California’s Standards For Confining Farm Animals Initiative
In 2008, Californians passed a state law called Proposition 2, also known as the Standards for Confining Farm Animals initiative. This law imposed measures so that certain confined farm animals could turn around freely, lie down, stand up, and fully extend their limbs. The law covered egg-laying hens and requires farmers to provide a minimum of 116 square inches for each hen.
However, this legislation still allowed for imported eggs, which make up 1/3 of eggs consumed in California, to be produced in farms that do not follow these minimum requirements. California egg farmers were concerned that they would not be able to compete with out-of-state farmers, who would could offer eggs at a lower price. This led to Assembly Bill (AB) 1437, which requires imported eggs to meet the same requirements as locally produced eggs.
Both Proposition 2 and AB 1437 took effect on January 1st 2015, prohibiting the sale of eggs produced by hens in extreme confinement conditions, regardless of where they are produced.
The present study examined how these two pieces of legislation influence the pricing of eggs in California and four other U.S. regions (Northeast, Southeast, Midwest, and South Central). The authors also looked at the impact of this policy on interstate trade, and to what extent these California-compliant production practices have been adopted throughout the United States.
The authors used economic models to compare two alternative scenarios: one in which all eggs produced and consumed in California comply with the space restrictions (actual data), and another where there were no restrictions (counterfactual data). In other words they compared reality to a prediction of what reality would look like if the policy had not taken place.
What they found is a long-term increase of about 14% in egg prices in California. In the rest of the U.S. egg prices increased as well, by 4-6%. Moreover, the authors found a reduction in the total number of layer hens across the U.S. and the proportion of layer hens who live in spaces compliant with the new California regulations had increased. Finally, they found that these laws did not reduce interstate trade. On the contrary, Northeast, Midwest, and Southcentral regions have increased their exports to California, while there has been a decrease of imports from the Southeast.
All in all, as a result of this legislation, fewer layer-hens are kept across the U.S. than there would have been otherwise, and a larger share of them have more space to live in. Even though egg prices have increased, consumers are willing to pay the difference for higher welfare standards. It seems that even local legislation can have a great influence on animal welfare, and especially when the “locality” in question is a large economy like the state of California.