PHOENIX — Saying the move is costing him money, the owner of three Tucson restaurants has filed suit to overturn rules designed to give egg-laying hens more room to move and stretch their wings.
Grant Krueger is arguing through his attorneys that the state Department of Agriculture did not have the authority to declare that laying hens have to be kept in cages that have at least one square foot — 144 square inches — of usable floor space. Prior to its implementation, cages could be less than half that size.
But that’s just the beginning. Under the same rule, by 2025 all major producers will have to go cage-free.
And that requirement also exists for out-of-state producers that want to sell their eggs in Arizona.
Krueger said what’s wrong with that, aside from the legal questions, is it is driving up his costs.
The state Department of Agriculture puts average annual per capita consumption at slightly more than 270 eggs a year. Figuring the new rules would add somewhere between a penny and 3.25 cents per egg, that comes out to somewhere between $2.71 and $8.79 a year for consumers.
But Krueger said the cost is much higher for restaurants. He operates three under the banner of Union Hospitality Group: Union Public House, Reforma Modern Mexican Mezcal + Tequila, and Proof Artisanal Pizza and Pasta, all located in St. Philip’s Plaza. Krueger said he buys well over 100,000 eggs a year “and that’s just our small restaurant.”
“It’s such a basic ingredient in so many things so when the cost goes up on eggs, the costs go up on everything,” said Krueger, whose restaurants employ 225 people.
Restaurants and consumers have been dealing with skyrocketing egg prices since 2022, when inflation drove up the prices of most consumer goods. But while some of those prices have steadily dropped, eggs still cost more than they did two years ago. The cage-free egg rule will drive those prices up even more, Krueger said, adding that most producers have already adapted to the cage-free rule and are now charging higher prices.
Krueger said his restaurants already are operating on thin margins that are getting even thinner. He said he’s anticipating the higher egg prices combined with higher costs for labor and other ingredient staples, including meat, could have a $50,000 to $100,000 impact on his bottom line.
“And that’s just our small restaurants,” he said, noting that when you consider Tucson’s 1,200-plus restaurants and the couple hundred other restaurants throughout Pima County, “you’re talking about millions and millions of dollars.”
“It’s not insignificant and it’s just one more factor” that is raising the prices of “just about everything,” he said.
John Thorpe of the Goldwater Institute, one of the attorneys on the case, said buying cage-free eggs isn’t a choice that Krueger would have made.
“When purchasing eggs or egg products, Union Hospitality Group does not specifically seek out eggs produced in a cage-free manner,” the lawsuit says.
But what gives Krueger and his attorneys a legal basis to ask a judge to void the rules is the way the Department of Agriculture adopted it.
The background is political.
In 2021, a group known as World Animal Protection was promoting an initiative to require cage-free systems by May 2023. Its proposal also would have made violations a crime.
That alarmed the owners of Hickman’s Family Farms, the state’s largest egg producer. So they agreed to back legislation that would impose the same mandate — but not until 2025.
All that came over the objections of the Arizona Farm Bureau Federation, which managed to kill the bill.
But the Department of Agriculture picked up the issue, reaching the conclusion that, absent state action, voters would approve the harsher initiative. More to the point, the agency concluded it already had the authority to approve its own rules, which is what it did.
Thorpe, in the new lawsuit, disagreed. He said the agency could act only with specific legislative authority, something it did not have.
And the way they did it, he said, made matters worse.
“The placing of the lawmaking power in the hands of AzDA led to a collusive process in which egg producers and industry groups worked closely with the agency to develop the rule they wanted,” Thorpe said, all to undermine the initiative.
“As a result, consumers, restaurateurs, and restaurants — three groups expected to be impacted by increased egg prices resulting from the rule — did not have adequate protection of their interests in the rulemaking process,” the lawsuit states. “Through this suit, Union Hospitality Group and Mr. Krueger seek to ensure that policies that impact the lives and finances of Arizonans are enacted by the elected Arizona Legislature to ensure the consideration and protection of all Arizonans’ interests.”
In adopting the rules, the Department of Agriculture said it is “intended to represent the best management practices in the shell egg industry that ensure the production of high-quality, cruelty-free eggs.”
Animal welfare
That issue of animal cruelty is not addressed anywhere in the lawsuit. But Joe Seyton of the Goldwater Institute said it is legally irrelevant. He said if there is to be a policy about whether cages are cruel, that is a decision to be made by lawmakers, not a state agency.
“Our beef with this particular law … was that this wasn’t actually made by lawmakers. It was made by decree of the Arizona Department of Agriculture,” Krueger said. “We are paying two to three times as much for egg products as we were two or three years ago (because) … the bureaucrats usurped the legislators and went around the lawmaking process.”
But there is no clear consensus on the issue.
In lobbying in 2021 to kill the bill, Chelsea McGuire of the Farm Bureau had one point of view.
“We’re locking producers into this premium product and doing so unnecessarily,” McGuire said. And she said it’s all being done “without a public health or safety justification or a scientific justification.”
And she sniffed at the contention of some animal rights groups that it’s cruel to keep the laying hens in tiny pens.
“Stress indicators on hens, things like that, are really no different between conventional confinement cages and cage-free production systems,” she said.
But that isn’t how Sen. John Kavanagh, R-Fountain Hills, saw it.
“Confining chickens to less than one square foot, I think, is really cruel,” said Kavanagh, at the time a state representative.
“Granted, they don’t have very high levels of sentient awareness,” he continued. “But they feel pain and they’re prevented from engaging in natural and instinctive behavior, even to the point of spreading their wings or being able to sit down when they lay their eggs.”
There were other issues raised during the 2021 debate.
Lawmakers asked Glenn Hickman, president of the company that bears the family name, if eggs from cage-free chickens are of higher quality than their more-confined cousins. He said there’s no simple answer.
“You feed the chickens the same,” Hickman said. He said it’s like brown versus white eggs, with no real difference.
“But there are some studies that suggest that chickens who have less stress tend to have more natural defenses, immunities, if you will, and are therefore healthier,” he continued. “And that would translate potentially into maybe a different composition of egg.”
Maybe.
“You’re making some scientific leaps,” Hickman agreed.
There was no immediate response to the lawsuit from the Department of Agriculture.
No date has been set for a hearing.
When it comes to spending, groceries are the biggest monthly expense for people. Maybe there is something to people complaining about the price of eggs! 48% say that grocery bills are their biggest monthly expense according to the UserTesting study conducted by OnePoll. Buzz60’s Keri Lumm has more.
