In the last six months, the third-generation egg farmer in central San Diego County has reduced his flock by half and embarked on a $1-million overhaul of his henhouses to make them more spacious. Customers are now paying about 50% more for a dozen eggs from Hilliker’s family business at around $3 a carton.

It’s all to comply with a landmark animal welfare law that takes effect in California on New Year’s Day. Voters overwhelmingly approved Proposition 2 in 2008 to effectively abolish the close confinement of farm animals in cramped cages and crates — a practice that animal advocates say causes needless suffering and boosts the likelihood of salmonella contamination…

…”When the law passed, we had to do some soul-searching,” said Hilliker, a stout, plain-spoken man with lean pork chop sideburns and, ironically, an aversion to breakfast. “We could have sold the land to development, become greeters at Wal-Mart and lived very comfortably.”

He resisted out of a sense of loyalty to his employees and their families. And he set out to comply with the new California rules by asking a bank for a new line of credit to pay for the retrofit.

More: Egg Prices Likely to Rise Amid Laws Mandating Cage-Free Henhouses