Mid-term financial impact of animal welfare improvements

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.