Humanitarian Resource Institute:  A U.S. & International Resource on the Scope of Humanitarian Assistance

August 9, 2001

Stephen M. Apatow
Director of Research and Development 
Humanitarian Resource Institute Biodefense Reference Library
Foreign Animal and Zoonotic Disease Center
Eastern USA: (203) 668-0282   Western USA: (775) 884-4680


The following overview has been compiled from the Ekboir paper: Potential Impact of Foot-and-Mouth Disease in California: The role and contribution of animal health surveillance and monitoring services: and Appendix C: Key Parameters of the Economic Model

Note on the current UK epidemic: The index case in the UK (Essex abattoir) was some 20 days after the putative start which combined with the disease getting into a sheep market gave it a tremendous advantage -- silent host, massive refluxing of flocks & sheep from one end of England to the other. Note that the Europeans had good warning and in spite of errors caught it very quickly and stopped it dead. If they had not been warned to look for FMD and be alert, I suspect that FMD would have ravaged Europe just as it has the UK. - Martin Hugh Jones, Dept. of Pathobiological Sciences, School of Veterinary Medicine, Louisiana State University

Current UK Statistics (UK Telegraph - 8.9.2001): affected premises to date: 9024

The economic model in the Ekboir study uses the results of the epidemiological model to estimate the direct, indirect and induced economic impact of a FMD outbreak in Tulare County, California. Because it is assumed that the outbreak is elimi-nated in a relatively short period of time (about three months, depending on the date of the initial diagnosis and the eradication strategy), all domestic effects are felt within one year while interna-tional trade restrictions continue for two years after elimination of the last outbreak.

The most important factor in containing the spread of a FMD outbreak is rapid and efficient inter-vention by state and federal animal health services. The efficiency of their actions depends on four factors: (1) preparedness for dealing with an emergency, (2) early diagnosis, (3) timely and adequate access to financial as well as human and physical resources, and (4) support from other civil and military authorities, private veterinarians, processing industries—and, in particular, dairy and live-stock producers (see NASDA FMD Resource Page for Individual State Resource Web Sites and Emergency Plans).

Note: The clinical signs of FMD are easily confused with other diseases such as vesicular stomatitis,
vesicular exanthema and swine vesicular disease. Since these diseases are present in the U.S., al-though with low prevalence, it is likely that FMD would not be properly identified at the start of the outbreak. One of the major problems in identifying a FMD outbreak is that any farm in the nation with animals showing vesicular lesions is strictly quarantined until the field diagnosis can be verified by the Foreign Animal Disease Diagnostic Laboratory (FADDL) at Plum Island. Because of the economic losses caused by such a quarantine, it is believed that some producers do not report vesicu-lar diseases—assuming that it is vesicular stomatitis, and that the infected animals will heal in two weeks

The producer’s crucial role

Modern dairy and pork technologies involve high animal densities. Under these conditions, strict sanitary practices and preventive measures are necessary. Economic considerations, however, dictate that veterinary services are used mainly for reproductive checks and design of preventive plans. Only in extreme cases are veterinarians called to treat clinical symptoms, and it is common to cull animals at the early signs of disease. This practice could favor spread of an exotic disease.

This bias against the use of veterinary services creates problems for the design of animal health policies. The actions taken by producers depend on their judgment about the seriousness of the symptoms. Only if they are aware of the possibility of an exotic disease will they report the symp-toms. In fact, prompt reporting depends crucially on the farmers’ observations and actions. This allows early diagnosis and intervention. Early detection was the main factor that determined the difference in magnitude of the 1924 and the 1929 California outbreaks. 

It must be stressed that from the individual farmer’s point of view, infected animals need not be eliminated from the herd, because they usually become productive again after the acute period. If other producers do not take measures to control the disease, it makes no sense to the farmer to depopulate a farm and repopulate it with non-exposed animals. Thus, it is only the societal decision to eradicate (stamp-out) the disease that justifies depopulation. This point is of crucial importance in considering the government’s role in controlling an outbreak, particularly the need for prompt compensation for depopulation.

The solution to this problem is to establish a system that involves all producers in a particular area. The appropriate mechanism varies with local conditions, existing political and legal institutions, capability of government (in particular animal health services), strength of farmers’ organizations, and past experiences with animal health programs. In almost all cases, the coordinating mechanism should be set up by the government with significant participation by the livestock industry. Without strong support of producers and producers’ organizations, it is impossible to maintain proper surveil-lance and to conduct a successful eradication campaign  (See: Grass Roots Support Crucial for Preparedness and Response to an Outbreak of Foot and Mouth Disease in the United States).

Economic losses due to a FMD outbreak are split into four categories: 

(1) the expenditures in extra resources used as a consequence of the disease, whether they are private (drugs, veterinary services, etc.) or public (quarantine enforcement, depopulation, C&D, etc.), 

(2) the direct effects of the disease on the production system (lost production, animal deaths, lower prices, etc.), 

(3) the indirect and induced effects of the disease on the entire economy (lost employment, disruption to other industries linked directly or indirectly to the dairy and livestock industries in the infected area, etc.),
and (4) losses caused by trade restrictions. 

Losses in the Diary Industry:

Direct losses in dairy production result from the depopulation of infected and contact herds during the quarantine period, which is 60 days after eradication of the last infected herd. 

It is assumed that C&D for a large dairy (2,000 milking cows) requires 10 days; for a small dairy (500 milking cows), five days. The cost of C&D and depopulation of a large dairy amounts to $3,098,279; for a small dairy, $819,217. The breakdown of the costs is:
Large dairy Small dairy
C&D $ 136,740 $ 82,246
Destroyed feed $ 561,538 $136,971
Destroyed animals $2,400,000 $600,000
Total $3,098,279 $819,217
Ekboir  Appendix C

Estimates of the direct costs of dealing with the outbreak (depopulation, quarantine enforcement, C&D costs, etc.) are based on APHIS (1991) and past experiences of C&D using market prices of December 1997.

Losses in the meat industry (beef and pork)

Losses in the meat industry arise from (1) depopulation of latent and infected premises, (2) destroyed
materials, and (3) production lost in the period between depopulation and when reintroduced animals
are ready for slaughter. It is assumed that exposed herds are slaughtered and diverted to human
consumption. Even though all exports of beef from California would be halted, it is assumed that the
markets in the quarantine area can absorb all the beef produced.

It is assumed that at the time of the outbreak feedlots have hay for half a year of normal operation,
and a stock of other feed for a month. It is assumed that C&D of a feedlot (15,000 head) and a
commercial hog operation (500 head) requires five days in both cases. The cost of C&D and depopu-lation
of a feedlot amounts to $14,543,473 while for a commercial hog operation it adds up to
$172,916. The breakdown of the costs is:
Feedlot Commercial hog Operation
C&D $ 134,780 $ 92,916
Destroyed feed $ 908,693 $ 25,000
Destroyed animals $13,500,000 $ 55,000
Total $14,543,473 $172,916
Ekboir  Appendix C

Estimates of the direct costs of dealing with the outbreak (depopulation, quarantine enforcement, C&D costs, etc.) are based on APHIS (1991) and past experiences of C&D using market prices of December 1997.

Issues of payment

Under provisions of Title 9 (CFR), Part 53, the U.S. Department of Agriculture has the authority to
pay up to 100% of the expenses of the purchase, destruction and disposition of animals and materials
required to be destroyed because they were contaminated by or exposed to FMD. The USDA also
pays for cleaning and disinfection of infected premises. Compensation payments depend on the
availability of funds. (APHIS, 1991).

Under current regulations, indemnity payments cover only the direct costs of animals and materials destroyed. It has been well documented, however, that the economic losses may exceed by several times the costs covered by the indemnity payments, as a consequence of trade disruptions (Berentsen at al., 1990). These “consequential losses” may be incurred not only by livestock producers but also by all industries linked directly and indirectly. It is impossible, however, to define and quantify consequential losses with any degree of accuracy. Therefore, they should be addressed by other measures such as those used to provide relief from natural disasters—low cost loans, tax relief, special unemployment payments, etc. Given the expected magnitude of the consequential losses, it may be difficult for the livestock and dairy industries to return to business after the lifting of the quarantines. The industry should study the creation of a self insurance scheme to cover the indemnification of consequential losses.

Note:  In the context of consequential losses regarding agricuiltural sectors that would be directly impacted due to an FMD outbreak, it should be noted that the horse industry directly produces goods and services of $25.3 billion and has a total impact of $112.1 billion on U.S. gross domestic product.  Racing, showing and recreation each contribute more than 25% to the total value of goods and services produced by the industry. 

The industry's contribution to the U.S. GDP is greater than the motion picture services, railroad
transportation, furniture and fixtures manufacturing and tobacco product manufacturing industries. It is only slightly smaller than the apparel and other textile products manufacturing industry. -- Statistics: American Horse Council

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