2294 part 1 final report.pdf - Agra CEAS Consulting

Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
We differentiate between prices in local/internal markets, and prices in international markets (world
market price). The former is used for the calculation of the loss in poultry value and for the lost income
per head of poultry; the latter is used for the calculation of the export market loss.
The world market price for poultry has experienced significant swings in the last 2 years, following the AI
outbreaks (FAO poultry meat outlook). At the onset of the outbreaks in 2004, lagging consumption in
Asia and the loss of export markets for regional supplies led to an 8% decline in international trade. Over
two years, as countries free from the disease moved to fill the gap in supplies, poultry prices in
international markets rose by over 30%. Market developments since late 2005, however, have
dramatically changed price developments in international meat markets. In particular, AI outbreaks in
approximately 40 previously unaffected countries, many of which are the major poultry consuming and
importing countries of Europe, the Middle East, and Africa, have prompted a decline in the FAO world
poultry price index by 22% (A111d). Plummeting consumer demand in a context of adequate supplies has
continued to put poultry prices under considerable downward pressure in the short term. The duration and
overall extent of the market impact of the more recent AI outbreaks will heavily depend on currently
erratic consumer perceptions about human health risks.
In view of these real market developments 140 , in our analysis we have taken a baseline world price that is
the average of the 2006 level for the US, Brazil and Europe (i.e. the main world poultry exporters
accounting for over 80% of global trade). Our assumption is that, in the most likely scenario, an AI
outbreak would cause shocks in world markets lasting 2 years. We have therefore assumed that prices
would fall by an average 20% over a 2 year period (thereafter recovering to pre-outbreak levels), and
world exports would fall by an average 10% over the same period before recovering to pre-outbreak
levels. In the low impact scenario, the duration of the impact is shorter (1 year) and the extent of the fall
smaller.
These scenarios and assumptions are summarised in the “Assumptions outbreak costs” worksheet of
Annex 5.
6.3. Estimates of outbreak costs
6.3.1. Direct impact
Cost estimates in the event of an HPAI outbreak are presented as a range between nine possible outcomes
from a combination of the 6 scenarios outlined above (‘most likely’, ‘low impact’ and ‘high impact’, and
A, B and C on the geographical country coverage).
Global estimates of the direct production costs and losses (excluding consequential on-farm losses), under
the ‘most likely scenario’ for each of the 3 scenarios of geographical country coverage (A, B, and C), are
presented in Table 23. Similarly, global estimates of total direct costs including consequential on-farm
losses under the ‘most likely scenario’ are presented in Table 24.
140 This was based on information and data available at the time of the analysis.
Civic Consulting • Agra CEAS Consulting 142