How consumer concerns impact farm animal welfare

The Business Benchmark on Farm Animal Welfare (BBFAW) publishes an annual snapshot of the farm animal welfare practices, performance and reporting of 150 global food companies, covering food retailers and wholesalers, food producers, restaurants and bars. 

The 2019 Benchmark, released in April 2020, shows that farm animal welfare management practices are being institutionalised. For example, 88 of the 150 companies (59%) have explicit board or senior management oversight of farm animal welfare, 112 (75%)have published formal improvement objectives and targets for farm animal welfare and 94 (63%) describe how they monitor and audit supplier performance. Overall, 60% per cent of the 150 companies are now considered to have formal farm animal welfare policies and appropriate management processes for ensuring that these policies are effectively deployed internally and through supply chains. 

Companies increasingly recognise farm animal welfare as integral to business strategy. 22 companies now occupy leadership positions (corresponding to tiers 1 and 2) in the benchmark. In total, 30 companies (mainly retailers and producers) improved by at least one tier, representing the largest year-on-year increase we have seen in the BBFAW’s eight-year history. 

There are however challenges. 40% of the companies provide little or no information on their approach to farm animal welfare. Furthermore, despite improvements in performance-related disclosures, progress remains slower than we would like. 

While almost two-thirds (63%) of companies now provide some information on the proportion of animals kept in close confinement, significantly fewer report on the proportion of animals that are free from routine mutilations (26% of companies), pre-slaughter stunned (24%) or transported for less than eight hours (25%).

Over the past three or four years, companies consistently pointed to consumer interest, business risk management, new opportunities and investor pressure as key drivers for action and improvement on farm animal welfare. Together, these drivers created the motivation and the senior management buy-in to accelerate and scale-up action on farm animal welfare. 

The question we now face is whether this will change as a result of Covid-19. Coronavirus is placing tremendous pressure on food businesses. They need to ensure food safety and product quality, ensure the health and safety of their employees and of their suppliers, and ensure the wellbeing of their employees, their suppliers and their communities, while also trying to navigate the economic and business challenges presented by coronavirus.

Following the launch of the BBFAW report, we have discussed this question extensively with food companies and with investors. The consistent feedback that we have received is that the fundamental drivers for companies to adopt higher standards on farm animal welfare remain the same. 

Consumer interest in farm animal welfare and its relationship with food safety and food quality is likely to remain high. The relationships between farm animal welfare, supply chain resilience, product quality and food safety are clear. The business case and reputational case for taking a proactive approach are clear, and leading companies see no benefit in pulling back from this position.

A number of companies, in particular, have commented that the way they think about and talk about farm animal welfare may change, where they place much more emphasis on risk management. It is likely that, in the coming months, food companies will redouble their attention on food supply chain risk management, focusing on issues such as standards (animal welfare, quality, safety), traceability,  supply chain integrity and reassuring their customers on their effective management of risks associated with food supply chains. 

Our expectation is that, as the current crisis passes, companies will harness these strengthened systems and processes to strengthen their approach to farm animal welfare and, in turn, identifying opportunities for improvement and enhancing their reputations for quality, safety and higher welfare.

It is also likely that we will see significant changes in the business landscape. While we can’t accurately predict the future, it is likely that:

·      Restaurants and bars (including foodservice companies) will take longer to recover than retailers. 

·      An increasing volume of food sales will be (a) via online platforms rather than through stores, and (b) through local independent merchants (such as butchers and farm shops).  

·      Consumer confidence will remain low with consumers avoiding spending on non-essential items.  

·      Consumers will continue to be cautious about social contact – on public transport, in stores, in workplaces.

·      Concerns about food safety, hygiene and traceability will become even more important. In response, food companies will look to exert greater control over their supply chains, and are likely to invest in traceability processes and in safety and quality testing

·      The proportion of people working from home will surpass pre-Covid-19 levels. This could adversely impact both “on-the-go” and workplace catering.

·      There is likely to be consolidation and potentially a wave of mergers across the food sector.

What do these scenarios mean for farm animal welfare? An optimistic scenario is that companies and sectors with strong commitments to farm animal welfare will emerge in a relatively stronger position. These companies will continue to strengthen their approach to farm animal welfare, and that this will be supported by their customers and their clients.

A less optimistic scenario is that, as a result of consumers being less willing or able to pay for higher welfare, companies will pull back from their commitments on farm animal welfare. We see this scenario as being the less likely for the simple reason that the economics of higher welfare have shifted quite dramatically in recent years. 

Underpinned, of course, by growth in demand we have reached a point where cage-free eggs (where hens are housed in barns or are free-range outdoors) are now cost competitive with other types of production systems. As companies reach the point where they need to invest in new facilities, the risk of stranded capital (ie that they will not be able to sell the products they produce at the prices that they want) is likely to be greater; given that there is now a narrowing difference between the costs of basic and higher welfare systems, the case for building higher welfare systems is clear.

So, while we cannot predict the future, it seems ever more likely that companies will – whether they wish to or not – find themselves on a trajectory of strengthening their approach to farm animal welfare.