The Scottish Government

Papers circulated on 28th March 2006

Paper 2.1 - Scottish Programme

Paper 2.2 - Priorities and targets

Paper 2.3 - Costs of Scottish animal health and welfare priorities

Purpose

1. The Scottish priorities for the next ten years have been agreed and this paper seeks the views of the Group on proposals for a Scottish Programme document and associated communications on priorities and targets.

Scottish Programme

2. Discussion at previous Advisory Group meetings has focussed on the need not to produce another Implementation Plan, but rather to focus on how this work can be best communicated to farmers on the ground. To this end we propose two different communications:

• A Scottish Programme document; and
• Sector specific communications

3. The Programme document would be a high-level, strategic document aimed at industry leaders, animal health and welfare related organisations and government, and would be designed to give an overview of where we are going with the Scottish Priorities. In contrast to the wider coverage of the Scottish Implementation Plan of December 2003, there will be a more specific concentration on an action plan to achieve the Scottish targets.

Specific communications

4. The key to successful achievement of the targets will be communication with individual animal keepers. It will be important to pitch this at the correct level and target the right people with relevant information. In order to achieve this we should consider communications which target specific Scottish Priorities or alternatively target the Priorities affecting a specific sector.

5. It was felt at previous meetings that there would be little benefit in using a big document (in this case the Scottish Programme document) to do this, but rather that more targeted communications should be used. These could include information leaflets, DVDs, on-farm demonstrations and farmer talks and could outline:

• Relevant priorities
• Costs and benefits associated with reaching the target
• Best practice for reaching the target, including work already going on
• Associated biosecurity issues
• Relevant experiences of other animal keepers

It may be that we could use Monitor Farms as one way of communicating this information.

Conclusion

6. The Group's views on the above proposal are invited, in particular on the more specific communications suggested at paragraphs 4 and 5.

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Annex A - Possible outline of a Scottish Programme document

A possible outline of this document could be:

Introduction

• Background on the Animal Health and Welfare Strategy
• Four Pillars - a brief explanation of work going on under each
• Advisory Group role
• Partnership working

Scottish Priorities and Targets

• Background
• Scottish Conference
• Summaries for each priority - reasons for choosing
• List of targets
• Strategic plan and timetable for tackling the priorities

Delivery

• Communication and knowledge transfer
• Monitoring progress
• The challenge to individual Animal keepers

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Purpose

1. To inform the Group of the position regarding baselines for the Scottish priorities and plans for future monitoring of this data.

Priorities and Targets

2. The list of priority areas and targets was finalised and agreed at the last Advisory Group meeting. It was suggested that the next step would be to scope out the framework of a Scottish Programme to implement these, and this is outlined in the accompanying paper AHWS.06.2.1

3. The attached table gives information on baselines as well as any surveys which will need to be carried out to obtain these. It also details the monitoring which we will need to undertake over future years.

4. We are currently in the process of obtaining data to set baselines for a few of the priorities, against the criteria attached at Annex A, and will report back with this information in due course. We will also be producing a timetable for forthcoming years, detailing when we will be measuring the priorities, as well as other things such as timing of surveys.

5. Possible questions for a postal survey on sheep scab and footrot are attached at Annex B. This could be sent to large animal practices and with the interest generated following the large take up of Animal Health and Welfare Management programmes, we might expect to get a good response.

6. Our exploration of research on laminitis in horses suggests that the prevalence level is very low (around 1.5%) and therefore it may be that the Group wish to consider whether laminitis should remain on the list of priorities.

Conclusion

7. We would ask the Group to:

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Annex A: Scottish Priorities - Targets, Baselines and Monitoring

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Annex B: Possible questions for a Sheep Scab and Footrot survey

This could potentially be done as a postal survey of large animal veterinary practices, starting with a preamble about the Advisory Group and the targets, and including reassurance about confidentiality. The questions could be:

• How many clients does the practice have that keep sheep?
• How many of the practice's sheep clients' flocks experienced footrot in the calendar year 2005? (Whether or not your practice was consulted).

(We may need to include some text or diagrams to ensure we have an accurate case definition).

• How many of these clients required veterinary treatment by any of the practice's veterinary surgeons? (Either on farm or at your surgery).
• How many of the practice's sheep clients' flocks experienced sheep scab in the calendar year 2005? (Whether or not your practice was consulted).

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Introduction

1. As part of the implementation of the Animal Health and Welfare Strategy in Scotland, the Advisory Group have developed a set of animal health and welfare priorities, which have been endorsed by the industry, and have set targets to be achieved against each priority over the next ten years. As with other aspects of the Strategy, it is recognised that a partnership between Government, industry and researchers will be critical in achieving these targets. One of the core features of the Strategy is the need to support farmer decision-making and identify the contribution which improved animal health and welfare status can make to farm business viability; key to obtaining real buy-in from individual farmers on the targets set by the Advisory Group is the ability to demonstrate the real costs of disease and the real benefits of disease control.

2. At the last meeting the Group had asked for an indication of the costs associated with those priorities they are targeting, and this paper outlines what is known to date about the likely costs of these, either to the industry as a whole, or at the farm level. It also outlines what additional relevant information is being pursued as part of current research, and what further information gaps may need to be filled.

Cautionary Advice on Quoted Costs

3. The estimated costs quoted in this paper are from a number of sources and are highly variable due to the different assumptions made in their calculation (e.g. of product prices, likely production loss, treatment costs etc.) and due to the different aspects of 'cost' addressed (e.g. some include wider monitoring, control and human health costs, others do not).

4. In addition to being somewhat sparse and often conflicting, it is suggested that these estimates need careful selection and interpretation before use in engaging farmers in tackling the targets set, since to date there has often been a discrepancy between such reported disease costs and real farmer experience, leading to a lack of credibility on the ground. This is in part due to the often skewed distribution of disease costs, with most individual cases attracting relatively low costs and a few incidents attracting huge expense; this means that costs for the majority of farmers are likely to come in below the average, with an unlucky few being hit particularly badly.

5. However, the main reason for the discrepancy is due to the way the estimates have been calculated. For many endemic diseases, most of the output loss and some of the control costs will not be avoidable even under best practice; such costs are already part of farmers' income calculations. Most of the estimates presented here state the total cost and therefore overestimate the investment potential of disease prevention at farm level.

6. These issues are explained further in Stott (2003), which has been previously circulated to the Advisory Group and is available on the Scottish Executive website at http://www.scotland.gov.uk/Topics/Agriculture/animal-welfare/AHWStrategy/CBAEndemicDisease

Targets Covered in Ongoing Research

7. Avoidable losses is a measure that takes into account the fact that investment in disease control may not mean that all output losses are avoided. For most animal diseases the law of diminishing returns applies to expenditure on control; the aim of a rational control programme is to find the economic optimum level of disease. The current SAC Flexible Fund project [1] follows on from previous SEERAD-sponsored work at SAC that has developed whole-farm economic models. As part of this project a generic framework will be developed for combining epidemiological models with whole farm economic models. This will generate decision support tools for farmers that give the avoidable losses of controlling disease at farm level, including cost and benefit appraisal for different control strategies. The Flexible Fund project will initially use information available to the group on ovine respiratory disease complex to develop the generic framework and to use the framework to develop a prototype decision support tool. This work will be followed up with research under SEERAD's new Science Strategy on specific high priority diseases; the diseases chosen will be guided by a survey of disease priorities within the industry (preliminary results indicate that BVD, Liver Fluke and Sheep Scab are among the top priorities).

8. In addition, Defra have funded research by Dr Richard Bennett (Reading University) with the objective to construct simulation models capable of demonstrating to farmers and advisers the financial impact of selected livestock diseases on the farm business and the costs and benefits associated with farm-level measures for disease control. While this work does not take on board all the farm costs, case studies of six different livestock diseases have been undertaken; BVD and digital dermatitis in cattle, ectoparasites (lice and mites) and lameness (scald and footrot) in sheep, enzoonotic pneumonia in pigs and coccidiosis in poultry. Preliminary results from this research were presented to the Defra Farm Health Planning Working Group on 17 February 2005 and at a Defra Seminar on 5th October 2005. The toolkit is presented on a CD-ROM which can be used by advisory staff to demonstrate the costs and benefits of disease control options; copies of the CD are in circulation. Defra have recently commissioned the University of Reading to work on an additional set of 6 diseases.

9. The BCVA have developed a Disease Cost Calculator which uses data from existing models to relate the cost of disease to farm-specific targets agreed by the vet and farmer (as % saving over target) leading to an idea of overall key economic loss. It has been suggested that a commitment to invest in health will follow, but there has been a poor take-up so far, perhaps because undergraduate and CPD training in farm level economics/farm health planning are needed, and because farms receive advice from nutritional and economic advisers as well as vets.

The importance of perspective

10. Annex B contains Alistair Stott's comments - highlighting the importance of perspective when considering this data.

Conclusions and Next Steps

11. The Advisory Group are invited to note these estimates of costs likely to arise from the priorities being targeted in Scotland, but that these are not considered entirely suitable for knowledge transfer to farmers. However, this report tabulates a range of cost estimates and the Group are invited to note that we expect to have further information on the costs of some of the Scottish priorities from the George Gunn and possibly Richard Bennett groups in due course. However; it appears that cost-benefit research on others (in particular dysbacteriosis and laminitis) is not currently covered to our knowledge and the Advisory Group may like to consider what further action needs to be taken in these cases.

12. In addition, the Annex from Alistair Stott draws attention to aspects of the interpretation of these figures considered pertinent to the Advisory Group. In particular disease costs may shift from Government to industry in line with recommendations in the AHWS and market price shifts may have important effects on the cost of specific diseases if control is tackled at national rather than individual farm level.

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Annex A - Table of costs

*

Compensation to farmers gives some guide to direct losses from the disease at farm level.

**

Total cost of BVD output losses and optimum biosecurity costs, assuming BVD status unknown. Costs for BVD-free herd not sig. different at £20/cow/year.

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Annex B - The importance of perspective: Alistair Stott comments

Many of the costs presented in the table were taken from the perspective of an individual farmer dealing with a particular disease. Where disease freedom at this level is feasible (e.g. Stott et al.(2003) for BVD and Stott et al. (2005) for Johne's disease) then the costs refer to the difference in margin either with or without the disease. The figures then give an indication of the maximum investment that may be justified on financial grounds alone (there are of course other important considerations) to eliminate that disease ceteris parabus. For diseases like mastitis where elimination is not possible, then the proper cost from this perspective is the avoidable losses i.e. the difference between current total costs and minimum total costs of the disease (e.g. Yalcin et al (1999)).

Where the perspective is wider then the above approach may become less relevant or even misleading. This is because it is no longer fair to assume that there are no significant issues beyond the individual farm gate. Of the diseases listed, the problem is most obvious in the case of BSE in cattle. Here the export ban and OTMS affected all farmers whether they had BSE or not. Perhaps most importantly for all cattle farmers, the loss of confidence in British beef led to much reduced demand for the product and hence lower beef prices. There was a switch to other meat products of some benefit to the producers concerned. Although price support mechanisms under CAP cushioned the blow, even before the nvCJD announcements of 1996, Mainland and Ashworth (1992) estimated that BSE cost beef producers £216m in lost revenue from October 1989 until September 1990. Since this work, economists have published modelling studies to tease out the economy-wide effects of the BSE crisis. For example, McDonald and Roberts (1998) concluded that in the absence of Government intervention, the cattle sector would suffer a decrease of 35% in profits due to the BSE crisis. This result is particularly significant given that Government intervention in the form of CAP price support is no longer available to protect farmers from this aspect of disease costs. Furthermore, the Animal Health and Welfare Strategy (AHWS) states that farmers cannot expect taxpayers to pay for animal health and welfare costs and risks that primarily affect farm businesses (page 32). Although 'health scares' are a rare event, their impact on a less protected farming industry could be immense. The above figures for BSE are orders of magnitude greater than the other diseases listed in the table. If the compensation costs that were paid by Government and perhaps some of the external costs too (see table) were in future to land at the door of the farming industry, then the total bill would be a substantial proportion of the total income from farming at £3bn in 2004 (Defra, 2005). Potential exposure to such risks requires a paradigm shift from the farming industry that is probably not yet fully understood. It is important that exercises such as this are used to communicate awareness of the need for such a shift as the consequences of another 'health scare' could then be mitigated.

BSE is an example of the type of disease where the costs to the farming industry lie mainly beyond the farm gate, greatly magnifying the costs of the disease to the industry and applying them to all farmers, not just to infected farms. Other endemic livestock diseases have a cost dimension beyond the farm gate but this is usually a public rather than a private cost and therefore rarely features in analyses of the type summarised in the table here, where the focus is on relative importance to the individual farmer. However, where the motive is as here to engage the farming community as a whole in a collective effort to reduce or eradicate the disease then this wider perspective again becomes important. This is because a collective effort will affect the supply/demand balance, market prices and therefore the overall cost/benefit to the individual farmer. There are also likely to be other non-market benefits at this level e.g. improvements in animal welfare for substantial numbers of animals or efficiency gains sufficient to make a measurable contribution to the environment (Santarossa et al. 2004). Johne's disease provides an example. Losinger (2005) estimated that if Johne's disease had not been present on US dairy operations in 1996, then an additional 580 million ±460 million kg of milk would have been produced, but the price would have fallen by 1·1±1·0 cents/kg. From these changes he concluded that Johne's costs the US economy about $200 million made up of $700 million loss to consumers through reduced supply and hence higher milk prices offset by a $570 million gain to producers through higher milk prices, more than making up for the reduced sales of milk. Although this exercise was imprecise and dealt only with milk supply shift it illustrates important differences between costing disease for individual farmer decision-support and economic analysis at national level. For Johne's disease the problem is compounded by the relative difficulty of monitoring, preventing and controlling the disease (SAC, 2001) compared to other endemic diseases competing for limited resources at farm level. The example illustrates the difficulties of more equitably sharing the costs and benefits of disease control between stakeholders as advocated in the AHWS. A telephone survey of 94 farmers (SAC, 2004) established that 87% felt that Government should fund Johne's disease control at farm level. However, 71% were unaware of possible public health implications of the disease (Stott et al., 2005b). If these ultimately lead to a 'health scare' then Johne's may take on some of the aspects of the BSE crisis discussed above, greatly altering the economics of the disease for the farming industry and hence the incentives for collective control action.

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Annex C - References

Bennett RM, Christiansen K, Clifton-Hadley RS (1999) Modelling the impact of livestock disease on production: case studies of non-notifiable diseases of farm animals in Great Britain. Animal Science 68: 681-689.

Bennett R & Ijpelaar J (2003) Economic assessment of livestock diseases in Great Britain. Final report to Defra; University of Reading).

Christensen, NH (1995). Evaluation of the effects of enzootic pneumonia in pigs on weight gain and days to slaughter under New Zealand conditions. New Zealand Veterinary Journal, 43: 146-148.

Clarkson, M. J. (1989) The costs of liver fluke infection and its control in sheep. Second International Congress for Sheep Veterinarians, Massey University, Palmerston North, New Zealand, February 12-16, 1989., 358-365.

Defra (2004a). The Report to the Chief Veterinary Officer 2004 - Animal Health 2004. Defra Publication PB 10905. p53

Defra (2004b). New arrangements for bovine TB compensation. Defra press release.

http://www.defra.gov.uk/news/2004/040804a.htm

Defra (2005) Agriculture in the UK 2004.

http://statistics.defra.gov.uk/esg/publications/auk/2004/default.asp

Gunn GJ, Stott AW, Humphry RW (2004) Modelling and costing BVD outbreaks in beef herds. The Veterinary Journal 167: 143-149.

Kossaibati MA & Esslemont RJ (1997) The costs of production diseases in dairy herds in England. The Veterinary Journal 154: 41-51.

Mainland, DD and Ashworth, SW (1992). The effect of BSE on the revenue from beef fatstock. Journal of Agricultural Economics, 43: 96-103.

MacDonald, S and Roberts, D (1998). The economy-wide effects of the BSE crisis: A CGE analysis. Journal of Agricultural Economics, 49: 458-471.

Losinger, W. (2005) Economic impact of Johne's disease on US dairy operations. Journal of Dairy Research, 72: 425-432.

Nieuwhof, GJ, and Bishop, SC (2005). Costs of the major endemic diseases of sheep in Great Britain and the potential benefits of reduction in disease impact. Animal Science, 81: 23-29.

Pointon, AM, Byrt, D, and Heap, P (1985). Effect of enzootic pneumonia of pigs on growth performance. Australian Veterinary Journal, 62: 13-18.

Pretty, JN, Brett, C, Gee, D, Hine, RE, Mason, CF, Morison, JIL, Raven, H, Rayment, MD, and Bijl, Gvd (2000). An assessment of the total external costs of UK agriculture. Agricultural Systems, 65: 113-136.

Raadsma HW& Egerton JR (1993) Current research on an alternative footrot control strategy. Wool Technology and Sheep Breeding 41: 21-28.

SAC (2001) Assessment of surveillance and control of Johne's disease in farm animals in GB. http://www.defra.gov.uk/animalh/diseases/zoonoses/zoonoses_reports/sac2.PDF

SAC (2004) Occurrence, management and perception of risk associated with Paratuberculosis in cattle. Final report to Seerad on project SAC/317/01.(658018)

Schweizer, G., Braun, U., Deplazes, P., and Torgerson, PR (2005). Estimating the financial losses due to bovine fasciolosis in Switzerland. Veterinary Record, 157: 188-193.

Santarossa, JM, Stott, AW, Woolliams, JA, Brotherstone, S., Wall, E, and Coffey, MP (2004). An economic evaluation of long-term sustainability in the dairy sector. Animal Science, 79: 315-325.

Stott AW (2003) Costs and benefits of preventing animal diseases: a review focusing on endemic diseases. A report to SEERAD funded through AA211

Stott, AW, Jones, GM, Humphry, RW, and Gunn, GJ (2005a) The financial incentive to control paratuberculosis (Johne's disease) on UK dairy farms. Veterinary Record, 156: 825-831.

Stott, AW, Lloyd, J, Humphry, RW, and Gunn, GJ (2003). A linear programming approach to estimate the economic impact of bovine viral diarrhoea (BVD) at the whole-farm level in Scotland. Preventive Veterinary Medicine, 59: 51-66.

Stott, AW, Milne, CE, Peddie, S. and Gunn, GJ (2005b) Balancing public and private interests in EU food production. 56th Annual Meeting EAAP, Uppsala, Sweden. June 5th-8th, 2005

Yalcin C, Stott AW, Logue DN, Gunn J (1999) The economic impact of mastitis control procedures used in Scottish dairy herds with high bulk-tank somatic cell counts. Preventative Veterinary Medicine 41: 135-149.

[1] SAC/009/05 (Endemic disease control in ruminants: decision making on costs and benefits to livestock business; project leader George Gunn; start date 1/02/06; end date 31/7/07)

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