Heaving with heavy goods, the A67 from Eindhoven barrels through the flat, featureless fields of the south-eastern Netherlands on its way to the German border. On a frozen December morning, nothing very much moves beyond the road's edge; a horse stamps at a trough, a tractor pushes along a narrow track. Every half mile or so, behind a stand of poplars, a neat brick farmhouse - raked gravel drive, lace curtains at the windows - slides into view. Next to it is a large, windowless and vaguely ominous shed, the size, perhaps, of a small aircraft hangar.

It will hold, almost certainly, several hundred pigs. In a country famed for the unnatural feats of its intensive farming sector (the Netherlands occupies less than one-thousandth of the world's surface, but is its third largest exporter of agricultural produce), this area, known as De Peel, is more densely populated with pigs than anywhere else on the planet.

Some of the sheds are multistorey; they're called pig-flats. There's a fair chance - especially if you're partial to bacon - that you've eaten meat from one of them. A good proportion of the 20m pigs born, fattened, sent abroad or slaughtered each year in the Netherlands come from here, and the Netherlands has become the biggest single supplier of our morning rasher.

"This," Hans Baij of the animal welfare group Varkens in Nood, or Pigs in Distress, had told me the day before in his office in Amsterdam, "is advanced industrial pig farming. There's nothing natural about this whatsoever. It's about science, sperm selection, antibiotics, piglets per sow, grams per day, muscle-to-fat ratios. It's what this country does. Welfare doesn't come into it."

Picture, for a moment, a pig. Engaging, maybe. Large, pink, ungainly, certainly (though that's not how they always were; the original pig was compact and capable of speeds up to 40mph). That strong, muscular snout was designed for rooting around in soil and undergrowth; a sense of smell acute enough to snuffle out buried truffles was plainly intended for forensic foraging.

In many languages, pigs are a byword for anything gross, unpleasant, unhygienic. They're actually very clean; they hate a dirty bed, and will select a latrine area and use it. They are the most curious and intelligent farmyard animals. (A professor from Pennsylvania State University has demonstrated that pigs learn problem-solving games faster than dogs and as quickly as chimps, and will remember the lessons for three years or more.)

Orwell, of course, knew that. Winston Churchill, a serious pig fancier, saw it too. "I like pigs," he said. "Dogs look up to you; cats look down on you; pigs treat you as equal." A shame, then, that we treat pigs the way we do. Britons ate 1.6m tonnes of pork in 2007. We're so fond of the meat that we now import more than 60%, including 40% of all fresh and frozen pork and an astonishing 80% of all bacon. In fact, our pig meat imports - mainly from Denmark, the Netherlands and Germany - have been soaring for nearly a decade; the Netherlands, and those sheds, account for almost half our bacon imports. Demand for UK pork, meanwhile, has slumped 36%.

There is one very good reason for this, say British farmers. It is that in 1999, we introduced standards on pig welfare - regarding the space in which they are reared - that have yet to come into force across the rest of the EU. They have made our pork a great deal more expensive.

"To rear our pigs the way we do," says Vicky Scott, who with her sister and father, Kate and David Morgan, wean more than 500 piglets a week on their 1,000-sow intensive farm near Driffield in Yorkshire, "costs us about 12p a kilo extra. Will that be reflected in the price we get for it? What do you think?"

Some Dutch and Danish producers do rear pigs for the UK market to UK rules. But according to the British Pig Executive, an alarming 70% of the 970,000 tonnes of pig meat we import each year does not meet British welfare standards. What's more, you are probably buying it without knowing it: retailers are perfectly entitled to label foreign meat British if it has been processed here.

The pigs from which much of that foreign meat comes will have led very different lives to many of those reared in Britain. Here, for example - and in Sweden, Switzerland and Norway - the use of a particularly nasty piece of kit called a sow stall has now been outlawed; it is legal in the rest of the EU until 2013. A sow stall is a narrow metal cage, on a bare concrete and slatted floor, in which pregnant sows spend all three months, three weeks and three days of their gestation. They can move a few inches back and forwards, but not turn around. Lying down and getting up is difficult, too.

"It prevents almost all their natural activities," says Phil Brooke, welfare development manager for Compassion in World Farming (CIWF). "They can't forage, they can't root around, they can't prepare a nest for their young. They're subject to bone and muscle weakness, digestive and urinary illnesses, cardiovascular problems. Many display signs of severe psychological problems, stress and frustration."

In much of mainland Europe, too, and on a by no means negligible percentage of British farms, naturally boisterous and playful fattening pigs also spend their days and nights on bare concrete and slatted floors; their faeces and urine fall through and are flushed away. In theory, EU regulations require plentiful "environmental enrichment" - straw, in other words - for bedding and rooting, but an undercover report by CIWF last month showed that 100% of farms surveyed in Spain, 89% in Germany and 88% in the Netherlands provided none. Such rules are, it seems, not very easy to enforce when animal welfare is weighed against export earnings.

If they're lucky, the animals may get a chain or a plastic football to play with. But since there is rarely enough light to see by (pigs are quieter in the dark), fighting and biting are more common than playing. To minimise the effects of this, the vast majority of piglets' tails are routinely docked soon after birth, and their teeth clipped, again in breach of EU rules.

Routine tail-docking in particular, Brooke and Baaij both argue, is a good general indication of pig welfare: pigs reared on extensive farms, outdoors, with plenty of scope for foraging and rooting, rarely need their tails docked. "If they've got plenty to do, they're happy," says Baaij. Otherwise, basically, they go for each other, with tails and ears the favoured targets. And once a pen full of pigs gets the scent of blood, the consequences can be catastrophic; pigs are, after all, omnivores.

In much of Europe too, male piglets are routinely castrated. That's because the powerful flavour of male pig meat - boar taint - is distasteful to many consumers. The operation is performed without pain relief, although the Dutch plan to adopt a gas anaesthetic, voluntarily, later this year. (British pigs are not castrated because they are slaughtered younger, before the taint develops.)

"Across Europe, we found examples of poor welfare and excessive use of confinement systems and mutilations in lieu of good welfare practice," the CIWF report concluded, lamenting the effects of "an industrial system on a highly sentient, intelligent" animal. "Pigs looked uncared for, they showed aggressive behaviour and there was nothing for them to do. Across Europe, pig legislation is being ignored and welfare conditions are often appalling."

So is that what it's like, then, in those Dutch pig farms? Perhaps unsurprisingly, it isn't all that easy to find out. The big farms at least seem distinctly wary of allowing a journalist access. Any number of Dutch welfare groups, including the highly vocal Varkens in Nood, backed by an array of Dutch writers and artists, are now on their case. CIWF has accused them, along with most other continental pig farmers, of routinely breaking EU laws. This month they might also have to face up to Jamie Oliver, in a TV special aiming to do for intensively reared pigs what the TV chef did last year for battery chickens.

At the pristine and gargantuan Houbensteyn Group in Ysselsteyn, home to a barely imaginable 25,000 pigs, a manager tells me bluntly that they can't let me in as they have too much work on in the run-up to Christmas. Another factory farm near Helmond cites stringent hygiene laws that mean no one can so much as poke a nose round the door without taking their outdoor clothes off, donning disinfected boots and laundered boiler suit, even taking a shower.

Introduced after a catastrophic outbreak of swine fever in 1997 that saw 10m Dutch pigs slaughtered, they're a useful deterrent for the curious visitor. "Too much of a bloody performance," says Jaap, the chief stockman. "What do you want to see, anyway? Look, everything here's spotless. You can't even smell this place from the outside. We put in a new air filtration system last year."

Smaller farms prove more open. A few have even installed neat little viewing windows so visitors can gaze into a couple of presumably carefully selected pens - Step in the Shed, the scheme is called, and it's very popular with Dutch primary schools.

John Rooijakkers, who runs a farm of 750 breeding sows with his brother Martin at Aarle-Rixtel, near Eindhoven, will not tolerate British farmers' accusations of unfair competition. "I'm losing money," he says. "Most Dutch pig farmers are. Only the most efficient 20-30% are making any. The European pig market is cut-throat, and it's swings and roundabouts - you may have tougher welfare regulations, but we have far more stringent environment and hygiene laws. Holland is much smaller, much more densely populated than Britain. Don't talk to me about regulations."

Rooijakkers is unusual in the Netherlands in keeping some of his pregnant sows on a mountain of straw, because a portion of his pigs are destined for "a big British supermarket" which he declines to name. For the same reason, some of his male piglets are not castrated. (He does, though, dock their tails: "Show me a single intensive pig farmer who doesn't.")

Elsewhere, tiny piglets - Rooijakkers says proudly that he averages 15 in a litter, where a free-range sow will typically deliver 10 or 12 - scrabble around their mothers on a blue plastic grate. The sows are locked into farrowing crates, similar but slightly bigger than sow stalls and used by many intensive pig farms in Britain too. The sows find it just as difficult to move in them, but they protect the baby pigs from being crushed.

"I have a 0.2% mortality rate," boasts Rooijakkers. "On organic farms they're lucky to get away with 16%. Where's the animal welfare there, then, when you're talking dead piglets? Anyway, you have to be realistic: today's pigs would all be sick within a week if you started raising them outside. They couldn't take it. All those germs."

But next door to the farrowing crates, weaned piglets squal and leap viciously at each other in a bare concrete pen, a punctured yellow ball their only distraction. When you open the door to the small viewing room Rooijakkers has installed, they're suddenly bathed in fluorescent light. Hang around for a while, and the light goes off: it's there for the visitors. Unless you're looking at them, the pigs live in near-total darkness.

Upstairs in his office, Rooijakkers blames the system. "We're supplying what the market wants," he insists. "And where are we, the farmers, in the chain? The retailers tell the slaughterhouses what they'll pay, the slaughterhouses set their prices for us. Everyone takes their margin, and right at the bottom it's the farmer. People, consumers, just aren't being realistic; they want cheap meat, then they're worried about welfare. Buy organic, then! Pay twice the price. But no one will do that."

A few miles down the road in Panningen, Lowie and Jeanette Kersten are similarly blunt. Their farm, Op den Haegh, is small: around 300 sows. Through their viewing windows, you can see pregnant sows lumbering around a barren concrete pen. They are fed automatically. It's an ingenious system. When each pig sticks her head round the feeder door, a computer reads an electronic chip clipped in her ear and calculates whether or not she she has had her daily fill. If she has, the door stays shut; if she hasn't, she's allowed in.

Next door are sows and piglets in spotless but desolate crates. Signs explain that the climate is computer controlled, and make much of how modern pig-farming is doing all it can to minimise the risk of disease, and reduce its impact on the environment. Weaned pigs are on stark concrete and slats; a chain swings from the ceiling and a piglet makes a desultory grab. And there is a whole long side of this big shed whose darkened windows you simply cannot see through; inside is a pale pink mass of occasionally writhing forms. And the occasional furious squeal.

The Kerstens are a charming, and plainly thoughtful, couple in their 50s. They invite me into their immaculate farmhouse kitchen for coffee. "It's all a compromise," says Lowie. "Everyone would like to see better conditions for pigs, but change demands time, good laws, an effort from everyone in the chain and responsibility, from the producer, the retailer, the consumer and the politician. The cold fact is that better welfare means more expensive meat. We'd love to produce it; are people ready to buy it?"

In fact Lowie already does produce some more expensive meat. Half of his piglets are of a different race to the others. They are taken off the farm and raised, in the open air and with special feed, on the grounds of a monastery, under a new label he has developed with colleagues. "The meat from my monastery pigs is tastier, with good fat - supermarkets don't want fat, they want pure lean, and modern pigs are bred to deliver that," he says. "But good restaurants want flavour, and they want meat with a story. Something distinctive."

Wouldn't he like to raise all his pigs that way? "Look," says Jeanette firmly, gesturing at the shed behind her. "We're producers. We do this to earn money. That's what I tell the schoolkids who come here. There's been a whole lot of research to see if we could produce the amount of meat we need any other way ... We're very professional. And pigs aren't people."

On the whole, if you're concerned about pig welfare, you generally are better off buying British (assuming, of course, you can be sure it actually was reared in Britain). Things are not perfect here, but they are quite a lot better: CIWF's undercover inspectors found only 36% of British farms they visited did not use straw, although 54% still carried out routine tail docking. But Vicky Scott and Kate Morgan's farm in Yorkshire feels a world removed from those stifling Dutch sheds. Their pigs are reared on straw, in huge, open-sided sheds that let in all the daylight and - on another chill winter morning - the fresh air you could want.

Scott uses farrowing crates for birthing, although she prefers the term maternity units. "It may look like factory farming," she says, "and it's not very nice to see, but I really believe no better system's been invented." She docks her animals' tails ("We're planning on doing a trial without it, but if they start tailbiting, really, it's horrendous") and clips their teeth ("We've tried not doing it, but they make such a mess of their pen mates. Pigs' teeth are incredibly sharp.") Both operations are done when the piglets are a day old. But the most important thing, for her, is the straw.

"I would never, ever finish [fatten] pigs on slats," she says. "I've always said that. You only have to look at them. They need it, it's the way they're made. It's inconceivable to deny them it." And the family's pigs do, indeed, look pretty damn happy. But there's precious little encouragement from the market to do things that way, or to refund the extra pence per kilo of pork that the straw - and the extra labour to muck it out and replace it - costs them.

The business is tough enough as it is: when animal feed prices went through the roof last summer, Morgan and farmers like her were losing £26 on every pig they sold. "The retailers always say the customer likes the cheapest," she says. "We say we think the customer would actually like the choice. But the bottom line is, if people don't want to pay for higher welfare, farmers will stop doing it."

The best conditions, of course, are free-range, although there is a lot of confusion about what that means. Some 40% of breeding sows in Britain are kept outdoors, compared to fewer than 1% in the Netherlands; but only 7% of the piglets born to them are reared outdoors after they're weaned and only 2% are fattened, or finished, outdoors. "Outdoor bred" is not the same as "outdoor reared". The best guarantee of all is organic, but that comes at a considerable cost.

On a magnificent high field bordered by the Ridgeway near the Wiltshire village of Bishopstone, Helen Browning keeps her 250 saddleback sows producing some 65 piglets a week, about 3,500 a year. The pigs sleep in spacious, clean, straw-filled arks and have free access to the open field around them. Eastbrook farm is a mixed farm and the pigs are integrated into the agricultural cycle; they'll spend a couple of months trashing - and very effectively fertilising - a patch of land and then move on, to be replaced by grass or an arable crop for a few years.

Unlike high-intensity systems, in which pigs are removed from their mothers at three weeks or even earlier, Browning's piglets are weaned at a more natural eight weeks. "They're stronger, maturer, they don't need antibiotics," she says. Farrowing crates and the like, Browning believes, have bred the maternal instincts out of most modern sows. And the never-ending, retailer-led search for ever-leaner meat means they simply don't have enough fat on them to nurse their litters for long anyway.

Browning's pigs are kept in the same family group, and they have an awful lot of room to create an unholy mess of their field. The day I was there, wading through the mud, they were positively gambolling: racing round the field, playing (there's no other word) games. In 20 years of raising pigs, Eastbrook farm has not experienced a single case of tail biting.

"Pigs are clever animals, curious animals, they're clean animals, they tell you about their problems," Browning says. "They're not like cows, they're not stoics, they vocalise. They wear their hearts on their sleeves. And they're funny. They have pretty simple needs, really: space, lots to do."

But all this comes at a price. Tim Finney, managing director of Eastbrook's organic meats business, reckons that amounts to an extra 30 or 40p a kilo just to keep the system running, plus another 70p a kilo for the organic feed. "Overall," he says, "it probably costs us about double what it costs to produce a conventional pig. Although if we weren't organic, we could run the farm the same way and produce meat that was maybe 25% more expensive. That would still be a huge step forwards in welfare terms."

High-welfare organic meat is of course a niche market, recession-sensitive, and Finney admits he's is budgeting for zero growth for the coming year. But the alarming thing is that today, even moderately good welfare standards are coming under pressure. When it comes to pig welfare Britain is, Browning reckons, "genuinely squeaky clean" compared to much of the rest of the world; "probably the best in the world, in fact, for conventional pig-keeping". But what counts, it seems, is price.

Some years ago, the late Lyall Watson, who devoted his last book to The Extraordinary Potential of Pigs, wrote that if you look properly behind the eyes of any pig, you will see "a liveliness, an intelligence for which you are just not prepared". These are not like other animals. If it matters to us that our morning rasher or chop or pork pie does not comes from a genetically engineered fat-free pig that spent its brief life in a dark, bare, windowless shed stuffed full of antibiotics and reduced to attacking its pen-mates for entertainment - a pathetic parody, in short, of a pig - we're going to have to reach deeper into our pockets. Right now, that seems increasingly unlikely.

Rasher by rasher

Buying better bacon

• Sainsbury's Basics Cooking Bacon Rashers, 670g: £1.57 (£2.34/kg)

• Asda Smartprice Unsmoked Streaky Bacon (250g): 87p (£3.48/kg)

• Sainsbury's Taste the Difference Wiltshire Unsmoked Back Bacon, 240g: £3.19 (£13.29/kg)

• Helen Browning's Organic Unsmoked Streaky Bacon Rashers, 184g (available from Sainsbury's): £2.79 (£15.16/kg)

• Duchy Originals Organic Dry Cured Unsmoked Back Bacon Rashers (184g) £4.89 (£26.58/kg)

• Prices taken from mysupermarket.com

Useful resources

• Compassion in World Farming (CIWF)

www.ciwf.org.uk

• Varkens in Nood / Pigs in distress

www.varkensinnood.nl/english_.htm

• Helen Browning organic farming

www.helenbrowningorganics.co.uk