Simulated financial losses of classical swine fever epidemics in the Finnish pig production sector

April 21, 2008 — J.K. Niemi, H. Lehtonen, K. Pietola, T. Lyytik?inen and S. Raulo

Rapid structural change and concentration of pig production in regions with most intensive production has raised concerns about whether the risk of large-scale disease losses has increased in Finland. This paper examines the pig industry's losses due to classical swine fever (CSF) epidemics. The work is based on economic and epidemiological models providing insights to the consequences of epidemics to infected and uninfected farms, government and meat processing. The economic analysis was carried out by use of a sector model, which simulated the recovery of pig production, starting from the recognition of the disease in the country and ending at a steady-state market equilibrium about 12 years later. The model explicitly took into account profit-maximising behaviour of producers and the effects of decrease in export demand.

Epidemiological evidence suggests that under the current spatially diversified structure of Finnish pig farming and related industries, the probability of a severe disease epidemic counting dozens of infected farms is small. Even for epidemics considered large in Finland (5-33 infected farms) combined with a major reduction in export demand, the median loss was simulated to be only ?19.2 million. The majority of these losses were due to loss of exports corresponding almost 20% of pig meat production in Finland. While the current structure of pig farming in Finland incurs higher production costs than the most intensive structures in Europe, it also seems to decrease the probability of 'catastrophic' economic losses. The results suggest that the response of export markets and the number of uninfected farms affected by preventive measures are critical to the magnitude of losses, as they can amplify losses even if only few farms become infected.

J.K. Niemi, H. Lehtonen, K. Pietola, T. Lyytikäinen and S. Raulo, Simulated financial losses of classical swine fever epidemics in the Finnish pig production sector, Preventive Veterinary Medicine, Volume 84, Issues 3-4, 15 May 2008, Pages 194-212.

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J.K. Niemi^a, H. Lehtonen^a, K. Pietola^a, T. Lyytik?inen^b and S. Raulo^c
aMTT Agrifood Research Finland, Economic Research, Luutnantintie 13, FI-00410 Helsinki, Finland
^bFinnish Food Safety Agency (EVIRA), Risk Assessment Unit, Mustialankatu 3, FI-00790 Helsinki, Finland
^cHelsinki University, Faculty of Veterinary Medicine, Basic Veterinary Sciences, PL 66, FI-00014 Helsinki, Finland