Financial incentives for higher welfare farming

To start bridging the gap between the current reality and a future in which industrial animal farming is outlawed in the UK, financial incentives can be powerful tools in promoting higher welfare farming practices. Adequate government steering can provide farmers with the necessary assistance, both technical and financial, to lead the current food production system towards a more sustainable and just one. This could be achieved through different policy instruments, particularly financial mechanisms, such as subsidies. In fact, agriculture is already one of the more subsidised sectors in the world³³³. The problem, however, is that the subsidies currently in place are directed by misled indicatives. While traditional indicators of economic performance are used to assess industrialized systems, nowadays, with all the newly scientific certainties about animal sentience, it is no longer morally acceptable to use the same methods to evaluate the productivity of systems reliable upon the lives of animals. Naturally, morality can be challenged as being a subjective indicative. Therefore, it is hard to dictate desirable policy outcomes strictly based on morals, as this is a matter that may vary substantially between individuals and is hard to be framed objectively. Nonetheless, there are sufficient objective criteria other than morality that weighs against industrial animal farming, as in the case of environmental impact and human health concerns.

The report from the Government Office for Science in the UK has said that ‘the food system today is not sustainable because of its negative externalities. These are not

332 World Bank, ‘Minding the stock: bringing public policy to bear on livestock sector development’, 2009, Report No. 44010-GLB.

333 Asmelash, 2015.

included in the cost of food and hence there are relatively few market incentives to reduce them’³³⁴. Along these lines, the UN Food and Agriculture Organization (FAO) has argued that ‘a top priority is to achieve prices and fees that reflect the full environmental costs (of livestock production), including all externalities (…) economic and environmental externalities should be built into prices by selective taxing and/or fees for resource use, inputs and wastes’³³⁵. Thus, not the market, but only government steering is capable of redirecting the market failures of industrialized farming, without which a timetable transition is not likely to happen.

To balance this asymmetry, policymakers could start by compensating the farmers willing to promote more sustainable farm practices and to increase the welfare of animals.

Financial incentives might be the necessary first step to kick off the transition towards a future without industrial animal farming. Utterly, in some cases, increased welfare standards are not even as costly as assumed and are capable of being even economically beneficial³³⁶. A recent study concluded that a complete market shift in the UK to humanely reared pork should cost only 3.8 cents, or 3.3 pence, per person per week³³⁷.

This is because in higher welfare systems animals tend to be healthier, mortality rates, and veterinary expenditures tend to be reduced. Also, the provision of straw and/or extra space for pigs can lead to better growth rates. Likewise, when compared to high-yielding dairy cows, lower-yielding but healthier animals, which are associated with increased fertility and longevity, can represent lower heifer replacement costs and higher sale prices for calves and cull cows. In sum, a variety of economic drivers can stimulate higher welfare, including mandatory labelling for all animal products; the use of the Common Agricultural Policy (CAP) to incentive practices not rewarded by the market but valued by society (i.e. carbon sequestration, higher animal welfare, pollution prevention, etc.);

taxation measures to farmers and consumers to reduce the costs of higher animal welfare

334 Foresight, ‘The Future of Food and Farming’, 2011, Final project report. The Government Office for Science, London.

335 Steinfeld, H. et al., ‘Livestock’s long shadow: Environmental issues and options’, 2006.

336 Peter Stevenson (CFIW), 2011.

337 Idem.

(i.e. to consumers: lower VAT on food products with higher welfare, to producers: capital allowances for investments in higher welfare, etc).

A possible counterargument when it comes to not only reverting subsidies, but actually increasing the taxation of meat and dairy products, is that subsidising industrial animal farming methods is essential to feed the population and, indirectly, the increasing global market demand³³⁸. However, this could be confronted with the fact that industrial-scale livestock production is inherently dependent on a substantive quantity of cereals, especially soy, used to feed the animals. This is a very inefficient use of natural resources, as the nutritional value that animals consume is extensively greater than what is delivered for humans through their meat consumption. Using plant foods to feed animals is not only wasteful when it comes to crop consumption, but also when analysing land use, water withdrawals, soil eutrophication, and greenhouse gas emissions³³⁹. On these lines, the World Health Organization (WHO) has endorsed the healthy benefits of plant-based foods over animal products³⁴⁰ . Thus, it is fair to say that subsidising animal products foods is a lot more tied to traditions and public expectations than to a matter of necessity or food efficiency.

Subsection 3.1.2 commented on the labelling scheme introduced in the EU, in which producers of free-range chickens are able to pass along the higher welfare costs to consumers via the price of free-range eggs. In contrast, before battery cages were banned in the EU, producers had no financial incentive to invest in enriched cage systems, since it was not subjected to any certification scheme, making it impossible for producers to pass the costs along to consumers. As a result, a farmer would rarely improve the welfare of his chickens, unless required by law. Applying the same rationale to all animal products, mandatory labelling referring to farm methods could have the same effect on dairy and meat products in the UK, as free-range eggs have been having in the UK and in the EU. Naturally, quantitative research is needed to support the claim that there exists a

338 In the case of countries which rely significantly on meat and other animal products exports, such as Brazil, and the USA, for example.

339 Ritchie – Roser, 2017, ‘Meat and dairy production’ published at OurWorldInData.org.

340 WHO, Regional Office for Europe, ‘A healthy lifestyle’.

sufficient number of consumers willing to pay higher prices for products originated from higher welfare systems.

Accordingly, before policymakers can start steering the path towards a factory-farming-free UK, it is necessary to put an objective cost to the externalities associated with this industry. For this purpose, impartial research, which is not biased by arguable economic performance indicatives, is necessary to put a number on the undesirable effects that are being pervaded to the entire society, including future generations. To illustrate, a study conducted in England and Wales to calculate the costs of water eutrophication divided the costs into two categories, damage costs and policy response costs, which were measured by how much was being spent to address the damage³⁴¹. In this sense, even if not considering the poor welfare of animals in intensive farm settings as an externality, the other problems, such as environmental damage and human health concerns, which are more tangible and easier to be accounted for objectively, are more than sufficient reasons to call for a policy response that would make it possible for these costs to be supported for the industry, and not animals or, indirectly and in the long-term, the entire society.

In conclusion, mandatory labelling, legislation, and subsidies are only a few of the tools that could be used to internalise the external costs of factory farming. Regulations can set higher animal welfare standards, certificates can engage consumers and promote faster market change, and subsidies, when designed properly, are capable of rewarding and incentivising desirable practices. Also, subsidies can help smaller farmers willing to improve their methods and the lives of animals. In addition, taxation, although associated with greater social resistance, can provide another form of policy response to internalise the costs of industrial animal farming. As carbon taxes have been increasingly applied in different regions to tackle climate change, taxes over meat and dairy production can help to balance the market failure of intensive livestock production. Taxes can even influence consumption. A Danish study argued that taxes on unhealthy food products, combined with subsidies for healthy food products are capable of improving public nutrition³⁴². So,

341 Pretty et al., 2003.

342 Beattie, et al., 2000.

higher animal welfare could be promoted to make animals healthier and our food systems more sustainable in the long run. Industrial assessment indicatives that leave these factors out of consideration should not be thought out as sufficiently dependable.