Mid-term financial impact of animal welfare improvements in Dutch broiler production

Abstract

This study used a stochastic bioeconomic simulation model to simulate the business and financial risk of different broiler production systems over a 5-yr period. Simulation analysis was conducted using the @Risk add-in in MS Excel. To compare the impact of different production systems on economic feasibility, 2 cases were considered. The first case focused on the economic feasibility of a completely new system, whereas the second examined economic feasibilities when a farm switches from a conventional to an animal welfare-improving production system. A sensitivity analysis was conducted to assess the key drivers of economic feasibility and to reveal systematic differences across production systems. The study shows that economic feasibility of systems with improved animal welfare predominantly depends on the price that farmers receive. Moreover, the study demonstrates the importance of the level and variation of the price premium for improved welfare, particularly in the first 5 yr after conversion. The economic feasibility of the production system increases with the level of welfare improvements for a sufficiently high price level for broiler meat and low volatility in producer prices. If this is not the case, however, risk attitudes of farmers become important as well as the use of potential risk management instruments.

Economic feasibility of animal welfare improvements in Dutch intensive livestock production: A comparison between broiler, laying hen, and fattening pig sectors

“…In recent decades, developments in broiler production have been concentrated in the following areas: type of breed used in a production system, enrichment, stocking density, provision of outdoor access, lighting regime, flock size, and barn size (Gocsik et al, 2013). The standards for the conventional broiler production system are based on EU guidelines (EC, 2007a(EC, , 2007b(EC, , 2008a and resemble the industrial type of production in many European countries (Roex and Miele, 2005).…”

“…These six systems are currently the most prevalent systems in the Netherlands (Ellen et al, 2012). The requirements of the six selected systems are shown in Table 1 (Gocsik et al, 2013). …”

“…In either system, castration is not allowed and pigs should be provided with natural enrichment (e.g. Table 1 Requirements of selected broiler production systems in the Netherlands (Gocsik et al, 2013 wood and sturdy rope) and special scrub facilities. In the Canadian bedding system, pigs are kept on sawdust bedding of 5-10 cm on a solid floor, which covers 90% of the total surface area.…”

“…Calculations for broiler production were made using the model described in Gocsik et al (2013). The model of Gocsik et al (2013) is to simulate the business and financial risk on the technical and economic performance of different broiler production systems in the Netherlands over a five-year time horizon. The economic feasibility of selected Dutch broiler production systems, expressed in terms of the cumulative debt repayment margin at the end of year five, was analyzed.…”

“…Third, AW concerns are particularly important in livestock sectors that are highly industrialized and that pursue intensive animal production, such as broiler chicken, egg, and fattening pig production (Bennett, 1996(Bennett, , 1997Moynagh, 2000). Hence, in recent years, these three sectors have developed similar market concepts with higher AW standards than the minimum legal requirements (Baltussen et al, 2010;Gocsik et al, 2013;Hoste, 2010;Van Horne, 2012). The similarities in the production characteristics of intensive livestock sectors suggest that the future development of new concepts and production systems aimed at improving AW can be pursued in a similar way for these three sectors.…”