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From: The eUpdate, 3.27.2012

Consumers Could Pay Big Under Expanded Livestock Regulations

Soy group’s study shows proposed rules could boost production costs

Proposed regulations for the livestock and poultry industries—most prominently those involving animal housing, environmental regulations, the use of antimicrobials and other drugs, livestock trading, and labor regulations—could increase production costs by 10% to 25%, potentially costing consumers as much as $16 billion annually, claims a new report commissioned by the United Soybean Board.

The report’s authors also noted that complying with certain regulations could potentially make companies more competitive.

For example, requiring cage-free housing for laying hens would raise the cost of eggs from $1.68 to $2.10 per dozen, suggests the report, "Consumer and Food Safety Costs of Offshoring Animal Agriculture,” released March 2. The report is available online.

The report based a number of its conclusions regarding the impact of possible regulations on experiences with similar policies in the European Union, such as housing changes for hogs. "The additional cost (to producers) would be $5.8 billion in capital costs and another $1.1 billion in operating expenses," said Andre Williamson, vice president of Promar International, which developed the report for the USB.

The study also noted that restrictions on the use of subtherapeutic antimicrobials in the EU, for example, had led to moderate increases in production costs, along with increases in the use of therapeutic antibiotics.

The report’s authors also found an association between new regulations in these sectors and a subsequent drop in production. “The causal effect between the regulations and drop in production is not well documented,” the authors noted, “but we simply note that from our research, where we have data, the two coincide more often than not.”

On the other hand, the report’s authors noted that complying with certain regulations could potentially make companies more competitive.

“Market participation requires both profitable production and product demand,” they wrote. “Some (though not all) of the potential costs that may be imposed upon farmers and ranchers may be consumer-driven. There may be a competitive risk in deflecting or delaying regulatory costs that are truly driven by consumer concerns. Also, new regulations or market requirements overseas could render U.S. production unsuitable for export to those markets, eroding U.S. opportunities and its competitive position in international markets.”

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