There is no such "thing" as "a dairy" that would or wouldn't care about something. It's all people making decisions and why wouldn't we strive to reduce suffering of other animals?!
Vegans also argue that the entire dairy industry, which necessarily requires keeping cows continually pregnant and separating them from their calves soon after birth, in itself creates immense suffering.
And as long as you still have a bottom line while reducing animal suffering, many farmers may be perfectly happy with that tradeoff.
They may see it as a win/win — they get to still run a business doing what they love, while caring for the animals they love.
And if they ultimately are more successful, maybe they reduce and/or “convert” the number of farmers that care less for their animals’ wellbeing.
Minimum standards remain useful to weed out scammers and whatnot who still try go against the grain after the market has shifted, but the general consensus has to be on board first, and when that is the case most farmers will have no choice but to comply. Agricultural markets are, as you say, mostly efficient. Far more efficient than most realize.
Of course, the world isn't limited to democracies, so perhaps you are imagining China or something?
Representative democracy simply introduces a messenger, allowing democracy to happen locally even where the people are spread over large areas. The people at the local level carry out democracy locally and the product of that is compiled with the products from other locales by the messengers. The action of the messenger is recorded to ensure that the will didn't change in transit. It doesn't introduce a dictator to invent laws for you like you seem to suggest. It is still by the action of the people.
I mean, it can introduce a dictator if the people forget to participate in democracy. Someone will rise up and take charge if everyone else completely ignores what is going on. That might be what you are imagining. But you don't really have a democracy (representative or direct) if the people are not active participants. A democracy in name only isn't actually a democracy.
While an assumption of a democracy was made for the sake of discussion, it was recognized that the world is bigger than democracy.