The Relationship Between Animal Welfare And Economic Performance At Farm Level: A Quantitative Study Of Danish Pig Producers

Abstract

We propose a theoretical framework for the relationship between animal welfare and the economic performance of livestock farms. We empirically analyse this relationship based on a unique data set of randomly sampled Danish pig herds that includes information from unannounced inspections of the compliance with the animal welfare legislation. We find large variations in economic performance indicators and animal welfare indicators. The relationship between these two indicators is rather weak, but tends to be slightly positive. We conclude that management has a major influence on both economic performance and animal welfare so that good farm managers are able to obey all animal welfare regulations and, at the same time, achieve a high economic performance. Keywords: animal welfare, gross margin, technical efficiency, pig farms, Denmark JEL codes: Q12

Generated Summary

This research investigates the relationship between animal welfare and economic performance in Danish pig farms. The study employs a quantitative approach, utilizing data from animal welfare inspections and economic records. The analysis uses a stochastic frontier framework and regression analysis to examine the correlation between animal welfare indicators (including total violations, specific violations of regulations, and the most severe sanctions) and economic performance (gross margin per livestock unit). The research aims to determine if and how compliance with animal welfare regulations impacts the economic outcomes of pig farming. The methodology includes tests for non-random sample selection, correlation analysis using boxplots and scatter plots, and regression analysis to control for confounding factors like production type and farm size. A stochastic frontier model is used to analyze technical efficiency, linking it to animal welfare. The data set includes 299 herds, and 136 farms are used for economic data.

Key Findings & Statistics

• The study analyzed 299 pig herds, with economic data available for 136 farms.
• The average herd size was 1,703 pigs.
• The majority of herds consisted of slaughter pigs only (176 herds) or a mix of sows, piglets, and slaughter pigs (91 herds).
• There were also 24 pure sow and piglets herds and 8 pure piglets herds.
• The most common areas of non-compliance were furnishing of adequate rooting and manipulable materials (24% of all herds) and treatment and handling of sick animals and the furnishing of the hospital pens (19% of all herds).
• The gross margin per LU varied considerably within each production type.
• Integrated pig producers, specialised slaughter pig producers, and producers with sows and piglets had about the same gross margin per LU.
• Farms that raise piglets and fatten slaughter pigs had on average a significantly higher gross margin per LU.
• The average gross margin per LU for all types of farms was DKK 15,137.4.
• The average number of total violations was 2.4.
• No significant relationship between gross margin per LU and the size of the pig farm was found for any of the analyzed groups.
• The removal of herds due to non-availability of economic data only biases the sample regarding the herd size of integrated pig producers: herds of integrated pig producers that are included in our analysis are on average 23% larger (in terms of LU) than herds of integrated pig producers that had to be removed from our analysis.
• The average gross margin per LU did not significantly differ between farms that comply with all animal welfare regulations and farms that violate at least one regulation (t-value: -0.20, P-value: 0.841 for integrated pig producers; t-value: -0.32, P-value: 0.750 for specialized slaughter pig producers).
• Each violation of the animal welfare legislation corresponds to a reduction in the gross margin per LU of around 400 DKK.
• The elasticity of scale of our estimated output distance function is around 1.03, indicating slightly increasing returns to scale.

Other Important Findings

• The study found a weak positive relationship between animal welfare and economic performance.
• The analysis revealed that the relationship between animal welfare indicators and economic performance was generally weak.
• No significant correlation was found between gross margin per LU and the total number of violations of animal welfare legislation.
• The most interesting result is that farms that specialise in raising piglets and fattening slaughter pigs have ceteris paribus a significantly higher gross margin per LU than the other production types.
• The study found that the management (e.g. skills, aims, motivations) has a major influence on both economic performance and animal welfare.
• Violations regarding rooting and manipulable materials and the treatment of sick animals seem to be irrelevant.

Limitations Noted in the Document

• The economic data represents an entire year, but animal welfare was only observed at one specific time.
• The animal welfare indicators focus on negative deviations from the legally required minimum animal welfare level.
• Many farms in the data set have more than one herd, but in most cases, the study only has animal welfare data for one of the herds.
• The study is based on observational data, so it cannot analyze causal effects of animal welfare on economic performance.
• The study’s findings are based on a non-random sample of Danish pig farms, as economic data was not available for all farms.

Conclusion

The study indicates that the current legally required minimum level of animal welfare for pig production in Denmark is not significantly above the economic performance maximizing level of animal welfare. The research suggests that the economic performance at the legally required minimum level of animal welfare is not significantly above the maximum economic performance. The management’s influence on both economic performance and animal welfare is a key takeaway. Many farm managers successfully adhere to all animal welfare regulations while maintaining a high economic performance. The large variations in economic performance and animal welfare indicators, paired with the weak relationship between them, suggest that factors beyond compliance with regulations significantly impact farm outcomes. The study’s findings do not substantiate consumer concerns regarding a trade-off between animal welfare and economic performance. The research suggests that larger farms and those with high economic performance do not necessarily have a lower level of animal welfare. The analysis indicates that each violation of animal welfare legislation corresponds to a reduction in gross margin, while the specific aspects of the violations (rooting, sick animal treatment) are not directly related to the financial outcomes. This work highlights the complexity of the interplay between animal welfare, economic factors, and farm management practices within the pig farming sector. The study suggests that future research should explore factors that give a higher animal welfare than legally required, outcome-based animal welfare measures, and methods to analyze causal effects on economic performance. The study’s limitations include the static nature of the welfare assessment and the lack of causal analysis. The research suggests that future studies consider repeated inspections, more diverse welfare measures, and the use of “big data” to provide a more comprehensive understanding of these relationships.