The economics of moving to high welfare farming

Compassion in World Farming

cuttingthecarbon did some work during the summer of 2011 to help with a Compassion in World Farming campaign about the economics of moving to high welfare farming.

2p is the starting price for better treatment of farm animals

If the true cost to society of intensive animal farming systems were factored into the retail price, then it would be far more expensive than farming which prioritises the welfare of animals. But high welfare farming actually costs a lot less than most people imagine. For example, a free range egg only costs 2p more to produce than a battery egg. There are also direct economic benefits associated with high welfare systems. Studies show consumers are ready to pay for higher welfare standards so introducing them does not need to penalise farmers. There are also many policy instruments which could be used to promote higher welfare farming.

Increasing the cost of production due to higher welfare farming leads to a significantly lower percentage increase in retail price, typically 25%.

  • Producing a free range egg in the UK costs 2p more than a battery egg Britons eat 187 eggs a year so going free range would only cost shoppers 7.5p a week more
  • Housing pigs in groups rather than individual sow stalls costs 2p more per kilo of pork
  • Britons consume 24.6kg of pork a year so higher welfare pig production would only cost consumers 2.4p per week more (£1.23 per year).

Higher welfare farming can mean direct economic benefits

Numerous studies show there can be direct economic benefits from higher welfare farming such as healthier and less stressed animals, lower levels of injury, better fertility, lower veterinary bills, better feed conversion ratios, higher growth rates, lower mortality rates, fewer rejections at slaughter and higher eating quality of meat.

  • UK chickens raised to the RSPCA Freedom Food standard have lower mortality, fewer transport losses, fewer slaughterhouse rejects, higher carcass quality
  • Group housing of pigs can be cheaper than sow stalls; outdoor production of pigs costs the same as indoor production; using no straw for pigs means higher energy costs
  • Selection of cows for high yield is economically disadvantageous because efficiency has traditionally been measured only by conversion of feed against milk yield and ignores fertility, longevity, health issues, grazing vs feed ratio, value of cull cows and calves

Paying the true cost of intensive farming

If all the costs to society of intensive farming – environmental degradation, greenhouse gas production, loss of biodiversity, consequences for human health – were included in retail prices, and the benefits of high welfare farming were rewarded, then high welfare systems would be much cheaper than intensive production.

“Unregulated, livestock generates significant negative externalities. It contributes to land degradation and water pollution and to the erosion of biodiversity, and it is a major source of greenhouse gas emissions. It poses serious risks to public health, including diseases such as highly pathogenic avian influenza (HPAI) and bovine spongiform encephalopathy (BSE).” World Bank, 2009.

Happy pigs

Consumers are ready to pay for higher welfare systems

  • A US study suggested Americans were prepared to pay 34 US cents per pound of weight for higher welfare pork (approximately 46 pence per kg)
  • Numerous studies have shown that the introduction of EU egg labelling regulations has led to consumers purchasing higher welfare, higher cost eggs

Levelling the playing field - clear rules can benefit everyone

  • There must be mandatory labelling of meat and dairy so that consumers can assess quality
  • The Common Agricultural Policy should only be used to subsidise factors valued by society which the market will not automatically reward (eg carbon sequestration, biodiversity-rich environments, higher animal welfare)
  • The EU Rural Development Regulation already allows payment of farmers who use high welfare standards - the 2013 reforms must retain and enhance this policy instrument
  • A sales tax could be introduced to internalise the negative externalities associated with intensive production, or higher capital allowances could be given to farmers who practice higher welfare farming