Economic side of veterinary work

2. Practical applications

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level: PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

Remember …. animal diseases cost money

10 % of the gross production volume~ 40-50 % of the net income (Dijkhuizen, 1990)

£ 180/cow/year~ 20 % of the average gross margin (Esslemont and Kossaibati,

1995)

How to study animal disease?

Changes in output of farm, given farm structure, input and diseases

Necessary data:●Economics and disease data●Not available

Attempts unto sofar●Low precision in diseases (e.g., Rougoor et al.,

1997)●Low number of farms (e.g., Rougoor et al., 1999)

Modelling to estimate effects of diseases and disease control

Simulation model

Input data based on data, literature, expertise

Relatively cheap

Pragmatic approach

Bio-economic modelling: economics combined with detailed physiological basis

Models ……. do not capture the complexity of the real situation

Models……. are sometimes nicer than reality (too good to be true)

Some terminology

Static vs dynamic●behaviour over time

Deterministic vs stochastic●definite predictions or averages (deterministic)

●output is probability distributions (stochastic)

●variability of the system uncertainty of knowledge

Spatial●Space effects play a role

Optimization vs simulation●optimum solution, given an objective

●outcome given a pre-defined set of input

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

Two decisions around reproduction

When do I start with inseminations

When do I stop with insemination

Difficult calculation

Cow factors

●First ovulation

●Probability of detection

●Probability of conception

●Milk production level

●Reproductive disorders

Economical factors

●Milk price

●Costs of insemination

●Costs of culling

●Costs of calving management

11

A complexsystem of

dynamics andinteractions

Model

Monte Carlo stochastic simulation

Interactions and dynamics at cow level

Time steps of 1 week

Different VWP (6-15 wks) for the same cow

Input for Dutch situation (Inchaisri et al., 2010)

●Literature

●Expertise

Stochastic dynamic modelling

• Breed

• Parity

• Month of calving

• Milk production

• Farm level

• Relative performance

• Persistence

Cow

START OF CYCLE

14

Calf

Ovulation

Oestrusdetected

Insemination

Conception

yes

yes

yes

yes

no

no

no

no

cow

Probabilitiesbased on cow

factors

Average results

Voluntary waiting periods

6 wk 7 wk 9 wk 11 wk 13 wk 15 wkFirst insemination

10.9 11.5 13.1 14.8 16.8 18.5Calving interval

391 393 401 410 421 433MP/cow/year (kg)

8200 8188 8157 8112 8056 7997Insemations

1.89 1.86 1.78 1.74 1.70 1.69Calves/cow/year

0.93 0.93 0.91 0.89 0.87 0.84

Not pregnant (%) 0.018 0.019 0.021 0.025 0.030 0.037

15

Economic consequences (€/cow/year)

Voluntary waiting periods

7 wks 9 wks 11 wks 13 wks 15 wksMilk production

2.2 8.9 18.3 32.4 46.4

Calves 0.1 0.3 0.6 1.0 1.7

Culling 0.4 1.6 3.4 6.3 10.1

Inseminations -0.5 -1.6 -2.0 -2.8 -3.1

Calf Management

-0.1 -0.5 -1.0 -1.8 -2.9

Net total 2.1 8.6 19.0 34.2 52.2  (-16-22) (-11-32) (-6-53) (4-78) (13-106)

16

Average

0

10

20

30

40

50

60

6 7 8 9 10 11 12 13 14 15VWP (weeks)

Net

loss

es (

€/co

w/y

ear)

But 6 weeks not always optimal18

0

5

10

15

20

25

30

35

40

6 7 8 9 10 11 12 13 14 15

Per

cent

age

cow

s

Optimal VWP (wks)

Longer VWP when ….

Cow factors

●Parity = 1●Not Holstein Frisian●High persistence●Low production●Late peak in production●Calved in winter●Bad oestrus detection●Late first ovulation●Reproduction diseases

Economical factors

●Lower costs low milk production

●High costs of inseminations

●High costs culling

19

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level: PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

Costs of mastitis

Mastitis is a costly disease

Estimiations between € 55 – 97 per cow per year

●The Netherlands: €78/cow/year (Huijps et al.,2008)

●USA: €61/cow/year (Bar et al., 2008)

●Sweden: €97/cow/year (Hagnestam- Nielsen and Østergaard, (2009)

●The Netherlands: €84/cow/year (Halasa et al., 2009)

●Sweden: €55/cow/year (Nielsen et al., 2010)

Total costs of disease

These costs are only half of the story

Definition of costs of an animal disease (McInerny et al., 1992):

Costs = Losses + Expenditures

●Loss : Benefit taken away (our estimations)

●Expenditures : Extra input into livestock production (preventive measures)

Remember this one?

High losses, low control expenditures

Low losses, high control expenditures

Optimal

Preventive costs (€)

Failure costs(€)

Material

Questionaire dataset of 189 farms (Santman-Berends et al., 2011)

●General questions

●Livestock management

●Lactating cows

●Milking process

●Feed

Pathogen dataset of 120 farms

●Pathogens present on individual farms

Milk recording services dataset of 120 fairy farms

●Testday records (e.g. milk production, SCC)

Normative calculations losses

Clinical losses: based on Huijps et al., 2008

Clinical milk production losses + Discarded milk + Medication + Labour + Veterinarian + Culling

Subclinical losses: based on Halasa et al., 2009

=

=

Costs of prevention

When present the following were calculated according to Huijps et al. (2010):

●Cleaning cubicles

●Cleaning lanes

●Drying off

●Pre-stripping

●Clean dirty udders

●Milker gloves

●Clean cluster after clinical case

●Milk high SCC cow last

●Post milking teat disinfection

●Fixing cows after milking

Estimated costs (€/cow/year) for mastitis

Average 5% percentile

95% percentile

Clinical mastitis 62 16 151

Subclinical mastitis 14 9 21

Failure costs mastitis

76 26 164

Prevention costs 88 43 131

Costs of mastitis 164 99 281

Failure costs vs preventive costs

- 18 management measures (Huijps et al., 2010)

- Quantify effect- 436 scientific papers (1996-2006)- 43 relevant and useful

- Expert sessions- Effect 100 % contagious- Effect 100 % environmental- Efffect on BMSCC- Efffect on clinical mastitis

Cost-effectiveness of preventive measures

Additional

expenditures

Reduced

losses Net benefit

Milk cows with clinical mastitis last 37 16 -21

Milk cows with subclinical mastitis last 104 20 -84

Use of separate cloths during udder preparation 26 9 -17

Wash dirty udders during udder preparation 3 9 6

Prestripping 34 9 -25

Use of milkers’ gloves during milking 1 9 8

Post milking teat disinfection 31 31 -0

Back-flushing clusters after milking a cow with clinical mastitis 1 11 10

Back-flushing clusters after milking a cow with subclinical mastitis 123 15 -108

Replace teat cup liners in time 13 11 -2

Use of a treatment protocol 7 15 8

Application of blanket dry cow therapy 9 36 27

Keep cows standing after milking 2 12 10

Feed additional dry cow minerals 13 13 0

Prevent overcrowding 23 13 -10

Clean boxes 54 15 -39

Clean yards 51 8 -43

Optimize feed ration 24 13 -11

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level: PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

Economic effects of PRRS

• Decrease in litter size

• Decline in average daily gain and feed efficiency

• Reproductive losses

• Increase of mortality

• Increase in healthcare costs

Costs of outbreaks:

• Cost of outbreaks USA: € 255/sow (Holck and Polson, 2003)

• Cost initial outbreaks NL: € 98/sow (Brouwer, 1994)

• Mean loss per sow NL: €126/sow (€59 - €379) (Nieuwenhuis et al, 2012)

Costs of endemic infection less clear

Methods

• Two strategies:

– Depopulation – repopulation

– Herd closure with off-site rearing of weaned piglets

• PRRS elimination reached after 4, 8 and 12 months.

– Compared with old situation (endemic PRRSV)

• Input parameters:

– Farm production parameter-estimates derived from 900 Dutch sow farms (Topigs 2009) or aggregated production (deterministic) figures (Agrovision B.V., 2010) of 2009

– Additional parameters (stochastic and deterministic) derived from literature or experts: LEI & KWIN

• Stochastic simulation model

• Commercial production farm with 436 sows

Results

Depop-repop, equal piglet price: Breakeven in 11.8 yrs

Depop-repop, higher piglet price: Breakeven in 2.2 yrs

Herd closure with elimination: Breakeven < 1 yr0

.51

1.5

2P

roba

bilit

y

0 5 10 15 20Years till breakeven

20% increase pigletprice no increase pigletprice

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level: PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

Foot and mouth disease

EU is free of FMD

What do with outbreak?

EU regulations

Additional measurements

Problem is:

●Stochastic

●Dynamic

●Spatial

Inter-FMD: a simulation model

Monte Carlo simulation●100 replications to obtain insight in variation of

outcomes

Examples of output parameters●number of infected farms

●duration of epidemic

●number of farms slaughtered, vaccinated, in MCZ,…

●number of animals slaughtered, vaccinated, in MCZ,…

●etc……

Output = Input economic model

What to expect…..

• of an outbreak on a dairy farm surrounded by• 240 farms in a radius of 10 km

(A)• 1923 farms in a radius of 10

km (B) • using only EU measures?

EU control measures

Sparse (A) Dense(B)

50% 95% 50% 95%

# infected farms 3 38 1583 3621

# prev. culled farms 8 49 679 1053

# farms in MCZ (10km)335 4,406 12,895 58,165

Length epidemic (days) 38 105 375 end

Other measures (dense)

EU Prev-1 Vacc-2 Vacc-4

Farms

rendered 2.262 281 76 74

vaccinated 0 0 593 1.184

MC 12.895 3.447 3.3183.334

Animals

culled 569.476 65.066 16.230 15.718

vaccinated 0 0 151.089 270.080

Length (days) 375 60 62 57

Adding economics (* mln €)

EU Prev-1 Vacc-2 Vacc-4

live cull live cull

Control >4.620 421 94 174 80 235

Consequential > 2.540 200 166 121 171 111

Marketdamage > 499 511 623 467 636 477

Total >7.659 1.132 883 762 886 824

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level: PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

BSE

1986 first described

1996 -> link with Creutzveldt Jacobs Disease (vCJD)

Since August 1989 measures against BSE in the Netherlands●Since 1990 feed ban (no animal protein)●Since 2000 dead cattle older than 30 m tested●Since 2001 slaughtered cattle older than 30 m tested●Disposal of BSE risk materials●Culling of cohort of detected animal

Incidence of BSE is decreasing●39 suspected cases in 2002●7 suspected cases in 2005

Model

Stochastic

3 types of BSE

●Clinically affected

●Test detectable

●Non detectable (3 for every detectable)

Per BSE type of BSE load (from different organs) of the food supply was calculated

Based on Infectious doses, risk of vCJD

Prevented case of vCJD -> life years saved (most like 51)

Costs

Removal of specific risk material (~60 kg): €/kg slaughtered weight

Transport of specific risk material

Post mortem testing: € 90 per head

Costs of cohort culling

Results - retrospective

Year 2002 2005

Number of BSE cases (total, at slaughter) 24, 12 3, 2

BSE load of the food supply Mean 5th – 95th Mean 5th – 95th.

Baseline scenario 34,857 30,213-39,602 5,502 3,592-7,620

SRM removal 2,330 2,020-2,648 368 240-509

Post-mortem testing (PMT) 7,455 4,846-10,306 939 198-2,091

PMT and cohort culling 7,059 4,505-9,865 939 197-2088

SRM removal and PMT 498 324-689 63 13-140

SRM removal and PMT and cohort culling 472 301-659 63 13-139

Food risk (life years lost) Mean 5th – 95tb Mean 5th – 95th pct.

Baseline scenario 16.98 8.66-26.70 2.69 1.25-4.61

SRM removal 1.14 0.58-1.79 0.18 0.08-0.31

Post-mortem testing (PMT) 3.63 1.67-6.27 0.46 0.08-1.11

PMT and cohort culling 3.44 1.56-5.94 0.46 0.08-1.11

SRM removal and PMT 0.24 0.11-0.42 0.03 0.005-0.07

SRM removal and PMT and cohort culling 0.23 0.10-0.40 0.03 0.005-0.07

Costs (mln €)

Year2002 2003 2004 2005

SRM removal19.22 18.27 19.29 19.82

Post-mortem testing38.16 29.56 26.57 21.12

Cohort culling6.97 4.80 3.41 2.43

Total costs64.34 52.64 49.27 43.37

Cost-effectiveness

Cost-effectiveness 2002-2005

What to expect?

Approach to economic calculations

The cow level: reproduction

The herd level: mastitis

The herd level: PRRSV

Country level: foot and mouth disease

Human health: BSE

Final remarks

Inseminations

●Start early

Mastitis

●Be careful with additional prevention

●Work farm-specific

PRRSV

●Eradication iscost-effective

Foot and mouth disease

●Have a good look at eradication programs

Zoönoses

●Look at costs vs utility

Key messages from examples

Farmers underestimate costs of disease

0

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Expected costs (€ per cow)

Rea

l co

sts

(€/c

ow

)

46 under estimators

Huijps et al., 2008

There is more than economics

Money is only one motivator for a farmer

Thank you for your attention

@henkhogeveen

animal-health-management.blogspot.com

On-line courses on Veterinary Economics on:

www.elevatehealth.eu