Animal Welfare in Intensive Animal Agriculture

In intensive animal agriculture, welfare issues pose risks to animals, food quality and human health. This article explores how these issues create risks for investors, their links to climate change and antibiotic use, and how consumer pressure and regulations are impacting the industry.   

Why farm animal welfare poses a material risk?

Animal welfare issues in intensive animal agriculture extend beyond inhumane treatment and include reduced efficacy of antibiotics and the spread of zoonotic diseases, which can be transmitted from animals to humans.  

The cost of zoonotic outbreaks can be significant, as COVID-19 demonstrated. The global cost of the pandemic exceeded US$12 trillion by 2024. Although the origin of COVID-19 has not been confirmed, pandemics like Swine flu and Avian flu have been transmitted directly from livestock to humans. In fact, over half of all zoonotic diseases arise due to agriculture and are more likely to occur and spread in intensive livestock systems. 

Intensive animal agriculture also drives disease risk indirectly, through deforestation and the expansion of agricultural land use. The proximity of wild animals and farmed animals increases when wild habitats are annexed for food production – and so does the likelihood of diseases spreading. 

Poor animal welfare also reduces animals’ growth and ability to reproduce, impacting productivity and food quality. 

Animal welfare issues in intensive animal agriculture

Key animal welfare issues in intensive animal agriculture include: 

• Confinement and housing systems, and whether they support wellbeing and natural behaviour 

• Transport and slaughter stress 

• Painful procedures without anaesthesia, such as beak trimming or dehorning 

• Breeding practices that are detrimental to animal well-being 

• Inadequate nutrition and water access 

• Behavioural deprivation caused by poor habitats or high stocking density   

• Disease and poor veterinary care, including antibiotic overuse 

• Climate and environmental stress 

The effect of climate change on animal health

Climate change further increases the risk of poor animal health. For instance, higher temperatures reduce productivity, animal welfare and fertility, and increase disease susceptibility and mortality. Cattle are particularly dependent on outdoor grazing (compared to pigs or chickens raised in intensive production systems), exposing them to the risk of heat stress.  

Overall, heat stress costs the US dairy industry around US$897 million to US$1.5 billion per year in revenue and the US beef industry US$369 million per year. 

How poor animal welfare can lead to increased use of antibiotics?

The use of antibiotics to treat animals with infectious diseases supports animal welfare, but their overuse – where healthy animals receive antibiotics to prevent disease or promote growth – raises the risks of antimicrobial resistance (AMR).  

Over 70% of antimicrobials are used in livestock, mainly for these purposes, partly due to poor farming conditions in intensive farming systems, which can accelerate the spread of disease.  

The overuse of antibiotics can therefore sustain intensive farming systems, where animals live in crowded conditions with compromised immune systems. The use of antibiotics as growth promoters can also change animals’ digestive and metabolic processes, with significant negative impacts on their welfare.

The impact of regulation and consumer demand

Animal welfare is increasingly recognised as a mainstream issue, creating material financial risks for producers that fail to act. Regulatory changes and corporate commitments from retailers and manufacturers are transforming intensive animal production systems through more stringent animal welfare standards, raising operating costs as a result.  

The OECD identifies animal welfare concerns as a key driver behind the shift towards meat-free diets in high-income markets. In China, growing consumer demand for higher-welfare products is tied to concerns about food safety and quality. Notably, 77% of Chinese consumers say they would prefer retailers offering higher-welfare pork. 

In response, the industry has largely focused on cage-free egg and chicken production, as well as phasing out crates for pregnant sows. Production systems such as aquaculture — previously under the radar — are now also facing increased scrutiny.   

Recent regulatory and corporate developments relating to animal welfare

• Under the Farm to Fork strategy, the EU plans to eliminate the use of cages for all farmed animals and update minimum standards for animal transport and slaughter   

• In January 2022, France, Germany, Austria and Luxembourg banned the culling of day-old chicks. Italy has passed an amendment to prohibit the practice by December 2026, and the European Commission is considering an EU-wide ban 

• Dutch supermarkets have pledged to shift to slower-growing chicken breeds by the end of 2023  

• The Humane League has filed a judicial review against the UK’s food regulatory agency for allowing the use of fast-growing chicken breeds   

• Companies including Burger King, Kraft Heinz, McDonald’s and Target have committed to a shift away from gestation crates 

• California, which consumes 15% of US pork, voted in 2018 to join nine other states in banning gestation crates for all pork sold, with the ban coming into effect in 2022  

• Sow stalls have been banned in the UK and Sweden and partially banned in the EU 

• In 2021, the World Organisation for Animal (formerly the OIE) released its first aquatic animal health and welfare strategy  

The five freedoms of animal welfare

Enhancing animal welfare is a crucial way to reduce the material risks arising from intensive animal production. The Five freedoms are a minimum requirement for companies assessed under the Coller FAIRR Protein Producer Index:  

1. Freedom from hunger and thirst: By ready access to fresh water and a diet to maintain full health and vigour. 

2. Freedom from discomfort: By providing an appropriate environment including shelter and a comfortable resting area. 

3. Freedom from pain, injury or disease: By prevention or rapid diagnosis and appropriate treatment. 

4. Freedom to express normal behaviour: By providing sufficient space, proper facilities and the company of other animals of its kind. 

5. Freedom from fear and distress: By ensuring conditions and treatment that avoid mental suffering. 

Why is animal welfare a material financial risk for investors?

The management of animal welfare is closely linked food companies’ management of issues related to food safety, provenance, traceability, and quality.  

Protein producers, supermarkets, restaurants and other companies in the livestock supply chain that fail to respond to animal welfare concerns and related issues could face reputational damage, loss of customers, and the potential withdrawal of their social licence to operate. 

Regulatory changes that look to enforce stricter standards around animal welfare and food safety could also lead to significant cost and operational disruptions if companies cannot comply.  

Many consumer-facing companies supplied by protein producers in the Coller FAIRR Protein Producer Index have set voluntary animal welfare commitments, reinforcing the need for producers to stay ahead of regulatory developments and align with shifting market expectations.  

Summary

Animal welfare in agriculture can have serious consequences for human and animal health and can present particularly high risks in intensive agricultural systems. While producers are subject to increasing levels of consumer and regulatory scrutiny and pressure, many are still not reporting or managing animal welfare effectively, posing risks to investors.

Reference

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