and pricing data from California and surrounding states from before and after the law went into effect.
They found that by July 2016, the number of egg-laying hens and eggs produced in California had dropped by 35%. This led to price increases as high as 33% per dozen, according to the researchers. The average price for a dozen eggs was 22% higher from December 2014 to September 2016.
“Our results indicate that over the 22 months observed in our data after the initial structural break in retail prices, total consumer welfare losses from higher retail prices in the three markets considered by this article were between $117 million and $144 million, or between $12.15 and $14.97 per household,” the authors wrote.
By fall 2016, prices were about 9% higher than they would have been without the new law. Lower prices at the end of the study may stem from a boost in supply following an avian flu epidemic. But egg production in California is still significantly lower than it has been before the new laws took effect. According to data from the U.S. Dept. of Agriculture’s (USDA) National Agricultural Statistics Service, California produced more than 5 billion eggs every year from 2008 to 2013. By 2014, that number had dropped to about 4.6 billion, and in 2015 and 2016, California hens produced fewer than 3.5 billion eggs.
Lusk’s future work on the issue will look at consumers’ stated preferences for cage-free eggs and the actual demand for those products. In surveys, a growing number of consumers say they want cage-free eggs, but the demand for those products has not matched up.