Throughout history, new farming methods have popped up to keep up with the food demands of the growing United States population. Such farming methods strived to make food production cheaper and more efficient. Hence, the birth of the modern factory farm. Now, nearly two thirds of U.S. agricultural output is from three percent of its farms (“Factory”). Though factory farms have been very good for the efficiency of food-production, animals in the farms are often victims of mistreatment. By examining these different theories, one can form an educated stance on the economic side of factory farms.Economic forces can be used to improve animal welfare. Economic incentives to treat animals better can be very effective. One huge positive force for improving animal welfare is that consumers are demanding that animals be treated better. Corporations, both large and small, can be motivated to improve practices when consumers demand it. The first section of the paper will cover economic factors that are detrimental to good animal welfare. In the second section of this paper, the effects of economic factors on improving animal welfare will be covered. The Customer Demands Live Animals: The Australian live sheep trade is a primary example. The welfare of the sheep would be greatly improved if the sheep were slaughtered in Australia and the meat was shipped to the Middle East. The problem is that there are great economic forces working against this. People in the Middle East dislike the taste of chilled meat and they are willing to pay huge prices for live sheep. The religious requirements for hala slaughter could be done in Australia. The main barrier to eliminating this trade is that the customer wants the unchilled (pre rigor) meat. The only way to change this would be to increase the customer’s awareness of animal welfare issues or convince them that chilled or frozen meat is a good product.Old Cull Livestock and Poultry of Little Economic Value:Some of the worst abuse during handling, transport, and slaughter occur with old cull breeding stock. In the U.S., cull dairy cows and old breeding sows often travel greater distances than young animals that have been fattened on either grain or grass. There is less economic incentive to treat these animals well because they are less valuable than young feed animals. An effective way to reduce abuses is to increase the value of old breeding stock. This provides an economic incentive to treat them better. Producers need to be educated that if they sell animals before they become skinny and emaciated, they will receive more money for them. In the U.S. and other parts of the developed world, programs have been implemented in some areas to fatten old breeding stock so that they will become more valuable for meat.Highly Segmented Marketing Chains With Many Dealers, Agents, and Middlemen are Bad for Animal Welfare: In the developed world, such as Europe and North America, most high quality young animals that are fattened for slaughter go directly from the feedlot or farm to a slaughter plant. This makes it much easier to make people accountable for losses. Old breeding stock often passes through a series of auctions or dealers and the origin of the animals may not be able to be traced. In the developing world, all classes of livestock are often sold through middlemen and dealers. In all countries, the sectors of the livestock market where the animals go through a series of auctions, dealers or middlemen will be the most difficult to improve. In a highly segmented market system there is often no accountability for losses. Middlemen and dealers who do not own the animals have little economic incentive to reduce bruises, injuries, and sickness because they are not held financially accountable for losses. In Australia, vaccinating calves and training them to eat from feed troughs reduced sickness (Walker et al., 2006). In the U.S., bovine respiratory disease is a major problem. Most cases of (BRD) could be prevented if ranchers pre-weaned and vaccinated their calves before they left the ranch. Half of the ranchers fail to do this because they receive no financial incentives for vaccinating and pre-weaning their calves (Suther, 2006).