The Supply Chain’s Role in Improving Animal Welfare

SIMPLE SUMMARY: The ability of supply chains to deliver high(er) levels and standards of animal welfare is subject to two critical conditions: (a) the innovative and adaptive capacity of actors in the chain to respond to society’s demands; (b) consumers actually buying animal-friendly products. Unless citizens are willing to support suppliers who comply with high(er) standards, their votes for better animal welfare risk exporting poor animal welfare to other countries with less rigorous standards. The logic of market failure in the case of animal welfare points to the superiority of consumer subsidies over producer subsidies to deliver improved animal welfare. ABSTRACT: Supply chains are already incorporating citizen/consumer demands for improved animal welfare, especially through product differentiation and the associated segmentation of markets. Nonetheless, the ability of the chain to deliver high(er) levels and standards of animal welfare is subject to two critical conditions: (a) the innovative and adaptive capacity of the chain to respond to society’s demands; (b) the extent to which consumers actually purchase animal-friendly products. Despite a substantial literature reporting estimates of willingness to pay (WTP) for animal welfare, there is a belief that in practice people vote for substantially more and better animal welfare as citizens than they are willing to pay for as consumers. This citizen-consumer gap has significant consequences on the supply chain, although there is limited literature on the capacity and willingness of supply chains to deliver what the consumer wants and is willing to pay for. This paper outlines an economic analysis of supply chain delivery of improved standards for farm animal welfare in the EU and illustrates the possible consequences of improving animal welfare standards for the supply chain using a prototype belief network analysis.