2294 part 1 final report.pdf - Agra CEAS Consulting

Prevention and control of animal diseases worldwide
Part I: Economic analysis: prevention versus outbreak costs
In terms of the global impact on trade from outbreaks of transboundary diseases, the size of the impact
will depend on whether the outbreak occurs in significant world exporting countries, in which case a ban
on exports from that country can send significant shocks to other major exporting as well as importing
countries. For example, in 1997, the EU classical swine fever outbreak significantly affected intra-EU
trade, as the Netherlands was a major exporter of pork and live pigs within the EU, but global pork trade
was largely unaffected since the Netherlands, as well as Germany, Belgium, France, Italy and Spain, were
not major exporters of pork outside the EU. By contrast, in 1996/97 the global pigmeat market was
affected by the FMD outbreak in Taipei China, a major world exporter whose pork exports fell to 15% of
the previous year’s value (Table 8). Furthermore, the net trade position of a major trading country can
determine how localised the impact of an animal disease will be, and the impact is likely to be different
when an affected country is both a major world exporter and a major importer, compared to a situation
where an affected country is a significant exporter only.
While it is possible to identify the resulting diversion in trade flows, as one country’s loss can be another
country’s gain, the resulting net effect in terms of total loss in world trade revenues is difficult to establish.
Available evidence suggests it is rather substantial. For example, restrictions on trade as a consequence of
BSE notifications may have resulted to an estimated net loss of US$4.1 billion in world trade (Table 9).
According to some analysts, the various world-wide import bans on meat from disease-infected areas,
combined with heightened border inspections and testing, have limited global meat trade growth, from the
7% annual gains witnessed during the late 1990s to only 2% annually over the past few years (to 2006)
(A111d). Given a global volume in meat trade of about 18 million tonnes and a global value estimated at
US$72 billion (2004 estimates, FAO), this represents a potential annual loss in trade of some 0.9 million
tonnes (or US$3.6 billion). In 2001 the severity and visibility of the FMD pandemic that affected major
meat markets (EU, Mercosur) led to countries around the globe closing their borders to at least 25% of
world beef trade and nearly 40% of global pork exports. In 2004 and 2005, the impact of the AI outbreak
in Asia led to an unprecedented 8% decline in global poultry trade, and a loss of approximately US$ 1
billion in export earnings for the Asian region alone. With the continuing menace of AI, it is estimated
that global poultry trade value is down nearly US$2 billion in 2006 (A295).
Due to the complexity of the factors involved and the methodological difficulties, very few studies have
tried to forecast such global aspects of the potential trade impact. A notable exception is the FAO/OECD
short term commodity model (STM) 87 , which has been used to evaluate the short term global impact of a
potential outbreak of Avian Influenza (as well as FMD and BSE) in different parts of the world. The
model attempts to measure the impact of exogenously imposed export shocks to baseline projections. The
potential impact is evaluated under difference scenarios of consumption shocks that the crisis may
provoke to the EU-25 and/or the rest of the world, with implications on export volumes and
87 Developed in the context of Aglink-Cosimo, a collaborative modelling project between the OECD and the FAO.
This is presently one of the most comprehensive partial equilibrium models for global agriculture and it is one of the
tools used in the generation of baseline projections underlying the OECD-FAO Agricultural Outlook. It is a dynamic,
multi-commodity, partial-equilibrium, global trade model, which provides one-year-ahead projections for demand,
imports, exports, stocks and prices, given predetermined supply for 18 basic agricultural products, covering 50
countries /regions. Four meat categories, sub-divided into disease-affected and disease-free markets, are included in
the model alongside a comprehensive coverage of the feed sector. Changes in real income, population and exchange
rates are the principal exogenous variables driving global agricultural commodity markets. This model has also been
used to evaluate the impact of FMD and BSE.
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