How Animal Welfare Laws Affect Egg Prices and Production

Like  California,  at least five  other  states (Massachusetts, Michigan, Ohio, Oregon, and Washington) have passed laws that will eventually limit the use of so-called battery cages in egg production, and retailers like Walmart and McDonald's have made pledges to do the same.  Because this move started earlier in California, and due to the size of that state and the volume of egg production there, California represent a good case to analyze the effects of these laws.  

While I've written on this topic a number of times here on the blog (e.g., here), Conner Mullally and I have finally pulled together a revision of our earlier work that is much more comprehensive and hopefully informative.

One question that I haven't seen much addressed is: what happened to egg production in California as result of their animal welfare laws (these laws include passage of Proposition 2 by voters in 2008 which banned the production of eggs from battery cages and the subsequent passage of state law AB 1437 which banned the sale of eggs from battery cages - both were  ultimately enforced on January 1, 2015 via California Department of Food and Agriculture (CDFA) rules)?   

Before all of this went down, Dan Sumner and other researchers at UC Davis warned that passage of Prop 2 could lead to an exodus of California egg producers and lead California retailers to increase imports of eggs from other states (that's one reason state law AB 1437 came into being - to try to prevent this outcome).  The chart below shows our analysis of the number of egg laying hens in California, which generally confirms the UC Davis researcher's conjecture made back in 2008.  

We estimate that:

“by July 2016 both egg production and the number of egg-laying hens were about 35% lower than they would have been as a result of the new regulations. Out-of-state eggs were able to compensate for falling California production until around the time of implementation of the new rules, at which point imports of eggs into California fell. ”

Here is a graph of egg imports into the state, which Conner obtained via a FOIA request from CDFA, along with egg production in the state.

In addition to these production impacts, we were also interested in the impacts on prices paid by food consumers.  To address this issue, we obtained retail scanner data from Nielsen.  

“We find that the average price paid per dozen eggs was about 22% higher from December 2014 through September 2016 than it would have been in the absence of the hen housing restrictions. The price impact fell over time, from an initial impact of about 33% per dozen to about 9% over the last six months of the observed time horizon. These price increases correspond to welfare losses of at least $117 million for the three California markets [in LA, San Diego, and San Francisco from December 2014 to September 2016]. Our results suggest annual average welfare losses of at least $2 per California household in future years.”

Here is a graph of the actual (or observed) price of eggs in California compared to our prediction of what egg prices would have been had the new animal welfare laws not gone into place.

Lesser Beasts

I just finished reading Mark Essig's book Lesser Beasts.  It is a fascinating account of the history of the pig - from hunter-gather times right through to today.  There were all kinds of interesting tidbits about the pig and the book uncovers an often unappreciated role for the pig in the development of civilization, politics and power-dynamics, and more.  

One theme that comes up several time is that throughout history, the pig was often a food of choice for the poor, in part because they pigs are so prolific producers of offspring and because they are such versatile eaters (devouring everything including excrement and dead bodies).  As a result, the ruling elite often disliked pork because of the pigs' unsavory diets but also because hogs gave the poor freedom to ignore the dictates of the leaders.  Kings and other rulers often controlled the supply of wheat and other-foodstuffs as a way of keeping their subjects in line, but pigs gave poor their own access to calories.  Essig also plays up the role of pigs in fostering the rise of civilization, writing:  

“Only when farmers grew enough food to fill the bellies of bureaucrats, priests, and soldiers could these elites go about the business of creating what we call civilization.”

Another interesting theme of the book is that throughout history pigs have served as a store of value, insurance against risk, and as mechanism to prevent waste and transform undesirable or inedible calories into tasty bacon, lard, and ham.  For example, Essig describes how Spanish and Portuguese sailors discovering North and South America made ample use of the pig. They: 

“dumped breeding pairs of pigs on uninhabited islands. ‘A sow and a boar have been left to breed’ on a certain island, one Spanish explorer told another in a letter. ‘Do not kill them. If there should be many, take those you need, but always leave some to breed, and also on your way, leave a sow and a boar on the other islands.’”

The plan apparently worked quite well.  When one supply ship sent to Jamestown, VA was blown off course to an island in Bermuda, they were pleased to find pigs left by the Spanish more than a century prior.  There is another story about how 24 pigs in Cuba soon turned to 30,000.  We also learn that one of De Soto's prized possessions in his trek across North America was his swine herd.  

Pigs were adept at converting inedible wilderness into tasty human food.  They continued to do this as the world industrialized:

“By the seventeenth century, however, a growing economy had created a new niche for pigs. Activities such as dairying and breadmaking, once undertaken in every household, became large commercial enterprises. The concentration of by-products rose, and so did the concentration of pigs: they began to devour all sorts of commercial wastes. ”

Fast forward a few centuries,  and they were not only devouring waste (as they still do today) but pigs were making use of the easy calories coming from a New World crop: corn.  As Essig writes: 

“In the nineteenth-century America, corn was too difficult to transport to become a cash crop, so farmers turned into valuable added products that were easier to sell: pigs and whiskey. ”

He also quotes an individual in 1867 as asking, "What is a hog but fifteen or twenty bushels of corn on four legs?"

The last three chapters were easily my least favorite as Essig uncritically recounts the "evils" of factory farming.  While there might be aspects of modern hog production that many of us would like to change, its in these parts of the book that Essig moves from the positive to the normative.  At one point Essig acknowledges pigs of yesteryear didn't always have lead lives high in animal welfare, but he seems to place a lot of moral weight on intentionality writing:  

“Such suffering, while not uncommon, indicated that something was wrong. The problem with confining pigs is that cruelty is built into the system.”

If you're looking for a more balanced critique of modern hog production, I suggest the documentary At the Fork.

These quibbles aside, I recommend Lesser Beasts - it's hard to imagine finding a more compelling account of the history of the humble pig.

The Future of Meat

If you haven't yet heard of the Breakthrough Institute, it is time you did.  They're bringing a fresh approach to thinking about environmental and food issues - one that isn't anti-technology, anti-growth, or anti-markets, and that is focused on improving the lives of the poor among us.  

The Breakthrough Institute is in the midst of releasing a series of articles on the future of food.  The latest article in their series is one on the future of meat by Marian Swain.  After discussing some of the environmental challenges with meat production, Swain is able to see through all the popular prognostications to get to the heart of the problem:

“conversations about mitigating this impact have focused on two strategies: convincing people to eat lower on the food chain and shifting meat production toward more extensive systems. But a growing body of evidence suggests that the former may not prove particularly practical, while the latter may not always bring about better environmental outcomes, particularly at global scales.”

Advocates of "convincing people to eat less meat" are right in one sense.  Eating meat isn't necessary.  Many people can live a perfectly healthy life without needing to eat meat.  We also don't need to drive cars, use electric light bulbs, type on our laptops, or have children.  But, we are immensely better off having these things in our lives.  The trick is to consume the things we want while trying to be responsible about it.  Swain, however, turns the table on perceptions of "responsible" by noting that intensive forms of production often come at a lower environmental cost than the extensive forms (e.g., free range, grass fed, etc.) so often favored by environmentalists.   

Swain documents the trends in consumption of meat products in different parts of the world over time.  When thinking about environmental outcomes, however, it is useful to focus on the number of animals rather than just the number of pounds or kilograms consumed.  The reason is that environmental impacts are more correlated with numbers of animals than numbers of pounds, and when it comes to animal welfare, animal well-being is experienced one brain at a time.  

As the graph below shows, we now have many fewer cows in the U.S. than we once did (for a broader discussion, see this article I wrote for the journal Animal Frontiers) 

The figure reports the ratio of the total beef production in a given year to the inventory of all cows and heifers (2 yr old and older) for the same year. The change is dramatic.  For each cow and heifer in the US, in 2012 an additional 217 lbs of beef was produced as compared with 1970 (a 50% increase). Meanwhile, the number of cows per capita has fallen by about 47%. Remarkably, 4.4 billion more pounds of beef were produced in 2012 than in 1970 despite the fact that there are now 9.5 million fewer cows and heifers. In a New York Times article, I pointed out that we would need 15.3 million more cows (not counting the additional heifers, stockers, and feedlot cattle) to produce the amount of beef Americans actually ate in 2015 if we were instead using 1950s technology.  For dairy, we'd need another 30 million cows to produce the amount of dairy products we enjoyed in 2015 if we were instead getting only 1950s yields.  The dramatic increase in productivity, brought about by changes in genetics, management, and other technologies, has given us more of want we want (meat and dairy) with fewer resource-using, methane emitting animals.  

One of the concerns in all this is the impact on animal welfare.  Yet, the tradeoffs are difficult.  Beef cattle have higher land requirements, lower feed efficiency, and higher carbon-equivalent emissions than pork and poultry.  Yet, a good case could be made that animal well-being is higher for beef cattle than for pork and poultry.  (And "no" it isn't the case that animal welfare is uniformly better or worse at small vs. large farms).  A key challenge for the future is in identifying how to realize the gains in efficiency and reductions resource use brought about by intensification without unduly sacrificing animal welfare or the price consumers pay for food.  As I discussed in my latest book, Unnaturally Delicious, there are innovate housing systems and creative markets that are attempting achieve these compromises.

Swain mentions another solution - lab grown meat.  As I discussed in Unnaturally Delicious, I'm a fan of this bovine-in-a-beaker approach.  But, it isn't a free lunch.  Lab-grown cell have to eat something.  And they produce waste.  The high costs of producing lab grown meat suggest the process currently uses many more resources than old-fashioned animals, but advances in technology may one day reverse that equation.  Whether people actually want to eat a lab grown burger is a different story and my surveys suggest the new burgers will face an uphill battle in terms of consumer acceptance.  Time will tell.

Regardless of whether we get meat from a lab, from a cow, or from a chicken, it is important to recognize science and technology as a path to improve environmental outcomes and animal welfare.  As I put in in a Wall Street Journal editorial on the subject:

“Let us also not gloss over what is beef’s most obvious benefit: Livestock take inedible grasses and untasty grains and convert them into a protein-packed food most humans love to eat. We may be able to reduce our impact on the environment by eating less meat, but we can also do the same by using science to make livestock more productive and environmentally friendly.”

Farm Size and Animal Welfare

When I published this piece in the New York Times a couple months ago arguing the large farms can, and often are, good for the environment, one of the most common comments/criticisms I received was something along the lines of: "well surely this isn't true for 'factory farms' and animal welfare."  It has been hard to say much about this because the evidence was limited on relationship between farm size and animal welfare.  However, I was recently alerted to this new review article published in the Journal of Animal Science by a group of researchers at the University of British Columbia.  

Among their many conclusions are these:  

“Farm size and animal welfare exhibit no consistent relationship”

and

“Our review does not support the contention that there is a consistent relationship between farm size and welfare on dairy farms or, indeed, other times of livestock farms. Moreover, the differences that do exist are unlikely to be caused directly by size but by other factors associated with size such as economic viability, staffing level, awareness of and exposure to emerging issues, and access to resources (e.g. time, capital, expert consultants, scientific information, etc.)”

What do cows want?

As many of you know, I've worked a lot on animal welfare issues over the years (e.g., see this book with Bailey Norwood).  One of the biggest challenges is knowing what changes will make a farm animal better off, particularly given the fact changes in housing conditions often improve one dimension of animal welfare while lowering another (e.g., giving animals more space and room might also expose them to aggression from other animals; providing access to outdoors might involve exposure to predators or more variable temperatures).  

It's too bad that animals can't tell you want they want.  Or can they?  Probably because the approach is so similar to the way economists model human behavior, I'm a big fan of a stream of the animal behavior research that looks at what animals choose to infer what they want.  

To illustrate, consider a a variation on the experiment in this 1977 paper by Marian Dawkins.  Imagine an egg laying hen that is given the choice of entering one of two pens with different flooring materials: wire or straw.  

What would the hen choose?  Not surprisingly, hens prefer straw to wire.  So, when presented with this choice, hens will choose to enter the pen with straw flooring.  

But how much do the prefer straw to wire? Well, we can try to make the wire cage a bit more attractive by adding something to it that we know hens like: food.  Now, the hen's choice is as follows:

Now it's not quite as obvious which option is preferable: the wire floor with good tasting food or the straw floor?  Let's suppose our hen still chooses the straw floor.  What now?  Well, we can continue to try to make the wire floor more attractive by adding more food:

We keep adding food until the hen switches from straw to wire, and the amount of extra food required to get the hen to switch from straw to wire is their minimum willingness-to-accept (WTA) compensation for living on a wire floor.  But, the units are in terms of food rather than in dollars.  But this doesn't mean it's not a useful metric.  Once we know the hen's WTA, we can compare the WTA (in units of food) for wire vs. straw floor to WTA (in food) for other things like outdoor access vs. no outdoor access to get a sense of what is most important to the hen.  Heck, because food has an economic value (in dollars) in the human word, we can even convert the hen's WTA to dollars if we really wanted to make comparisons in monetary units.  

Now let me ask a different question: what would you think of a law that required dairy farmers to milk their cows more often?  My presumption would have been that this would reduce milk cows' welfare.  However, this quote in a post from Tyler Cowen at Marginal Revolution suggests cows think otherwise: 

“There’s something very interesting in someone else’s vantage point, which might have a truth to it. For instance, the tagging of cows for automatic milking machines, so that the cows can choose when to milk themselves. Cows went from being milked twice a day to being milked three to six times a day, which is great for the farm’s productivity and results in happier cows, but it’s also faintly disquieting that the technology makes clear to us the desires of cows – making them visible in ways they weren’t before. ”

So the next time you wonder what an animal wants, you might conjure up a creative experiment to let them tell you.

BTW, economists have been studying animal choice behavior for a long time, and it seems animals' behavior is often quite consistent with our "rational" economic models (e.g., see this book by Kagel, Battalio, and Green)