Socio-economic Impact Assessment of TADs: Methodological Issues

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2 Socio-economic Impact Assessment of TADs: Methodological Issues Joachim Otte & Nicoline dehaan FAO, Rome, 18 October 2011

3 Overview Disease impacts theory practice (HPAI) Impact assessment current limitations Lines of work

4 Disease impact / effect cascade Infectivity, Host range, Severity Impact on animal (1) Impact on farm / household (2) Impact on livestock sub-sector (3) Impact on agriculture sector (4) Impact on national economy (5) Impact on regional/global economy (6) Quant & qual of products & services Food security, social stigma,... P & Q of products & substitutes,... Crop yield, feed prices,... Tourism, employment,... Trade flows, intl. investments,...

5 Disease cost Impact on animal (1) Choice of breed Infectivity, Host range, Severity Direct disease effects Impact on farm / household (2) Impact on livestock sub-sector (3) Impact on agriculture sector (4) Impact on national economy (5) Risk mgmt / disease control Impact on regional/global economy (6) Herd / flock structure, biosecurity investments,. Movement restrictions, standstill, zoning... Quarantine & disease control system,... Import / export bans, consumption choices,.. Intl. verification / certification,...

6 Example: HPAI impacts

7 The value chains / webs ANIMAL AND PUBLIC HEALTH SERVICES Feed Chicken Layer/Broiler Slaughterhouses Processors Day -old chicks Vet. Supplies Ducks Layer/Broiler Quail, etc Layer/Broiler Assemblers / Traders Markets wholes/rtl Restaurants Shops Consumers FINANCIAL SERVICES

8 Direct producer losses Asset loss Birds Feed Bedding & other material (Eggs) Production downtime Financial liabilities Investments in production facilities

9 HPAI & food security, Cambodia 3,500 3,000 Potential calorie availability of bottom quintile poultry keepers Non food Fruits 2,500 Vegetables Fish Calories/day 2,000 1,500 1,000 Food security threshold Milk Eggs Poultry meat Other meat 500 Other grain 0 Rural Rice

10 Adaptive behavior: Producer Small-scale / backyard Consume sick / dead birds Sell birds that don t show signs Move birds to friends / relatives Hide birds Large-scale / commercial Early slaughter (sub-weight) Slaughter and feed to other animals (catfish, pigs) Lay-off staff (reduce wages)

11 Adaptive behavior: Consumer Price effect between 25% and 75% in affected and non-affected countries Volume effect between 30% and 90% in affected and non-affected countries Duration 3 to 6 months supply shortages of seed stock can lead to price increases Prices for substitutes up

12 Adaptive behavior: Itl. markets 400,000 Thai exports of frozen chicken meat (MT) 350, , , , , ,000 50,

13 Flow-on impacts Up-stream Feedmills demand down (10-80%) outstanding payments move to pig & fish feed Breeders price of DOCs down fertilized eggs table eggs Vet. suppliers demand from poultry industry down (30% in Turkey) Down-stream Wholesalers / traders reduced volumes reduced margins Slaughterhouses reduction in throughput (Turkey 20%) to complete standstill (Egypt) Restaurants / Catering up to 100% reduction in sales of poultry dishes Cold storage demand for space up

14 HPAI outcome, Thailand Industry adjustments Reduction in industry participants producers, traders, slaughterhouses exporters Consolidation / increased integration of remaining participants Trade in processed rather than frozen meat (increased valueadded)

15 Disease impact assessments Focus of most disease impact studies has been on levels 2 (farm) and 3 (lstk sector), sometimes level 4 (ag sector). What s missing is behavior how does the system (individuals & institutions) adjust to risk & intervention? Herd demographics: different dynamic patterns of herd growth Marketing dynamics: adjustments in herds themselves in response to lower risk Off-farm / macro impacts also potentially significant, as are externality impacts within and across borders are seldom considered Costs of action and likely success need to be factored in to guide decision making

16 Chad: Benefit of RP eradication, sector 12,000 10,000 8,000 6,000 4,000 2,000 Rinderpest deaths Billion CFA (2000) Deaths >300,000 Cum. add. $ prim. prod. JP15 starts

17 Chad: Benefits of RP eradication - economy 12,000 10,000 8,000 6,000 4,000 2,000 Rinderpest deaths Billion CFA (2000) Deaths >300,000 Cum. add. $ prod. JP15 starts

18 Chad: Benefits & costs of RP eradication - economy 12,000 10,000 8,000 6,000 4,000 2,000 Rinderpest deaths Billion CFA (2000) Deaths >300,000 Cum. add. $ prod. Cum. add. costs JP15 starts Assumption: Rinderpest attributable mortality = 0.32% Ratio of discounted (5%) benefits to costs = 15

19 India, RP Final Push ( ) Productivity impacts: very small <10,000 cases avoided / year 45,000 40,000 35,000 30,000 Number Billion INR (2005) Deaths Value of meat exports Trade impacts: very large export revenues from cattle & buffalo meat more than trippled 25,000 20,000 15,000 10,000 5, Declaration of freedom Zone A B C

20 Lines of work Development and application of a methodological framework capable of disaggregation by: production system region / spatial unit stakeholder group (producers, traders, consumers) first, second, and further round impacts Risk management along the value chain Capacity building

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