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Should investors be encouraging better farm animal welfare standards in the South African food sector?

2 August 2013

The 2012 Report of the Business Benchmark on Farm Animal Welfare (“Benchmark”), which is funded by Compassion in World Farming and the World Society for the Protection of Animals, finds that “there is a systemic risk that many companies in the food industry are either not effectively managing or not properly reporting on farm animal welfare”. The Benchmark, which provides the first global measure of how farm animal welfare is managed and reported on by food companies, primarily focuses on European companies. This is because, given stricter regulation and greater public awareness, European companies were seen as being more likely to have developed and implemented farm animal welfare systems.

Animal welfare might not be the priority issue for consumers in South Africa that it can be in developed  countries, but a number of examples highlight the fact that it can be an important business issue for food sector companies. These include:

  1. Recombinant Bovine Somatotropin (rBST) – is a synthetic hormone that is used to increase milk production in cows. Although human health concerns appear to be behind consumer awareness campaigns against the use of rBST in South Africa, the increase in health problems in cows as a result of the use of rBST means that there are also animal welfare issues involved. In 1999 the European Union announced a ban on the use of rBST on the basis of animal health and welfare.In 2006, Woolworths announced that it was the only South African retailer to offer only rBST-free milk and yoghurts. Pick ‘n Pay followed with its No Name brand milk and a number of other milk producers also became rBST-free. However, it appears that the introduction of the Consumer Protection Act, which came into effect in 2010, has resulted in a number of companies removing the term “rBST-free” from their packaging, creating understandable confusion amongst consumers.
  2. Free-range eggs – the confinement of laying hens in battery cages continues to attract attention in South Africa. In 2004, a campaign by Compassion in World Farming (SA) and others led Woolworths to become the first (and still the only) retailer that does not sell whole eggs from caged hens. Other stores do offer free-range eggs but continue to also sell eggs from caged hens. In 2009, Woolworths was criticised for not expanding its policy on the sale of whole eggs from non-caged hens to food products containing eggs as an ingredient. Woolworths reportedly responded that using free range eggs as an ingredient was not cost effective but has subsequently introduced more than 100 food lines that are made with free-range eggs.
  3. Gestation crates – gestation crates or sow stalls are two metre by 60cm metal cages that limit movement of sows during pregnancy. A partial ban on sow stalls, which limits the amount of time a sow can be confined, came into effect in the EU in 2013. In South Africa, the National Council of SPCAs (NSPCA) continues to campaign against the use of sow stalls. Although the South African Pork Producers’ Organisation (SAPPO) reportedly agreed in January 2011 to phase out the use of sow stalls, the timeline is contested. SAPPO is pushing for 2020 while the NSPCA and other stakeholders are demanding that the stalls are phased out by 2016. From 2013 new housing for pigs must allow for group housing or individual pens.

SAPPO has raised concerns over the cost implications of phasing out crates which could have implications on the price of pork for retailers. In June 2013, Woolworths said that it supported a 2016 deadline, but indicated that, as a relatively minor purchaser of pork, they would not be able to drive industry changes. Pick ‘n Pay addresses the issues in its Sustainable Living Report 2013, but highlights 2020 as the deadline despite the NSPCA suggesting that the company support a 2016 deadline.

How do South Africa retailers perform?

So how do South African food companies, specifically retailers, measure up with regards to farm animal welfare systems? The Benchmark is composed of three pillars: Management Commitment; Governance and Management; and Leadership and Innovation. The first pillar, Management Commitment, is composed of the following key elements:

  • Is farm animal welfare recognised as a business issue?
  • Do companies have overarching policies on farm animal welfare?
  • Do companies have specific policies on key welfare concerns such as the close confinement of livestock, animals subjected to genetic engineering or cloning, routine mutilations, pre-slaughter stunning, and long distance live transportation?

Analysis of the performance of the top four South African food retailers (Woolworths, Shoprite, Pick ‘n Pay, and Spar based on publically available information is provided below:

Retailer Recognised as a business issue? Overarching policies? Specific policies?
Pick ‘n Pay Animal welfare is acknowledged under sustainability but no indication as to why it is a business issue is provided. The 2009 Sustainability Report indicated that procurement policies were being reviewed “to drive ethical and animal welfare standards throughout [the] supply chain”, but no update appears to have been issued. According to the 2013 Sustainability Report, suppliers are audited on animal welfare standards. Contradictory reports on policy on gestation crates.
Shoprite No evidence No evidence No evidence
Spar No evidence No evidence No evidence
Woolworths Animal welfare is acknowledged under sustainability but no indication as to why it is a business issue is provided. Website indicates there is a NSPCA-approved Animal Welfare Code of Practice, but this is not available online. No whole eggs from caged birds and changing to free-range eggs as ingredients in food.

Monitor local wool suppliers on mulesing (surgical removal of skin around breech of sheep).

Supports banning of gestations crates by 2016.

Management commitment appears to be poor

This analysis suggests that, in general, the performance of South Africa retailers in recognising farm animal welfare as a business issue and publishing relevant policies is relatively poor. There is also a wide difference between the best and worst performers. However, even Woolworths, which goes the furthest in setting out specific farm animal welfare policies, appears to fall well short of best practice set out in the Benchmark Report. Furthermore, there appears to be minimal disclosure of how animal welfare issues are being managed or implemented, with few objectives or targets being set and weak involvement in providing leadership and innovation on the issue.

As in Europe, the importance of farm animal welfare as a business issue will differ between the various companies. It is interesting to note that Woolworths has come under some of the strongest criticism for its position on animal welfare, particularly with respect to free-range eggs, despite its apparent leadership on the issue. This will be partly the result of its attracting high-end consumers who might be more conscious of animal welfare concerns.

Drivers for action

Perhaps, as recognised by the Benchmark’s 2012 Report with respect to European companies, the drivers action on farm animal welfare such as market pressures relating to intensive farm production, consumer concerns and the legislative environment are not strong enough to pressure companies to change direction. One study on the purchase behaviour of South African consumers found that quality and convenience considerations were given priority over issues such as animal welfare, safety  and environmental concerns.

However, drivers can change. In March 2013, it was reported that Compassion in World Farming (SA) was investigating legislative amendments that would address concerns relating to intensive  farming. Consumer preferences might also shift as new animal welfare campaigns gain media coverage. Is it time for investors to play a greater role in encouraging the food industry in South Africa to take steps toward managing and reporting on farm animal welfare more effectively?


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