Concentrated Animal Feeding Operation (CAFO)

Concentrated Animal Feeding Operation (CAFO)


caption A farm in Wisconsin. (Source: Tom Beyaert, Stock.Xchng)


The Environmental Protection Agency (EPA) defines a Concentrated Animal Feeding Operation (CAFO) as an animal feeding operation (AFO) accommodating more than 1,000 animals at the facility. Also, EPA may classify AFOs as CAFOs if they house 300 or more confined animals and discharge pollution directly or indirectly into a body of water.[1]

Cows, hogs, poultry (esp. turkeys and chickens ) are animals typically associated with CAFOs. Fish are also raised intensively and are subject to many of the same issues.

CAFOs are particularly popular in the United States because of their relatively favorable economics compared to traditional farms. However, CAFOs are a global phenomenon.

However, CAFOs are often criticized on grounds of environmental impact, health, and the ethics of animal treatments. Proponents of CAFOs argue that all of these issues can be used in favor of intensive agriculture because the economics and concentration of animals allows each to be addressed more effectively and result in less impact "per animal" delivered to market.

The negative environmental implications of CAFO are related in significant part to the large volume of concentrated agricultural waste coming from a small area. This concentration of pollution may result in environmental justice issues. Scientifically-defensible and workable programs for handling waste are required to assure environmentally sound management of AFOs and CAFOs , overall.

CAFOs are often labeled "Factory Farms," particularly by critics, because of their approach to animal management.

Current Market Conditions

In the United States, most farmers have found it difficult to earn a high income. Farmers face high costs and diminishing market prices, often resulting in low profit margins for their goods. In order to operate, farmers must pay for the many inputs of farming:

  • investments in capital goods (for example, land, tractors, buildings);
  • transportation costs of goods and supplies;
  • labor costs;
  • waste disposal costs; and
  • expenditures on new technology in order to remain competitive.

Farmers participating in traditional agriculture (versus organic farms) also incur chemical costs, including: antibiotics, pesticides and herbicides. Bacteria and insects continue to adapt to antibiotic and pesticide use, making it necessary for farmers to apply increased amounts of these chemicals. In 2002, the average United States farm spent $16,227.94 on chemicals.[2]

In 2002, United States farms faced a total cost of $173 billion with individual farms facing an average cost of $81,362. [3] Farmers can use a multitude of approaches to minimize their costs. Farms with high levels of production capilatize on the economic concept of economies of scale. Thus, the farm minimizes its average capital expenditures by maximizing its production. CAFO enable farmers to develop economies of scale in the raising and managing of animals to drive down their costs per animal. A trend toward greater concentrations of animals has been in place for a long time.

Vertical integration can also be a powerful tool in minimizing costs--producing the input goods the farm needs and providing the farmer more control over costs. This minimizes transportation costs

Some farmers may also reduce costs associated with pollution control by locating their farm in an areas of low pollution regulation, minimal enforcement of pollution controls, or by deferring abatement costs.

Lower prices of agricultural goods also decrease farmers’ profits. For example, it has been reported that one typical farmer, Jim Hamilton of Wyoming, received $1.10 per pound for his calves in 1979 and he received $0.86 per pound in 2002.[4] Including the impact of inflation, this shows a significant decrease in the price of meat goods. This decrease in price has impacted farmers across America and continues to do so. Agricultural prices have fallen as markets become flooded with cheap farm goods. The law of supply and demand predicts that increased supply will lead to decreased prices. This increase in supply is a result of a number of factors, including: improved technology and the increasing numbers of CAFOs. The presence of agricultural cartels has also caused decreases in prices.

Government Subsidies

Funding in the form of government subsidies has also encouraged the increase in number of CAFOs. The United States Department of Agriculture (USDA) provides commodity based agriculture subsidies, which are based on units of output. This system results in the majority of these subsidies going towards large farms; however, small farms receive the majority of USDA conservation subsidies. Commodity based subsidies encourage a level of agricultural production that is above an efficient level, causing agricultural markets to flood with cheap goods, decreasing the prices of farm goods. Agricultural subsidies also incur a high cost upon the US government. Government spending on commodity based subsidies has averaged $16 million between FY1996 to FY2002.[5]

Negative Impacts of CAFOs

CAFOs tend to increase the costs of their surrounding community, in the form of increased healthcare costs, property depreciation costs and pollution mitigation costs. By failing to internalize their externalities, CAFOs frequently cause market failure in this way. Besides deferring sizable costs to neighboring communities, CAFOs do not generally contribute significantly to their local economy. According to Weida, CAFOs spend approximately 80% of their expenditures outside of their local community.[6]

The presence of a CAFO increases the healthcare costs of nearby residents because CAFOs generally discharge considerable amounts of water and air pollution that are not routinely monitored. While it is difficult to make an exact link between CAFO pollution and specific health problems, there are a number of cases where communities exposed to increased levels of agricultural pollution exhibit a number of common health problems. The increase in healthcare costs associated with CAFO pollution also adversely affects property value because average willingness to pay for land decreases in areas plagued with high levels of pollution and health problems. For example, properties varying from 0.45 miles to 1.21 miles from CAFOs in Craven County, North Carolina, decreased in value by 4.8-20.6% folliowing the construction of the CAFO. [7]

While CAFOs do not always discharge pollution illegally into waterways, such discharge is an effective way to decrease their private costs by avoiding waste disposal costs. In large quantities, this pollution can severely alter the ecosystem of the area by upsetting the balance of nutrients present in the water and soil. Thus, cleaning this pollution is very important; however, pollution mitigation costs associated with CAFOs are generally very high. For example, the remediation of hog lagoons in South Carolina cost $42,000 per surface acre.[8] These hefty pollution mitigation costs are often passed on to the US Environmental Protection Agency (EPA) because of the difficulty of holding CAFOs liable. While communities have the legal right to sue a CAFO to remove its pollution, they often have trouble holding CAFOs liable for pollution mitigation costs because CAFOs often are integrated horizontally, where multiple owners own shares of the company.[9]


caption Pigs at a farm in Iowa. (Source: Andy Culpin, Stock.Xchng)


CAFOs decrease the prices of agricultural goods because they operate at a much lower costs than small farms; therefore, they can afford to sell their goods at lower prices. One reason that CAFOs operate at a lower cost is that they function under the economic principle of economies of scale: because they produce a large amount of goods, they spread out their initial expenditures over a larger quantity of goods, thus decreasing their average costs. CAFOs maximize their expenditures on capital goods like land and farming implements by using their capital to its fullest extent, thus increasing production and increasing total profit. Another way that CAFOs operate at a lower cost is that they operate at a cost that is not allocatively efficient. Callan and Thomas define allocative efficiency as appropriating resources “such that the additional benefits to society are equal to the additional costs incurred."[10] In producing at an allocatively inefficient level, the CAFO only accounts for its private costs, not public costs. These public costs include: increased healthcare costs of residents living near a CAFO, decreased property costs near the CAFO, and increased taxes due to pollution mitigation costs. By choosing not to accurately account for their costs, the CAFO forces the market into failure, not allowing the market to work correctly to appease both suppliers and consumers. CAFOs produce large quantities of goods, thus increasing the supply of agricultural goods and causing the prices of these goods to decrease.

CAFOs are often detrimental to the overall environment because upset the normal balance of nutrients in the environment. They cause increased quantities of nitrogen and phosphorous to the point of excess thereby contaminating local streams, [river|[rivers]], and wells. Phosphorous is an important nutrient in moderate amounts: algae need phosphorous and fish eat algae; however, high levels of phosphorous create eutrophic lakes and streams. This rapid increase in algae population causes a drop in oxygen levels, threatening the existence of fish populations. Another way that CAFOs threaten the quality of the surrounding environment is through antibiotic contamination. In order to keep the animals from getting sick, CAFOs operators elect to use antibiotics on all animals, regardless of their level of health. Because of this, the animals excrete excess antibiotics and this waste enters the environment, creating large amounts of antibiotic runoff. This runoff kills naturally-occurring bacteria, upsetting an ecological balance. It also causes increased human exposure to antibiotics. Because of this overexposure, human, plant and animal pathogens are becoming increasingly resistant to specific antibiotics—a severe threat to the global human population.

Excessive amounts of animal waste can also contaminate other agricultural goods. E. coli is far more prevalent in CAFOs than in small farms. During the fall of 2006, agricultural runoff containing animal waste infiltrated water systems, and the infected water was sprayed on spinach. This resulted in an outbreak of Escherichia coli (E. coli), causing nearly 200 illnesses and 2 deaths.[11]

Increased concentrations of CAFOs can also compromise the social structure of rural communities. In a meta-evaluation study, Curtis Stofferahn examined a number of studies where rural communities with a higher concentration of CAFOs were compared to communities with higher concentrations of small family farms. This study found that CAFO farming caused increased inequality of income and increased unemployment.[12] Findings of this study also showed that CAFO farming altered the social composition of communities in ways that caused increased crime, social conflict, and decreased community participation.

Recent Trends in Farming

Small family farms have been decreasing since WWII, with increased rates of decline occurring in the 1970's. The number of family farms declined by 39% between 1969 and 2002.[13] As of 2002, only 25% of all US farms were family farms.[14] The traditional pastoral life of America’s past is quickly disappearing. Many factors have influenced this decline: urban population growth, increased efficiency of farms, and a decrease in interest in farming. One of the most influential factors in the decrease in family farms, however, is the increase in number of CAFOs, or Concentrated Animal Feeding Operations. Current market conditions are causing CAFOs to thrive--and causing small farms to dwindle out of existence.


  1. ^ Environmental Protection Agency. “Concentrated Animal Feeding Operations.” 4/5/02.
  2. ^ USDA, National Agricultural Statistics Service. Farm Production and Expenses: 2002 and 1997. 2002 Census of Agriculture: U.S. State Level Data. vol 1 chapter 2.
  3. ^ USDA, National Agricultural Statistics Service. Farm Production and Expenses: 2002 and 1997. 2002 Census of Agriculture: U.S. State Level Data. vol 1 chapter 2.
  4. ^ Charlie Pye-Smith. The Subsidy Scandal: How Your Government Wastes Your Money to Wreck Your Environment. Earthscan: Sterling, VA, 2002. 56.
  5. ^ Becker, Geoffrey S. Farm Commodity Programs: A Short Primer. Congressional Research Service. 20 June, 2002.
  6. ^ Scott Callan and Janet Thomas. Environmental Economics and Management: Theory, Policy, and Applications. 3rd ed. Thompson: Mason, Ohio, 2004. 16.
  7. ^ FDA. "Statement on Foodborne E. coli O157:H7 Outbreak in Spinach." 6 Oct 2006.
  8. ^Stofferahn, Curtis W., 2006. Industrial Farming and Its Relationship Community Well-Being: An Update of a 2000 Report by Linda Lobao. University of South Dakota, Department of Sociology. Accessed online: 19 November, 2007.
  9. ^Stofferahn, Curtis W., 2006. Industrial Farming and Its Relationship Community Well-Being: An Update of a 2000 Report by Linda Lobao. University of South Dakota, Department of Sociology. Accessed online: 19 November, 2007.
  10. ^ Scott Callan and Janet Thomas. Environmental Economics and Management: Theory, Policy, and Applications. 3rd ed. Thompson: Mason, Ohio, 2004. 16.
  11. ^ USDA, National Agricultural Statistics Service. 2002 Census of Agriculture: Michigan State Level Data.
  12. ^ USDA. National Agricultural Statistics Service. 2002 Census of Agriculture Congressional District Profile.
  13. ^ Oksana Nagayet. “Small Farms: Current Status and Key Trends.” Wye College. 26 June 2005.
  14. ^ EPA. “Ag 101."

Further Reading



(2012). Concentrated Animal Feeding Operation (CAFO). Retrieved from


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