Monday, September 28, 2009

Farewell To Gestation Stalls in Michigan

My Feedstuffs news alerts told me that Michigan is expected to pass a law banning gestation crates. The events leading up to this are similar to the Colorado story: HSUS threatens a referendum, livestock producers don't want the negative publicity that would bring, both groups negotiate a long time horizon (10 years) to implement the ban in order to minimize the economic burden, and legislation banning the crates ensues. Battery cages and veal crates will also be banned.

What is the impact of the ban? My research suggests that the cost of pork production will rise $0.0533 per lb of retail pork. The demand side of the ban is more difficult to identify, and ultimately ambiguous. Jayson Lusk and I have conducted hundreds of real-pork auctions across the country and have found that consumers, on average, will pay up to $0.14 more for each lb of retail pork that is raised in group pens, which is the alternative to gestation crates. Thus, at first glance, the ban would provide a net benefit of $0.0867 for society as a whole.

However, one cannot simply say that demand for pork will increase. The gestation crate ban could change consumers' perceptions of pork, and ultimately decrease the total ban for pork. It is true that consumers on average prefer pork produced without gestation crates, but the information that a ban provides could produce a pork demand that is lower or higher than the current demand. That is, consumers prefer that gestation crates not be used, but after learning that gestation crates were used in the first place may begin to think hog production is inhumane. Or, they may conclude that hog production is humane and becoming even more humane. We simply don't know.

The ultimate impact of the gestation crate ban is thus ambiguous. However, my best guess is that, with this type of legislation, pork demand will be unaltered, consumers will be largely unaware of the improvement, and, and hog producers will make less money.

Of course, that analysis pretends that Michigan is a closed economy. In reality the gestation stall ban allows the importation of pork produced under any means. Consumers will undoubtedly choose the cheaper pork produced in other states, and so the impact of the legislation on farm animals will depend on whether the Michigan farmers can stay in business. If they remain in business, then the animals will be raised on what is presumably a more humane farm. Michigan farmers will pay the higher production costs themselves. Consumers will not pay a dime more. If they go out of business, roughly the same amount of pork will be produced, but out-of-state; and the only impact the law will have is to drive Michigan farmers out-of-business.

Other people have some interesting views on gestation crates...
  • Trent Loos and other producers and animal scientists (I only use Loos' name because he is rather famous) believe that banning gestation crates will not improve animal welfare, and may lower welfare.
  • Gary Francione (just Google the name if you don't know him) often asserts that every time you improve animal welfare the farmers' costs actually go down. In this case, hog producers would be surprised to find that their costs are lower than when they used the crates.
  • The Animal Welfare Institute (AWI) would probably argue that banning gestation crates is fine, but we should really be going much further and producing more pork under the Animal Welfare Approved label. Personally, I concur with the AWI.