2294 part 1 final report.pdf - Agra CEAS Consulting

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Prevention and control of animal diseases worldwide Part I: Economic analysis: prevention versus outbreak costs 5.2.4. Comparison of prevention versus outbreak costs The animal health component of Vietnam’s national Operational Programme for Avian Influenza and Human Influenza (OPI) for the 2006-2010 period comes to US$ 83.74 million. Of this total, the most significant amount (US$ 55.17 million) is earmarked for control activities (Table 12). Excluding the provision for control costs in the event of an outbreak (culling and compensation), total prevention and control activities as such (during ‘normal times’) come down to US$ 70.14 million. Other key components include the strengthening of VS as such, which accounts for US$ 15.8 million over the 5-year period, and vaccination (US$ 25.7 million). Estimates of the various components of surveillance, vaccination and biosecurity are also provided in some literature (Table 13). Against these figures, the analysis of existing data suggests that direct costs of the 2004-05 HPAI outbreaks (including culling and control costs, excluding consequential on-farm losses) amounted to US$ 124.2 (Table 15). Our own estimates of a potential HPAI outbreak occurring in future suggest that, under the scenarios and assumptions presented in section 6, Vietnam could face total direct costs and losses (including consequential on-farm losses) of US$ 115.4 million a year. These direct impacts are compounded by multiple indirect effects as described in Table 14. According to one source, the outbreak in 2004 is estimated to have resulted to total GDP losses in Vietnam of US$ 0.3 billion for that year alone (Table 6). The comparison of the relative scale of the required investment for the next 5-10 years (as provided in the OPI budgets and estimates from literature) against the actual and potential outbreak costs involved is depicted in Figure 13. It is noted that the national OPI prevention and control figures are totals over a 5 year period, and the estimates of the various prevention and control components from the literature are totals over a 10 year period, while the outbreak costs are quoted as annual amounts. It is also noted that comparisons have been made only between the public investment components and the total costs. Components of an effective prevention and control system covered by the private sector, notably investment on biosecurity which is normally covered by farmers, have not been taken into consideration here. The scale of this investment (min US$500-700 in Vietnam) is considered prohibitive for the smallholder sector (Table 13). The comparison clearly points to the fact that the potential benefits that can accrue from improving prevention and control are worth several times the investment. It is noted, however, that this relies on the assumption that a certain investment would result in gains in productivity and export earnings. The extent to which this will occur will depend on the effective design and implementation of the investment, to ensure the effective control of the disease. A risk factor will be the re-appearance of the disease, as is often the case in practice. The above calculations do not take into account the incremental operational costs involved, which can be a significant part of the cost of strengthening VS. On the other hand, the investment in strengthening the control of a particular disease, e.g. HPAI, can have important spill-over benefits on the entire VS. Although these conclusions are made at macro-economic level, they have important implications at microlevel for individual farmers and other business relying on the poultry sector, particularly in the poorer rural parts of the Vietnamese population. Civic Consulting • Agra CEAS Consulting 116
Prevention and control of animal diseases worldwide Part I: Economic analysis: prevention versus outbreak costs The OIE and the FAO estimate that between one third and one half of the population in the most affected areas of South East Asia earn at least part of their income from poultry farming. In Vietnam, 60% of the poorest section of the population, for whom poultry farming accounts for 6% to 7% of household incomes, is relatively more exposed to revenue losses caused by avian influenza. The number of rural households directly involved in poultry production, predominantly carried out by women, is reported to have fallen by 50% (Table 14). Although the smallest producers are the ones who have lost the least in absolute terms, in relative terms they have lost the most, with losses due to an outbreak costing several times their daily income (A292). Figure 13 Vietnam: comparison of prevention versus outbreak costs 2004-05 outbreaks: total direct costs per year (a) scenario outbreak: total direct costs per year (b) 2004-05 outbreak: total GDP loss (2004) Bio-security training, 10 year period (c) Vaccination, 10 year period (c) Early warning, 10 year period (c) OPI (2006-10): Epidemiological research OPI (2006-10): Strengthening VS OPI (2006-10): Vaccination OPI (2006-10): Disease investigation OPI (2006-10): AH total excl. outbreak control OPI (2006-10): AH total incl. outbreak control 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 US$ million (a) annual; including consequential on-farm losses (source: Agra CEAS projection, Annex 5) (b) annual average over 2004-05; excluding consequential on-farm losses (source: Table 15) (c) estimates for a 10 year period (source: Table 13) Notes: OPI figures are totals over a 5 year period; Bio-security training, vaccination and early warning estimates are totals over a 10 year period; Outbreak costs are quoted as annual amounts; Incremental operational costs (a significant part of the total costs of strengthening VS) are excluded from these calculations, due to lack of data. Source: Agra CEAS Consulting, based on literature and own analysis Civic Consulting • Agra CEAS Consulting 117
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