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Pork Industry Grapples With Whiplash of Shifting Regulations

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Retailers in California, and pig farmers and processors thousands of miles away, are bracing for the impact of a state ban on some sources of the meat.These were supposed to be boom times for Pederson’s Natural Farms.In the days this spring after the Supreme Court upheld a California law banning the sale of certain pork products made from pigs raised in small gestation pens, the phones were ringing off the hook at Pederson’s headquarters in Hamilton, Texas.California grocery stores and restaurants were desperate to line up supplies of bacon and pork chops that met the new state standards by a July 1 deadline. Pederson’s products filled the bill, and the company was happy to help send them to California, which consumes about 15 percent of the nation’s pork.“We were going to have a good year,” said Neil Dudley, the vice president at Pederson’s. “We were putting it in the budget. We were going to put pressure on us to grow, but the extra income would help fund that growth.”But a couple of weeks later, some of those new orders were canceled as California regulators pushed back the full force of the law, known as Proposition 12, to early next year, allowing grocery stores and restaurants to use up pork they had already boughtBrined pork bellies ready for removal from a vacuum tumbler and then hanging in a smoker at Pederson’s.Tamir Kalifa for The New York Times“We were going to have a good year,” said Neil Dudley, a Pederson’s executive. Then California pushed back its timeline, and some orders were canceled.Tamir Kalifa for The New York TimesThe normally orderly pork industry has been thrown into upheaval as pig farmers in the Midwest, major pork processors and California businesses have reacted to the changing legal and regulatory landscape in recent months. Further confusion could come if Congress passes pending legislation that would effectively nullify the California act.“There is so much murky water here,” said Todd Davis, the meat and seafood coordinator for Oliver’s Markets, which operates four grocery stores in Sonoma County, Calif., and has lined up pork products that meet the new state requirements.“You are supposed to be compliant as of July 1, but I don’t think the state has any teeth on the enforcement side of things,” Mr. Davis continued. “Companies aren’t taking it as seriously as they should, and at some point the state will make an example out of one of them,” which he said could include costly fines.Already, farmers are facing hog prices that have been depressed since fall while feed costs have remained high, leading to average losses of $30 to $50 a hog for much of this year in Iowa, according to estimated livestock returns from Iowa State University. A pound of bacon costs an average of $6.20 at grocery stores across the country, down from $7.60 last fall, according to data from the Federal Reserve Bank at St. Louis.Nationally, pork prices are influenced by everything from feed cost to demand from China to the shifting mood in commodities markets, but some retailers are already raising prices in California, to pass on the higher cost to hog farmers of meeting the state’s more stringent standards. With other farmers opting not sell in the state, short supply could also push the prices of bacon and pork chops higher.Piglets are kept with their sows at A-Frame Acres in Elliott, Iowa, which is part of the Niman Ranch network.Rachel Mummey for The New York TimesFeeding time at A-Frame Acres, which is run by Ron Mardesen, above.Rachel Mummey for The New York TimesPig farmers say making changes for California is costly. Along with his partners, Dwight Mogler, a fourth-generation farmer in Iowa who sells about 200,000 hogs each year, spent $8.7 million in 2022 building a new facility and modifying an existing one to meet the new standards. A packing company pays him a small premium over market price for his pigs — he declined to provide details of the deal — but Mr. Mogler estimates that it will take 10 years to recoup his outlay.Other farmers say they’re simply not going to modify how they raise pigs.“We’re losing money in the pig industry,” said Trish Cook, the president of the Iowa Pork Producers Association, who, along with her family, raises pigs near Winthrop in eastern Iowa. “The idea of having a large capital expenditure with no clear payback on it doesn’t make business sense to us. We don’t know what sort of premium those pigs will get.”For California, questions about whether consumers will have enough bacon and pork chops and how much they will cost also remain unclear.Ronald Fong, the chief executive of the California Grocers Association, which pushed for an extension of the deadline, said stores were able to make it through Labor Day with the product that they had already bought. However, Mr. Fong said that soon “we’ll be faced with some shortages and price hikes.”Mr. Davis of Oliver’s Markets said he already bought pork from Niman Ranch, a producer that exceeds the California criteria, but had also always offered customers less-expensive pork options. Now, the cheaper pork that meets the new state criteria, from Open Prairie Natural Meats, a brand owned by Tyson, costs Oliver’s $1 to $1.50 a pound more, which Mr. Davis is passing along to customers, he said.“Chicken and pork are still very affordable options, especially when compared to beef prices,” Mr. Davis said. “So we’ve seen very little pushback from consumers.”Loading brined pork bellies into the smokehouse at Pederson’s.Tamir Kalifa for The New York TimesWhen voters passed Proposition 12 five years ago, it was a blow to the industrial meat producers, requiring that any veal calves, breeding pigs and egg-laying hens sold in California be housed in systems that allow freedom of movement. Under the rule, pigs must be born to sows housed in spaces that provide at least 24 square feet per sow. California produces very few of its own pigs, but the new rule also applies to pigs raised in other states.The law was supposed to go into effect in 2022, but the new pork standards were put on pause after the National Pork Producers Council and American Farm Bureau Federation filed a lawsuit challenging California’s ability to dictate pig operations in other states. They argued that if other states adopted different restrictions, the result would be a patchwork of rules and regulations. Massachusetts, for instance, passed its own gestation pen rule, called Question 3, in 2016, but it has been on hold, awaiting various court proceedings.In May, the Supreme Court ruled 5 to 4 that Proposition 12 was legal. It said the pork industry had not proved that the law imposed a substantial burden on interstate commerce. California officials began working through how to regulate and enforce the rule, but a state court delayed enforcement until the end of the year.And the pork industry isn’t done fighting. In June, senators from largely agricultural Midwestern states introduced the Ending Agricultural Trade Suppression Act, which would limit the ability of states to regulate agriculture in other states.In early August, attorneys general from several states, including Texas, New Hampshire and Utah, signed a letter urging Congress to pass the EATS Act.“The industry lost in the court of public opinion in terms of California voters adopting this law, they lost in the courts, and now they’re trying to get something through with this legislative act,” said Chris Oliviero, the general manager of Niman Ranch, which pays its network of 600 farmers in 20 states premium prices to raise the beef, pork and lamb used in its products in conditions that exceed the California standards.“The ultimate goal is to prevent Prop. 12 from going into effect,” Mr. Oliviero added.Bacon slabs cooling after being smoked at Pederson’s.Tamir Kalifa for The New York TimesAs for Pederson’s, much of the pork it produces is already committed to a handful of longtime customers, including Whole Foods. The company did, however, have excess bacon that met the new standards.That is, until one of the farmers who supplied half of the pigs used by Pederson’s received a better offer from a larger company. Suddenly, Pederson’s pig supply was at risk.“Farmers, who are struggling to make money, are getting calls from the big guys, saying they want to contract with them,” Mr. Dudley said. “The big players can’t lose market share, not in a market as big as California. Instead of a boom year, we’re now looking at diminishing sales.” More

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    Who’s to Blame for a Factory Shutdown: A Company, or California?

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    VERNON, Calif. — Teresa Robles begins her shift around dawn most days at a pork processing plant in an industrial corridor four miles south of downtown Los Angeles. She spends eight hours on her feet cutting tripe, a repetitive motion that has given her constant joint pain, but also a $17.85-an-hour income that supports her family.So in early June, when whispers began among the 1,800 workers that the facility would soon shut down, Ms. Robles, 57, hoped they were only rumors.“But it was true,” she said somberly at the end of a recent shift, “and now each day inches a little closer to my last day.”  The 436,000-square-foot factory, with roots dating back nearly a century, is scheduled to close early next year. Its Virginia-based owner, Smithfield Foods, says it will be cheaper to supply the region from factories in the Midwest than to continue operations here.“Unfortunately, the escalating costs of doing business in California required this decision,” said Shane Smith, the chief executive of Smithfield, citing utility rates and a voter-approved law regulating how pigs can be housed.Workers and company officials see a larger economic lesson in the impending shutdown. They just differ on what it is. To Ms. Robles, it is evidence that despite years of often perilous work, “we are just disposable to them.” For the meatpacker, it is a case of politics and regulation trumping commerce.The cost of doing business in California is a longtime point of contention. It was cited last year when Tesla, the electric-vehicle maker that has been a Silicon Valley success story, announced that it was moving its headquarters to Texas. “There’s a limit to how big you can scale in the Bay Area,” said Elon Musk, Tesla’s chief executive, mentioning housing prices and long commutes.As with many economic arguments, this one can take on a partisan hue.Around the time of Tesla’s exit, a report by the conservative-leaning Hoover Institution at Stanford University found that California-based companies were leaving at an accelerating rate. In the first six months of last year, 74 headquarters relocated from California, according to the report. In 2020, the report found, 62 companies were known to have relocated.Dee Dee Myers, a senior adviser to Gov. Gavin Newsom, a Democrat, counters by pointing to California’s continued economic growth.“Every time this narrative comes up, it’s consistently disproven by the facts,” said Ms. Myers, director of the Governor’s Office of Business and Economic Development. The nation’s gross domestic product grew at an annual pace of 2 percent over a five-year period through 2021, according to Ms. Myers’s office, while California’s grew by 3.7 percent. The state is still the country’s tech capital.Still, manufacturing has declined more rapidly in California than in the nation as a whole. Since 1990, the state has lost a third of its factory jobs — it now has roughly 1.3 million, according to the Bureau of Labor Statistics — compared with a 28 percent decline nationwide.The Smithfield plant is an icon of California’s industrial heyday. In 1931, Barney and Francis Clougherty, brothers who grew up in Los Angeles and the sons of Irish immigrants, started a meatpacking business that soon settled in Vernon. Their company, later branded as Farmer John, became a household name in Southern California, recognized for producing the beloved Dodger Dog and al pastor that sizzled at backyard cookouts. During World War II, the company supplied rations to U.S. troops in the Pacific.Leo Velasquez, 62, started working at the plant in 1990. He had hoped to stay there until he was ready to retire.Mark Abramson for The New York TimesAlmost 20 years later, Les Grimes, a Hollywood set painter, was commissioned to create a mural at the plant, transforming a bland industrial structure into a pastoral landscape where young children chased cherubic-looking pigs. It became a sightseeing destination.More recently, it has also been a symbol of the state’s social and political turbulence.In explaining Smithfield’s decision to close the plant, Mr. Smith, the chief executive, and other company officials have pointed to a 2018 statewide ballot measure, Proposition 12, which requires that pork sold in the state come from breeding pigs housed in spaces that allow them to move more freely.The measure is not yet being enforced and faces a challenge before the U.S. Supreme Court this fall. If it is not overturned, the law will apply even to meat packed outside the state — the way Smithfield now plans to supply the local market — but company officials say that in any case, its passage reflects a climate inhospitable to pork production in California.Passions have sometimes run high outside the plant as animal rights activists have condemned the confinement and treatment of the pigs being slaughtered inside. Protesters have serenaded and provided water to pigs whose snouts stuck out of slats in arriving trucks.In addition to its objections to Proposition 12, Smithfield maintains that the cost of utilities is nearly four times as high per head to produce pork in California than at the company’s 45 other plants around the country, though it declined to say how it arrived at that estimate.John Grant, president of the United Food and Commercial Workers Local 770, which represents Ms. Robles and other workers at the plant, said Smithfield announced the closing just as the sides were to begin negotiating a new contract. “They’re kicking us out with no answers,” said Teresa Robles, who has worked at the factory for four years.Mark Abramson for The New York Times“A total gut punch and, frankly, a shock,” said Mr. Grant, who worked at the plant in the 1970s. He said wage increases were a priority for the union going into negotiations. The company has offered a $7,500 bonus to employees who stay through the closing and has raised the hourly wage, previously $19.10 at the top of the scale, to $23.10. (The rate at the company’s unionized Midwest plants is still a bit higher.)But Mr. Grant said the factory shutdown was an affront to his members, who toiled through the pandemic as essential workers. Smithfield was fined nearly $60,000 by California regulators in 2020 for failing to take adequate measures to protect workers from contracting coronavirus.“After all that the employees have done throughout the pandemic, they’re now all of a sudden going to flee? They’re destroying lives,” said Mr. Grant, adding that the union is working to find new jobs for workers and hopes to help find a buyer for the plant.Karen Chapple, a professor of city and regional planning at the University of California, Berkeley, said the closing was an example of “the larger trend of deindustrialization” in areas like Los Angeles. “It probably doesn’t make sense to be here from an efficiency perspective,” she said. “It’s the tail end of a long exodus.”Indeed, the number of food manufacturing jobs in Los Angeles County has declined 6 percent since 2017, according to state data.  And as those jobs are shed, workers like Ms. Robles wonder what will come next.More than 80 percent of the employees at the Smithfield plant are Latino — a mix of immigrants and first-generation native-born. Most are older than 50. The security and benefits have kept people in their jobs, union leaders say, but the nature of the labor has made it hard to recruit younger workers who have better alternatives.On a recent overcast morning, the air in Vernon was thick with the smell of ammonia. Workers wearing surgical masks and carrying goggles and helmets walked into the plant. The sound of forklifts hummed beyond a high fence.Massive warehouses line the streets in the area. Some sit vacant; others produce wholesale local baked goods and candies. Mario Melendez, who has worked at the plant for a decade, says he feels betrayed by the company.Mark Abramson for The New York TimesMs. Robles started at the Smithfield plant four years ago. For more than two decades she owned a small business selling produce in downtown Los Angeles. She loved her work, but when her brother died in 2018, she needed money to honor his wish to have his body sent from Southern California to Colima, Mexico, their hometown. She sold the business for a couple of thousand dollars, then started at the factory, making $14 an hour.“I was proud,” she said, recalling the early months at her new job.Ms. Robles is the sole provider for her family. Her husband has several health complications, including surviving a heart attack in recent months, so she now shoulders the $2,000 mortgage payment for their home in the Watts neighborhood of Los Angeles. Sometimes her 20-year-old son, who recently started working at the plant, helps with expenses.“But this is my responsibility — it is on me to provide,” she said.Ms. Robles has long recited the Lord’s Prayer every night before bed, and now she often finds herself repeating it throughout the day for strength.“They’re kicking us out with no answers,” she said.Other workers, like Mario Melendez, 67, who has worked at the plant for a decade, shares that unmoored feeling.It’s an honor to know his labor helps feed people across Southern California, he said — especially around the holidays, when the factory’s ribs, ham and hot dogs will be part of people’s celebrations.But the factory is also a place where he contracted coronavirus, which he passed along to his brother, who died of the virus, as did his mother. He was devastated.A truck carrying pigs entering the plant. Animal rights activists have sometimes protested outside.Mark Abramson for The New York Times“A terrible shock,” said Mr. Melendez, who says he feels betrayed by the company.So does Leo Velasquez.He started on the night shift in 1990, making $7 an hour to package and seal bacon. A few years later, he moved to days, working 10-hour shifts.“I’ve given my life to this place,” said Mr. Velasquez, 62.Over the years, his body began to wear down. In 2014, he had shoulder replacement surgery. Still, he had hoped to continue at the factory until he was ready to retire.“That’s not going to happen,” he said. “Where I go from here, I do not know.” More

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    Food Prices Approach Record Highs, Threatening the World’s Poorest

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    The prices have climbed to their highest level since 2011, according to a U.N. index. It could cause social unrest “on a widespread scale,” one expert said.WASHINGTON — Food prices have skyrocketed globally because of disruptions in the global supply chain, adverse weather and rising energy prices, increases that are imposing a heavy burden on poorer people around the world and threatening to stoke social unrest.The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. They come as farmers around the globe face an array of challenges, including drought and ice storms that have ruined crops, rising prices for fertilizer and fuel, and pandemic-related labor shortages and supply chain disruptions that make it difficult to get products to market.A global index released on Thursday by the United Nations Food and Agriculture Organization showed food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya. The price of meat, dairy and cereals trended upward from December, while the price of oils reached the highest level since the index’s tracking began in 1990.Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics who was formerly chief economist at the International Monetary Fund, said that food price increases would strain incomes in poorer countries, especially in some parts of Latin America and Africa, where some people may spend up to 50 or 60 percent of their income on food.He said that it wasn’t “much of an exaggeration” to say the world was approaching a global food crisis, and that slower growth, high unemployment and stressed budgets from governments that have spent heavily to combat the pandemic had created “a perfect storm of adverse circumstances.”“There’s a lot of cause for worry about social unrest on a widespread scale,” he added.Even before the pandemic, global food prices had been trending upward as disease wiped out much of China’s pig herd and the U.S.-China trade war resulted in Chinese tariffs on American agricultural goods.But as the pandemic began in early 2020, the world experienced seismic shifts in demand for food. Restaurants, cafeterias and slaughterhouses shuttered, and more people switched to cooking and eating at home. Some American farmers who could not get their products into the hands of consumers were forced to dump milk in their fields and cull their herds.Two years later, global demand for food remains strong, but higher fuel prices and shipping costs, along with other supply chain bottlenecks like a shortage of truck drivers and shipping containers, continue to push up prices, said Christian Bogmans, an economist at the International Monetary Fund.Drought and bad weather in major agricultural producing countries like Brazil, Argentina, the United States, Russia and Ukraine have worsened the situation.The I.M.F.’s data shows that average food inflation across the world reached 6.85 percent on an annualized basis in December, the highest level since their series started in 2014. Between April 2020 and December 2021, the price of soybeans soared 52 percent, and corn and wheat both grew 80 percent, the fund’s data showed, while the price of coffee rose 70 percent, due largely to droughts and frost in Brazil.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.While food prices appear set to stabilize, events like a conflict in Ukraine, a major producer of wheat and corn, or further adverse weather could change that calculation, Mr. Bogmans said.The effects of rising food prices have been felt unevenly around the world. Asia has been largely spared because of a plentiful rice crop. But parts of Africa, the Middle East and Latin America that are more dependent on imported food are struggling.Countries like Russia, Brazil, Turkey and Argentina have also suffered as their currencies lost value against the dollar, which is used internationally to pay for most food commodities, Mr. Bogmans said.In Africa, bad weather, pandemic restrictions and conflicts in the Democratic Republic of Congo, Ethiopia, Nigeria, South Sudan and Sudan have disrupted transportation routes and driven up food prices.Joseph Siegle, the director of research at National Defense University’s Africa Center for Strategic Studies, estimated that 106 million people on the continent are facing food insecurity, double the number since 2018.“Africa is facing record levels of insecurity,” he said.While shopping at a market in Mexico City’s Juarez neighborhood on Thursday, Gabriela Ramírez Ramírez, a 43-year-old domestic worker, said the increase in prices had strained her monthly budget, about half of which goes to food. Inflation in Mexico reached its highest rate in more than 20 years in November, before easing slightly in December.“It affects me a lot because you don’t earn enough, and the raises they give you are very small,” she said. “Sometimes we barely have enough to eat.”The impact has been less severe in the United States, where food accounts for less than one-seventh of household spending on average, and inflation has become broad-based, spilling into energy, used cars, dishwashers, services and rents as price increases reach a 40-year high.Yet American food prices have still risen sharply, putting a burden on the poorest households who spend more of their overall budget on food. Food prices rose 6.3 percent in December compared with a year ago, while the price of meat, poultry, fish and eggs jumped 12.5 percent, according to the Bureau of Labor Statistics.The Biden administration has tried to restrain some of these increases, including with an effort to combat consolidation in the meat packing business, which it says is a source of higher prices.Inflation F.A.Q.Card 1 of 6What is inflation? More