The Supreme Court’s ruling on Proposition 12 has added “a whole bunch more uncertainty to a very uncertain market,” said Lee Schulz, Iowa State University ag economist and Extension livestock specialist.
The entire pork production system will experience great financial burden from the expense of retrofitting existing barns and building new facilities to the expense incurred for further processing and retail segregation.
“A lot of those exact cost estimates are yet to be determined,” Schulz told AgriTalk’s host Chip Flory. “But what we know is this will result in a much higher cost to producers and those costs are going to vary throughout the different segments of the industry.”
The industry has to reconfigure, and some already have, Schulz explained.
“We know there's been some new construction that meets the Prop 12 guidelines. It's relatively small, but the first movers have decided to adjust. Often, those are ones that have a lower cost of production which may be because of economies of size, or operations that have been able to secure premiums.”
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