Impacts of Improved Animal Welfare Standards on Competitiveness of EU Animal Production

The paper presents results of the FP7 Econ-Welfare Project “Assessing the socio-economic consequences of measures promoting good animal welfare”. The paper illustrates the economic consequences at the farm level of indicative improvements in animal welfare conditions for pigs and cattle and addresses the consequences of improved animal welfare for international trade and competitiveness1. For the farm level considerations costs - effectiveness analysis was applied, whilst impacts of the upgraded standards on international trade and competitiveness was assessed with the use of the partial equilibrium Agmemod model. The Belief Network Approach was used to determine the effects of animal welfare standards and labels on the competitiveness of the EU animal production and supply chain. Introducing upgraded Animal Welfare standards at the farm level would increase costs of production in pigs and beef cattle sectors. In dairy sector upgrading cows welfare standards results with higher benefits than costs. Accordingly, Agmemod results indicate that on the pork and beef markets international competitive position of the EU producers may be undermined. However, as the analysis showed, there are both supply conditions and demand side circumstances which may well resolve the apparent conflict between animal welfare and chain competitiveness. On the supply side, it is apparent that there are some animal welfare improvements that can be made without compromising competitiveness. Supply chain information, education and training may well be able to improve both animal welfare and competitiveness. In addition, better understanding of both animal welfare and animal productivity (through R&D) can be expected to lead to improvements in both objectives.