The economic impacts of foot and mouth disease – What are they, how big are they and where do they occur?

1Foot and mouth disease (FMD) has been eradicated by many wealthy nations but remains endemic in most of the world (see Fig. 1). When FMD outbreaks occur in disease free countries and zones that produce livestock for export the economic impact is clear to see; however, the impact of the disease in endemic countries is more controversial, particularly when compared to diseases that cause greater mortality.

2In recent times there has been increased consideration of FMD control in endemic countries. Knowledge of disease impact is essential when deciding on the level of expenditure that can be justified by a disease control programme. Impact, together with the marginal returns for investing in disease control should be compared for different diseases, considering the cost of control measures and their likely effect.

3There is always a danger that conclusions on disease impact will be based on observations of affected individuals or farms, particularly if losses are dramatic. When considering the burden of a disease one must step back and consider its impact at the population level. To consider this as a function of losses in diseased individuals and the number affected is an over-simplification; for livestock diseases and FMD in particular the full impact of a disease is far more complex.

4Although FMD is a disease of low mortality the frequency of outbreaks and the large numbers of animals and species affected in each outbreak results in a high and on-going impact for FMD in endemic countries. FMD endemic countries collectively contain three-quarters of the world's population.

5Livestock movements and trade play a key role in the spread of FMD. Hence, despite the significant economic losses involved, movement and trade restrictions at domestic and international level are fundamental to control.

6The objective of this paper is to describe the economic impact of FMD including how it varies in different settings and how knowledge of this should be used to guide control policy. This included a synthesis of current literature on the subject. To help appreciate the scale of global FMD impact estimates were made of the direct costs of disease and vaccination in endemic countries as well as outbreak costs in free countries.

7The literature search covered published journal articles, reports and grey literature and was performed using the following methods:Online search; ProMED, google scholar and google web were searched for papers with “FMD” or “foot and mouth disease” and “economic*” or “impact” or “cost-benefit”.Eight experts in the field of FMD economics were asked to provide suitable publications.References of interest in identified papers were reviewed.Other relevant publications that the authors were aware of were included.

8Online search; ProMED, google scholar and google web were searched for papers with “FMD” or “foot and mouth disease” and “economic*” or “impact” or “cost-benefit”.

9Eight experts in the field of FMD economics were asked to provide suitable publications.

10References of interest in identified papers were reviewed.

11Other relevant publications that the authors were aware of were included.

12Articles written in English or Spanish were included. Articles were retained if they reported either original research or reviewed aspects of FMD economic impact. Articles reporting the predicted impact or cost-benefit of future FMD control or of FMD control already conducted during an outbreak are presented in a separate section.

13FMD affects all the major non-avian livestock species causing high morbidity and low mortality, although high mortality of young stock can occur. Fig. 2 shows the different impacts of FMD. The framework used differs to the one proposed for livestock diseases by, and.

14Production losses due directly to FMD include reduced milk production, affecting both the humans and calves that depend on it. This can account for 33% of losses in endemic settings. Not only crucial to commercial dairy operations, milk is an important source of nutrition for many pastoralists, particularly for children. Although FMD typically has a short-term affect on an animal's health, chronic FMD typically reduces milk yields by 80%. Livestock growth rates are also suppressed and mortality amongst young stock is typically 2–3% although occasionally much higher. Loss of traction power where draught animals are used is particularly damaging if it occurs during harvest. FMD can result in abortion, the cost of which is high as the farmer will have to pay to keep the cow without it producing anything for another year or more, or cull the animal.

15Visible production losses are most prominent in pigs in intensive production systems and dairy cattle. These two systems are key sources of animal protein in poor countries and their importance continues to grow.

16A compound effect of fertility problems due to abortion and reduced conception rates is a need to have a greater proportion of breeding animals in a population for a given output. This invisible loss means that for every kilo of meat or milk produced there is an additional fixed cost to maintain more breeding stock.

17The cost of control carried out by the state veterinary services (e.g. vaccination, outbreak control, culling and compensation) is borne by the tax payer. In addition significant amounts are spent by the private sector. These costs are enormous with an estimated 2.35 billion doses of FMD vaccine administered in the world every year (Table 1) at a cost of $0.4–3 or occasionally $9 per dose including delivery and application. Due to the short duration of immunity induced by FMD vaccines, ongoing control programmes vaccinate cattle one to five times a year and sheep and goats once a year; limiting resources available to combat other diseases.

18Wildlife are sometimes kept out of FMD free zones with fencing which is both costly and affects wildlife ecology.

19Even if a country is FMD free there are ongoing costs due to efforts to prevent disease introduction, including import controls and sometimes vaccination. In addition, maintaining FMD early detection and control capability, including vaccine banks, is costly. Other costs include FMD related research and permanent restrictions on the livestock sector (such as post-movement standstills and bans on feeding swill).

20The cost of surveillance are significant, including proving disease freedom after an outbreak; >3 million serum samples were tested after the UK 2001 outbreak in addition to approximately 3.5 million sera tested during the outbreak.

21Control measures can affect other industries, a worst case example being the UK 2001 outbreak which caused US$4–5 billion in lost tourism revenue. Culling based control measures can have wider impacts including public outrage, depression and suicides amongst farmers, pollution from carcasses and animal welfare issues. Movement restrictions disrupt the normal flows of animals between different units and enterprises at different stages of their life and can result in welfare problems if access to housing and grazing is prevented; in the UK 2001 outbreak welfare reasons accounted for one third of animals culled.

22Countries infected with FMD cannot trade live animals with FMD free countries. Typically the countries with the best meat prices are FMD free (i.e. EU, USA and Japan) where prices are typically 50% higher.

23The trade of livestock products is also restricted. If regular outbreaks occur only processed, tinned products can be exported to free countries; if FMD is effectively controlled with vaccination by a competent veterinary service able to detect outbreaks then deboned meat can be exported. Also, trade of fruit and vegetables can be affected by FMD status. Even if a country is FMD free, if it trades with FMD infected countries it will experience trade restrictions.

24Lack of access to lucrative markets has further consequences; it restricts the development of commercial farming. Restrictions limit the supply of livestock and livestock products to free countries; although this is good for domestic producers it leads to increased market prices for consumers. If FMD free status is lost livestock are dumped on the domestic market, reducing prices for consumers at the cost of producers. Even within an endemic country livestock trade is limited; those affected by FMD receive lower prices for their stock and those wishing to purchase animals from FMD free herds face a restricted supply. Furthermore, investment in the livestock sector is limited if there is a perceived risk that FMD may occur. High productivity breeds are typically more susceptible to FMD. The threat of FMD therefore restricts (a) the use of these breeds and (b) prevents the development of more intensive production.

25FMD is highly contagious, affects many species and is not easily contained within one farm or one population. The presence of FMD creates problems to all livestock owners who are connected to populations where FMD is present. This connection may be geographical or via market chains. Therefore, FMD creates what economists call externalities. If an outbreak occurs because one farmer did not protect his animals others may suffer. Conversely when a livestock owner protects their animals from FMD infection they will generate a positive externality as they are less likely to become infected and transmit the pathogen to other farms.

26The positive and negative impacts of FMD on different players in a dynamic market are complex; when FMD outbreaks create increased demand for vaccines, pharmaceutical companies benefit. When a free country experiences an outbreak poultry prices may increase due to public reluctance to consume products from FMD susceptible species, particularly if through ignorance there is a reluctance to eat products from FMD vaccinated animals.

27Where externalities exist there is a need for public investment as one farmer's actions create costs and benefits for others. These externalities are not equally shared amongst different livestock sectors with production losses being particularly severe for commercial dairy farms. Even when individuals reap positive returns from successful FMD control there is less of an incentive to undertake such a programme if there is a high risk of reinfection from those that do not attempt FMD control.

28Effective control of infectious diseases with vaccination often requires high levels of vaccine coverage to develop herd immunity; with a sufficient proportion of immune animals outbreaks will tend to die out due to a lack of susceptible hosts. If left in the hands of individual farmers a lack of action by those less visibly affected by FMD will result in pockets where control is poor, undermining the entire control programme. Impacts on the livestock producer have ripple effects along the entire market chain, impacting on other players, such as markets, abattoirs and dairies to mention a few. FMD control can be both an externality, with benefits not captured by the market, and a regional or global public good, as the reduction in risk of FMD is also experienced by countries other than ones controlling the disease; external funding and cooperation is therefore required.

29The impact of disease is not equal across all countries and livestock populations due to differences in not only FMD status, incidence and risk of incursion but also (a) the genetics of the national herd; (b) prevailing livestock management practices; (c) prevailing prices of livestock production inputs and outputs and (d) their ability to supply livestock for export markets. This is easier to appreciate when one considers specific countries which differ in these characteristics.The impact of FMD in a disease free country with export potential but where FMD is present in the wider region.In this setting the main impacts are through the cost of on-going control, particularly vaccination, and loss of export markets and further control measures when outbreaks occur.Example 1 – UruguayThe case of Uruguay highlights the benefits of FMD control, particularly if it allows export markets to open up. Upon gaining free status without vaccination in 1996 the value of exports increased by over 50%, providing an added $110 million of revenue per year through exports to America, consisting of 20,000 tonnes of beef sold at double domestic prices; in addition there was increased trade with the Pacific rim countries. Savings of $8–9 million per year were initially made via avoided routine vaccination costs, however, after an outbreak in 2001 ongoing vaccination was re-introduced due to the threat of infection from neighbouring countries. Controlling the 2001 outbreak cost $13.6 million, 55% of which was due to vaccination costs. This included two rounds of nationwide mass vaccination for 10.6 million cattle; 24 million vaccine doses were used, mostly administered by farmers. The remaining 45% of costs were for farmer compensation, cleaning and disinfection, and operating costs. The estimated total cost of the outbreak (including loss of trade) was US$700 million (Personal Communication, F. Munzio).The impact of FMD in a disease free country with significant livestock exports and relatively low risk of incursion.In this setting the major impact is through maintaining preparedness due to the dire economic consequences of an FMD incursion.Example 2 – AustraliaIn 2000–2001, the gross value of Australian livestock industry was US$8 billion with exports worth US$7.5 billion. FMD control costs include maintenance of preparedness and efforts to keep the virus out or minimise the impact should an outbreak occur. Australia also funds FMD control in countries most likely to act as a source of any future virus incursion into Australia. Due to reduced prices for export products in non-FMD free markets, loss of FMD free status could cause Australian export revenue to fall by 70% in the first year after the outbreak. Increased supply to the domestic market would reduce meat prices, which although beneficial for the consumer would lead to additional industry losses of >US$1.5 billion for a 12 month outbreak with total losses for such an outbreak falling between US$4 and 6.5 billion (converted using 2001 exchange rate where AUS$1 = 0.5US$). As long as it remains FMD free, Australia benefits from FMD being present in other countries as it reduces competition for lucrative export markets, resulting in high prices for their exports.The impact of FMD in a disease free country which imports livestock products.In this setting the major impact is due to the high price paid for importing meat from FMD free countries only. Other ongoing control costs may also exist.Example 3 – IndonesiaAs the archipelago of Indonesia is FMD free the disease has no impact on production and ongoing vaccination is not required. However, the country imports significant amounts of meat. To reduce the chance of virus incursion Indonesia only imports meat from FMD free countries like Australia. The price of meat from these sources is much higher. This is essentially an additional FMD control cost paid to reduce the risk of FMD virus being imported. Within Indonesia growing income levels have increased the demand for meat causing further increases in the price of meat. High beef prices have resulted in increasing quantities of meat being smuggled into the country from India where FMD is present but where meat is cheaper. To reduce the price of legal meat imports the government is considering relaxing regulations to allow imports from not only FMD free countries but also FMD free zones in countries with endemic regions (such as Brazil).The impact of FMD in an endemic country with limited export potential looking to increase national productivity and reduce risk to neighbouring countries.In this situation the main impacts are disease-induced production losses, ongoing vaccination costs, premium prices paid for FMD free imports and the risk the country poses to neighbouring free countries.Example 4 – TurkeyFMD is endemic in most of Turkey, however, a free zone with vaccination exists in the region in continental Europe (Thrace). Great efforts have been made to control FMD in Turkey via vaccination. Turkey acts as a FMD virus reservoir which could spill over into disease free Europe. To combat this the European Commission spent €65 million on vaccination in endemic Turkey between 2008 and 2011 with additional ongoing funding for vaccination in the free zone.FMD is widespread with approximately 10% of the 11 million cattle population infected with FMD before the age of 2 years and the direct impact of FMD for each case costing on average $150–300 depending on production type [i.e. dairy, beef, dual purpose]. Limited domestic production led to Turkey's meat prices being amongst the highest in the world; in 2010 beef was over €8/KG and yearling Friesian bulls sold for €1500. Importation of live cattle was highly restricted in part to reduce the chance of importing diseases such as Bovine Spongiform Encephalopathy; in 2010 very few countries could legally export live cattle to Turkey. High prices encouraged illegal imports from neighbouring FMD endemic countries which in turn undermined FMD control in Turkey.More countries can now export to Turkey and import taxes have been reduced. Even countries that export livestock to countries other than Turkey, benefit from trade rivals diverting their exports to Turkey as this reduces supply elsewhere resulting in higher prices.The impact of FMD in an endemic country with the potential to export.In a country like this the control costs required to attain and maintain free status are sizeable and the risk of subsequent outbreaks in free zones may be high. If FMD free trade can be established the benefits are significant, however, other barriers to market access may exist.Example 5 – ZimbabweZimbabwe had a zonal FMD control programme based on wildlife control and vaccination much like Botswana, Namibia and South Africa have today. Until 2007 Zimbabwe could export meat to the EU with reduced import tariffs. This trade brought in $50 million per year up to 2001. In 2003 estimated that if FMD control was reduced, every dollar saved in reduced control costs would result in $5 lost to the national economy. The breakdown of FMD control in Zimbabwe after the land reforms of 2000 has also had a big impact on Botswana where spill-over FMD outbreaks have jeopardised the valuable beef export industry.FMD control in Zimbabwe was largely funded by the tax payer and external donors. Although FMD control measures impacted on all livestock owners, the benefits were largely received by a relatively wealthy minority involved in the commercial beef sector. If FMD free status was regained it would take time to re-establish a beef industry capable of supplying a sufficient quantity of export quality beef.Example 6 – EthiopiaEthiopia has the largest cattle population in Africa; in 2006 there were >43 million cattle with slightly fewer sheep and goats. Large numbers of ruminants are exported; in the Ethiopian financial year (July 2010–July 2011), meat and livestock export revenue was $211.1 million, mostly from live animal trade with the Middle East (>472,041 heads of live animals, 70% of which were cattle). However, production costs are high compared to other meat exporting nations, such as Australia or Brazil, limiting the potential for export market access regardless of FMD status. Difficulties in meeting export Sanitary and Phyto-Sanitary standards results in greater numbers of livestock being purchased by traders for export through unofficial channels where prices are lower.Due to the presence of FMD and other OIE listed trade limiting diseases the export of live cattle and their products to FMD free countries is an unlikely prospect. This raises the case for investment in veterinary service infrastructure to improve the control of all trade limiting diseases for international market access.Having an economy that is highly dependent on smallholder and animal-based agriculture, including the widespread use of beasts of burden, the direct impacts of FMD are substantial in Ethiopia. In agro-pastoral areas, FMD infected oxen are unable to work for the entire season when affected at cropping time. Pastoralists are particularly vulnerable to FMD as their living depends entirely on their livestock. By reducing the supply of milk FMD impacts on food security, particularly when outbreaks occur during times of the year when other food sources are limited and dependency upon milk is greatest.

30The impact of FMD in a disease free country with export potential but where FMD is present in the wider region.

31In this setting the main impacts are through the cost of on-going control, particularly vaccination, and loss of export markets and further control measures when outbreaks occur.Example 1 – Uruguay

32Example 1 – Uruguay

33The case of Uruguay highlights the benefits of FMD control, particularly if it allows export markets to open up. Upon gaining free status without vaccination in 1996 the value of exports increased by over 50%, providing an added $110 million of revenue per year through exports to America, consisting of 20,000 tonnes of beef sold at double domestic prices; in addition there was increased trade with the Pacific rim countries. Savings of $8–9 million per year were initially made via avoided routine vaccination costs, however, after an outbreak in 2001 ongoing vaccination was re-introduced due to the threat of infection from neighbouring countries. Controlling the 2001 outbreak cost $13.6 million, 55% of which was due to vaccination costs. This included two rounds of nationwide mass vaccination for 10.6 million cattle; 24 million vaccine doses were used, mostly administered by farmers. The remaining 45% of costs were for farmer compensation, cleaning and disinfection, and operating costs. The estimated total cost of the outbreak (including loss of trade) was US$700 million (Personal Communication, F. Munzio).

34The impact of FMD in a disease free country with significant livestock exports and relatively low risk of incursion.

35In this setting the major impact is through maintaining preparedness due to the dire economic consequences of an FMD incursion.Example 2 – Australia

36Example 2 – Australia

37In 2000–2001, the gross value of Australian livestock industry was US$8 billion with exports worth US$7.5 billion. FMD control costs include maintenance of preparedness and efforts to keep the virus out or minimise the impact should an outbreak occur. Australia also funds FMD control in countries most likely to act as a source of any future virus incursion into Australia. Due to reduced prices for export products in non-FMD free markets, loss of FMD free status could cause Australian export revenue to fall by 70% in the first year after the outbreak. Increased supply to the domestic market would reduce meat prices, which although beneficial for the consumer would lead to additional industry losses of >US$1.5 billion for a 12 month outbreak with total losses for such an outbreak falling between US$4 and 6.5 billion (converted using 2001 exchange rate where AUS$1 = 0.5US$). As long as it remains FMD free, Australia benefits from FMD being present in other countries as it reduces competition for lucrative export markets, resulting in high prices for their exports.

38The impact of FMD in a disease free country which imports livestock products.

39In this setting the major impact is due to the high price paid for importing meat from FMD free countries only. Other ongoing control costs may also exist.Example 3 – Indonesia

40Example 3 – Indonesia

41As the archipelago of Indonesia is FMD free the disease has no impact on production and ongoing vaccination is not required. However, the country imports significant amounts of meat. To reduce the chance of virus incursion Indonesia only imports meat from FMD free countries like Australia. The price of meat from these sources is much higher. This is essentially an additional FMD control cost paid to reduce the risk of FMD virus being imported. Within Indonesia growing income levels have increased the demand for meat causing further increases in the price of meat. High beef prices have resulted in increasing quantities of meat being smuggled into the country from India where FMD is present but where meat is cheaper. To reduce the price of legal meat imports the government is considering relaxing regulations to allow imports from not only FMD free countries but also FMD free zones in countries with endemic regions (such as Brazil).

42The impact of FMD in an endemic country with limited export potential looking to increase national productivity and reduce risk to neighbouring countries.

43In this situation the main impacts are disease-induced production losses, ongoing vaccination costs, premium prices paid for FMD free imports and the risk the country poses to neighbouring free countries.Example 4 – Turkey

44Example 4 – Turkey

45FMD is endemic in most of Turkey, however, a free zone with vaccination exists in the region in continental Europe (Thrace). Great efforts have been made to control FMD in Turkey via vaccination. Turkey acts as a FMD virus reservoir which could spill over into disease free Europe. To combat this the European Commission spent €65 million on vaccination in endemic Turkey between 2008 and 2011 with additional ongoing funding for vaccination in the free zone.

46FMD is widespread with approximately 10% of the 11 million cattle population infected with FMD before the age of 2 years and the direct impact of FMD for each case costing on average $150–300 depending on production type [i.e. dairy, beef, dual purpose]. Limited domestic production led to Turkey's meat prices being amongst the highest in the world; in 2010 beef was over €8/KG and yearling Friesian bulls sold for €1500. Importation of live cattle was highly restricted in part to reduce the chance of importing diseases such as Bovine Spongiform Encephalopathy; in 2010 very few countries could legally export live cattle to Turkey. High prices encouraged illegal imports from neighbouring FMD endemic countries which in turn undermined FMD control in Turkey.

47More countries can now export to Turkey and import taxes have been reduced. Even countries that export livestock to countries other than Turkey, benefit from trade rivals diverting their exports to Turkey as this reduces supply elsewhere resulting in higher prices.

48The impact of FMD in an endemic country with the potential to export.

49In a country like this the control costs required to attain and maintain free status are sizeable and the risk of subsequent outbreaks in free zones may be high. If FMD free trade can be established the benefits are significant, however, other barriers to market access may exist.Example 5 – Zimbabwe

50Example 5 – Zimbabwe

51Zimbabwe had a zonal FMD control programme based on wildlife control and vaccination much like Botswana, Namibia and South Africa have today. Until 2007 Zimbabwe could export meat to the EU with reduced import tariffs. This trade brought in $50 million per year up to 2001. In 2003 estimated that if FMD control was reduced, every dollar saved in reduced control costs would result in $5 lost to the national economy. The breakdown of FMD control in Zimbabwe after the land reforms of 2000 has also had a big impact on Botswana where spill-over FMD outbreaks have jeopardised the valuable beef export industry.

52FMD control in Zimbabwe was largely funded by the tax payer and external donors. Although FMD control measures impacted on all livestock owners, the benefits were largely received by a relatively wealthy minority involved in the commercial beef sector. If FMD free status was regained it would take time to re-establish a beef industry capable of supplying a sufficient quantity of export quality beef.Example 6 – Ethiopia

53Example 6 – Ethiopia

54Ethiopia has the largest cattle population in Africa; in 2006 there were >43 million cattle with slightly fewer sheep and goats. Large numbers of ruminants are exported; in the Ethiopian financial year (July 2010–July 2011), meat and livestock export revenue was $211.1 million, mostly from live animal trade with the Middle East (>472,041 heads of live animals, 70% of which were cattle). However, production costs are high compared to other meat exporting nations, such as Australia or Brazil, limiting the potential for export market access regardless of FMD status. Difficulties in meeting export Sanitary and Phyto-Sanitary standards results in greater numbers of livestock being purchased by traders for export through unofficial channels where prices are lower.

55Due to the presence of FMD and other OIE listed trade limiting diseases the export of live cattle and their products to FMD free countries is an unlikely prospect. This raises the case for investment in veterinary service infrastructure to improve the control of all trade limiting diseases for international market access.

56Having an economy that is highly dependent on smallholder and animal-based agriculture, including the widespread use of beasts of burden, the direct impacts of FMD are substantial in Ethiopia. In agro-pastoral areas, FMD infected oxen are unable to work for the entire season when affected at cropping time. Pastoralists are particularly vulnerable to FMD as their living depends entirely on their livestock. By reducing the supply of milk FMD impacts on food security, particularly when outbreaks occur during times of the year when other food sources are limited and dependency upon milk is greatest.

57If money is spent on disease control, the intention is to reduce losses elsewhere by a greater amount. These losses may be due to reduced production or restricted market access. To control FMD governments must create an environment where population level control costs reflect the benefits experienced by the livestock sector and the wider economy. This requires a combination of:Investments in veterinary services, education, research and general infrastructure to develop the animal health system – what economists would call fixed costs.Specific programmes that cover the costs of FMD control and management – what economists would call variable costs.In many countries there is already a fixed cost investment in animal health systems, and adding an FMD control programme is relatively easy. However, countries that have low level investments in animal health will struggle to implement an effective FMD control programme. In this situation there needs to be an increase in both the fixed and variable costs. The fixed cost element will generate capacity and skills that will benefit the control of other diseases and therefore not all costs for this element should be assigned to FMD.

58Investments in veterinary services, education, research and general infrastructure to develop the animal health system – what economists would call fixed costs.

59Specific programmes that cover the costs of FMD control and management – what economists would call variable costs.

60FMD transmission is controlled by both reducing an animal's chance of virus exposure and reducing susceptibility via vaccination or culling high risk animals in case virus exposure cannot be prevented. Socio-economic factors influence both aspects.

61Control measures such as movement restrictions and culling create hardship. To encourage individual self-sacrifice for public disease control the carrot and stick of compensation and enforcement are required. Unfortunately production types with the least interest in FMD control are often more prevalent in countries least able to compensate and enforce. This is self-perpetuating; as if FMD is not controlled farmers will keep animals less susceptible to FMD to reduce its visible impact increasing the need for compensation and enforcement, yet high incidence and limited public budget makes this unfeasible. Indirect losses due to restricted market access are less tangible to less commercially driven farmers and if other trade barriers (including other diseases) are present the benefits of FMD control become more distant.

62A sensible approach to increasing global FMD control would be to identify areas where control is most likely to succeed such as regions with motivated, commercial farms and low farm density. Small holder systems are problematic as they often have extensive between farm contacts through high farm densities, frequent trading and a dependency on communal grazing. In addition they may have fewer visible incentives to control FMD. Small holdings are logistically difficult to vaccinate with high coverage and they are more prevalent in countries with less effective veterinary services unable to enforce restrictions and to compensate.

63If widespread control is not possible, farmers keen to control FMD should be assisted by making quality vaccines available (if efficacy is questioned uptake will be low) and limiting the damage of those not participating in FMD control. Some countries fully subsidise vaccination in small holdings, funded by governments and industry bodies, whilst larger farms pay for vaccination. Although not yet an option, commodity based trade would allow enterprises to access lucrative markets without the enormous hurdle of achieving national or zonal freedom.

64The preferred method of estimating global FMD impact would be to aggregate national and regional studies. This is the approach taken by the World Health Organization when estimating global disease burdens.

65The literature was searched for studies of FMD economic impact. There has been no study carried out for a global strategy for FMD control and eradication, but just over 30 country or regional studies have been published in the peer reviewed and grey literature (see Table 2). A large number of these are ex post evaluations after large outbreaks in previously free countries. Countries that are free have also carried out a number of outbreak simulations studies. Finally there is a limited set of studies on FMD control in endemic countries. The challenges and uncertainties associated with FMD control in endemic regions are considerable; predicting returns on investment in FMD control in these settings is not easy. Aggregating these papers and filling in the gaps to incorporate them into a global estimate is beyond the scope of this paper but this literature synthesis reveals the following:Control programmes in countries previously free generate positive returns to the economy.Countries free from FMD that suffer an outbreak lose between 0.2% and 0.6% of GDP.In countries with international trade in livestock and livestock products the control of FMD has good economic returns.In countries with limited or no international trade in livestock and livestock products a positive return on FMD control requires targeted programmes.There is a lack of studies that examine the full economic cost of FMD in endemic countries particularly considering indirect losses at the national level.There has also been very limited work carried out on the economic analysis of farm-level control of FMD, an important consideration in the success of disease control. Both and indicate high impact of FMD and positive returns to its control for dairy systems in India and Bolivia, respectively. indicate that FMD would have a high impact in dairy and pig systems, but limited or no impact on sheep and beef systems. In Bolivia a study indicated that there was no positive return to farm-level control of FMD with preventive vaccination.

66Control programmes in countries previously free generate positive returns to the economy.

67Countries free from FMD that suffer an outbreak lose between 0.2% and 0.6% of GDP.

68In countries with international trade in livestock and livestock products the control of FMD has good economic returns.

69In countries with limited or no international trade in livestock and livestock products a positive return on FMD control requires targeted programmes.

70There is a lack of studies that examine the full economic cost of FMD in endemic countries particularly considering indirect losses at the national level.

71Five recent studies on FMD impact on small holder systems were identified. Studies in Cambodia reported a reduction in household income of 4.4–11.7% annually following an outbreak of FMD with a loss of 54–92% of animal value. This compares to a reported 22–30% loss in of animal value in Laos following FMD. In Sudan losses of US$25 per cow per year were found in a region where 90% of the population have an income of less than 1 dollar a day. Finally a study in Pakistan found that compared to pre-FMD milk yield 60 days after disease was still reduced by a third; in this study vaccination had an estimated cost/benefit ratio of 5.7, this compares to 11.5 in South Sudanese pastoralists.

72To demonstrate the scale and distribution of the global FMD burden we have made an approximate estimate of the impact of direct losses and vaccination due to FMD in endemic countries. These impacts fall on affected farmers and those that pay for vaccination, usually the state. A more complex analysis considering externalities and knock on effects on market prices and how this affects different producers in different countries and sectors is beyond the scope of this paper. Calculations were made using the statistical software R using Monte-Carlo simulation with 20,000 simulations.

73Based on estimates of FMD incidence and population size (FAO stat gridded livestock population – see Fig. 3) an estimate was made of the number of animals affected by FMD in a year with the current control measures in place. This was done for all countries using the nine incidence categories in. Results were then aggregated by region (see Table 3).

74The numbers of animals were converted to livestock units to estimate the economic value of livestock affected on a yearly basis (i.e. one LSU = 1 head of cattle, 3.3 pigs or 10 sheep or goats).

75To account for uncertainty of the estimate, incidence was multiplied by an uncertainty factor. This factor was thought to range from a minimum and most likely value of 1 (i.e. the incidence estimate was correct) to 8 (i.e. only one in eight cases were accounted for), described by a Betapert distribution (min = 1, max = 8, mode = 1). That is, in many cases the estimates in are the best estimates available. However, it could be that in some instances the original estimate used was an eighth of the true incidence; the latter figure was derived from work done in Iran, comparing incidence of reported cases to incidence of infected premises detected by serology. Iran was used in to derive incidence in endemic countries for which little information was available assuming under-reporting was uncommon in Iran.

76It was estimated that 32 million livestock units (LSU) are affected by FMD in a year, although the figure could be between 28 and 79 million (5th and 95th percentile of the uncertainty distribution, median = 41 million). The worst affected regions in terms of absolute numbers are China, Africa and India (see Table 3).

77Three quarters of the livestock units affected by FMD are predicted to be cattle and 13% pigs. The impact on cattle is greatest in Africa, India, rest of Asia and China, whereas the impact of the disease in pigs is estimated to be greatest in China. In terms of the proportion of livestock affected we estimate that around 2% of the world's cattle population has FMD in a year (90% uncertainty range: 2–5%), but there are regional differences with China and India the worst affected areas (see Table 3).

78Some regions have FMD strains that cause greater impact in certain species, so for example a pig adapted strain will have a greater impact when present in an area of high pig density; this level of complexity was not modelled.

79Estimates made by leading FMD vaccine manufacturers of the number of vaccine doses produced per region in 2010 were used (see Table 1).

80The overall economic impact was calculated based on the costs of a vaccine and its application being between US$0.4 and US$3, with most likely cost US$1 [triangle distribution (min = 0.4, max = 3, mode = 1)]. Direct, visible FMD production losses were assummed to range from US$100 to US$370 per case, with the most likely value US$100 [triangle distribution (min = 100, max = 370, mode = 100)]. The latter estimate takes into account the death of an animal, loss in weight gain, milk production and draught power. This was multiplied by the number of cases per year to estimate total direct losses.

81The total annual impact of FMD due to direct losses and vaccination was estimated to range between US$6.5 billion and US$21 billion (90% range) with an average value of US$ 11 billion (see Table 4). The majority of FMD impact occurs in China, India and Africa. In Africa it has been estimated that more is spent controlling FMD than any other veterinary disease. Impact in South America is largely due to the costs of vaccination.

82The impact estimate does not account for restricted development of the livestock sector when FMD is present or other FMD control and surveillance costs. In addition it does not include the losses due to trade restrictions which although large at both the local and international level could not be estimated with any accuracy and are highly variable. Even when focussing on the most visible and tangible impacts of FMD, estimates are uncertain with wide confidence intervals. Therefore US$11 billion quantifies some but not all aspects of FMD impact in endemic countries.

83One study estimated that FMD losses due to deaths, milk loss, draught losses and treatment costs were US$2.7–3.6 billion in India alone.

84The above gives an indication of the ongoing burden of FMD in endemic countries, but outbreaks in free countries can be devastating. In the country examples in Table 5, these outbreaks cost from half to almost 10 billion US dollars. In 2011 and 2012 there were 10 reported outbreaks in FMD free zones or countries.

85The 2001 UK FMD outbreak highlights how severe and widespread the consequences of an outbreak in an FMD free country can be. Widespread culling was used to contain the disease and ultimately over 6 million animals were slaughtered, approximately 7% of all UK cattle and 15% of all sheep.

86In recent times Asia has suffered major FMD epidemics in countries that were previously free. In Taiwan an outbreak of FMD (1997), mainly in the pig population, decimated the sector and was estimated to have reduced the total GDP of the country by 0.28%. Japan has had FMD outbreaks in 2000 and 2010, and the Republic of Korea experienced an outbreak in 2010 and 2011 with the destruction of 3.4 million livestock and costs of US$ 2.78 billion.

87In total over US$20 billion has been lost during the last 15 years due to major FMD epidemics in countries that were previously free (US$25 billion if corrected to the value of a US$ in 2011); this equates to about US$1.5 billion per year. In addition there were many smaller outbreaks (see Fig. 1) in FMD free zones or countries; although the economic impact of these outbreaks is small compared to the major outbreaks in Table 5, the amounts are still significant [e.g. the UK 2007 outbreak involved eight farms and cost the government GB£47 million and industry GB£100 million, i.e. total US$300 million]. If one considers these figures in conjunction with the US$6.5–21 billion vaccine costs and direct losses in endemic countries one gets some idea of the magnitude of global FMD impact.

88Wealthy countries that have eradicated FMD face ongoing costs from periodic outbreaks and the costs of maintaining preparedness. Many countries reduce the impact of the disease with extensive ongoing vaccination programmes. The global scale and costs associated with these programmes is vast with billions of doses administered annually. Restricted access to international markets due to FMD greatly reduces revenue for nations with the capacity to export livestock and their products.

89The impact of FMD in endemic countries has received less attention than the impact of outbreaks in free countries despite the huge numbers of animals affected and the importance of livestock in these countries (see Table 3). Direct losses due to death and disease are easy to appreciate, however, in endemic countries the burden of FMD often manifests as widespread and ongoing losses that limit development of the livestock sector. FMD impacts on different enterprises and countries in different ways; the consequences of this variable impact and risk should be considered when planning disease control.