America’s egg industry is adjusting to the restraints of two new California laws. Effective January 1, 2015, Proposition 2 and Bill AB 1437 prohibit the sale of eggs in California that were produced by chickens housed in too-small spaces.

Passed in 2008 by over 60% of voters, Proposition 2 regulates the amount of space per hen that must be provided by California egg producers. According to Proposition 2, each egg-producing chicken in California is legally entitled to at least 116 square inches of space. This amount of space is significantly more than the current industry standard.

Furthering the impact of Proposition 2, the California legislature passed legislation applying Proposition 2 to all eggs sold in California regardless of whether the egg is produced outside of the state of California. Bill AB 1437, was signed into law in 2010.

The majority of eggs produced in the US do not satisfy California’s new requirements. The Iowa State University Egg Industry Center estimates that California’s new laws will result in a 15% increase in production costs and in a 73% increase in the amount of space required to house California-compliant chickens. Therefore, most US egg producers must choose between bypassing the California egg market to avoid increased production costs, decreasing their flock size (and therefore number of eggs laid), or modifying their facilities to provide additional space for each hen.

As a result, egg price per dozen has increased. According to a report published by Iowa State University’s Egg Industry Center (EIC), the cost of eggs in California was $2.34 per dozen in January 2014. Following the implementation of California’s new laws, price per dozen is now as high as $5.99. EIC calculates that egg retail prices in California are now 66% higher than prices in other western states. Whether the market rebalances remains to be seen.

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