Egg Prices Spike as Prop. 2 Takes Effect

Come January 1, a statewide ballot initiative passed six years ago to give egg-laying hens more space in their cages takes effect, meaning that the hens of any eggs sold throughout the state are legally entitled to twice as many square inches as they occupied before.

In the short run, egg prices could spike by as much as $1 a dozen, predicted David Cisneros, chief operating officer of Dakota Layers, the parent company of Santa Maria’s Rosemary Farms. Long term, Cisneros said he expects the Proposition 2 requirements to increase the cost of eggs by about only 20 cents a dozen. How long it will take for prices to stabilize, Cisneros would not speculate. “It’s all about supply and demand,” he said.

Californians consume roughly 785 million eggs a year. With the number of statewide egg hens dropping down to 15 million from 19 million just two years ago, Californians have increasingly relied on out-of-state producers to satisfy their needs. Due to a bill signed in 2010 by then-governor Arnold Schwarzenegger, any egg sold in California must comply with the state’s new animal cruelty standards regardless of its point of origin.

Cisneros said he’s spent $6 million over the past seven months building new hen barns in South Dakota, where most of Rosemary Farms’s 1.3 million hens actually reside. Many out-of-state producers — and their legislatures — have tried to block Prop. 2 in the courts, arguing the measure is too vague and that it constituted a restraint of interstate trade. None of these legal challenges succeeded. In that time, industry critics have argued, egg producers did little to modernize their facilities to meet existing demand.

“The same people who voted for Prop. 2 are now saying they don’t know why the cost of eggs is going up,” Cisneros said. “It’s cause and effect.” In 2008, 63 percent of all California voters endorsed Prop. 2. While such animal cruelty measures tend to make for high political drama, Prop. 2 was greatly overshadowed by Prop. 8 — California’s anti-gay-marriage initiative — and by a presidential contest that resulted in the first election of an African American to the White House.

Prop. 2 was heavily bankrolled by the Humane Society and animal-rights advocates, who lambasted traditional egg production practices that limited hens to no more than 67 square inches of space. Hens were packed in so tightly, critics argued, that producers snipped their beaks to prevent birds from pecking each other to death. Under rules subsequently adopted by the California Department of Food and Agriculture, hens are now required to have 115 square inches. Under the terms of Prop. 2, hens need enough space to stand up, stretch out their wings, and turn around.

Cisneros argued this language is not sufficiently precise. “Does this mean that they have to be able to do it all at the same time or just one at a time?” he asked. In either case, he insisted, this behavior is not something chickens do “naturally.” Even with the new space requirements, he said, hens tend to cluster tightly together. And nothing in Prop. 2 — or subsequent regulations — have addressed the politically volatile issue of beak snipping.

As of January 1, all egg cartons sold in California must bear a stamp stating that the eggs inside were harvested in accordance with California’s compliance standards. For Rosemary Farms’s Santa Maria operation, the new rules will have little effect. The Santa Maria operation has been transformed in recent years and now produces only a few thousand “pasture raised” hens a year — meaning they’re free to roam outside and peck the ground for food. Their eggs sell for $8 to $9 a dozen.

The law is the law, Cisneros said, and his company has invested heavily to comply. As to whether it was worth it, he’s not so sure. “As I walk down through the barns now and see the all hens, I can’t tell if they’re any happier,” he said. “But then,” he added, “they can’t tell me.”