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UC Law Business Journal

Stephanie Don

Abstract

California’s animal production industry is a powerhouse in the United States food supply chain. In 2021, California generated $12.8 billion in gross cash income from animal production alone, ranking California’s animal production industry as #7 among the states. However, most small farms reported net losses. This paper identifies two financial issues plaguing California’s small farms in the animal production industry: monopolization, and the cost of complying with California’s heightened standard for ethical animal production.

First, the monopolization of small farms is a nationwide issue. In 2022, only four companies controlled 85% of meat packing in the United States. Large companies purchase meat and animal products through contract sales with small farms, allowing the large corporations to control the purchase price of those meat and animal products. Although antitrust laws apply to agriculture, courts have been reluctant to prevent the monopolization of small farms.

Second, in 2018, California voters passed Proposition 12, the Prevention of Cruelty to Farm Animals Act, to raise the standard for ethical animal production for veal, calves, chickens, and breeding sows. For breeding sows, the National Pork Producers Council estimates the cost to comply with Prop. 12 is $3,500 per sow.

California does not do enough to protect small farms from these two issues. To better aid small farms, avoid monopolization, and comply with Prop. 12, California should issue tax credits to qualifying small farms that have expenditures related to compliance with Prop. 12. The tax credit would be modeled after the proposed California Farm Bill (AB 2166, 2018) and would consider the United States Department of Agriculture’s California Census of Agriculture data and reports.

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