Piecemeal Farm Regulation and the U.S. Commerce Clause

Abstract

Since January 2015, California has required that all shell eggs consumed in the state be produced cage free or by hens housed in enlarged cages defined under Assembly Bill 1437. This paper assesses the effects of California farm animal housing restrictions on egg prices and production practices inside and outside California, and on the volume of interstate trade. We find that the California regulation generated short‐ and long‐run egg price increases across the U.S. It has also bifurcated production methods outside California yielding more concentrated interstate trade. The largest share of the associated private costs was borne by out‐of‐state consumers. The balance between a state's power to regulate food production within its borders and the impacts on out‐of‐state producers and consumers has potential legal implications under the dormant Commerce Clause of the U.S. Constitution.

Assessing Animal Welfare and Farm Profitability in Cow-Calf Operations with Stochastic Partial Budgeting

“…A negative relationship between improved FAW and contribution margins has several economic and societal implications. First, in the absence of governmental or private financial incentives for improved FAW, and assuming constant output prices, costs associated with more stringent FAW legislation can drive cost-inefficient farms out of business and leave fewer but likely larger farms to capture the available market share [ 23 ]. This may be considered unproblematic if we only consider the private benefits of farming.…”

Farm Animal Enclosure Requirements, Industry Concentration, and Supply Chain Dynamics

“…However, consumers' ability to influence the treatment of animals is generally limited to choosing from available options in the marketplace or abstaining entirely from food and clothing products derived from animals. While there are instances where producers will adopt production practices aimed to enhance the welfare of animals in hopes of selling this product for a premium, this is an incomplete approach to resolving animal welfare issues (Carter et al, 2021). Generally, these products make up only a small portion of sales and, therefore, most animals are then raised under conventional practices rather than the enhanced practices (Carter et al, 2021).…”

“…While there are instances where producers will adopt production practices aimed to enhance the welfare of animals in hopes of selling this product for a premium, this is an incomplete approach to resolving animal welfare issues (Carter et al, 2021). Generally, these products make up only a small portion of sales and, therefore, most animals are then raised under conventional practices rather than the enhanced practices (Carter et al, 2021). Further, consumers that care most about animal welfare may be unwilling to accept the price premium because their concern is not just for the animals that produce the products they consume, but for all animals involved in the production of food and clothing.…”

“…Over $10 million was raised in support of the proposition, mainly from the Humane Society of the U.S., and approximately $9 million was raised in opposition mainly from large egg producers (Ballotpedia, 2021). After the proposition's approval by voters, the CA legislature then had to pass accompanying legislation to ensure the requirements applied to all affected products sold in the state (Carter et al, 2021). Later on, Colorado adopted minimum confinement requirements through the legislature as a way to head off what was seen as a more stringent ballot initiative effort (Brown, 2020).…”

“…inches to 117 sq. inches (Carter et al, 2021). To determine the degree of concentration in the egg industry and examine the impacts of the regulation, we compute the four-firm concentration ration (CR4) for California and the rest of the U.S.…”