FARM ANIMAL WELFARE ECONOMICS

1. FARM ANIMAL WELFARE ECONOMICS L.T. CZISZTER1, S. ACATINCĂI1,G. STANCIU1, E.N. SOSSIDOU2,M. PENEVA3, D. GAVOJDIAN1 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

2. Howmuchthe animals’ welfarecoststhe farmer • 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

3. Howmuchthe animals’ welfarecoststhe farmer Conflicts between animal welfare and productivity (McInerney, 2004)

4. Howmuchthe animals’ welfarecoststhe farmer 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

5. Howmuchthe animals’ welfarecoststhe farmer - values • 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

6. Savings from better animal welfare • 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

7. Savings from better animal welfare • Low-cost technologies could be animal-friendly • Loose housing for dairy cows vs. tie-stalls • 48 dairy cows

8. Consumers’ benefits from better animal welfare • 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

9. Consumers’ benefits from better animal welfare • 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

10. 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

11. 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

12. Impact on animal food prices of animal welfare policy

13. 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%

14. 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

15. 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

16. 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)

17. 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

18. 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

19. WTP in RomaniaPartial results of WELANIMAL questionnaires in Romania Question: What additional price premium would you be willing to pay for animal products sourced from an animal welfare friendly production system?