NC State Economist: The 1997 Moratorium on Construction or Expansion of Swine Farms: A Tale of Unintended Consequences

By Tomislav Vukina, Professor and Extension Economist
Department of Agricultural and Resource Economics, NC State University

In this edition of the NC State Economist, Dr. Tomislav Vukina describes how the state of North Carolina, determined to curb the negative environmental impacts of the rapidly expanding hog industry, passed new regulations that generated several unintended consequences. First, these regulations created substantial wealth gains for hog farmers who were grandfathered valuable production quotas for swine. Second, the quota system accelerated the industry’s concentration in North Carolina. Third, the quota system stifled competition among swine-producing companies that eroded some of the initial windfall gains to hog farmers in later years.