Fiscal and economic effects of Proposition 2

Abstract

In November, California voters will vote on Proposition 2, which would create minimum space requirements for egg-laying hens and other animals on California farms. Proposition 2 does not spell out specific cage sizes or characteristics, but rather requires that animals be able to turn around freely, lie down, stand up, and fully extend their limbs. This report examines the likely economic and fiscal effects of Proposition 2 on the state of California and its egg consumers and tax payers. The measure is not expected to cause higher prices for eggs at California supermarkets. Because eggs are national commodity, price-sensitive Californians will still be able to purchase conventional eggs from non-California Producers at prices which will be unaffected by Proposition 2’s passage. (Note that throughout this report, the term “conventional eggs” refers to eggs produced in battery cages.) In addition, Proposition 2 is likely to result in an increase in the availability of cage-free eggs and, thus, is likely to reduce prices for these types of eggs. Further, because egg production represents such a small share of the state’s economy, both fiscal and economic effects of the measure are expected to be minor.