2120 final report.pdf - Agra CEAS Consulting

THE SOCIO-ECONOMIC IMPLICATIONS OF THE VARIOUS SYSTEMS TO KEEP LAYING HENSThe main differences between the EU-15 and EU-25 models relate to key data inputs. First, bothtotal revenue from egg production and total costs of production, are greater for the EU-25. Second,to reflect differences in egg production by production system, the contribution to total revenue hasbeen adjusted. As would be expected, caged egg production provides a higher proportion ofrevenue because in the EU-25 the use of alternative systems to produce eggs is lower than in the EU-15.7.2. Scenario results7.2.1. Production costsThe four scenarios examined involve changes (all net increases) to feed, labour and other costsresulting in total cost changes of 1%, 5%, 10% and 20%. It is important to note that these changesare intended to highlight possible implications of the ban on production in unenriched cage systemsand they could be induced by a combination of actual cost changes, changes in the productionsystems used and/or changes in space allowances within enriched cages. As is evident from the Stage1 research presented earlier in this report there are substantial differentials in costs between thevarious production systems currently in use. Section 2.4.2.1 shows that the variable costs of barnproduction are 12% higher than production in traditional cages and free range production costs are22% higher. The scenarios presented therefore represent an estimation of the potential implicationsof moving from traditional caged production to alternative systems. It should be noted that thescenarios are not based on data drawn from any single country but are derived from the discussionwith industry in Stage 1 of this project as well as a literature review.It needs to be borne in mind that for the lower percentage changes (1%, 5% and 10%) the modelresults are considered to be robust. However, the 20% change in the model needs to be treatedwith a degree of caution since as with all economic models there are limits to the interpretativecapacity, particularly for changes in parameters that represent a significant change from thebenchmark 36 . The standard deviations (SDs) presented in the tables are small which means that thesensitivity analysis highlights that the model results are robust with respect to a range of keyparameter estimates.Our results are presented in Table 7.1 for the EU-15 and Table 7.2 for the EU-25.36 As part of our analysis we have conducted significant sensitivity analysis using Monte Carlo methods. All results reported are for aMonte Carlo experiment of 10,000 draws which is large in comparison to existing applications of this method in the literature. As a resultwe can be sure that our mean and standard errors results are robust. In terms of the model performance it can be seen from all theresults presented the standard errors are small compared to the means. More details of the various assumptions underpinning the MonteCarlo experiment are provided in Appendix 3.91