Lecture week 7
Economic
Analysis for
Agricultural and
Environmental
Sciences
Topics:
Overview of livestock production in the EU and UK
Animal welfare and how much it costs to farmers
Benefits from better animal welfare
Consumer willingness to pay (WTP)
Overview of livestock production in the EU and UK
Livestock production in the EU is a large economic sector and products of animal
origin make up 45% of the EU´s agricultural production value.
Itcontributes substantially to the European economy (€168 billion annually, 45%
of the total agricultural activity)
UK national average is higher, 60.2%.
European livestock farms employ around 4 million people, with on average, 1 to
2 workers per livestock farm
Average Livestock farm: Europe
Theaverage size for livestock farms in Europe is below 50 hectares and
hosts less than 50 “livestock units”.
The “average European livestock farm” uses 34 hectares of agricultural
land area and has a herd size of 47 livestock units. Even in livestock-
driven regions, a farm in the European top-10 countries uses 51 ha of
land, with around two people working on the farm, hosting 79
“livestock units” for a total value of 138,000 Euros.
Average Livestock farm: Europe
In all livestock sectors combined, the United Kingdom, Denmark
and France host the largest farms in terms of surface, with roughly
95 ha per farm. Poland, Italy and the Netherlands have the smallest
farms, with less than 40 ha per farm, with as low an average as 18 ha
in Poland.
Overview of livestock
production in the EU and
UK
The EU livestock population
consists of several species
(Eurostat, 2021):
76 million bovine animals,
142 million pigs, and
71 million sheep and goats
Official numbers of EU poultry
are not available
UK statistics
UK statistics
Animal welfare and how much it costs to farmers
Animal welfare means how an animal is coping with the conditions in which it
lives. An animal is in a good state of welfare if (as indicated by scientific evidence)
it is healthy, comfortable, well-nourished, safe, able to express innate behavior, and
if it is not suffering from unpleasant states such as pain, fear, and distress. (AVMA,
2021).
Animal welfare and how much it costs to farmers
Source:McInerney, J. (2004). Animal welfare, economics and policy. Report on a study undertaken for the Farm & Animal Health Economics Division of Defra, 68.
Animal welfare and how much it costs to farmers
Higher animal welfare standards increase production costs:
Increases fixed costs, and
Increases variable costs
For example:
Increase space requirements (if modifications or new facilities are needed)
Change of production systems (i.e. more land)
Increase of operation costs
Increase of cost of transportation and processing
Animal welfare and how much it costs to farmers
Welfare Change Effects on Commodity Price change (%)
production costs (%)
Limit transport to 8hrs +3 All +1.44
Ban broiler systems +30 Poultry meat +13.2
Ban batter cages +28 Eggs +17.9
Benefits from better animal welfare
Positive impact of higher animal
welfare is on:
animals
producers
consumers
society
Benefits from better animal welfare
Low morbidity and mortality
Higher production
Healthier animals
Calm animals Safety in work environment
Reduced expenditure on disease management and control
Consumer benefits
80% of the EU consumers are concerned about animal welfare
Feel more comfortable about knowing how their food-producing animals have been
treated
Society
Benefits from non-use value
Consumer WTP
Public perceptions is an important component within Farm animal welfare and
represent a potentially important driver of consumption behaviours of European
consumers (Clark et al, 2017).
Thepublic are an important stakeholder with interests in the food chain, and drive
demand for specific foods and commodities (Jensen, 2006).
Due to the subjective evaluation of animal welfare, individuals may have different
opinions as to what counts as a minimally acceptable standard (McInerney, 2004).
This is a hurdle in establishing a baseline level of animal welfare in production systems
that will satisfy all individuals.
Consumer WTP
Because farm animal welfare standards are demand driven, it is important to
establish the market potential for these.
One approach is to assess consumer willingness-to-pay (WTP) for farm animal
welfare.
WTP has also been used as an indication of public preferences (Harvey and
Hubbard, 2013), and so can be used to assess the acceptability of different farm
animal welfare practices, to consumers.
This evidence can then subsequently be utilised in policy development.
Consumer WTP
WTP is used as a measure to value
goods or services by defining the
maximum price an individual is willing
to agree to in order to obtain a certain
benefit or to avoid undesirable
characteristics.
Example:
Consumer WTP
Purpose of study was to investigates
UK consumer perception and
willingness-to-pay (WTP) for egg
attributes associated with laying hen
welfare namely with beak-trimming
practices and injurious feather
pecking (IP).
In 2015, Defra established the Beak
Trimming Action Group (BTAG)
with the purpose to evaluate what
effect an introduction of a ban on
beak-trimming would have on hen
welfare (Mitchell, 2015).
Consumer WTP
Consumer WTP
Results of the study: UK consumers have a preference in higher hen welfare
resulting in a decrease in WTP once they are aware of welfare losses in current
systems; however, more insights are required in terms of the promotion of
white shelled eggs as a means of reducing IP on UK farms.
References
Drivers of change and development in the EU livestock sector_BLE_CASA_STUDY_0.pdf (er
a-susan.eu)
http://webarchive.nationalarchives.gov.uk/20110318142209/http://www.defra.gov.uk/evidence/
economics/foodfarm/reports/documents/animalwelfare.pdf
Clark, B., Stewart, G. B., Panzone, L. A., Kyriazakis, I., & Frewer, L. J. (2017).
Citizens, consumers and farm animal welfare: A meta-analysis of willingness-to-pay
studies. Food Policy, 68, 112-127
Dunne, C., & Siettou, C. (2020). UK consumers' willingness to pay for laying hen
welfare. British Food Journal.
McInerney, J. (2004). Animal welfare, economics and policy.
https://habricentral.org/resources/569/download/defra_animalwelfare.pdf
Defra (2022)
https://www.gov.uk/government/statistics/agriculture-in-the-united-kingdom-2021/chapt
er-8-livestock
Defra (2021)
https://www.gov.uk/government/statistics/total-income-from-farming-in-the-uk/total-inco
me-from-farming-of-the-united-kingdom-2021-provisional-estimate
