The Impact of the Marketplace on Farm Animal Welfare

Humane treatment of farm animals is of increasing importance to consumers, according to a tracking poll conducted to help the food industry keep up-to-date on evolving consumer trends. In another study conducted by researchers at Kansas State University, a majority of consumers said they favored mandatory labeling of pork produced on farms using gestation crates and of eggs produced using battery cages, and that they would pay more to receive this information on a package.

America is a capitalistic, free-market society, and businesses—including animal farming operations—must ultimately satisfy consumers in order to survive. That is the point being made by agricultural economists Bailey Norwood and Jayson Lusk in their provocative new book, Compassion by the Pound: The Economics of Farm Animal Welfare (Oxford University Press, 2011). They remark, however, that consumers drastically underestimate the extent to which farm animals are raised in intensive confinement. They further note that finding crate-free pork and free-range poultry remains difficult for most consumers, and therefore “...observed choices in the market-place do not reveal people's values for improved animal well-being.”

To illustrate the role of marketplace economics in overall production and in the lives of individual animals, Norwood and Lusk conducted a series of experiments including mathematical calculations and in-person auctions with typical consumers. In one exercise they estimated the effects of hypothetically reducing one person's consumption of six animal food products—beef, chicken, milk, veal, pork and eggs—on total production of the products. The impact varies due to differences in the elasticities of supply and demand for the various foods, with the result that cutting out one egg has more of an impact than giving up one pound of any of the meats.

The economists also looked at the potential impact of changes in consumption on the lives of animals. This exercise, referred to as the “Ethical Eating Assessment Tool,” is designed to inform individuals regarding the impact of dietary choices, based on one’s own personal views about farm animal welfare. In the provided example—using standards based on the assumptions and beliefs of one of the authors (Norwood)—welfare at the level of the individual animal was most affected in a positive direction by reducing consumption of veal, followed by eggs and pork. The decision to decrease consumption of milk, beef and chicken, however, was estimated to have a negative impact on dairy cows, cattle and chickens, given the author’s belief that even under the conditions in which they find themselves, these animals were still better off being born into the system than not being born at all.

Another experiment looked at the economic costs of eliminating confinement systems for specific farm animals (sows and egg-laying hens) versus the amount of money consumers are willing to pay for the change. This study used, as an example of a shelter-pasture system, AWI’s Animal Welfare Approved program—which the economists describe as providing “superb care,” better than “virtually any other labeling scheme.” In the case of both pork and eggs, consumers were willing to pay more than the cost of making the change. Projected price increases from eliminating the confinement systems were modest, only $0.35 for a dozen cage-free eggs and $0.065/lb. for crate-free pork or $0.11/lb. for shelter-pasture pork.

This leads one to ask—if consumers want the change and they are willing to pay for it, why are farmers still using cruel confinement methods? It turns out that the consumers in Norwood and Lusk’s research were educated regarding various production systems and their impact on the well-being of farm animals, while the average American consumer is not. Because most consumers are not informed, they don’t choose products from more animal-friendly systems when given the chance.

If consumers want an alternative to factory farming they must communicate their desire to farmers, and then back it up by being willing to pay a slightly higher price for it. Giving consumers more complete information, according to the book, is an essential step in this process.

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