Thursday, August 6, 2009

Feeding the World, Treating Animals Kindly

In the farm animal welfare debate, traditional production methods are often criticized on the grounds that alternative methods cannot feed the world the same way as factory farming. In a previous post I described a free-range egg farm. If we compare cage and free-range egg production according to which can produce the most eggs using the fewest inputs, cage eggs will demolish free-range eggs.

Free-range egg production does not generate desirable profits, as I described previously. It is inefficient in the sense that few eggs are produced from each bird, and the number of farms in which free-range egg production can take place is limited. There must be a farmers' market close by, or another marketing outlet. The farm must have the right type of pasture for production to take place. Now, with the right premium there could be a large volume of free-range egg production taking place, but it will not rival cage production.

At this point it is natural to deem free-range egg production a failure in its ability to feed the country. I disagree with the thought experiment from which such conclusions are drawn. It is true that if cage eggs were banned and only free-range production was allowed (whether by government or consumer decree), prices would be higher and quantity consumed would be less. However, this may not be as bad as it initially sounds. As price rises consumers will voluntarily purchase less and food processors will be motivated to produce viable egg substitutes. These substitutes already exist, but if the profitability of the industry increased better products would inevitably result. Consumers would also substitute for egg in other ways. They might consume more yogurt in place of eggs.

The point is that consumers do not lose by an amount equal to the value of the foregone eggs. The lose by an amount equal to the difference between the value of the foregone eggs and the value of the next best substitute.

The point is that a higher price and smaller quantity does not mean that consumers are walking around their house complaining about the lack of eggs. They substitute towards other products, taking care to use eggs when its value is greatest. For example, there are many substitutes for scrambled eggs (e.g. yogurt, bacon, cereal) but there are few substitutes for eggs when making whole wheat bread. Thus, eggs will be utilized proportionally less in direct egg consumption and proportionally more in indirect consumption.

What do consumers get in return for having to find slightly less desirable substitutes for eggs? The satisfaction from knowing that chickens are happier. This could be a trade consumers are willing to make.

When judging alternative egg production systems, we should not judge the alternative by its ability to generate the same production level as cage eggs. It should be judged by (a) the reduction in egg consumption that will take place (b) the desirability of the substitutes used to make up for less eggs and (c) the value consumers place on hen welfare.