USB Study: Regulations to Push Up Food Prices

New data shows potential for $16.8 billion annual increase in U.S. consumers' food bills.

Published on: Mar 2, 2012

If you apply Newton's third law, the equal and opposite reaction to potential increased regulations on the U.S. poultry and livestock sectors may be anything but pleasant for consumers who are already facing increased food costs associated with higher input costs.

A recent study says additional regulations – such as cage-free housing for chickens and larger farrowing crates for hogs – will require significant capital investments, as well as additional operating costs that will likely be passed on to consumers. These additional costs, the reports says, threaten U.S. producers' ability to compete globally, triggering a rise in food imports, a drop in exports and increased costs for consumers in the U.S. and globally.

Lewis Bainbridge
Lewis Bainbridge

The "Consumer and Food Safety Costs of Offshoring Animal Agriculture" report, prepared  by  Promar  International  for  the  United  Soybean  Board (USB),  says if production costs rise 25%, consumers can expect to doll out an additional $16.8 billion per year for pork, beef, chicken, turkey and eggs. Even a smaller scenario of a 10% increase would still pull an additional $6.8 billion from consumers' food budgets. 

The U.S. is a leading global producer and exporter of animal products.  In 2010, this production led  to  $283  billion  in  economic  output  and  1.8  million  jobs.  Additional regulations, the study reports, would result in a reduction in net exports of $1.1 billion and a loss of 9,000 jobs. 

Vanessa Kummer, a soybean farmer from Colfax, N.D., and chair of USB, says, "U.S. agriculture leads the world as a global producer and exporter of animal products, and we need that to continue. The poultry and livestock sectors not only support the U.S. export market, but also make our economy stronger here at home by creating jobs and tax revenue."

The study found the five regulatory areas most likely to generate increased costs for US producers in the near term included animal housing, environmental regulations, the use of antimicrobials and other drugs, livestock trading, and labor regulations. 

To require cage-free housing for laying hens would spike the cost of eggs from $1.68 to $2.10 per dozen, a total cost of $2.66 billion per year to U.S. consumers, the study reports.

Andre Williamson, Vice President of Promar International, says the study used numbers from Europe when looking at housing changes for hogs. "The additional cost (to producers) would be $5.8 billion in capital costs and another $1.1 billion in operating expenses," he says.

The most recent statistics compiled by the soy checkoff show the poultry and livestock sectors support 1.8 million jobs and generate more than $283 billion for the U.S. economy.

Lewis Bainbridge, USB domestic marketing chair, says the entire U.S. economy will take a hit if unreasonable restrictions and regulations without scientific basis are forced on producers. "There are real consequences that threaten U.S. competitiveness," he says.

The USB says it will work with the American Soybean Association, the lobbing organization for soybean growers, to take this information to the hill to share with legislators and also with the U.S. Farmers and Ranchers organization to reach consumers.

The study, commissioned by the USB Board and paid for with check-off dollars, was completed in the fall of 2011 and released by the commodity organization during Commodity Classic in Nashville, Tenn., March 2. The cost of the report was not released.

For more information on the United Soybean Board, visit www.unitedsoybean.org