04/07/2013 11:10 BST | Updated 02/09/2013 06:12 BST

Investments in Suffering

In the last several years the European Union has implemented bans on many inhumane practices of confining farm animals.

Key measures included ending lifelong confinement of breeding pigs in sow crates as well as ending the use of conventional battery cages for confining egg-laying hens and the use of veal crates for restraining baby cows. These practices left animals to live out their lives in tiny, barren enclosures preventing them from freely turning around or stretching their limbs, let alone walking or experiencing many other natural behaviours.

For these efforts, the region has gained a reputation as a global leader in humane and sustainable agriculture.

However wonderful these accomplishments are for animals, consumers and farmers, research by Humane Society International shows there are threats that could undermine these gains. With financial backing of Member States in the EU, international banks and credit agencies are investing in agricultural companies that fail to meet the EU's standards for the humane treatment of farm animals.

Funds are financing huge animal production factories that employ extreme confinement systems in the Ukraine, Russia, China and other developing and emerging economies.

The very practices phased out in the EU are merely being transplanted from the EU to countries with less stringent animal welfare standards. Furthermore, products from these animal factories are poised to enter the EU as our markets open up to imports from many of these countries. As a result, farmers investing in higher welfare production systems, including EU farmers, may be at a competitive disadvantage as companies using cheaper, inhumane systems gain a foothold in exporting their products to regional and global markets.

Global financing is not an easy subject to understand. But we believe farmers and consumers across the EU must learn about how public money supports intensive farms abroad.

The institutions investing in mega-animal factories are backed by Member States. Therefore, portions of these funds come from the EU citizen.

The funds get channeled through international finance institutions, such as the European Bank for Reconstruction and Development. Development banks, such as the EBRD, espouse goals of economic and sustainable growth. Yet one can hardly call agribusiness companies whose business practices circumvent EU policy sustainable.

Another way this happens is through export credit agencies, which protect local exporters and banks from non-payment by recipient businesses. Our report finds ECAs culpable, in providing export insurance for equipment used by agribusiness companies that do not meet EU farm animal welfare standards. Insurance guarantees underwritten by the German government support the export of animal confinement systems that do not meet either EU standards or Germany's own animal welfare requirements, for example. In the last four years, EUR40.86 million in credit insurance was granted by the country for the construction of cage systems to confine laying hens outside Germany. Yet, these systems are not permitted inside Germany itself.

Since the release of our report, some lawmakers from the EU are joining HSI in the call for greater alignment between EU farm animal welfare policy and agribusiness investments -- specifically for an end to the use of public funds to support animal agribusiness facilities outside the region, unless those facilities either already meet EU standards for animal welfare, or agree to deadlines for compliance with EU standards. This is a common sense step that is needed in order to protect EU farmers, support sustainable agricultural development in poorer countries, and stay true to the intentions of the EU Farm Animal Welfare Directives - which were not to merely push inhumane farm animal production practices out of the EU - but to reduce animal suffering and to respect EU consumers' desire for higher farm animal welfare.

Read more about the intensive confinement issue and the work of Humane Society International.