Where's the Bacon?

It looks like California may never be ok, but this time they did it to themselves - it is not an act of nature like a flood or fires. At the beginning of 2022, California will begin enforcing an animal welfare proposition that requires more space for breeding pigs, egg-laying chickens, and veal calves. That does not sound like a big deal until you hear that roughly only 4% of hog operations now comply with the new rules. Unless the courts intervene or the state temporarily allows non-compliant meat to be sold in the state, California will lose almost all of its pork supply, and pork producers will face higher costs to regain a key market. Sure, the California farms could get into compliance, but any pork that is imported from other states must also meet these standards, which, fun fact, a lot of California's pork supply comes from farms that do not meet the animal welfare standards in Iowa.

It will be interesting to see how this new rule plays out, especially since it is hard to see how the pork industry can adequately supply California, which consumes roughly 15% of all pork produced in the country. If you didn't know, according to global food and agriculture financial services company Rabobank, California's restaurants and groceries use about 255 million pounds of pork a month, but its farms produce only 45 million pounds. Which means that a significant amount of meat that Californians use comes from out of state. Hog farmers claim that they haven't complied with the new rule for a few reasons: cost and because California hasn't yet issued formal regulations on how the new standards will be administered and enforced. It was estimated that if half the pork supply was suddenly lost in California, bacon prices would jump 60%, meaning a $6 package would rise to about $9.60, according to a study by the Hatamiya Group. Now imagine how devastating that value is if it rises to more than half die to the new regulations.

Of course, the impacted farmers won't go down without a fight, and the pork industry has filed lawsuits but so far courts have supported the California law. The National Pork Producers Council and a coalition of California restaurants and business groups have asked Gov. Gavin Newsom to delay the new requirements, and the council is holding out hope that meat already in the supply chain could still be sold. If true, this act could potentially delay shortages, but likely not for long.

This is not the only interesting thing happening in California right now. In addition to new pork rules, there are also new energy rules. Essentially, a new energy bill passed that limits electrical "gluttons." So what does that mean for you? Well, if you live in California, you can no longer purchase some Alienware computers, and you can't have a crypto mining rig. It will probably also limit your options with any large indoor botany projects. California is not alone in passing energy laws, but Alienware has removed the high energy options from being shipped to any state with energy bills that do not allow for certain products.