3.5 Animal Disease Control Issues, Options, and Impacts

3.5.1 High Stakes for Countries and Farmers

Animal disease poses an economic threat to livestock producers that has few parallels in the world of crop farming in terms of the speed of onset, the potential severity of outcomes, the rewards for success, and the need for regional as opposed to farm-specific solutions. Animal diseases result in increased mortality and morbidity in livestock populations. Disease may affect performance through reduced fertility, delays in reaching maturity for reproduction or sale, decreased production of milk, eggs, or wool, decreased draught power, or decreased weight of fattening or cull animals. Animals raised by small-scale producers and backyard farmers in developing countries tend to be plagued with re-infection, and they typically lack access to diagnosis and control programs. Diseases are also easily spread across farms, regions, and national boundaries. The proximity of small producers to larger-scale operations, despite the latter's best efforts at control, creates a potential for constant re-infection. As noted in the Thai country study (Poapongsakorn et.al., 2003), backyard livestock producers often do not strictly follow recommended procedures and enforcement is difficult in a small-farm setting.

Epidemics affect not only farmers, but also the entire agricultural sector and even the national economy, as recent experience in the United Kingdom has shown. Consequently many countries have implemented eradication and control programs to combat epidemics and prevent the introduction or reintroduction of contagious diseases, supported research and development on vaccines and, in some cases, produced vaccines to farmers. These programs would be justified even in closed economies, but take on added luster if disease control increases the access of poor countries to developed country markets.

Recognizing that animal health is truly a global issue, animal health officials world-wide coordinate their animal disease control strategies with the Office Internationale des Epizooties (OIE), also known as the World Animal Health Organization. OIE is the international body in charge of monitoring animal health and minimizing the spread of important animal diseases that affect productivity. Through this organization, an International Animal Health Code has been developed that lists various disease statuses within every country and the time frame and conditions for a country or zone to be considered disease-free under each category. Besides providing better animal health status domestically, compliance with OIE norms can result in a certification of compliance with developed country standards, opening a whole slew of new export possibilities. Among the countries studied, Brazil and Thailand are at the forefront of this high-value trade in livestock products.

There are two major classes of disease recognized by the OIE. List A diseases are defined as being transmissible diseases that have the potential for very serious and rapid spread, irrespective of national borders, are of serious socio-economic or public health consequence, and are of major importance in the international trade of animals and animal products.^[15] Horst et al., (1999) report that of the outbreaks that occurred in 1997, the most frequently reported List A diseases were Newcastle disease, Foot-and Mouth Disease (FMD), and Classical Swine Fever (CSF). Fifty-nine countries reported one or more outbreaks of FMD, 38 countries reported one or more outbreak of CSF, and 87 countries reported one or more outbreaks of Newcastle disease. List B diseases are transmissible diseases that are considered to be of socio-economic and/or public health importance within countries and that are significant in the international trade of animals and animal products. Many of the list B disease are also considered a significant public health concern because of their zoonotic nature. Not all of these are feed or food-borne. For instance, trypanosomes is a major zoonotic concern, but is not feed or food-borne.

Most countries monitor the movement of animals and animal products, which includes veterinary checks at borders. To prevent the spread of disease within a country or across borders, rejection of animals and animal products may occur at port of entry (or at quarantine station) if the quarantined animal or commodity originates from a country or region from which the imported product is prohibited, an OIE List A or B disease is found, or if the quarantined commodity is found to be unhealthy or in poor condition. Similarly, animals will be destroyed if they fail subsequent treatment.

Historically trade decisions on animal products were based on the country status for a disease. Countries that had List A or B diseases anywhere within their border were not allowed to trade either live or animal products from that animal (or family of animals). Over time it has been recognized that in many countries, there are identifiable and measurable gradations in the degree of risk presented by imported animals and animal products, and that these gradations are more often tied to climatological, geographical, and biological factors more specific to eco-regions than to national political boundaries. This provided the basis for certifying parts of countries disease-free for trade purposes, which only began in 1995 with the adoption of the Sanitary and Phyto-Sanitary (SPS) agreement in the wake of the establishment of the World Trade Organization (WTO) in late 1994. The adoption of regional certification enables trade from a specific region within a country that may be free of a specific disease, even if the rest of the country still is considered as having the disease. Regional certification has been attempted in most developing countries wishing to establish livestock export zones. Establishment of such a disease-free zone greatly increases pressures on small-scale producers within the zone to make investments in disease control more typically absorbed on larger farms.

3.5.2 Options for Disease Control

Though many diseases can be controlled through good hygiene, many animal diseases are controlled through either vaccination or a stamping-out policy, which includes depopulation (slaughter and disposal of potentially infectious material), quarantine of remaining stock, and continued surveillance of areas where disease had been observed. The method by which a country chooses to combat a disease may have impacts on small-scale producers if either the full cost of the control program is directly passed onto them with no subsidy from the government, and/or the political environment is such that they "disappear" as they are "forced" out of production, in an effort to eliminate disease in a region desiring to obtain regionally free disease status.

Vaccination programs as preventive measures are among the most often practiced methods for controlling disease, particularly for high-risk countries.^[16] Problems arise when a country lacks the infrastructure to make and deliver vaccines. Countries with large-scale operations usually rely on the established private sector to deliver vaccines; often the public sector is the main source of vaccines for small-scale and backyard producers. An indirect cost associated with vaccination policies is that disease-free (without vaccination) countries are reluctant to import livestock and livestock products from countries using vaccinations. This is because vaccinated animals can potentially transfer a virus used to create a vaccine to the importing countries own livestock population. Thus, the choice of method for disease control in more limited in exporting countries, as the form of control chosen will affect market access.

Stamping-out programs involve the eradication of a disease by the destruction of all infected animals. When outbreaks occur, protection and surveillance zones are established around the outbreak, and animals in the protected zone are destroyed. The level of surveillance in the area is increased and the movement of animals from surveillance zone is restricted. Stamping-out programs tend to be applied when there is no known vaccine or it is not available, when the disease has reached a low level of incidence following other forms of control, or when a country wants to maintain its access to export markets that require certification of being disease-free without vaccination.

If there is no compensation for stamping-out, then producers, particularly small-scale producers, are reluctant to participate and if they participate it may mean that they no longer can afford to produce. In order to avoid de-capitalization, small-scale producers who rely solely on their animals for income may move their animals across the border rather than killing them, further spreading infection. If the large-scale operations have enough political clout, they may use the state to force small-scale producers out of business, or alternatively may choose to work with them in eradication. The latter has occurred in Mexico, where large-scale producers in Sonora and the Yucatan aided the small-scale producers in eradicating disease in order to obtain regionally-free disease status with regard to hog cholera (Narrod, 1996).

The method used to combat a disease outbreak depends on the severity of the outbreak, the degree to which total eradication has been achieved, and the number of animals that are slaughtered. Different methods affect participants to a different degree. Table 3.6 summarizes some of the economic impacts of the different control programs chosen and who bears the cost under different scenarios. It can be seen that the incidence on different parties depends on the details of the method chosen. It is also clear that-as in the case of the environment-major negative externalities are present in the area of animal health and disease control.

Vaccination alone does not achieve eradication of a disease, as everyone must comply for the program to be effective and the program must be maintained over time, and disease inflows from other areas prevented. Since producers cannot recoup the full social benefits of investments in disease control, an externality is created (Umali, Feder, and deHaan,1992; Hirshorn, Unnevehr, and Narrod, 2000). An individual producer may take steps to eliminate an animal health problem, but cannot do so completely without the cooperation of other producers. On the other hand, producers can benefit for m the control efforts of others without contributing to their cost. This creates a public good problem and the under-production of animal health efforts, and may warrant public sector intervention.

As with environmental externalities, governments should in principle intervene in the market to correct for the animal health risk associated with the production of goods that create a negative externality. Without intervention, society bears a cost that may not fully be reflected in the local market price for the agricultural products and inputs used in producing them. The government may instead choose to intervene and vaccinate the whole affected population so that there will be minimal time wasted in reaching disease-free-status to enable access to trade. This is especially valid when there are producers that cannot or refuse to participate otherwise.

Many countries have regulatory agencies in place to remedy the failure of the free market to allocate resources efficiently in the area of animal health. These agencies are supposed to intervene to reduce the social costs associated with animal health problems. But public intervention is costly, enforcement is difficult, and once established, public systems can fail to respond to changing market conditions. This can be aggravated by lack of strong institutions and political clout to monitor disease status effectively. Difficulties in eradication of disease may also be exacerbated with many small-scale and backyard producers, infected wildlife, smuggling, and cockfighting. In such situations private solutions to animal health problems can emerge, where the costs of information or monitoring can be overcome.

A key scale difference in animal health externalities is that the rationale for public intervention is stronger where a given concentration of animals per square km are kept by smallholders as opposed to a few large farms. Large-farms will find it easier to match contributions to a voluntary association better to benefits achieved than would be the case for a multiplicity of small farms, where it is easier to be a free rider.

3.5.3 Animal Disease Status and Scaling-up in the Case Study Countries

Among the study countries, certain OIE List A diseases are of particular concern from the standpoint of production and trade: FMD, CSF, Rinderpest, and Newcastle disease. The study countries are in the process of eradicating these diseases and some have been more successful than others. Rinderpest has been eradicated according to OIE in both Brazil and the Philippines. Eradication efforts in Thailand have been successful and the Thailand's Rinderpest free status confirmed in 2001 by the OIE, but Thailand is required still to re-confirm this status annually to the OIE. Since March 1998, India has declared itself provisionally free from Rinderpest; but OIE to date has not officially confirmed disease-free status. To achieve the final stage of freedom from the disease, the Indian government has initiated a National Project on Rinderpest Eradication.

Foot-and-mouth disease is one of the most contagious diseases of cloven-hoofed animals.. All four-study countries have actively been trying to eradicate FMD from affected regions. Of the study countries, the Philippines presently has FMD-free zones in Mindanao, Visayas, Palawan and Masbate, which have been approved by the OIE and where vaccination is not practiced.

Table 3.6 Framework for the evaluation of the economic impact of outbreaks of epidemic diseases

Source: Horst, H., C. de Vos, F. Tomassen, and J. Stelwagen, 1999.

Brazil is currently recognized by the OIE as FMD-free with vaccination in the states of Bahia, Espírito Santo, Goiás, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Paraná, Rio de Janeiro, Rio Grande do Sul, Santa Catarina, São Paulo, Sergipe, Tocantins, the Federal District, and Rondonia. However, FMD was reported in August 2000 in Rio Grande do Sul, and suspected to have come from infected animals from across the border in Paraguay, which has delayed their status of becoming free without vaccination. Figure 3.4 shows the latest incidences of sanitary problems in Brazil. Note that these areas are where most of the livestock production is currently located. The northern part of Brazil has difficulty in eradicating disease due to its proximity to the Amazonian forest region. The other disease concerns in Brazil where there are sporadic outbreaks are vesicular stomatitis, CSF, and Newcastle disease.

There has been a systematic effort to eradicate FMD from Thailand. Currently the Thai government is promoting 3 regions (Regions 2, 8 and 9) as disease-free zones and have set a large number of quarantine stations to prevent the spread from within the country and especially from outside the country (see Figure 3.5). Region 2 is the export-oriented zone and it is where the largest operations are currently found. However, FMD outbreaks continue to emerge sporadically in the country and OIE has not recognized these regions as disease-free. In case of swine, Kehren, Murphy, and Tisdel (1997) claim that several factors have seriously affected the spread of disease among swine, particularly at village level. These factors include lack of capacity for accurate diagnosis at the village level, no restriction in movement of sick animals, the high density of swine populations, unhygienic conditions and poor sanitation, etc.

In Thailand, the other main animal health disease concern is CSF. Classical Swine Fever outbreaks appear to be mainly a problem in Region 7, where there is the highest pig density (Figure 3.5). Though Newcastle disease has been a problem in the past due to a large number of backyard producers, with contract farming and the hygienic controls integrated firms require, the last case was reported in 1996.

Figure 3.4 Map of last Brazilian disease problems

Source: Camargo Barros, G.S., et. al., Annex V.

FMD is a major disease facing Indian livestock and it is prevalent all over the country. Part of the problem is that there has been no systematic control and vaccination program against FMD in the country, even though there is a massive but sporadic vaccination program. The population at risk in the country (all susceptible species) is about 420 million, and barely 5 percent of the animals at risk are vaccinated.

Besides the usual funding problems of public-sector initiatives in developing countries, efforts to date have suffered from failure to offer compensation to affected farmers whose stock is destroyed. To compensate for this, the private sector in the Brazilian states of Santa Catarina, Mato Grosso do Sul, and Parana, has set up insurance- like programs in partnership with the government. In the event of quarantine or the need for slaughter of diseased animals, the producer is compensated by a fund, which producers pay into in better times, and is supplemented by the government. In Thailand companies such as the Betagro Group, the second largest company in the chicken and swine farming business, has established a laboratory to work with the producers to find out the causes and effects of diseases (See Poapongsakorn et. al., 2003).

The case studies report mixed evidence of disease control and scaling up production. All countries appear to be currently having difficulties in with disease eradication regardless of size of producers in cases (particularly in Brazil and Thailand), where there is smuggling of animals across borders, making it difficult to eradicate diseases such as FMD and CSF. Conversely the Philippines, being an archipelago, has had more success in being able to eradicate disease regardless of farm size..

The Thai study (Poapongsakorn et. al., 2003) alludes to small-scale farmers being less interested in eradicating non-stock-life threatening diseases (such as FMD) than life threatening disease such as Newcastle Disease, making it difficult to totally eradicate FMD from the country. Cases where the success in disease eradication has been greatest is where the main gainers from disease eradication are the large integrators who are exporting. However, whenever export is banned, small-scale farmers who serve as subcontractors suffer the most since the large integrators tend to react to such a ban by reducing the amount of contract broiler production before reducing their own production.

Figure 3.5 Department of Livestock Development Animal Quarantine Stations in Thailand

Sources: Poapongsakorn, N. et. al., Annex IV.

In sum, animal disease control issues are growing with increased concentration of animals in restricted space around major cities and other producing areas. This is a problem for both large and small producers, but it is harder to monitor compliance with disease control measures where the production system is primarily smallholder. It is also difficult to separate small-scale and large farms for the purposes of disease eradication unless then are physically separated by zone. The rise of disease-free export zones, particularly those certified for export without vaccination, increases the incentive of large-scale export producers to either eliminate small-scale producers from the zone or co-opt them into a system of disease control that is similar in terms of overhead costs to those practiced on much larger farms, resulting in relatively high per unit costs of production for smallholders in those zones, and possible competitive disadvantage.