FARM ANIMAL WELFARE ECONOMICS

L.T. CZISZTERL.T. CZISZTER11, S. ACATINCĂI, S. ACATINCĂI11,, G. STANCIUG. STANCIU11, , E.N. SOSSIDOUE.N. SOSSIDOU22,, M. PENEVAM. PENEVA33, D. GAVOJDIAN, D. GAVOJDIAN11

1Faculty of Animal Sciences and Biotechnologies, Timişoara, România,

2National Agricultural Research Foundation, Veterinary Research Institute, Thessaloniki, Greece,

3University of National and World Economy, Sofia, Bulgaria cziszterl@yahoo.com

Higher welfare standards increase fixed and variable costs• Fixed costs: reduced conversion rates• Variable costs: energy, labour

Costs for the farmers to improve the welfare of their animals• Increased space requirements = modification or

construction of new facilities• Extensive production systems = more land• Higher labour requirements, increased energy

consumption, reduced feeding efficiency = increased operational costs

• Higher standards = increased costs of transportation and processing

Conflicts between animal welfare and productivity (McInerney, 2004)

High costs for the farmers but low costs for consumers = consumers’ demand for such products

In some cases switching the technology could be insignificant while in others quite expensive

Production costs could rise 5 to 30% Laying hens

• £10 per bird in the EU (Blandford et al., 2000)• 12-15% in Italy (higher feed consumption,

more broken eggs, higher variable costs) Pigs

• Stalls, tethers, space = 3-11% (£39-£65 thousand)

• New pig units cost = 18-22% Loss of 6,000 jobs

Lower morbidity and mortality Reduced expenditure on disease control and

treatments Low-cost technologies could be animal-

friendly Healthier animals = higher production Careful, quiet handling = higher meat quality

(less bruises)• Bruises costs

US beef industry $1.00 per animal on feedlot beef and $3.91 per animal on cows and bulls

US pork industry $0.34 per pig due PSE and $0.08 per pig due bruises

Australia beef industry $36 million annually Calm animals = employee safety

Low-cost technologies could be animal-friendly• Loose housing for dairy cows vs. tie-stalls• 48 dairy cows

Tie-stalls Cubicles

Construction (CHF/cow/place)

18,500 16,000

Labour (hours/cow/year)

95 80

Individual benefits• Consumers feel more comfortable when they

know the way its food-producing animals are treated

• 80% of the EU consumers are concerned about animal welfare

• 5% of the EU consumers volunteer animal welfare as concern

• Consumers like to tell by looking at a product how it is made

• Producers that use animal-friendly technologies have an incentive to reveal that to the consumer

Social benefits• When consumption of goods by one person

affects a lot of other people, government action is required

• Left by their own, consumers will only take care of their own welfare when deciding what to consume

• An animal welfare regulation improves social welfare if: benefits to the consumer of increased animal

welfare > increased costs to the consumer and producer

Consumers’ willingness to pay (WTP) for animal-friendly

products Consumers’ response

• Cease of consumption UK and Ireland: veal and foie gras

• Become vegetarian Appleby, 1999 – “Buying meat produced with high welfare

standards does more to improve farm animal welfare than eating a vegetarian diet”

• Choose products associated with higher level of animal welfare: labeling

• May not change their food purchasing behaviour, because Their purchase will not have an impact on how food is

produced They mistrust the information provided They do not afford the price

Consumers’ willingness to pay (WTP) for animal-friendly

products

Western countries• Price is not the only determinant in buying

animal products• Consumers do not seek the cheapest food

but the best value for money

Impact on animal food prices of animal welfare policy

Welfare changeEffects on production costs (%)

CommodityPrice

change (%)

Introduce BST -8Liquid milk -2.56

Cheese -1.92

Ban hormones +4 Beef -1.44

Limit transport to 8 hrs

+3 All carcasses +1.14

Ban sow tethers and crates

+5Pork +1.9

Bacon & ham +1.3

Ban broiler systems +30 Poultry meat +13.2

Ban battery cages +28 Eggs +17.9

WTP laying hens USA college students $8 UK £0.43 to eliminate battery cages for

poultry Variants for laying hens

• Convention battery production• Barn production• Free-range production

Market share of free-range eggs in EU• Austria (1996) 40%• Denmark (1996) 25%• Netherlands (1996) 22%• UK (1998) 20%• Germany (1996) 11%• France (1996) 8%• Italy (1997) 3%

WTP laying hens

Denmark (2005) WTP more• Urban consumers than rural people for

organic eggs• People who perceive the level of animal

welfare as higher in organic eggs: not only for organic but for animal welfare

WTP yogurt

Italy (2007) WTP more if:• Higher welfare standards indicated on label

higher WTP for yogurt• Information about animal welfare if given to

consumers can be determinant in WTP for animal products

WTP broiler chicken UK (2005) £7.53 per household/year

• Reduce stocking density from 38 to 30 kg/m2: £3.89/kg;• Reduce percentage of flocks failing foot pad lesion standard

from 15% to 5%: £3.01/kg;• Change quality of ventilation from low to high: £2.68/kg;• Reduce stocking density from 38 to 34 kg/m2: £1.91/kg;• Change ventilation from low to intermediate: £1.67/kg;• Reduce percentage of flocks failing foot pad lesion standard

from 15% to 10%: £1.38/kg;• Change period of darkness from 4 hours to 8 hours:

£0.97/kg;• Change period of darkness from 4 hours to 8 hours with at

least 4 hours continuous: £0.67/kg UK (2005) supermarket standard price £1.78-£2.99

• Free-range chicken price £3.17-£5.99 (6-250% more)

WTP meat Chile (2007)

• 60% of consumers had some knowledge about livestock management practices

• 50% considered those practices had a negative effects on animals

• 32.1% changed their meat consumption habits• Strong WTP 15.2% higher prices for meat produced

under animal welfare principles• Positive perception for meat produced by pasture-fed

animals, raised in free-range and transported and slaughtered following humane principles

• Large part of population perceives animal welfare as a desirable condition when purchasing beef

WTP veal and beef

USA (1996) $8 to improve welfare of veal calves

South Chile (2009)• Origin of beef was the most important

attribute• Then, information about animal welfare• Then, price of the product

WTP in RomaniaPartial results of WELANIMAL questionnaires in

Romania

Farmers Consumers Trainers

Total responses

58 71 9

No 13 (22.4%) 21 (29.6%) 2 (22.2%)

5% 20 (34.5%) 19 (26.8%) 3 (33.3%)

10% 7 (12.1%) 13 (18.3%) 2 (22.2%)

25% 5 (8.6%) 2 (2.8%) 2 (22.2%)

>25% 1 (1.7%) 2 (2.8%) 0

DK 12 (20.7%) 14 (19.7%) 0

Question: What additional price premium would you be willing to pay for animal products sourced from an animal welfare friendly production system?