EU Welfare Regulations and the Law of Unintended Consequences [edited]

April 25, 2012 — 

Just three months after the battery cage ban, EU egg production is reported to be down by between 10 and 15 per cent and there has been much disruption in the market, including in some unexpected areas. A partial ban on sow stalls is due to come into force in January 2013 so what can we expect for the pig sector?

These goals are commendable and are certainly supported by a vocal sector of the general public. And very few producers would not oppose them in principle if they were to receive appropriate reward for their efforts.

Experience from EU Egg Sector

Since the beginning of this year, conventional battery cages have been illegal for laying hens throughout the European Union. Despite many years of advanced warning, many egg producers – mainly in eastern and southern European member states – failed to replace in time their old cages with the so-called enriched or colony cages, which are acceptable under the new directive.

The Commission had estimated 2.5 per cent drop in egg production across the EU due to a cut-back in chick placings following a period of over–supply, according to the English NFU poultry board vice chairman, Duncan Priestner. In fact, he reported that the Welfare of Laying Hens Directive has had a much bigger impact, with total EU production estimated to be down by 10 to 15 per cent, and a 20 per cent drop in Spain.

As a result, wholesale rates in the UK have increased substantially, ending 18 months of extremely low prices. However, the free-range sector continues to have a tough time due to over-supply as so many new free-range units have been built recently.

From Member States less well prepared for the changes, there have been reports of substantial increases in egg prices. Farm–gate prices for eggs increased 72 per cent between 2011 and the end of February in Spain, for example. In the Czech Republic, one egg cost 2.50 crowns in December and 7.00 crowns in the run-up to Easter, according to The Guardian.

Pig Industry: Looking to the Future

From January 2013, sow stalls will be outlawed in the EU and, with some limited exceptions, all breeding pigs must be group-housed for most of their lives.

Pig production in the EU could fall by between five and 10 per cent as ‘significant numbers’ of producers quit the industry because they will be unable or unwilling to comply with the new sow stall ban. Pig meat processors and retailers are expected to face substantial price increases.

The European Commission has made it clear that it expects the new rules to be rigorously enforced and will initiate infraction proceedings against Member States which are not fully compliant, just as for the egg industry.

AHDB Senior Analyst, Stephen Howarth, said: “Historically, even small changes in pig production have led to significant shifts in price. With production likely to fall by five per cent or more, prices could be at least 10 per cent higher, possibly more.”

The report envisages three possible scenarios.

The most likely scenario, suggest the authors, is that total EU pig meat production in 2013 would be around five per cent lower than in 2011.

A second scenario, which would result if enforcement of the new rules were to be rigorous, would lead to a 10 per cent cut in pig meat output in 2013 compared to 2011.

The third scenario presented considers the possibility that the regulations would be a catalyst for a realignment of production in the form of integration across much of the EU, with breeders in North West Europe supplying piglets to finishers in Eastern and Southern Europe. This situation would have significant impacts on the environment, welfare and the processing sector but it may reduce production costs, suggests the report.

Full story: TheMeatSite, April 19, 2012 By Jackie Linden, Senior Editor