The Future of Animal Agriculture in North America - Farm Foundation

eak the rules; discipline is far more difficult to impose in a
collective approach. For a voluntary, collective approach to be
effective, some elements of the food industry must be willing
and able to impose sanctions in the event standards are not
met. There will also be costs for audits and enforcement. The
potential for enforcement exists in the FMI/NCCR program if
food retailers and restaurant chains refuse to do business with
non-conforming suppliers. McDonald’s has been a leader in this
approach. Food processors and integrators could play a similar
role in helping to ensure that agreed standards are met at the
producer level. However, producers are the ones that will
implement the animal welfare practices, make necessary
investments and cover, at least initially, any added costs. They
must also be involved in developing the standards adopted.
Economic Impacts
Unless animal production practices actually result in lower
productivity and efficiency in the animal industry or pose a
threat to human health, low animal welfare standards do not
impose an economic cost on society. In fact, society as a whole
may gain economically if the prices of animal products are
lower due to current production practices.
It is sometimes argued that animal welfare is a public good, i.e.,
all members of society benefit from a system that treats animals
in certain ways, or, alternatively, that certain production systems
impose external costs on society that are not reflected in the
price of animal products. In both cases, there will be a market
failure—the wrong quantity of a desired attribute is supplied, in
this case welfare. The public as a whole may suffer “psychic
costs” in the sense that the well-being of members of society is
reduced by the knowledge that certain practices are used in the
search for lower cost food, but there is little evidence of true
market failure (failure to account for economic costs) associated
with animal welfare (Carlsson et al., 2003). Consequently, if a
choice is made to impose higher welfare standards in farming, it
must be based on criteria other than economics.
Production Costs and Consumer Response
More research is needed to understand the relationship between
increasing animal welfare standards and production costs. In
some cases, higher welfare standards are likely to increase
production costs for animal products. Changes in confinement
operations, particularly increased space requirements, may
create additional capital costs through the modification of
existing facilities or construction of new or larger facilities.
Extensive production systems, such as free-range eggs, require
more land. Operating costs may increase due to greater use of
labor in caring for animals, higher energy costs involved in
running larger facilities, and higher feed costs if feeding
efficiency declines because of greater energy use by unconfined
animals. If production systems require fewer animals producing
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less meat, milk or eggs in a given period, there will be less
output per dollar of total costs. In this case, there will be less
total production unless there are more production units built
raising concerns about air quality, site selection and neighbor
conflict, and, particularly for outdoor facilities, water quality
related to manure runoff issues, as discussed in the
Environmental Issues Chapter. Higher standards may also
increase the costs of transporting and processing animals.
Multidisciplinary approaches are necessary in balancing various
trade-offs. Focusing only on natural behaviors and ignoring
mortality (which is two times higher in non-cage systems) and
disease issues are examples. Recent concerns about the spread of
H5N1 avian influenza by migratory birds have led to bans on
outdoor poultry production in some European countries.
Balanced against this, there may be some cost savings as a result
of the application of higher welfare standards. Morbidity and
mortality may decline and expenditures on disease control and
treatment may decrease if animal health improves, though this
may not necessarily be the case. Increases in reproductive
efficiency may lead to cost savings. For example, product
quality may improve meat quality as a result of less stress in the
handling and slaughter of animals.
For example, total house feed efficiency favored housing birds
at 48 square inches. However, providing space to the new
standards of 69 square inches increases per-hen productivity
and lowers mortality (Bell et al., 2004). This is an example
where economics and welfare are not in opposition.
The net effect on costs of changes in standards is difficult to
determine. Some changes that reduce the stress imposed on
animals in handling can be relatively inexpensive.
Unfortunately, there have been relatively few studies of changes
in production costs associated with changes in animal welfare
standards. One analysis of increases in poultry production costs
associated with higher welfare standards in the EU estimates
unit cost increases ranging from 5 percent for modest changes
in practices for broilers and layers to 50 percent for more
radical changes, such as free-range egg production (Table 1,
Moynagh, 2000). Another study indicates there is a major
increase in labor costs in switching from the use of cages to
free-range production—roughly five times as much labor is
required per bird, egg production per bird falls by 15 percent
and the amount of feed used increases by roughly 7 percent
(Vocke, 1991).
A recent study of the switch from traditional cage systems to
alternative systems in the EU provides data that confirm some
of these conclusions (Agra CEAS, 2004). The amount of feed
used per kilogram of eggs is significantly higher in free-range
and organic systems, compared to traditional cages (Table 2).
These alternatives also require more labor. Birds kept under