Who Should be Responsible for Farm Animal Diseases: The Government or

the Farmers?

Jeremy PhillipsonCentre for Rural Economy

Newcastle Universitywww.ncl.ac.uk/cre

Structure of Presentation

• Introduction: Are we dealing with animal disease outbreaks efficiently?

• Example of 2001 Foot and Mouth outbreak in the UK and its impact

• Lessons learnt from 2001

• The changed political context for combating animal disease

• The Responsibility and Cost sharing agenda

Costly Disease Outbreaks Worldwide

• Are the costs of animal disease control becoming too high?

• The approach is profoundly reactive

• Is it also outmoded?

• Does it get right the balance of risks and responsibilities between government, society and producers?

Disease Cost (US$m)

Impact on GDP

BSE UK 1996/97

3,800 -0.4%

FMD Taiwan1997

6,600 -0.64%

Classical Swine Fever Netherlands1997/98

2,300 -0.75%

FMD UK2001

9,200 -0.2%

Avian Influenza Vietnam2003/04

76 / 450 -0.3 / -1.8%

Avian Influenza Netherlands2003

681 Not available

The ‘Stamping Out’ Approach to Exotic Diseases

• Isolation and culling since 15th Century

• International rules – disease-free to trade

• EU Directive

• UK responsible for contingency planning

FMD 2001: Unprecedented Factors

• Airborne infection of sheep

• Time of year – virus survival – movements of sheep

• Absence of signs of disease in sheep

• Delay in reporting disease

• Movement of sheep through markets before disease suspected

FMD 2001: Unprecedented Factors

FMD 2001: Unprecedented Scale of Stamping Out

Culled-out farms:

2026 Infected farms; 256 Slaughter on

Suspicion; 8230 Dangerous Farms

Slaughtered animals:

4.2 million for disease control; 2.5 million for

welfare disposal

Manpower:

2000 vets; 6000 technical /administrative;

2000 military

Infected farms in Northern England

Photos from website of the BBC

FMD 2001: Unprecedented Scale of Stamping Out

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Northumberland 88 323 199 12 622 226201 (197006 sheep

27678 cattle) Durham 94 262 172 17 545 149865

(116562 sheep 24695 cattle)

Cleveland 2 12 11 1 26 3228 (2436 sheep

774 cattle) Tyne and Wear 6 7 1 1 15 3150

(1348 sheep 614 cattle)

North East 190 604 383 31 1208 382444 (317352 sheep

53761cattle) Great Britain 2026 8060 3370 256 13712 4167701

(3428191 sheep 592937 cattle)

Farm Holdings and Livestock Culled

Direct Government Expenditure $4,000,000,000

47%

9%10%

10%

24%

Compensation Haulage and Disposal Cleaning and Disinfection Support Measures Administration

FMD 2001: Unprecedented Scale of Stamping Out

Disease control and eradication- slaughter of stock on infected premises and stock at

risk of spreading disease- livestock movement restrictions - biosecurity regimes- vaccination not used

Access restrictions- blanket closure of footpaths- wholesale discouragement of visits to countryside- closure of major visitor attractions

Response driven by agricultural considerations

Impacts upon wider rural economy a secondary concern

Photos from website of the BBC

“It is imperative that every local council which has rural footpaths and rights of way within its boundaries closes them immediately. There must be a blanket ban across the country. I implore everyone again: please, please stay away from the countryside”

Ben Gill, National Farmers Union

“Though we are not at direct risk from this disease, we can play a part, unknowingly, in spreading it. FMD is a highly infectious virus which can be picked up by us on our boots, clothes and cars and carried many miles. By staying away from farmland, by keeping off any footpaths through or next to farms or open land with livestock, we can help the efforts to eradicate this disease. We are giving local authorities today the power to enforce the temporary closure of footpaths and rights of way, but we hope people will voluntarily stay away in any case”

Tony Blair

Extent of Impact by Sector

Sector % firms impacted in

sector Hospitality 96 Land-based 92

Extensively affected sectors Recreation/culture 70

Retail 59 Transport 50 Business services 47

Partly affected sectors

Manufacturing 44 Personal services 29 Construction 18 Education and training 14

Little affected sectors

Health and social 10

impact spread throughout a wide range of sectors extensive impact on sectors reliant on tourism,

visitors or connected to agriculture partly affected included those directly affected or

servicing extensively affected sectors

0

5

10

15

20

25

30

35

40

45

50

High negative Mediumnegative

Low negative No impact Mediumpositive

High positive

for half of impacted firms impact was of medium or high negative severity

three quarters of impacted firms expected negative

change in profit position

Severity of impact on Individual Firms (%)

Sectoral Costs

- to agriculture $500 million

- to food industry $200 million

- to tourism $4,400 million

- to tourism-support services $2,900 million

$8,000 million

Employment employment effect was ‘hidden’

- a fifth laid off staff - a fifth reduced numbers of casual and

seasonal employees - a third reduced staff hours

not reflected in official unemployment statistics

Coping responses % impacted firms n=72

Household members working longer hours 40 Take smaller wage 39 Cancel or postpone investment 36 Reduce staff working hours 35 Increase marketing/advertising 32 Cut back household spending 30 Spend business reserves 30 Cancel or postpone plans to expand 29 Decrease marketing/advertising 27 Renegotiate existing loans 27 Spend personal savings 26 Take out new loan 21 Layoffs/redundancies 21 Not taking on seasonal/casual staff 17 Change strategy 16 Household member looking for job 14 Temporary closure 9 Ask staff to take holidays 7 Increase staff working hours 6 Attempt to sell business 3

• $8 billion cost to private business

• Massive losses but only 141 business closures officially registered

• Households acted as buffers to firms and rural economies

Micro-business-Household Interactions: FMD 2001

• Coping responses based on access to human, social, physical and financial capital of households and local communities

• Household income portfolio compensated for reduced flow of business income and maintained business cash flow

• Cut backs in household consumption, investment and spending

• Values and power relations influenced access to household assets by firms

Micro-business-Household Interactions: FMD 2001

Social Impacts

% farms where household members prevented from normal activity

Visiting friends 96 Visiting family 93 Going to the pub 89 Attending agricultural show 82 Shopping further afield 74 Going to church 72 Shopping locally 64 Attending school 58 Attending special occasions 50 Attending off-farm work 46 Receiving health care 9

Curbed human movements (average farm confinement = 19 days)

financial strain and curbed household spending stress, exhaustion, uncertainty, tensions disruption of village life, social relations and networks invasion of officials and turmoil (‘war zone’ imagery)

Lessons Learnt

• Improved global and regional monitoring

• Customs officials now responsible for import checks: substantial increase in seizures.

• Better contingency planning – worst case - mandatory

Better surveillance and preparedness for exotic diseases:

Lessons Learnt

• Rapid diagnosis

• National movement ban from day 1

• Vaccination to be given greater emphasis as a control option

• Ramping up resources

• Keeping the countryside open

More decisive control of disease outbreaks:

Lessons Learnt

• Greater attention to farm animal health planning and biosecurity

• 6/20 days standstill when an animal has moved between farms

• ‘Burden sharing’ between farmers and government over disease control

A more proactive, risk-based approach to exotic diseases:

Burden Sharing: The Broader Politics

• Concern over the huge public costs of FMD

• Other sectors seemingly sacrificed to defend farming

• Public disquiet at large-scale slaughter of (mostly uninfected) animals

• Farming leaders’ veto of vaccination in 2001

Burden Sharing: The Broader Politics

• After FMD, Ministry of Agriculture → Department of Environment, Food and Rural Affairs

• Ongoing costs of public support for agriculture questioned

• $1 billion annual public expenditure on animal health and welfare

• Reform of Common Agricultural Policy, shifting justification of funding to farmers from production supports to maintenance of sound farming (including animal health and disease prevention)

• Farmers opposed to red tape; government keen on deregulation

Burden Sharing: The Policy Context

Animal Health and Welfare Strategy (2004) set out broad principles:

• Animal owners have the primary responsibility to meet the health and welfare needs of their animals

• Prevention of disease (through high health standards and biosecurity) is better than cure

• Disease prevention requires a partnership between farmers, the farming industry and government

• The justifications for government intervention are to protect: public health, animal welfare, society’s interests and international trade

Burden Sharing

“A new approach to handling the risks of animal disease is required, one which allows joint problem solving between industry and Government and permits industry to find efficient and effective market based solutions. This approach aims to ensure that Government intervenes only when necessary, and seeks to do so in agreement with industry on what should be done and how costs should be borne”

Government looking specifically for those who benefit from disease prevention and control to bear greater responsibility and bear more of the costs.

- use general taxation to fund the provision of public goods only

- ensure private beneficiaries of public intervention meet the costs

Government also looking for more flexible means and partnership approaches to disease management

Burden SharingPrinciples of Responsibility and Cost Sharing for Animal

Health and Welfare (2006)

• Sharing responsibilities guided by the aims of cost effectiveness, efficiency and best value for money

• Sharing costs only where the activity provides a clear benefit

• Focus cost sharing where most likely to reduce disease risk

• Responsibilities should be shared where costs are shared but cost sharing should not be the boundary to responsibility sharing

• The total regulatory burden should be reduced

Examples of Cost Sharing Initiatives in other EU Member States

Germany Animal Disease Fund in each Land (province) – legal bodies financed by livestock keepers and the Länder and Federal governments. Disease control expenses, such as vaccination banks, research and development, financed jointly by the livestock keepers and the government. Costs of dealing with disease outbreaks are met 50:50 by government and livestock keepers.

NetherlandsDisease outbreak costs financed by livestock producers up to a predetermined limit. Representatives of livestock keepers and government negotiate the limit and this is set out in a five year agreement.

FranceDisease outbreak costs are met by the Government of France, but there is a regional system of industry driven self help to improve animal health and welfare.