1. Cost-benefit of a private certification scheme
Schemes for transport companies and control posts
May 7/8 2014, Elsje Oosterkamp & Willy Baltussen

2. Content
1.Introduction
2.Description of scenarios
3.Conceptual model
●Benefits
●Costs
4.Main assumptions
5.Results
6.Conclusions

3. 1. Introduction
 Goal of cost-benefit analysis: compare expected
additional benefits with the additional costs of the
introduction of voluntary high quality schemes for
transport companies and control posts.
 Background:
● Regulation 1/2005; long distance transport of animals
● Regulation 1255/97; requirements for control posts
● Problems with compliance  no optimal animal welfare and
biosecurity

4. 2. Scenarios
 Scenario 1: baseline; no improvement of compliance, no
increase of checks, no increase in penalties and fierce
competition among transport companies compared to 2009.
 Scenario 2: Introduction of high quality schemes with 95% of
the transport companies and control posts participating. The
scheme is a ‘licence to deliver’ in the product chain.
 Scenario 3: = scenario 2 but only 60% is participating because
only part of the meat processing companies ask for the
certificate.
 Scenario 4: = scenario 2 but 20% is participating. Only front
runners in the transport branch and control posts have high
quality schemes.

5. 3. Conceptual model (1)
Only additional benefits and costs are taken into account.
Benefits in the model are:
● Better animal welfare
● Reduced risk of outbreak of contagious animal disease
Other possible benefits but not valued are:
● Consumer premiums;
● Preferred supplier;
● Gains of social responsibility;
● Better harmonisation and implementation of EU rules.

6. 3. Conceptual model (2)
Costs
● Additional investment costs and operational costs;
● Change in inspection costs of public authorities;
● Cost to get and maintain a certificate (initial audit,
re-audits, participations fees).

7. 4. Main assumptions (1)
 Annually > 12 million animals transported over 8 hours
in almost 55,000 consignments with almost 11,000 stops
at control posts.
 There are 122 control posts and 1,000 transport
companies.
 Animal welfare costs (direct costs) are estimated at > 9
million euro per year. Can be reduced by half if high
quality schemes are introduced.
 Annual costs of outbreak of a contagious disease is
estimated at 11 million euro (mainly risk of outbreak of
Food & mouth disease in EU).

8. 4. Main assumptions (2)
 Investment costs at control posts are 2.21 million
annually if all control posts will invest.
 Additional costs of a high quality transport plus stop at
control post is 10 euro per consignment;
 Less inspection time is needed for competent authorities
to inspect a truck load. Per load for long distance
transport an advantage of 70 euro is assumed.
 Certification costs are estimated at 750 euro per
transport company per year and at 850 euro per control
post per year.

9. Results: costs and benefits in million euro
Cost /
benefit
Cost category Scenario 2 Scenario 3 Scenario 4
Benefit Better animal
welfare
4.6 2.9 1.0
Less costs Inspection costs 3.6 2.3 0.8
Additional
costs
Certification
costs
-0.8 -0.5 -0.2
Additional
costs
Operational
costs
-0.1 -0.06 -0.02
Investment
costs
Investments in
HQ control
posts
-2.1 -1.3 -0.4
Total
balance
5.2 3.3 1.1

10. 5. Sensitivity analysis
 Scenario 2: even if additional gain of animal welfare with
high quality scheme is reduced to 10% instead of 50% a
positive balance remains
 Scenario 2: even if no reduction in public inspection is
expected a positive balance remains (1.6 million), but it
has a high impact.
 In the worst case scenario; investments of control posts
are doubled, certification costs are doubled, participation
is limited to 60% and less gain in animal welfare is
realised  net balance becomes negative: -2.2 million
euro per year. To realise a balance (break even point)
between benefits and costs the period between two
outbreaks of contagious diseases has to increase by
20%.

11. 6 Conclusions
1. The CBA of high quality schemes of high quality transport and high quality
control posts shows a socially positive balance (except for the worst case).
2. For very long transport the positive balance can be realised if the needed
investments to become high quality are low or if the investments are
subsidized and more transports are using the control posts because of a
better compliance.
3. Given the positive balance of the CBA the right incentives should be
implemented in the production chain. This in such a way that the
stakeholders who make additional costs like the transport companies and the
control posts also realise additional benefits.
4. Also the administrative burden can be lowered by setting up a system of self-
regulation. This can be a win-win-win situation for the competent
authorities, transport companies and animals.

12. Questions for discussion
 What need to be done to attract the interest of
transporters in a scheme focussing on animal welfare?
 How can cost and benefits along the chain be shared?
What incentives need to be introduced?
 What needs to be done to make the schemes a licence
to deliver?
 How could a reduction of the public inspection time be
realised?

13. Thanks for your
attention!
Elsje.oosterkamp@wur.nl
Willy.baltussen@wur.nl