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Assessing the Economic Impact of
         Swine Disease -
        The Case of PRRS


   James Kliebenstein
  Agricultural Economist
  Iowa State University
Production Impacts

 Death
 Permanent Damage

 Uncompensated Growth
  Interruption
 Reduced Feed Efficiency
Production Impacts

 Abortion
 Reproductive Inefficiency

 Decreased Animal Product Output

 Increased Culling
Cost of Disease
   Mortality
       Value, expenses, and disposal
   Morbidity
       Production, efficiency, cash flow
   Revenue loss
       Lower weight & value, condemn
Cost of Disease
 Prevention and/or treatment
 Seedstock suppliers

     Lost market
     Reputation/goodwill

   Industry impact
       Export market, consumer
        confidence
Budgeting Economic
Impact of Disease

 Reduced Revenue
 Reduced Costs

 Increased Costs
Impact of Disease on Market Pig
      Growth
                                       A
                                           C
Weight                                         D
                               B



                    AS DS                   Age/days
    As=Animal Sick
    Ds=Days Sick
    A=Normal growth
    B=Compensating growth
    C=Growth resumes but no compensating gain
    D=Growth is impacted through days on feed.
Economics

   Evaluating trade-offs
       Prevention v. treatment
   Marginal analysis
     What is the value of additional
      intervention versus its cost
     Optimal is when they are equal
Relationship of Treatment Level
     and Losses
                                        Control costs
     $


                                           Losses
               A         B          C
             Treatment Level
   A=Allow disease to go to higher level and then treat
   B=Keep incidence at medium level
   C=Keep incidence at low level-treat often
Issues in Disease
    Management Biosecurity

 Economic Impact on the
  Herd/Operation
 Impact on Management of Animal
  Flow or System
 Need to have a focus on what the
  it causes as well as what causes
  it.
Issues in Disease
    Management Biosecurity

 Cost of Prevention
 Cost of Treatment

 Prevention Effectiveness

 Treatment Effectiveness

 Probability of Getting Disease

 Disease Contagiousness
   Can’t afford total prevention.
    It will bankrupt you.
Evaluating Trade-offs

Cost to   Treatment Effectiveness
Farm         High        Low
High
             Treat          Prevent


Low       Treat/Ignore   Prevent/Ignore
Evaluating Trade-offs

Cost to    Probability of Disease
Farm         High         Low
High
            Prevent       Prevent/Treat


          Treat/Prevent      Ignore
Low
Evaluating Trade-offs

Cost to     Cost of Treatment
Farm         High        Low
High        Prevent       Treat/Prevent

          Prevent/Treat    Treat/Ignore
Low
Evaluating Trade-offs
   Variables        Treatment            Prevention

Incidence       More important for   Import ant for high
                low incidence        incidence

Infections      Less important       Important

Clinical        Important            Less important

Sub-Clinical    Less important       Important

Lead to other   Less important       Important
disease

Contact         Important            Less important
Transfer

Air Transfer    Less important       Important
Disease Management
May be Key to Survival
Breeding-age Females Culled over a 12-month
Period as a Percentage of Sow and Gilt Inventory



        Time Period                   Percent
            1990                        43.5
            1995                        41.2
            2000                        37.7
            2006                        48.8


  Source: USDA, 2008, Part IV, “Swine 2006: Changes in
  the U.S. Pork Industry, 1990-2006. USDA-APHIS-US,
  CEAH, Ft. Collins, CO.
Percentage of Pigs That Died During
          Nursery Phase


       Time Period                   Percent
           1990                         2.4
           1995                         2.3
           2000                         2.6
           2006                         2.9


 Source: USDA, 2008, Part IV, “Swine 2006: Changes in
 the U.S. Pork Industry, 1990-2006. USDA-APHIS-US,
 CEAH, Ft. Collins, CO.
Percentage of Grow/Finish Pigs that Died During
               Grow Finish Phase



       Time Period                   Percent
           1990                         1.8
           1995                         2.1
           2000                         2.9
           2006                         3.9


 Source: USDA, 2008, Part IV, “Swine 2006: Changes in
 the U.S. Pork Industry, 1990-2006. USDA-APHIS-US,
 CEAH, Ft. Collins, CO.
Per Litter Productivity
                (Pigs per litter)
       Item                          Year
                     1990     1995          2000    2006


Stillbirth/mummies    .87      .05           .81    1.04
Born Alive           9.47      9.37         9.94    10.80
Total Born           10.34    10.02         10.75   11.84
Preweaning Deaths    1.10      .88          1.17    1.42
Weaned               8.37      8.49         8.77    9.38


Source: USDA, 2008, Part IV, “Swine 2006: Changes in
the U.S. Pork Industry, 1990-2006. USDA-APHIS-US,
CEAH, Ft. Collins, CO.
Percent of Sites in Which PRRS was Diagnosed
by a Veterinarian or Laboratory during Previous
                   12 Months



                                      Year
 Item                         2000           2006


 Breeding Herd                16.2           18.8
 Nursery Pigs                 11.6           21.5
 Grow/Finish Pigs             10.3           23.4


 Source: USDA, 2008, Park IV, “Swine 2006:
 changes in the U.S. Pork Industry, 1990-2006.”
 USDA-APHIS-US, CEAH, Ft. Collins, CO.
Percentage of Sites Which Usually Vaccinated for
    PRRS During 12 Months Prior to Survey



       Item                        Year
                          2000               2006
  Breeding Females        37.1               27.3


    Weaned Pigs            5.2                5.4


  Source: USDA, 2008, Part IV, “Swine 2006: Changes in
  the U.S. Pork Industry, 1990-2006. USDA-APHIS-US,
  CEAH, Ft. Collins, CO.
Brief Summary of PRRS Study

   Source of Information:
     10 Case Study Farms
     Range of Producer Types

     National Animal Health

      Monitoring System PRRS
      Incidence
Study Cooperators
   Eric J. Neumann, New Zealand
   Colin D. Johnson, Iowa State Univ.
   John W. Mabry, Iowa State Univ.
   Jeffrey J. Zimmerman, Iowa State Univ.
   Eric J. Bush, USDA Center for Natl Animal Health
    Surveillance
   Ann H. Seitzinger, USDA Center for Natl Animal
    Health Surveillance
   Alice L. Green, USDA Center for Natl Animal Health
    Surveillance
Case Study Population
             FARROWING


Farm   Number of Sows   Number of Litters Affected


 A1        10,200                 23,885
 B1        1,400                  1,185
 C         4,000                  2,240
 D          475                   1,434
 E         2,800                  1,837
 F         1,000                   432
Case Study Population
                NURSERY


Farm   Number of Groups   Number of Groups
          Affected          Unaffected


 A1           40                105
 J            66                220
Case Study Population
             GROW-FINISH


Farm   Number of Groups   Number of Groups
          Affected          Unaffected


 A            38                109
 G            2                  12
 H            12                 8
 I            27                 21
 J           546                356
Farrowing Productivity Differences –
          PRRS Outbreak
                               Percent Change
                            Pigs Weaned per sow   Pigs Weaned per Sow per
    Farm
           Farrowing Rate         Farrowed                 Year
A-1            -11.11              -7.69                  -14.44
A-2            -10.26              -6.21                   -9.09
B-1            -2.35              -28.21                  -26.24
B-2            -21.98             -32.55                  -46.45
C              -19.21             -25.58                  -23.56
D-1            -8.41              -14.29                  -21.43
D-2            -4.33               -6.82                  -10.95
E              -11.90             -10.11                  -11.44
F              -39.05             -13.58                  -38.32


High          -39.05              -32.55                  -38.32
Low            -2.35              -6.21                   -9.09
Average       -13.76              -16.43                  -22.94
Farrowing Productivity Differences –
          PRRS Outbreak
                              Absolute Difference
                             Pigs Weaned per sow    Pigs Weaned per Sow per
     Farm
            Farrowing Rate         Farrowed                  Year
 A-1            -9.00               -0.70                    -3.24
 A-2            -8.00               -0.55                    -1.95
 B-1            -2.00               -2.95                    -5.80
 B-2            -20.00              -3.41                   -11.20
 C              -13.40              -2.20                    -4.50
 D-1            -7.00               -1.30                    -4.80
 D-2            -3.60               -0.60                    -2.30
 E              -9.00               -0.90                    -2.30
 F              -26.20              -1.10                    -6.40


 High          -26.20              -3.41                    -11.20
 Low            -2.00              -0.55                    -1.95
 Average       -10.92              -1.50                    -4.72
Nursery and Grow-Finish Productivity
    Difference – PRRS Outbreak
                             Percentage Difference
             Average Daily    Feed Efficiency        Mortality (%)
      Farm
                 Gain
                                  NURSERY
  A-2           -28.00             11.73                 1,041
  J             -22.58             11.64                 246
  Average       -25.29            11.69                  644


                                GROW-FINISH
  A-2           -10.06             7.45                  189
  G             -39.02             37.11                 408
  H             -12.26             1.72                  187
  I              -1.96             5.71                   44
  J-1            -2.78             -1.45                  59
  J-2            -6.11             -5.09                 109
  Average       -12.03             7.57                  166
Nursery and Grow-Finish Productivity
        Difference – PRRS Outbreak
                           Absolute Difference
           Average Daily   Feed Efficiency       Mortality (%)
    Farm
               Gain
                               NURSERY
A-2            -.21             0.19                 17.91
J              -.21             0.17                 3.39
Average        -.21             0.18                10.65


                             GROW-FINISH
A-2            -.17              .21                 11.10
G              -.64             1.18                 15.59
H              -.19              .06                 4.10
I              -.03              .18                 1.53
J-1            -.05             -.04                 1.56
J-2            -.11             -.14                 2.90
Average        -.20             .24                  6.05
Summary of Pig Production Efficiency
         Impacts of PRRS-Case Study Farms



                            Negative   Positive
                             Group      Group     Difference


Farrowing Rate (%)          79.36%     68.44%       -10.92
Pigs weaned /litter (#)       9.13       7.63       -1.50
Litters/sow/yr (#)            2.29       2.09        -.20
Nursery mortality (%)         1.55       12.2      +10.65
Grow/finish mortality (%)     3.64       9.69       +6.05
Range in Economic Impact for
                  Case Study Farms



Item                            Lowest Impact   Highest Impact


Impact per litter – farrowing      $27.61          $156.60
Impact per pig – nursery            $3.35           $9.12
Impact per pig – grow/finish        $0.21           $28.30
Economic Impact of PRRS Outbreak
        for Selected Feed Costs

Item                          Corn ($/bu)   2.50     3.75     5.00
                              SBM ($/ton)   199      238      277
Farrowing Phase

 Reduced revenue per litter                 $45.00   $45.00   $45.00
 Reduced farrowing rate                      29.57    31.73    34.00
 Economic impact per litter                 $74.57   $76.73   $79.00
Nursery Phase
 Increased mortality                         $3.58    $3.58    $3.58
 Reduced feed efficiency                      1.21     1.39     1.57
 Reduced average daily gain                   1.26     1.26     1.26
 Economic impact per pig                     $6.05    $6.23    $6.41
Grow-Finish Phase
 Increased mortality                         $3.23    $3.23    $3.23
 Reduced feed efficiency                      3.24     4.24     5.25
 Reduced average daily gain                   1.44     1.44     1.44
 Economic impact per pig                     $7.91    $8.91    $9.91
Annual Cost of PRRS to the United States
      Swine Industry for Selected Feed Costs


                           Corn ($/bu)   2.50       3.75          5.00
            Item           SBM ($/ton)   199        238           277
                                                Million Dollars
Farrowing Losses
  Reduced pigs weaned                     $40.50      40.50        40.50
  Reduced farrowing rate                   26.61      28.56         30.1
Nursery Losses                            231.17    238.05        244.93
Finisher Losses                           295.91    333.32        370.73
  TOTAL                                  $594.19    640.43        686.77

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Assessing the Economic Impact of Swine Disease - The Case of PRRS

  • 1. Assessing the Economic Impact of Swine Disease - The Case of PRRS James Kliebenstein Agricultural Economist Iowa State University
  • 2. Production Impacts  Death  Permanent Damage  Uncompensated Growth Interruption  Reduced Feed Efficiency
  • 3. Production Impacts  Abortion  Reproductive Inefficiency  Decreased Animal Product Output  Increased Culling
  • 4. Cost of Disease  Mortality  Value, expenses, and disposal  Morbidity  Production, efficiency, cash flow  Revenue loss  Lower weight & value, condemn
  • 5. Cost of Disease  Prevention and/or treatment  Seedstock suppliers  Lost market  Reputation/goodwill  Industry impact  Export market, consumer confidence
  • 6. Budgeting Economic Impact of Disease  Reduced Revenue  Reduced Costs  Increased Costs
  • 7. Impact of Disease on Market Pig Growth A C Weight D B AS DS Age/days  As=Animal Sick  Ds=Days Sick  A=Normal growth  B=Compensating growth  C=Growth resumes but no compensating gain  D=Growth is impacted through days on feed.
  • 8. Economics  Evaluating trade-offs  Prevention v. treatment  Marginal analysis  What is the value of additional intervention versus its cost  Optimal is when they are equal
  • 9. Relationship of Treatment Level and Losses Control costs $ Losses A B C Treatment Level  A=Allow disease to go to higher level and then treat  B=Keep incidence at medium level  C=Keep incidence at low level-treat often
  • 10. Issues in Disease Management Biosecurity  Economic Impact on the Herd/Operation  Impact on Management of Animal Flow or System  Need to have a focus on what the it causes as well as what causes it.
  • 11. Issues in Disease Management Biosecurity  Cost of Prevention  Cost of Treatment  Prevention Effectiveness  Treatment Effectiveness  Probability of Getting Disease  Disease Contagiousness
  • 12. Can’t afford total prevention. It will bankrupt you.
  • 13. Evaluating Trade-offs Cost to Treatment Effectiveness Farm High Low High Treat Prevent Low Treat/Ignore Prevent/Ignore
  • 14. Evaluating Trade-offs Cost to Probability of Disease Farm High Low High Prevent Prevent/Treat Treat/Prevent Ignore Low
  • 15. Evaluating Trade-offs Cost to Cost of Treatment Farm High Low High Prevent Treat/Prevent Prevent/Treat Treat/Ignore Low
  • 16. Evaluating Trade-offs Variables Treatment Prevention Incidence More important for Import ant for high low incidence incidence Infections Less important Important Clinical Important Less important Sub-Clinical Less important Important Lead to other Less important Important disease Contact Important Less important Transfer Air Transfer Less important Important
  • 17. Disease Management May be Key to Survival
  • 18. Breeding-age Females Culled over a 12-month Period as a Percentage of Sow and Gilt Inventory Time Period Percent 1990 43.5 1995 41.2 2000 37.7 2006 48.8 Source: USDA, 2008, Part IV, “Swine 2006: Changes in the U.S. Pork Industry, 1990-2006. USDA-APHIS-US, CEAH, Ft. Collins, CO.
  • 19. Percentage of Pigs That Died During Nursery Phase Time Period Percent 1990 2.4 1995 2.3 2000 2.6 2006 2.9 Source: USDA, 2008, Part IV, “Swine 2006: Changes in the U.S. Pork Industry, 1990-2006. USDA-APHIS-US, CEAH, Ft. Collins, CO.
  • 20. Percentage of Grow/Finish Pigs that Died During Grow Finish Phase Time Period Percent 1990 1.8 1995 2.1 2000 2.9 2006 3.9 Source: USDA, 2008, Part IV, “Swine 2006: Changes in the U.S. Pork Industry, 1990-2006. USDA-APHIS-US, CEAH, Ft. Collins, CO.
  • 21. Per Litter Productivity (Pigs per litter) Item Year 1990 1995 2000 2006 Stillbirth/mummies .87 .05 .81 1.04 Born Alive 9.47 9.37 9.94 10.80 Total Born 10.34 10.02 10.75 11.84 Preweaning Deaths 1.10 .88 1.17 1.42 Weaned 8.37 8.49 8.77 9.38 Source: USDA, 2008, Part IV, “Swine 2006: Changes in the U.S. Pork Industry, 1990-2006. USDA-APHIS-US, CEAH, Ft. Collins, CO.
  • 22. Percent of Sites in Which PRRS was Diagnosed by a Veterinarian or Laboratory during Previous 12 Months Year Item 2000 2006 Breeding Herd 16.2 18.8 Nursery Pigs 11.6 21.5 Grow/Finish Pigs 10.3 23.4 Source: USDA, 2008, Park IV, “Swine 2006: changes in the U.S. Pork Industry, 1990-2006.” USDA-APHIS-US, CEAH, Ft. Collins, CO.
  • 23. Percentage of Sites Which Usually Vaccinated for PRRS During 12 Months Prior to Survey Item Year 2000 2006 Breeding Females 37.1 27.3 Weaned Pigs 5.2 5.4 Source: USDA, 2008, Part IV, “Swine 2006: Changes in the U.S. Pork Industry, 1990-2006. USDA-APHIS-US, CEAH, Ft. Collins, CO.
  • 24. Brief Summary of PRRS Study  Source of Information:  10 Case Study Farms  Range of Producer Types  National Animal Health Monitoring System PRRS Incidence
  • 25. Study Cooperators  Eric J. Neumann, New Zealand  Colin D. Johnson, Iowa State Univ.  John W. Mabry, Iowa State Univ.  Jeffrey J. Zimmerman, Iowa State Univ.  Eric J. Bush, USDA Center for Natl Animal Health Surveillance  Ann H. Seitzinger, USDA Center for Natl Animal Health Surveillance  Alice L. Green, USDA Center for Natl Animal Health Surveillance
  • 26. Case Study Population FARROWING Farm Number of Sows Number of Litters Affected A1 10,200 23,885 B1 1,400 1,185 C 4,000 2,240 D 475 1,434 E 2,800 1,837 F 1,000 432
  • 27. Case Study Population NURSERY Farm Number of Groups Number of Groups Affected Unaffected A1 40 105 J 66 220
  • 28. Case Study Population GROW-FINISH Farm Number of Groups Number of Groups Affected Unaffected A 38 109 G 2 12 H 12 8 I 27 21 J 546 356
  • 29. Farrowing Productivity Differences – PRRS Outbreak Percent Change Pigs Weaned per sow Pigs Weaned per Sow per Farm Farrowing Rate Farrowed Year A-1 -11.11 -7.69 -14.44 A-2 -10.26 -6.21 -9.09 B-1 -2.35 -28.21 -26.24 B-2 -21.98 -32.55 -46.45 C -19.21 -25.58 -23.56 D-1 -8.41 -14.29 -21.43 D-2 -4.33 -6.82 -10.95 E -11.90 -10.11 -11.44 F -39.05 -13.58 -38.32 High -39.05 -32.55 -38.32 Low -2.35 -6.21 -9.09 Average -13.76 -16.43 -22.94
  • 30. Farrowing Productivity Differences – PRRS Outbreak Absolute Difference Pigs Weaned per sow Pigs Weaned per Sow per Farm Farrowing Rate Farrowed Year A-1 -9.00 -0.70 -3.24 A-2 -8.00 -0.55 -1.95 B-1 -2.00 -2.95 -5.80 B-2 -20.00 -3.41 -11.20 C -13.40 -2.20 -4.50 D-1 -7.00 -1.30 -4.80 D-2 -3.60 -0.60 -2.30 E -9.00 -0.90 -2.30 F -26.20 -1.10 -6.40 High -26.20 -3.41 -11.20 Low -2.00 -0.55 -1.95 Average -10.92 -1.50 -4.72
  • 31. Nursery and Grow-Finish Productivity Difference – PRRS Outbreak Percentage Difference Average Daily Feed Efficiency Mortality (%) Farm Gain NURSERY A-2 -28.00 11.73 1,041 J -22.58 11.64 246 Average -25.29 11.69 644 GROW-FINISH A-2 -10.06 7.45 189 G -39.02 37.11 408 H -12.26 1.72 187 I -1.96 5.71 44 J-1 -2.78 -1.45 59 J-2 -6.11 -5.09 109 Average -12.03 7.57 166
  • 32. Nursery and Grow-Finish Productivity Difference – PRRS Outbreak Absolute Difference Average Daily Feed Efficiency Mortality (%) Farm Gain NURSERY A-2 -.21 0.19 17.91 J -.21 0.17 3.39 Average -.21 0.18 10.65 GROW-FINISH A-2 -.17 .21 11.10 G -.64 1.18 15.59 H -.19 .06 4.10 I -.03 .18 1.53 J-1 -.05 -.04 1.56 J-2 -.11 -.14 2.90 Average -.20 .24 6.05
  • 33. Summary of Pig Production Efficiency Impacts of PRRS-Case Study Farms Negative Positive Group Group Difference Farrowing Rate (%) 79.36% 68.44% -10.92 Pigs weaned /litter (#) 9.13 7.63 -1.50 Litters/sow/yr (#) 2.29 2.09 -.20 Nursery mortality (%) 1.55 12.2 +10.65 Grow/finish mortality (%) 3.64 9.69 +6.05
  • 34. Range in Economic Impact for Case Study Farms Item Lowest Impact Highest Impact Impact per litter – farrowing $27.61 $156.60 Impact per pig – nursery $3.35 $9.12 Impact per pig – grow/finish $0.21 $28.30
  • 35. Economic Impact of PRRS Outbreak for Selected Feed Costs Item Corn ($/bu) 2.50 3.75 5.00 SBM ($/ton) 199 238 277 Farrowing Phase Reduced revenue per litter $45.00 $45.00 $45.00 Reduced farrowing rate 29.57 31.73 34.00 Economic impact per litter $74.57 $76.73 $79.00 Nursery Phase Increased mortality $3.58 $3.58 $3.58 Reduced feed efficiency 1.21 1.39 1.57 Reduced average daily gain 1.26 1.26 1.26 Economic impact per pig $6.05 $6.23 $6.41 Grow-Finish Phase Increased mortality $3.23 $3.23 $3.23 Reduced feed efficiency 3.24 4.24 5.25 Reduced average daily gain 1.44 1.44 1.44 Economic impact per pig $7.91 $8.91 $9.91
  • 36. Annual Cost of PRRS to the United States Swine Industry for Selected Feed Costs Corn ($/bu) 2.50 3.75 5.00 Item SBM ($/ton) 199 238 277 Million Dollars Farrowing Losses Reduced pigs weaned $40.50 40.50 40.50 Reduced farrowing rate 26.61 28.56 30.1 Nursery Losses 231.17 238.05 244.93 Finisher Losses 295.91 333.32 370.73 TOTAL $594.19 640.43 686.77