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

2. How much the animals’ welfare costs the 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. How much the animals’ welfare costs the farmer
Conflicts between animal welfare and productivity (McInerney, 2004)

4. How much the animals’ welfare costs the 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. How much the animals’ welfare costs the 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
Tie-stalls
Cubicles
Construction (CHF/cow/place)
18,500
16,000
Labour (hours/cow/year) 95 80

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
Welfare change
Effects on production costs (%)
Commodity
Price change (%)
Introduce BST -8
Liquid 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 +5
Pork
+1.9
Bacon & ham
+1.3
Ban broiler systems
+30
Poultry meat
+13.2
Ban battery cages
+28
Eggs
+17.9

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 Romania Partial 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?
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%)
25%
5 (8.6%)
2 (2.8%)
>25%
1 (1.7%) DK
12 (20.7%)
14 (19.7%)