As reported by the New York Times and Change.Org's Sustainable Food Blog, researchers at the University of Toronto and Washington University have devised a means to make mammals insensitive to pain. So far, they've only worked on mice, but the protein that they've genetically engineered away from the mice is common to pretty much all mammals.
The writers reporting on this are discussing the development due to how it could impact commercial animal production in the US, which is rife with animal cruelty abuses, like veal production in boxes, or docking of pigs tails to keep them from biting each other's tails. The argument is that by making the animals insensitive to pain, they are no longer as effected by the unpleasant conditions in which they live. Of course, it could cause issues with the animals not moving away from potentially dangerous situations because they are simply not bothered by pain. For instance, part of the reason pigs tails are docked as so that they'll fight back if their tail gets bit. Without sensitivity to pain, they're not likely to fight back, which raises the threat of infection to the animal.
However, the biggest problem is that this research, while interesting, wouldn't actually solve the problem. From an animal rights perspective, it probably encourages even more egregious abuses, since poor handlers will likely be rougher with the animals than before, simply because the stimulus they were providing is no longer effective. Plus, how does the lack of perception of pain make the actions any less offensive? But ignoring the issue of animal rights and cruelty, this solution does nothing to solve the problems that modern commercial animal production causes elsewhere.
The environmental impact of CAFOs? Could get worse, since the animals insensitivity to pain encourages even higher densities. Which encourages greater centralization. Which increases the food safety risk. While the removal of this protein is unlikely to have any negative health effects on it's own, and animal breeding is easier to control than plant breeding, there isn't much risk of some of dangers of genetically modified food that are often raised, but the most likely end results of this technology are highly negative.
The research is interesting, and the knowledge of the mammalian pain experience could be used to generate some new pain treatments. However, as a technology with reasonable application in modern commercial animal production....I don't see it. And I see it making things worse.