An unexpected wave of disease has exacerbated increases brought on by Golden State policymakers. “While the avian flu outbreak this spring that resulted in the killing of 48 million domestic chickens and turkeys, mostly in the Midwest, continues to have a ripple effect across the country, a perfect storm of additional factors in California, namely the rollout of Proposition 2 and higher chicken feed prices, are wreaking havoc on Bay Area supermarket egg prices and limiting the supply of eggs to local restaurants, ice cream shops and bakeries,” the San Francisco Chronicle reported.

Citing data from the Department of Agriculture, KGO San Francisco noted that prices for a carton of large eggs jumped from $1.45 last August to $3.61 this month. Meanwhile, since last May, California has produced nearly 20 percent fewer eggs, according to USDA figures.

Costly chickens, costly eggs

According to the egg industry, that dip in production numbers should be attributed primarily to the passage of Prop. 2. Passed into law by voters as the Prevention of Farm Animal Cruelty Act, the Chronicle recalled, Prop. 2 “requires that all eggs sold in California come from farms that allow chickens to move around freely. Because each egg-laying hen must have 116 square inches of space, rather than the standard 67 inches of space in battery cages, there are fewer hens overall, and farms had to be upgraded.”

Those upgrades imposed costs passed along to consumers, industry advocates observed. “The costs of having to build new structures and new facilities were incurred by the egg farmers, and those costs have to get passed along,” said John Segale, spokesman for the Association of California Egg Farmers, in comments to the Associated Press. What’s more, the limitations imposed by Prop. 2 worsened the impact of the avian flu outbreak. Ken Klippen, president of the National Association of Egg Farmers, told AP that some of the big Iowa farms that meet Prop. 2 requirements have been knocked out completely by the disease.

More costly feed, meanwhile, has pushed egg prices higher. Klippen added that “California producers have to pay 20 cents more per dozen eggs for chicken feed because it’s mostly shipped from the Midwest.”

After hitting record prices earlier this summer, as Reason noted, consumers faced even greater sticker shock this fall.

Struggling to respond

As is often the case, the changing market has disproportionately affected small businesses; bakery owner Terri Littleton told Fox Sacramento she “survived the initial jump in prices when California’s law giving more cage space to egg laying chickens went into effect. But the avian flu epidemic and higher feed prices in drought-ridden California have made eggs even more expensive.”

Proprietors have been forced to make unattractive choices about how to compensate for the changes. Littleton stressed that “raising prices is a tough proposition for businesses that work on a small budget, and changing recipes might even be more harmful.” The experience of some larger chains appeared to underscore that point. One CNN report revealed that consumers have lashed out at Panda Express restaurants for pulling eggs from their fried rice and hot and sour soup recipes.”

In an ironic twist, not all egg merchants have found themselves in a painful bind. Anecdotal evidence suggested that specialty sellers could benefit from relatively more expensive egg prices. “We have seen people that we have not seen before at the farmers’ market, and they are saying if we’re going to pay that amount at the grocery store, we’d rather buy a fresher egg and a higher-quality egg,” one pasture-raised chicken rancher told the Chronicle. Eggs produced by so-called free range chickens now typically retail for  about $9 a dozen.

In 2008, they passed Proposition 2, which mandated more comfortable hatching quarters for chickens. Because of the cost to farmers of expanding chicken coops, a grace period was allowed of six years, to Jan. 1, 2015.

As NBC reported, the extra time allowed farmers time to “invest in operations to make sure that every hen would have at least 116 square inches of space, or about a square foot. One thousand laying hens, for example, now require a facility measuring more than 800 square feet.” That’s about double the space egg-layers enjoyed previously.

Now that the clock has run out on preparation time, egg prices are poised to rise even higher. According to the Associated Press, the cost of breakfast will rise for consumers across the country, not just California:

“The new standard, backed by animal rights advocates, has been criticized by chicken farmers in Iowa, Ohio and other states who sell eggs in California and will have to abide by the same requirements. California is the nation’s largest consumer of eggs and imports about one-third of its supply.”

Nationwide, the market could eventually adjust. UC Davis economist Daniel Sumner told the AP “prices initially could rise sharply this year but he expected them to eventually settle 10 to 40 percent higher in California and return to their normal prices elsewhere in the country.”

That would leave Golden Staters paying a premium that other Americans, with less comfortable chickens, would avoid.

Foie gras

The egg price jump also ties into the ongoing foie gras controversy. As CalWatchdog.com previously reported, for now, foie gras is back on Californian menus.

In a brief ruling that skirted deep questions of constitutional law, U.S. District Court Judge Stephen Wilson held this week that federal poultry regulations “preempt” what was a statewide ban on the delicacy, a rich dish made from the liver of force-fed geese or ducks.

But as Daniel Fisher noted at Forbes, supporters of the ban swung quickly into action. “The Humane Society immediately urged California to appeal the decision to the Ninth Circuit of the U.S. Court of Appeals, which has been friendly toward the state’s extraterritorial regulatory efforts in the past.”

Notably, the activist organization referenced another hot area concerning chickens: eggs.

According to Fisher, the “foie gras ban ran afoul of federal law controlling the ingredients in poultry products, the Humane Society said, while the egg ban involves the process of raising chickens.”

There, the important distinction concerns out-of-state production and in-state consumption. The Ninth Circuit’s ostensible treatment of the foie gras case will turn on its interpretation of the Interstate Commerce clause of the U.S. Constitution.

Faced with a previous challenge to the ban, the Ninth Circuit did not object to the way that Sacramento’s ban on foie gras made it impossible under state law for out-of-state producers to import the food into California. Nevertheless, Wilson held that federal poultry law prevailed over California’s policy.

Different argument

So the Humane Society and other ban defenders want the Ninth Circuit to consider a different argument: California should be able to ban food production that requires what they consider cruelty to animals — even for out-of-state production.

In a case last fall, Judge Kimberly Mueller, of the Sacramento Division of U.S. District Court for the Eastern District of California, held that out-of-state producers of eggs running afoul of California’s new rules lacked “standing” to sue — meaning  the capacity of a party to bring suit in court.

Now the Humane Society and its allies expect to show in-state standing before the Ninth Circuit.

All told, California’s food fight isn’t just set to expand. It’s set to escalate, perhaps even to the national level.

That’s why Missouri is challenging California egg protectionism:

Missouri’s attorney general has asked a federal court to strike down a California law regulating the living conditions of chickens, setting up a cross-country battle that pits new animal protections against the economic interests of Midwestern farmers. 

The lawsuit by Missouri Attorney General Chris Koster takes aim at a California law set to take effect in 2015 that prohibits eggs from being sold there if they come from hens raised in cages that don’t comply with California’s new size and space requirements.

If the law goes into effect, it will limit competition for California egg producers, allowing them to raise prices on California consumers.

Federal courts will decide the issue. The key section of the U.S. Constitution is the Commerce Clause, which grants only to Congress, not the states, the power “to regulate Commerce with foreign Nations, and among several States, and with the Indian Tribes.”

Even states’ rights proponents, who favor returning power to the states in most areas, don’t disagree on this one. The Constitution is clear and, despite some deviations over the years, the Commerce Clause has allowed mostly open free trade among the several states.

There are some exceptions, but only for special reasons. For example, California mandates special formulas for automobile gasoline. But that’s allowed because of the state’s unique problems with pollution in the Los Angeles basin. Such exceptions have nothing to with markets for common commodities.

So once again, California’s politicians could end up with egg on their faces.