University of California studies economic impact of Proposition 2

In November, Californians will be voting on a ballot initiative that would eliminate the housing of egg-laying hens in cages in California, starting in 2015.

A study released on July 22 by the University of California Agricultural Issues Center explores the potential economic effects on California egg farmers and consumers if Proposition 2, which would regulate the “treatment of farm animals,” passes. This research was funded by the University of California.

It finds that the state's egg industry would be severely reduced as costs of production rise while more eggs would be shipped in from other states, which would not be required to meet the regulations set for California production.

“Egg farmers began housing hens in cages in the 1930s in order to reduce hen health problems, improve egg cleanliness and increase the economic efficiency of egg production,” said study co-author Joy A. Mench, UC Davis professor and director of the Center for Animal Welfare.

Currently less than 5 percent of the eggs produced in the state come from hens that are not housed in cages. (These are called non-cage or cage-free eggs.) The research study notes that non-cage production costs are simply too far above the costs of the cage systems used in other states to allow California producers to compete with eggs shipped into the state.

“The most likely outcome, therefore, is the elimination of almost all of the California egg industry over a very few years,” said the study's lead author Daniel Sumner, director of the Agricultural Issues Center and Frank H. Buck, Jr., professor at UC Davis Department of Agricultural and Resource Economics.

California produces about 6 percent of the nation's table eggs, and consumes about 12 percent. The value of table egg production in California was about $330 million in 2007. The industry produces almost 5 billion eggs per year from almost 20 million laying hens.

Using published data from a variety of sources and cost information from farmers who have both non-cage and cage systems, the researchers found that non-cage systems incur production costs that are at least 20 percent higher per dozen eggs than cage systems. The added costs per dozen include higher feed costs, higher housing costs, higher pullet costs and higher labor costs.

To comply with the new regulations, California producers would need to invest about $500 million in new or retrofitted housing systems.

“Since the proposed restrictions apply only to eggs produced in California, the regulations would raise the costs of California production relative to costs in other states,” said Sumner.

Although retail prices for eggs from non-cage systems are at least 25 percent higher than conventionally produced eggs, California consumers would see little if any price increase from the initiative because more eggs produced in cage systems in other states would be shipped to California to replace the eggs no longer produced in the state.

About 3,000 people work in egg production, mostly in Southern California, the Central Valley and Sonoma County. The elimination of those jobs would have a significant impact on the California economy, especially in rural areas such as in Merced County, which has much higher poverty and unemployment rates than the state average.

Mench and Sumner's co-authors are J. Thomas Rosen-Molina, AIC research analyst; William A. Matthews, an AIC post-doctoral fellow; and Kurt R. Richter, a UC Davis doctoral student. The full report, Economic Effects of Proposed Restrictions on Egg Laying Facilities in California, can be downloaded from the AIC Web site.

For more information on Proposition 2, go online to

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