2294 part 1 final report.pdf - Agra CEAS Consulting

Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
5.2.3. Costs of outbreaks
Vietnam’s losses from the AI epidemic have been extensively covered by literature, making this one of the
best-documented countries on the subject. Table 14 provides a picture of the direct and indirect impacts
based on a selection from the available literature 117 . A more detailed calculation of the direct production
costs and losses (including culling and control costs), based on the available literature and certain
assumptions, is provided in Table 15.
A total 44 million birds were culled/died after the first HPAI outbreak in 2004. Although compensation
was applied, this was judged to be at low level and reportedly acted as a disincentive for farmers to report
the disease on time (A3, A258).
Table 14 Vietnam: selected direct and indirect impacts of AI outbreaks (a)
Direct costs and losses
Production
losses
Compensation
Culling &
control costs
Consequential
on-farm losses
In the first outbreak in 2004, 58 out of 64 Provinces were affected, and 17% of the total
national poultry flock of 262 million birds (about 44 million) lost. The loss in terms of the
value of birds was estimated at VND 800 billion (assuming an average farm gate price for
chicken of VND 20,000 before AI) or US$ 53 million. According to other sources the value
of the birds lost is even higher. In the second wave of outbreaks, the costs were smaller due to
a less drastic approach to culling in which clinically infected birds only were slaughtered, and
because the disease spread less. (A9, A16, A91, A204, A292)
The central government budget allocated to AI compensation up to June 2005 amounted to
VND 268 billion (US$ 17.2 million) (A3).
It was estimated to cost about US$ 0.25 per bird to cull and dispose approximately 200
chickens per farm (A7, A9, A91). Containing the first epidemic in 2004 is estimated to have
costs the government about VND 400 billion (US$ 27 million) including the temporary
labour for culling and disinfection, hiring of equipment etc. (A204)
The loss of income, assuming poultry production fell to zero for a period of 3 months (during
the moratorium on re-stocking), would amount to around VND 1.6 trillion (US$107 million),
which is considered a realistic estimate of the actual losses caused by the 2004 crisis. (A204).
The number of rural households directly involved in poultry production, predominantly
carried out by women, is reported to have fallen by 50% (A40, A91).
Total direct
impact
The WB has estimated the total direct impact in terms of the poultry sector’s contribution to
GDP (0.6% Vietnam before the HPAI epidemic). With poultry output down by around 15%,
this part of economic loss is worth about 0.1% of GDP or about $45 million. On the other
hand there have also been important substitution effects, especially towards production of
pork. Combining these effects, the direct cost in Vietnam may be around 0.12% of GDP.
117 It is noted that the literature available on this subject in some cases may provide conflicting information due to the
assumptions and base data used, e.g. on the bird value. The various results have therefore been calibrated and
updated with latest evidence to provide a more accurate picture of the impact.
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