US Pork Supply Chain Locked in Limbo as Producers Await Legal Ruling
The US pork supply chain faces significant disruption in 2022, when California’s animal welfare regulations (Proposition 12) take effect. With less than 4% of US sow housing currently able to meet the new standard, Rabobank expects a shortfall in compliant pork to bifurcate the US market, leaving California with a severe pork deficit (and high prices), while generating a surplus in the rest of the US market.
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“Producers are reluctant to make the costly investments needed to comply with the new regulation, unless compensated with long-term premium guarantees. Packer processors and end users are unwilling to enter into long-term supply arrangements, given outstanding legal challenges to the California rule and limited visibility around implementation,” according to Christine McCracken, Senior Analyst – Animal Protein.
As higher animal welfare and sustainability standards proliferate, driven by individual statewide mandates and customer requirements, producers are left trying to figure out which standards they should adopt. As these compliance hurdles become higher and more diverse, it will require greater investment and result in higher costs to the consumer.
US hog producers are encouraged to proactively work with packer processors and end users to establish animal welfare and sustainability targets that are both economically viable and aligned with consumer values, rather than being forced to react to inconsistent and costly statewide regulations.
Where to go from here
Christine McCrackenSenior Analyst – Animal Protein Read more