The economics of an infectious disease outbreak: Using the

European Q Fever epidemic as an example

Henk Hogeveen, Mirjam Nielen and Maaike A. Gonggrijp

Business Economics group, Wageningen UniversityDepartement Farm Animal Health, Utrecht University

Disease outbreaks

• Can have large consequences– Eradication– Vaccination– Production consequences– ……

• Zoonosis– Even more consequences – Public scrutiny

An example

• Q fever outbreak the Netherlands

• Relative new industry, still growing:

– 98,000 dairy goats in 2000 – 231,000 dairy goats in 2009

(Source: the Dutch Dairy Board)

• 80% of the produced goat milk is exported, only small part consumed in the Netherlands

• Dairy goat products: soft and hard cheeses, yoghurt, consumption milk and milk powder

Dutch dairy goat industry

• 320 goat farmers > 100 goats on farm• Typical seize > 500 goats up to 2500 goats• Milk collectors: cooperations and small businesses• Dairy processors: receive milk either direct or indirect

from farmers• Dairy distributors: dairy goat products are minor part of

their business• Retail: collaborate with each other when purchasing

products

Dutch dairy goat industry

Goat husbandry

• Intensive system• Confined, group housing on straw• Hay and concentrate feeding• Production level 850/goat/year• Partly continued lactations (persistency)• Twice per day milking• External labour is common

Q fever outbreak• In 2005 Coxiella burnetii diagnosed in

the Netherlands as cause of abortion problems on a dairy goat farm

• In 2007 the first Q fever outbreak in humans was diagnosed

• Since then thousands of people got infected, which reached a climax in 2009

Year and week of notification

Source: www.eurosurveillance.org

DALY’s

• DALY = Life years lost + life years lived with disability

• Fatal cases * (expected life – age)

+• Cases * duration * disability weight

– EQ 5D system: 243 different health states based on: mobility, self care, anxiety/depression, pain/discomfort, usual activities

Total nr of DALY’s

• Years 2007 to 2010: 2,507 (1,286 – 5,152)• Mostly (57%) caused by mortality• Compare with other lung diseases:

– COPD: 146,200– Pneumonia and bronchiolitis: 72,000– Influenza: 8,600

• Enough for societal unrest

Farms with abortions due to Q fever

Roest et al 2011

Why dairy goats as source?

• Overlapping area• Succession in time• No other explanation

• Confirmed by genotyping• Other possible sources excluded by

genotyping

Control measures

Majority of control measures in December 2009:• Vaccination programme • Culling of (pregnant) goats from infected farms• Animal movement restrictions• Breeding ban• Bulk milk monitoring -> no good confirmation • Extra hygiene programmes

Around 62,500 dairy goats were culled significant drop in milk production

Economic impact

• How large was the negative economic impact for affected farmers?

• Were other actors of the industry also negatively affected by the control measures?

• Were the relations of the actors and their behaviour in the industry still the same?

Objective:

Study the impact of Q fever control measures on the Dutch dairy goat industry with the use of a quantified value chain analysis

Supply chain

Input (feed, vets)

Farmer Processor Retail Consumer

Input of money (bank), regulation (government)

Transport

Value Chain

Input (feed, vets)

Farmer Processor Retail Consumer

Input money (bank), regulation (government)

Transport

Value chain analysis

• Mapping the value chain

• Governance in the value chain

• Upgrading in the value chain

• Distribution of value in the value chain

Value chain analysis

• Information on the structure, the trade flows and all the relations between the involved actors of a livestock sector

• Often qualitative and descriptive

• In this value chain analysis focus on quantification

Data collection

• Identification of actors in value chain, preliminary map of value chain

• Semi-structured individual interviews (n=34)• Questions asked about total revenues, gross

margins, governance and upgrading possibilities in the value chain and the Q fever outbreak

• Complementary secondary data • Construction of final map of value chain

Preliminary map of the value chain

Final map of the value chain

Data analysis

• Value chain analysis

– Chain of 2009 compared to chain of 2010– Relations and behaviour– Governance, upgrading possibilities

Data analysis

• Gross margin analysis• Output - variable costs• No fixed costs taken into account no net

profit• Amounts of milk, products or animals• Gross margins per kg milk or per animal

• Compare same group not between the groups• 2009 compared to 2010

Gross margin analysis with different scenarios for 2010:

• Growth in milk production of 10,3%• Growth in number of goats of 6,6%• Milk price of 2010:

– -30% (0.31€/kg) – -20% (0.36€/kg) – 2010 (0.41€/kg) – +5% (0.47€/kg)

Data analysis

Results of interviews

• Governance in chain: processors and retail most often mentioned

• Goat farmers most opportunity for upgrading• All but one of the relations in the chain

remained the same

The distribution of goat milk and milk equivalents 2009

Gross margin results

• Decrease of gross margins in 2010 of the total industry of -12% and -23% for farmers compared to 2009

• Enormous difference in decrease between affected farmers (-53%) and non-affected farmers (-12%)

• Prim. dairy processors, meat processing and retail not negatively affected

Goat farmers Milk collectors Prim. dairy processors

Second. dairy processors

(Feed) suppliers Meat processing Retail Total0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

20092010

Eur

o (€

) x 1

0⁶

Gross margins of the Dutch dairy goat industry in 2009 - 2010

Differences in gross margins between 2009-2010 in the Dutch dairy goat sector (%)

Goat farmers Milk collectors Prim. dairy processors

Second. dairy processors

(Feed) suppliers Meat processing Retail Total

-40

-30

-20

-10

0

10

20

Per

cent

age

(%)

Different scenarios

Comparison of 2009 with different 2010 scenarios:

• Q fever outbreak• No Q fever outbreak:

– Growth in milk production of 10,3%– Growth in number of goats of 6,6%– Milk price of 2010:

-30% (0.31€/kg),-20% (0.36€/kg), +5% (0.47€/kg)

Results different scenarios

Drop in milk price to 0.31€/kg -> -57% gross margin

Drop in milk price to 0.36€/kg -29% gross margin

Different scenarios for the whole sector (effect on gross margin)

Goat farmers Milk collectors Prim. dairy processors

Second. dairy processors

(Feed) suppliers Meat processing Retail Total

-80

-60

-40

-20

0

20

40

Q fever outbreak

0.31 €/kg

0.36 €/kg

0.41 €/kg

0.47 €/kg

Per

cent

age

(%)

Scenario of 2010:

Discussion

• Not all of the actors participated. Especially actors close to the consumer were hard to motivate.

• Information provided in interviews correct? simulation model to deal with incorrect data.

• Uncertain if changes in 2010 solely due to the effect of the outbreak and control measures change of export to France in 2010.

• Compensation used to pay off credit loans or to buy new dairy goats.

Discussion – Value chain analysis

• All the (complex) relations in the dairy goat industry were made visible with the mapping of the chain

• Individually held interviews: – sensitive information was shared– no room for group discussions

Conclusion

• Quantification of the value chain succeeded• Farmers most visibly affected but other actors

as well or even more• Compensation for farmers alone not

adequately address the economic impact• The value chain analysis can be

complemented with:– Transmission data – Data on government costs and human benefits

Acknowledgements

Goat farmers

Milk collectors

Dairy processors

Feed companies

Milking system suppliers

Milk powder suppliers

Veterinarians

A.I. station

Semen inseminators

Claw carers

Accountants

Animal health service

Dairy traders

Goat traders

Meat processors

Slaughterhouses

Consumers

Dutch Dairy Board

Dutch Federation of Agriculture and Horticulture

Many thanks to all of the participating actors of the following groups:

Thank you for your attention.