As large companies pay greater attention to farm animal welfare, their suppliers are likely to face growing scrutiny of their performance in this area
Farm Animal Welfare on the Business Agenda
Farm animal welfare is increasingly becoming established as a core business issue for food companies. This is most evident in the retail sector, where the importance assigned by consumers to animal welfare issues, and high profile media stories on issues such as salmonella in eggs, BSE in beef, and the welfare issues associated with intensive chicken production, have resulted in many UK food retailers adopting higher standards of farm animal welfare.
However, this is not just a UK phenomenon. Consumers in other markets are also paying attention to farm animal welfare, and retailers are responding. For example, recent surveys in the US and Australia have demonstrated that upwards of 70% of consumers are concerned about farm animal welfare; a German study of chicken consumers found 59% expressed an interest in buying chicken from higher welfare systems; and in France, the market for higher welfare Label Rouge chicken in the whole chicken market exceeded 60%.
Beyond retail, virtually all parts of the food sector - service companies, manufacturers and producers – are starting to take action. A variety of drivers, including customer and client demand, the potential for cost savings, brand enhancement, access to new markets, and strengthening legislation (particularly within the EU), have been important.
How Are Companies Responding?
Within the food industry, companies are beginning to recognise that farm animal welfare is central to their core business proposition and therefore needs to be managed proactively. Large companies have taken a variety of actions including: defining and implementing farm animal welfare policies, assigning senior management responsibility for farm animal welfare, hiring experienced farm personnel to manage issues on a day-to-day basis, identifying farm animal welfare-related risks and opportunities, and reporting on performance.
Reflecting the structure of many of these companies, a major area of focus has been on the supply chain. An increasing number are working with suppliers and setting minimum farm animal welfare standards as a part of supplier contracts as well as conducting regular audits or inspections of suppliers’ premises and practices based on these standards. Others have offered incentives (in terms of higher prices, higher volumes or longer term contracts) to those suppliers that adopt higher welfare standards. There has also been significant focus on building supplier capacity through training and sharing best practices.
Implications for SMEs
There are three important implications for SMEs in the food industry. The first is that farm animal welfare is an issue that they need to be aware of and consider in their purchasing and in their operational practice. This will require that they have clear policies on issues such as the close confinement of livestock (e.g. sow stalls, battery cages), the use of genetically modified or cloned animals, routine mutilations (e.g. teeth clipping, tail docking, dehorning, beak trimming), the use of meat from animals that have not been subjected to pre-slaughter stunning, and long-distance live transport. Companies will also need to take action to ensure that these policies are met by the companies in their supply chains, and will need to be able to demonstrate that these policies are being complied with.
The second is that it presents significant business opportunities. Higher welfare products tend to receive price premiums and such products (e.g. free range) enable producers or suppliers to tell a compelling marketing story, often linked to food provenance or local production.
The third is that there may well be costs associated with higher farm animal welfare. However, this may be addressed in three ways. The first is that there is evidence that higher welfare practices provide cost and efficiency benefits in terms of higher quality products and lower wastage. The second is that, as noted above, higher welfare products often sell at a price premium. The third is that large companies recognise that they need to work with and support their suppliers to enable them to deliver the higher welfare products at volumes that customers and clients demand. This support, in the form of technical or financial assistance (e.g. offering longer-term contracts), should reduce risks associated with moving towards higher welfare practices.
The level of consumer interest in higher welfare products has been sustained through the economic downturn. Company interest (in terms of the number making policy and other commitments to action, and in terms of farm animal welfare being built into purchasing and capital allocation decisions, has continued to grow. For food-related SMEs, the consequence of adopting higher farm animal welfare standards is likely to be a core driver of business value over the next decade.
Nicky Amos is the Programme Director of the Business Benchmark on Farm Animal Welfare. She has over 20 years’ experience in managing and directing corporate responsibility in global companies, including The Body Shop International.
Dr Rory Sullivan is an expert adviser to the Business Benchmark on Farm Animal Welfare. He is an internationally recognised expert on responsible investment, and is the author of seven books and many papers and articles on responsible investment and corporate responsibility.
The Business Benchmark on Farm Animal Welfare is designed to help drive higher farm animal welfare standards in the world’s leading food businesses. It is the first global measure of animal welfare standards in food companies and is designed for use by investors, companies, NGOs and other interested stakeholders.
For more information, go to www.bbfaw.com or contact the Programme Director, Nicky Amos: email@example.com.