A tough egg to crack: Will Utah amend its cage-free law before 2025 deadline?

Cliff Lillywhite admits that it has not been easy converting his egg-producing facility from cages to no cages.

He began the endeavor at Oakdell Egg Farms in North Salt Lake before the Utah Legislature passed a law two years ago requiring all egg facilities in the state to be cage-free by the start of 2025. While he expects to be compliant by that deadline, he's now worried by what the law didn't include: a state ban on selling noncage-free eggs.

"If the state of Utah remains where it is, it will encourage all of us to sell eggs outside of the state, which we don't want to do because we love Utah," he told members of the Natural Resources, Agriculture and Environment Interim Committee last week. "We want to take care of things here in Utah. It's just been a real difficult thing."

He's not alone, either. Utah's egg producers are asking state lawmakers to consider banning the sale of noncage-free eggs by the time the 2021 law goes into effect, state agriculture officials reported to the committee on Aug. 9.

But members of the committee, including the original bill's sponsor, seem hesitant to oblige, arguing that it might be easier to pass a bill that rescinds portions of the law than pass legislation that could ban a potentially lower-cost option for consumers.

The committee ultimately approved a motion to open a bill file for a broad review of the matter ahead of the 2024 legislative session before any changes are made.

How Utah's cage-free law came to be

The Legislature, in 2021, set a deadline for Utah egg producers to use only cage-free methods. Sen. Scott Sandall, R-Tremonton, who sponsored the legislation, said at the time that producers requested the legislation, asserting that they wanted to take a "proactive" approach to the issue.

The law states that Utah egg producers must provide hens perches, nest boxes, scratching areas and other amenities that allow them to "exhibit natural behaviors" by the start of 2025. Several producers, animal rights groups and the Utah Retail Merchants Associations all endorsed the law, saying it meets the growing pressures placed by consumers and many food companies.

With Arizona approving a similar measure this year, the Beehive State is one of now 11 states with complete or partial cage-free requirements on the books. Other Western states include California, Colorado, Nevada, Oregon and Washington, according to Amber Brown, director of legislative and government affairs for the Utah Department of Agriculture and Food.

Major retailers like Walmart, Costco and Kroger, the parent owner of Smith's, all have pledged to be cage-free by 2025, too, she added.

Producers realized it might be the only way they could sell their products, Lillywhite explained.

"I'm not sure we saw it as an entrepreneurial opportunity for us," he said. "We saw it as a matter of survival to supply our customers."

The law also gave the Utah Department of Agriculture and Food the job of enforcing the law and for the department to compile an implementation report for the Legislature's Business and Labor Interim Committee by this November.

A costly implementation

Utah's egg producers report being anywhere from 50% to 75% compliant with the regulation and expect to reach 100% by the end of next year, according to Brown, who offered members of the Natural Resources committee a sneak preview of the November report in last week's meeting.

Producers are somewhat split on how to describe future changes, as 36% called it an opportunity, compared to 28% who called it a challenge. Another 36% — the plurality of the survey — said they view it as equally challenging and opportunistic. Four-fifths of those surveyed said demand for cage-free eggs has increased over the past three years, estimating that the increase is between 10% and 15%, according to the department presentation.

But getting there hasn't been easy, as Lillywhite mentioned. Every Utah producer the department spoke to reported spending at least $1 million transitioning to the law and costs may exceed $10 million altogether, Brown said. That's because going cage-free requires at least twice the capital costs, along with all sorts of other additional costs associated with the process.

These additional costs could be pushed onto the consumer, which would cause problems. She adds that self-reported data indicates most people will buy the cheapest egg available no matter what.

"Data has shown consumers will purchase the lower-priced egg regardless of whether there is a cage-free pledge or cage-free requirement in the law. If the price is too high, they will just not purchase eggs at all," she said, cautioning that there isn't enough sales data yet to confirm the self-reported information.

Addressing the new problem

This is where the new concerns about implementation arise. The 2021 law doesn't include any sort of language that prohibits noncage-free eggs from being imported and sold in Utah.

If the consumer scenario plays out, agriculture officials suspect there might be a shift in the market, where Utah produces eggs sold to other states and retailers import eggs from states that don't have similar requirements, raising potential food security concerns, especially if there are transportation issues blocking imports.

Utah egg producers — the ones like Lillywhite — are requesting an amendment to the law to address the possibility. They want a change that allows for noncage-free eggs to flow through the state, but not sold in it, and requires egg sales in Utah to "meet or exceed Utah production standards," Brown said.

However, that idea didn't sit well with some members of the committee, including Sandall. He said he isn't sure the Utah Legislature would support a measure that would "deny" consumers a potentially lower-cost option in stores.

"I'm a free market person and I have a hard time saying, 'You can't do this.' I think it ought to be the consumer that makes the choice," said Rep. Rex Shipp, R-Cedar City, in agreement.

Rep. Tim Jimenez, R-Tooele, presented a motion to open a committee bill file looking into the idea of rescinding the 2021 bill, allowing producers to decide whether to go cage-free or not, as a possible solution.

That idea, in turn, didn't sit well with Lillywhite, whose company put even more time and money into its facility to meet the state law after the 2021 bill cleared the Legislature.

"That ship has sailed quite frankly," he said. "We had no choice, we invested a lot of money. If you put all Utah producers out of business — that could happen."

Rep. Walt Brooks, R-St.George said he doesn't believe the Legislature would want to "pull the carpet from underneath" producers after requiring them to convert their equipment, either. In the end, the committee agreed on opening a bill file to review the law and explore any possible changes before the 2025 deadline.

"(We'll be) working with you (in the) industry to make sure we're doing it in a way that's favorable, as well, for you," he said, speaking to Lillywhite and other agriculture experts.

It's likely a topic that will be considered further as the deadline slowly approaches.