costs of biosecurity and factors contributing to ... of biosecurity and factors contributing to...

Jarkko Niemi and Jaakko Heikkilä

MTT Agrifood Research Finland

Costs of biosecurity and factors

contributing to biosecurity in Finland

9.5.2014

Nordic-Baltic seminar on Biosecurity: experiences, training, motivation and economic aspects

Johannesberg Castle, Sweden, 6-8 May 2014,

Outline

• Introduction

• Factors contributing to the use of biosecurity

• Producer perceptions and estimates on the costs of

biosecurity

• Are economic incentives an issue?

• Simulation results

• Conclusions

9.5.2014 © MTT Agrifood Research Finland 2

What is biosecurity?

• A framework for managing the risk of biological hazards

• Measures to reduce the risk (“prevention vs. treatment”)

• Externalities: Benefit to all, costs paid by individual(s)

• Biosecurity has characteristics of a public good

• Non-excludable: We all can benefit from it

• Non-rivalrous: It doesn’t affect the amount of biosecurity how much

you enjoy it or whether ten or million people enjoy it!

• However, biosecurity is to some extent joint production

• It is of vital importance when livestock producers are

protecting their animals, and to the society in general

9.5.2014 3 © MTT Agrifood Research Finland

Biosecurity

Food safety

Environmental health

- invasive alien species

(e.g. lupine)

Animal health

- non-zoonotic animal diseases (e.g.

Classical Swine Fever, bluetongue)

Plant health

- plant pests and diseases

(e.g. Colorado potato beetle,

sweetpotato whitefly)

Human health

- foodborne microbes

(e.g. salmonella, E. coli,

Listeria, campylobacter)

- diseases in cooked meat (e.g.

CJD/BSE)

- diseases in uncooked meat (e.g.

Newcastle disease, avian

influenza)

Human health

- non-foodborne zoonotic

diseases (e.g. bubonic plague,

rabies)

Dietary safety

(excessive or exiguous accumulation) Human health

Foodborne accumulating

substances

- fat

- salt

- sugar

Human health

Foodborne accumulating

chemical substances

- dioxin

- acryl amide

- pesticide residue

- heavy metals

- food additives

HUMAN HEALTH

Human health

- sports

- way of life

- stress

ENVIRONMENTAL HEALTH

Human health

- Physical risks (radiation, noise, temperature)

- Chemical non-foodborne risks (environmental pollutants, toxic substances)

SECURITY AND SAFETY

Environmental safety

- Natural forces (flood, drought,

earthquake, tsunami, fire, avalanche)

- Social hazards (terrorism, sabotage,

mass hysteria, violence)

- Multiple hazards (combinations,

infrastructure, large constructions, etc.)

Social health

- various diseases and species

Human health

- food-borne acute chemical substances

- physical safety of food (e.g. radiation,

foreign objects)

Human health

Foodborne substances

acquired in deficient quantities

- vitamins

- minerals

- iron

- etc.

Peltola and Heikkilä

Decision-making & biosecurity

• Decision-maker should have sufficient incentives to take

a biosecurity measure • Farmers may be reluctant to take very costly biosecurity measures

• Poor biosecurity by one stakeholder may frustrate others

• In some cases, it may be more beneficial for a livestock producer to

allow poor biosecurity as s/he may be better off if the animals are culled

• Cognitive dissonance • Low probability-high consequence events may be underestimated

• Decision on biosecurity is state-dependent • The more likely or more severe the threat, the more likely is decision-

maker to take extra measures

• Risk aversion– if the benefits of biosecurity are uncertain, the measures

might not be taken


Costs and benefits of biosecurity

can change over time


Impact

Time

Pre

vention

Era

dic

ation

Conta

inm

ent

Asset

pro

tection

Factors contributing to biosecurity

• Next few slides are based on two different surveys

• Finnish pig and cattle farms (Sahlstöm et al., 2014)

• Finnish pig and poultry farms (Heikkilä and Niemi, 2012)

• We have examined how different factors contribute to

• The use of biosecurity measures among respondents and how

• Farm-specific factors are related to the costs of adopting these

measures


Costs of use affect biosecurity


Wear protective

clothing

Verify health of

incoming animals

Pigfarm + + +Full-time farmer + +Female respondent + +Farm has a production contract + +Farm size increases by one SD +Highly educated +Intentions to expand +Suckler cow farm - - + +Not engaged in continuous training - -Costs increase by one SD - -

Costs and implementation are

linked to each other

5/9/2014 © MTT Agrifood Research Finland 9

0,0

0,2

0,4

0,6

0,8

1,0

Like

liho

od

Verify health

status

Wear protective clothing

Very low costs

per measure

Costs at an

average level

Very high costs

per measure

Pro

bab

ilit

y o

f

au

sin

g t

he m

easu

re

Farms with disease history usually pay

more attention to some measures


0 % 20 % 40 % 60 % 80 % 100 %

Separate loading room

Room cleaned after use

Everybody entering the facility to change boots and clothes

Used protective clothing

Feed storage and equipment cleaned frequently

Feeds purchased from selected partners only

Use carcass container

Participates in training

Pigs, no disease

Pigs, disease

Poultry

The costs of biosecurity measures


Extra labour input

Materials (protective clothing, disinfectants etc.)

Extra services needed (e.g. vets inspecting animals, cleaning, transports)

Impacts on prices of inputs (e.g. certified feed may be more expensive)

Consequential costs due to changes in business management

Other costs

Producers’ perceptions about the costs


In a recent survey pig and cattle producers estimated that the use of protective clothing or boots typically costs 100-200 €/year/farm

The costs of changing clothes always when entering the facility usually range from about 100 € to about 2000

€/farm/year

The costs of verifying the health of animals coming to

the farm was usually less than 2000 €/farm/year

Measures which require investments can cause substantial costs (e.g. compartmentalization, separate loading room)

Measures require different resources

Different background factors contribute

to the perceived costs

Perceived costs usually decreased by

• Previous experience on the measure

• Female respondent

• Newer animal shelter

• Older respondent

• Low education

• Plans to expand

Perceived costs usually increased by

• Larger farm size

• Full-time farmer

• Producer not engaged in continuous training

• Contracts made by the farm

• (Low education)

• (Plans to expand)


Ensuring food safety carries a cost

• In the early 2000’s Kilpeläinen et al. estimated that the

costs of food safety (mitigating zoonotic diseases) at the

farm level costs roughly as follows • Milk 4.38 cents/kg

• Pigmeat 14.9 cents/kg

• Broiler meat 10.51 cents/kg

• Eggs 0.18 cents/kg


The costs of preventive biosecurity

at the poultry farm level

• Siekkinen et al. (2008): Semi-structured phone survey of Finnish broiler producers and hatching egg producers

• Broiler farms • 3,55 euro cent / bird (90% confidence interval 2,56-4,40)

• 2,54 euro cent / kg

• 4,64 euro / m²

• 0,10 euro cent / bird / rearing day

• Hatching egg farms • 75,73 euro cent / bird (90% confidence interval 39,3-115,5)

• 4,19 euro / m²

• 0,27 euro cent / bird / rearing day

• A batch of 75,000 broilers -> total cost 2 700 euro

Siekkinen et al. 2012

Biosecurity costs at the farm level


Costs by category

0,00 0,10 0,20 0,30 0,40 0,50 0,60

Biosecurity plan

Preventive bio-treatment

Pest control

Equipment

Education

Sanitation (special)

Purchase contracts

Structural planning

Health monitoring programme

Operational hygiene

Production and health monitoring

Insurance

Monitoring

% of total costs

Broiler producers Hatching egg producers

The costs of preventive biosecurity

at the farm level

• Preventive biosecurity (Siekkinen et al. 2011)

• Approximately 2% of total production costs

• Work time represents some 8% of total work time on

broiler farms and about 5% on broiler breeder farms

• Compare to cost of vaccination

• Organic turkey vaccination against erysipeloid, cost of

vaccination (substance + labour) 0,63–0,68 euro per

bird (Schulman et al. 2014)

• Vaccination against Newcastle Disease in poultry 0.32

euro per bird (Ek-Kommonen et al. 2005)


How does the cost vary? Regression 1 Regression 2 Regression 3

Dependent variable Total cost per bird Direct cost per bird Labour cost per bird

Intercept 3.673

(p=0.000)

2.417

(p=0.000)

1.256

(p=0.001)

Annual number of birds -0.00000235

(p = 0.004)

-0.0000007353

(p = 0.190)

-0.00000161

(p = 0.031)

Processor B (dummy) 0.945

(p = 0.006)

0.592

(p = 0.025)

0.353

(p = 0.244)

Processor C (dummy) 0.582

(p = 0.028)

0.339

(p = 0.100)

0.243

(0.326)

Female producer 0.528

(p = 0.026)

0.090

(p = 0.606)

0.438

(p = 0.060)

Regression statistics F = 11.437

Sig. = 0.000

R2 = 0.792

F = 2.602

Sig. = 0.089

R2 = 0.465

F = 5.028

Sig. = 0.013

R2 = 0.626

5/9/2014 © MTT Agrifood Research Finland 18 Siekkinen et al. 2012

Restrictive measures upon

a highly contagious animal disease

• An important cost item can be that biosecurity measures can disrupt

the production process (Niemi et al. 2004)

• A producer may be financially better off if the animals are culled and

compensated than if s/he applies stringent biosecurity in the face of

business disruptions

• Potential incentive problem – Is the producer enough motivated to take

care of biosecurity?

19 Time until slaughter if business-as-usual

0

5

10

15

20

25

Five weeks

Three weeks

One week Slaughter day

Loss

€/p

ig s

pac

e u

nit

Culled

Not culled

• Substantial indirect costs

(revenue losses) must be

taken into account

WHAT ABOUT THE BENEFITS

AND PRODUCER’S BEHAVIOUR?


Benefits of biosecurity

• More stable business

• Healthier animals and safer food!

• The benefits of biosecurity are caused by lower costs of

disease – i.e. losses that can be avoided by putting effort

on their prevention


A case-study (simulation) to illustrate

the benefits of improved biosecurity

• Foot and Mouth disease used as an example because the

data were readily available • Simulations based on models represented by Lyytikäinen et al. (2012)

• In the following slide we illustrate how a decrease in the

probability of infection on one farm could decrease losses

• Assume that the probability of infection would decrease either by

25% or by 50 % decrease

Assess how that could affect to the losses caused by the disease


A dairy farm as an example A smaller impact was simulated at pig farms


0

5

10

15

20

25

30

Average size Average+1 standard deviation

Average+2 standard

deviations

€/D

airy

far

m/y

ear

Baseline

Baseline -25%

Baseline -50%+145%

+336% Assumed probability

of infection:

Average-sized

farm Fairly large

farm (=mean+1 SD)

Very large

farm (=mean+2 SD)

Exp

ecte

d c

osts

of

dis

ease

€/d

air

y f

arm

/year

Putting the incentives right

• Many decisions to combat contagious animal diseases are

made by individual producers, without government being

able to control for their decisions

• Instead of choosing actual measures, society can design a

scheme which provides producers with incentives to

choose mitigation actions that benefits society too

• The next slides represent a simulation-based example

about the role of economic incentives


Incentives to voluntarily reduce contacts

between farms during an FMD outbreak


27

28

29

0 500 1000

Co

sts

of F

MD

ou

tbre

ak t

o

soci

ety

mil

lio

€o

n a

vera

ge

Cost of biosecurity EUR/week/farm

Without scheme

With scheme

1. Without any extra incentives

2. With compensations paid only to farms which take measures to

reduce the probability of infection (whether this option is used, is

decided individually by the each farm)

Providing extra incentives

can help to reduce the

costs of disease

Exp

ecte

d c

osts

of

FM

D

€ m

illio

n

0 %

20 %

40 %

60 %

80 %

100 %

week 1 Week 2 Week 3

Co

ve

rag

e in

re

lati

on

to

ze

ro-c

os

t s

ce

na

rio

Period

With scheme

Without

While the costs may decrease a little,

the use of biosecurity may increase a lot


An example on how providing

extra incentives can help to

improve biosecurity

Perc

en

tag

e o

f fa

rms

usin

g

a b

iosecu

rity

measu

re

Conclusions

• Economics of biosecurity is more than cost-benefit analysis

• The costs vary by the type of measure and farm

• Simple practices can be quite inexpensive

• The costs increase by farm size

• The costs per animal seem to be lower on large farms (economies of

scale?)

• Motivation, attitudes and skills matter

• The use of biosecurity depends on farm-specific factors such as

production type and farm size

• High costs and lack of education reduce biosecurity

• Economic incentives matter, because the use of biosecurity is often

decided by the producer

• Compensation and payment policies can promote biosecurity


Thank you for your attention!

This presentation is based on results of research projects carried out by MTT.

The authors gratefully acknowledge fruitful collaboration with Evira, and funding

from the Ministry of Agriculture and Foresty to research in this field. For further

information, please contact: [email protected] or [email protected]

28

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