How California's New Rules Are Scrambling The Egg Industry : The Salt On Jan. 1, all eggs sold in California will have to come from chickens living in more spacious digs. The rules have disrupted the egg industry and pushed prices up at grocery stores in California.

How California's New Rules Are Scrambling The Egg Industry

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LOURDES GARCIA-NAVARRO, HOST:

Within just a few days, Thursday, in fact, all eggs sold in California must come from chickens who live in more spacious quarters. In fact, they'll get nearly twice as much room as what has been the standard. It's been a shock to the egg industry. As NPR's Dan Charles reports, shoppers are already seeing the impact.

DAN CHARLES, BYLINE: Ronald Fong, who's president of the California Grocers Association, says there are a few really basic rules for surviving in the grocery business.

RONALD FONG: You have to have bread, milk, lettuce, you know, you have to have eggs.

CHARLES: That's why right now, California's grocers are doing whatever it takes to get their hands on eggs that will be legal to sell in the new year, eggs that are stamped with a new, almost incomprehensible label.

FONG: The label reads something like CA SEFS Compliant, which stands for California Shell Egg Food Safety Compliant.

CHARLES: That stamp means those eggs comply with a new regulation, the result of a voter initiative that 60 percent of Californians voted for in 2008. It was called Prop. 2 and it said that eggs in California have to come from chickens that have enough room to fully extend their limbs and turn around freely. That was going to mean big changes because most egg-laying chickens cannot do that. They live in small cages, five or 10 birth to a cage. State officials had to figure out how to translate Prop. 2's requirement into regulations. California's state veterinarian, Annette Jones, turned to animal welfare experts of the University of California.

ANNETTE JONES: We actually did hire some scientists at UC Davis to do a study for us to kind of give us their feel based on some field trials that they did of, you know, how much space Prop 2 meant.

CHARLES: And they decided each chicken is legally entitled to at least 116 square inches of floor space. But that means as of January 1, most egg producers in the United States cannot sell eggs in California. Egg producers have responded in several ways. Some have tried to challenge the California rules in court; so far that's failed. Jones says some egg producers have built new hen houses - free-range houses, where chickens can walk around on the floor, or houses with bigger so-called enriched cages, with perches and enclosed places where chickens can lay their eggs.

JONES: In general, poultry farmers are trying to move in that direction, to provide, you know, more space mobility and the ability for their hens to exhibit more natural behaviors.

CHARLES: But that takes time and costs a lot of money. Ronald Fong from the California Grocers Association says most egg producers so far have taken a simpler, cheaper route.

FONG: The way that they are complying with the new standards is by reducing the flock size.

CHARLES: They've kept their cages for now. But instead of eight birds to a cage, maybe they have four. Obviously, that means fewer chickens in each house and fewer eggs going off to supermarkets. People in the egg industry say this is one reason why the egg industry in California has gone into a sharp decline. According to government statistics, the number of egg-laying chickens in California has fallen by 23 percent over the past two years. In the rest of the country, though, egg production is expanding. And egg brokers who supply the California market have been ringing up egg producers all across the country offering high prices for eggs that meet California's new rules. Ronald Fong says they're finding plenty of legal eggs.

FONG: Retailers are telling us that it is going to be business as usual come January 1.

CHARLES: But consumers will pay.

FONG: We can confirm that egg prices have gone up at least 35 percent. Some have reported going up as far as 70 percent.

CHARLES: Actually, egg prices are soaring in lots of places, not just in California. People are just eating more eggs. Mexico is importing lots of eggs because of disease in chicken flocks there. With prices so high, more egg producers are going to be expanding production, building new hen houses. And because of California's law, those houses are more likely to give chickens more room to spread their wings. Dan Charles, NPR News.

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