Abstract
Simple SummaryThe 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.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.
Highlights
The animal product supply or marketing chains are critical in determining and delivering animal welfare
The virtuous circle is seen as being driven by more informed consumers and by mobilizing their willingness to pay (WTP) for improved animal welfare so as to reward the supply chains for their efforts to ensure such improvements
The critical conditions determining the ability of the supply chain to deliver animal welfare can be divided into two conceptually distinct components: (a) the innovative and adaptive capacity of the chain to respond to society’s demands for improved animal welfare, which determines the position of the production possibility frontier (PPF), and the extent to which all firms are at or close to the industry best practice; (b) the extent to which consumers are willing to pay for improved animal welfare, which determines the position on the PPF towards which the supply chains will tend to adjust
Summary
The animal product supply or marketing chains are critical in determining and delivering animal welfare. This paper highlights the major implications of this general progression towards improved animal welfare for the supply (or marketing) chain of animal products, based on the workshops and stakeholder engagement activities pursued under the EconWelfare project.
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