Abstract
This article reviews the literature on the economics of farm animal welfare. It starts with the challenge of defining and measuring animal welfare. Subsequently, the demand for farm animal welfare is evaluated from both the citizens’ perspective and the consumers’ perspective. The much-cited preference gap in between these perspectives constitutes a dilemma for the governance of animal welfare. Literature on the supply of farm animal welfare discusses the implications of enhancing farm animal welfare for production cost. The linkages between farm structure, farm technology, and animal welfare are discussed, and the frequently voiced hypothesis that smaller and more traditional farms automatically imply higher farm animal welfare levels is rejected. We examine the central challenge to the governance of farm animal welfare: its effects on competitiveness and trade. We also discuss objectives, governance instruments, the interplay of different policy instruments, and how to combine them for an effective and efficient strategy for farm animal welfare.
Generated Summary
This review article explores the economics of farm animal welfare, addressing the challenges in defining and measuring animal welfare, evaluating the demand for farm animal welfare from both citizen and consumer perspectives, and discussing the implications of enhancing farm animal welfare for production costs. The study employs a literature review methodology, encompassing various research areas, including governance instruments, the interplay of policy instruments, and their impact on competitiveness and trade. The article examines the central challenge of governance, particularly its effects on competitiveness and trade. It reviews the literature, provides insights for policymakers, administrators, and stakeholders, and identifies knowledge gaps for future research in this field. The review also focuses on the economics of farm animal welfare, which are relevant and challenging because the improvement of farm animal welfare can induce substantial cost on the farm as well as at subsequent market stages.
Key Findings & Statistics
- In total, additional animal welfare-induced annual costs are estimated at €3-5 billion for Germany, increasing current production costs by 13–23%.
- The highest percentage increases apply to pork (28–41%), and the lowest increases apply to cow milk (2-5%).
- Based on a sample of 23 WTP studies predominantly from Organisation for Economic Co-operation and Development (OECD) countries, they conclude that WTP for animal welfare is on average at a level of approximately 15% above base price.
- WTP is found to be approximately 6% higher for traceable beef attributes compared to those for pork.
- Lagerkvist & Hess (2011) perform a meta-analysis of consumer WTP for farm animal welfare based on 24 WTP studies that provide 106 WTP estimates in various OECD countries. They conclude that income has a positive effect on WTP, whereas WTP declines with increasing age.
- Approximately 82% of European respondents believe that the welfare of farm animals should be better protected than it actually is today.
- Approximately 64% of people would prefer to know more about the conditions under which farm animals are reared.
- In the Netherlands, the private sector label Beter Leven (Better Living) is widespread at the retail level.
- The German Branch Initiative on Animal Welfare, funded by German retailers, covers approximately 85% of the retail sector and pays 4 euro cents (6.25 euro cents from 2018 onward) per kilogram of pork or poultry marketed to a fund that pays farmers for the compliance with certain animal welfare measures.
Other Important Findings
- The primary demands are for more space, more variation in climate and floor covering, and more installations/materials for species-specific activities.
- The much-cited preference gap in between these perspectives constitutes a dilemma for the governance of animal welfare.
- The frequently voiced hypothesis that smaller and more traditional farms automatically imply higher farm animal welfare levels is rejected.
- This review addresses the economics of farm animal welfare and the governance options for improvement.
- This review provides policy makers, administrators, and stakeholders with an overview of governance options.
- One much-debated issue in defining animal welfare is whether it is a private good or a public good, as this has implications for the governance approach chosen.
- In developing countries, the issue of animal welfare is also becoming part of the agenda, due to the import requirements faced by exporting countries as well as rising domestic concerns in the course of economic development.
- The economics of farm animal welfare are relevant and challenging, as improvement of farm animal welfare can induce substantial cost on the farm as well as at subsequent market stages (e.g., transportation, slaughter).
- This article provides a literature review on the economics of farm animal welfare. The objectives are threefold: First, this review summarizes the state-of-the-art in economic research on farm animal welfare. Second, it identifies knowledge gaps that could be addressed by future research in this field of increasing importance. Third, the review provides policy makers, administrators, and stakeholders with an overview of governance options.
- The issue of farm animal welfare is receiving increasing attention, especially in high-income countries such as the member states of the European Union (e.g., Roosen et al. 2016, Spiller et al. 2015, Veissier et al. 2008) and in the United States (e.g., Sumner et al. 2010, Tonsor & Wolf 2010).
- Based on an online survey in five EU countries, Verbeke et al. (2010) perform a conjoint analysis and conclude that housing and floor type and efforts to protect soil, air, and water at the farm have the strongest influence on citizens’ evaluations of pig production systems.
- In total, additional animal welfare-induced annual costs are estimated at €3-5 billion for Germany.
- High animal welfare standards may result in increased domestic prices due to the existence of segregating market policies (tariffs, tariff rate quotas, nontariff measures).
- If a country or region enhances its animal welfare standards, this can also have impacts on the political discussion in other countries and may contribute to increasing standards elsewhere.
Limitations Noted in the Document
- The review focuses on the economics of farm animal welfare, and it does not cover the arguments of the animal rights movement.
- The cost estimates are subject to various uncertainties and only present a general range of the expected additional annual production costs.
- Reviewing specific case studies is beyond the scope of this article, as calculations are highly specific to both context and farm, and the citation of specific results is meaningless without considering such detail.
- The various animal welfare concerns range from some that are unambiguous among the general public as well as ethologists (e.g., more space, materials for manipulation, functional areas) to demands that are voiced by only a smaller group of citizens, discussed controversially by ethologists, and rather difficult and costly to implement (e.g., no separation of calf and mother).
Conclusion
The economics of farm animal welfare are complex and multifaceted, requiring a nuanced approach that considers various factors. The governance of animal welfare necessitates a comprehensive strategy, including regulatory measures, public and private sector incentives, and labeling schemes. A central challenge is to reconcile the costs of improving animal welfare with the need to maintain competitiveness and facilitate trade. The study emphasizes the importance of addressing the citizen-consumer gap by understanding consumer preferences and increasing transparency in the market. The discussion highlights the role of various instruments, such as regulations, taxes, subsidies, and labeling, in improving farm animal welfare. The review concludes that, despite the challenges, achieving high levels of animal welfare in open-market economies is possible with sufficient political will and a balanced funding strategy. Future research should focus on developing operational animal-based welfare indicators, reconciling scientific evidence with public perception, and exploring the potential of new technologies. The reconciliation of science-based and public perception-based animal welfare measures is essential for informed consensus. This underscores the need for a multifaceted approach, combining various policy instruments and strategies to create a more sustainable and ethical agricultural system. The importance of long-term guidelines, stakeholder dialogue, and a commitment to continuous improvement. The development of the German Branch Initiative on Animal Welfare suggests that it circumvents the usual disadvantage for retailers that results from moving to higher animal welfare standards: cheaper supply for competitors. The review concludes that the core conclusion on governance options is that, with sufficient political will, it is possible to reach high levels of farm animal welfare. This will require a policy combination and a balanced funding strategy, both of which must be tailored to the respective country and extend beyond a single legislative period.