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Open Philanthropy Project Farm Animal Welfare Newsletter
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Can We Knock Out Factory Farming's Supports?

How can we undermine the factory farming system? Some argue that factory farms rely on structural supports to survive. In this newsletter, I focus on three commonly cited supports — farm subsidies, sub-therapeutic antibiotics, and market concentration — which seem fairly indefensible:

  • Farm subsidies cost the American taxpayer about $20B every year, more than double the EPA’s budget, mostly to support wealthy corporate farms.

  • About 80% of all antibiotics in the US are fed to farm animals, almost all non-therapeutically (not to treat disease), contributing to antibiotic resistance.

  • The pork, chicken, and beef industries are today more concentrated than the beef industry was in 1902, when it was a target of President Theodore Roosevelt’s trust-busting.

But how important are these supports to the factory farming system? Could removing them make plant-based or pasture-based meat cost-competitive with factory farmed meat, as some claim? This newsletter is my first, very tentative, attempt at answering these questions.

Farm subsidies

The federal government largely doesn’t subsidize factory farms directly, but it does subsidize the crops on which they depend. It does so through the farm bill, which Congress first enacted in 1933 as part of the New Deal, and has since re-authorized roughly every five years. The farm bill's centerpiece is farm subsidies, which mainly subsidize farmers to buy crop insurance (direct payments to farmers are a thing of the past). These insurance subsidies lower the price of crops like corn, helping factory farmers, for whom feed costs can reach 70% of production costs.

But these subsidies might not help factory farmers as much as we think. It’s tough to estimate the effects of crop insurance subsidies because of the many factors that affect crop and meat prices. The best estimates I know of though, from agricultural economist Jayson Lusk, suggest that repealing US crop insurance subsidies might only raise animal protein costs at retail by 0.1 to 1%.

Other federal farm policies may negate even this small effect. The federal ethanol mandate requires fuel refiners to blend ethanol into their gasoline, creating competition for corn, the most popular feed grain for farm animals, especially chickens. Estimates of the price effect of the ethanol mandate vary wildly, from less than 1% to over 50%. But even taking a conservative estimate, the ethanol mandate might more than cancel out the impact of crop insurance subsidies.

Repealing the ethanol mandate might lower animal protein prices by more than repealing crop insurance subsidies would raise them, increasing the number of animals farmed. Sources: crop insurance data unpublished (but available on request) from correspondence with Jayson Lusk; ethanol data based on most conservative scenario presented in PWC (2012) report; cumulative supply effect calculated based on supply elasticities provided in Lusk (2015); calculations here.

Other federal farm policies likely have mixed effects for factory farms:

  • The two other biggest titles in the farm bill probably raise meat prices slightly: the nutrition title, which funds food stamps, does so by increasing demand for meat; the conservation title, which pays farmers to grow fewer crops, does so by reducing supply.

  • The limited "livestock programs" in the farm bill likely help factory farms a bit. These programs largely reimburse ranchers who lose cattle and sheep during storms, but also reimburse factory farms hit by avian flu. And they fund "buy backs" of “surplus commodities” when the industry produces too much, though the $115M that the USDA spent to buy back poultry in 2013 was just 0.26% of the industry's sales that year.

  • The "checkoff programs" spend about $500M per year, from producer levies, to promote commodities. The biggest checkoff programs promote dairy, soy, beef, and pork. But it’s not clear what they’ve achieved: consumption of dairy and red meat has stagnated since the checkoffs began, while consumption of chicken, which has no checkoff, has skyrocketed.

Sub-Therapeutic Antibiotics

By contrast, the case against factory farmers’ non-therapeutic use of antibiotics seems straightforward. Broiler producers adopted antibiotics in the 1940s, at the same time as they adopted factory farming, to boost growth and prevent disease outbreaks in the newly crowded conditions. Surely, then, removing the drugs would undermine the factory farms too?

As it happens, producers are testing that assumption right now. Since 2013, Chick-Fil-A, McDonald’s, and other food chains have reduced their antibiotic use, while California and Maryland have banned the non-therapeutic use of antibiotics in farm animals entirely. Three of the four largest US poultry producers are reducing their antibiotic use, with Pilgrim’s Pride and Perdue now using no antibiotics at all in about 25% and 95% of their chickens respectively. 

The results for the chickens seem mixed. Antibiotic-free producers may use cleaner litter and lower stocking densities to prevent disease outbreaks, and Perdue, which led the industry on antibiotic removal, is now doing so on animal welfare too. A 2006 survey of broiler producers found that producers who didn’t use antibiotics were more likely to follow animal welfare requirements — though we don’t know if one caused the other.

We do know, though, that removing antibiotics hasn’t ended factory farming. Antibiotics had already become dispensable in recent years as factory farms improved their biosecurity; Perdue’s transition came after a large scale study found that antibiotics were no longer worth the cost. Producers who drop antibiotics typically substitute prebiotics, probiotics, and organic acids, allowing them to maintain rapid growth without changing conditions much.

And chickens may even be worse off without the drugs. Studies suggest that chickens raised without antibiotics get sicker and die more often than those fed drugs — with reports of antibiotic-free “normal weekly [mortality] rates averaging 1.20-1.40%,” about double the regular rate. This may be why US broiler chicken mortality rates began rising in 2013 for the first time in decades. (Contract growers could still hire a vet to administer antibiotics to a sick chicken, but are unlikely to do so when they only earn 5.55 cents per pound of chicken they raise, or about 34 cents per bird.)

Broiler chickens eating antibiotic-laced feed from an automatic feeder at a broiler farm in Andhra Pradesh, India. Antibiotics are added to feed to boost growth and prevent disease outbreaks in squalid factory farm conditions. Source: personal photo.

Market Concentration

Factory farmers have amassed incredible market concentration: the four largest US producers in each industry now control 51% of chicken, 57% of turkey, 66% of pig, and 85% of cattle production. (The genetics companies are even more concentrated: just two may control three quarters of all broiler chicken genetics globally.) Advocates argue that this concentration crowds out higher welfare producers and forces contract growers into a race to the bottom.

But it’s not obvious market concentration should be bad for animals. Oligopolies normally push prices up, not down; indeed, poultry buyers are currently suing major chicken producers for price-fixing, alleging that they conspired to slaughter fewer chickens. The most competitive industries — for eggs and farmed fish — arguably treat their animals worse than anyone. And small farms pioneered some of factory farming's most heinous innovations: from Amish and Mennonite farms using veal crates, to artisanal producers force-feeding geese and ducks to produce foie gras.

Yet the market power of the broiler and pork oligopolies may empower them to ignore animal welfare demands. When McDonald’s pledged to go cage-free, their egg producers — battling in a competitive marketplace — quickly agreed to comply. But in recent weeks two of the largest broiler chicken producers, Tyson Foods and Sanderson Farms, have indicated they may not comply with their corporate customers’ pledges to improve animal welfare. They can do this, for now, because of their concentration; in many markets, large customers have no other choice.

The four largest broiler chicken, pig, and beef cattle producers have more than doubled their market share over the last three decades and now control a majority of production. Source: Pew Charitable Trust Fact Sheet (2012).

So, I doubt it's worth fighting these three supports, which seem less important than I originally thought to the factory farming system. I'm also skeptical that they're likely to be tractable: President Obama promised to address the market power of animal agribusiness, tried, and failed; and Presidents Clinton, Bush, and Obama all unsuccessfully fought farm subsidies.

But the evidence is weak, and certain narrow farm policy reforms may be important and tractable. Moreover, it may still be worth publicizing these policies for other reasons: discussing antibiotic resistance, for instance, may help to build a broader coalition against factory farming in general.

Next month I’ll share some insights from Europe, where I just finished a week of meeting with potential grantees. In particular, I’ll try to answer why the European Union once led the world on farm animal welfare, why it then fell behind, and how it may soon lead again.

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