At the moment I am in Kenya, at a site visit of Dr Esther Wafula, who is doing a PhD with us in Utrecht. Today I gave a presentation at KARI, the Kenyan Agricultural Research Institute. This is a huge institute, consisting of more than 3000 people. People responsible for animal health work both from KARI as well as the University of Nairobi were present. The presentation has quite some overlap with the one I gave last year in Kupang. However, I added some new figures about the complexity of management as well as the first research results of Dr Wafula: costs of trypanosomosis.

1. Economics of animal health
A little theory and some applications

2. Who am I
 Born on a dairy farm
 Animal science at Wageningen University
● Epidemiology (simulation model of management
regarding cystic ovaries)
● Economics (long term effects of herd health
management programs)
 PhD at Fac. Veterinary Medicine (AI to diagnose mastitis)
 Working in field of animal health management
In between Wageningen University and Faculty of Vet. Med.
(since 2001)
@henkhogeveen
animal-health-management.blogspot.com
www.slideshare.net/henkhogeveen

3. Wageningen
Utrecht
Leusden

4. Animal diseases are a ……….
 Welfare problem
 Human health problem (one health)
 Nuisance to the farmer

5. Animal diseases are a:
 Welfare problem
 Human health problem (one health)
 Nuisance to the farmer
But also an economic problem ….

6. Outline
 Disease control: optimization
 Modeling disease
 The cow level: reproduction
 The herd level: trypanosomosis - costs
 The herd level: mastitis - prevention
 Final remarks

7. Maximization
Veterinarians want to maximize animal
health
● If there is a vaccine, use it
● If there is a (better) treatment, use it
● In case of doubt: treat (better safe than sorry)
Medical doctors also want to maximize
health
● And minimize risk of infection
Microbiologists want to maximize detection
● If there are more precise tests, use it

8. But ……. Is it optimal?
 There is more than only the health of animals:
● Money
● Time
● Availability of drugs or vaccin
 So measures need to be balanced

9. Economic effects of diseases
Expenditures (additional resources)
● Drugs
● Veterinarian
● Labour
● Expenditures to control disease
Losses (decrease in production)
● Decreased production level
● Discarded milk
● Changes in milk price (milk quality)
● Culling

10. Total costs
 Expenditures + losses
 Often overlooked
 90 % of studies only look at losses
 Farmers tend to look at expenditures
 We need to optimize

11. Source: McInerney et al., Prev. Vet. Med, 1992
Control vs failure
Control expenditures (€)
Output
losses
(€)

12. Source: McInerney et al., Prev. Vet. Med, 1992
High losses, low control
expenditures
Control vs failure
Control expenditures (€)
Output
losses
(€)

13. Source: McInerney et al., Prev. Vet. Med, 1992
Low losses,
high control
expenditures
Control vs failure
Control expenditures (€)
Output
losses
(€)

14. Source: McInerney et al., Prev. Vet. Med, 1992
Optimal
Control vs failure
Control expenditures (€)
Output
losses
(€)

15. Types of animal diseases
 Production diseases
● On-farm optimization
● Externalities
● E.g., mastitis, lameness, trypanosomosis
 Endemic contagious diseases
● On-farm control decision
● Interaction between farms
● E.g., BVD, Aujeszky’s disease
 Notifiable contagious diseases
● Regional control decisions (eradication)
● Surveillance
● E.g., FMD, AI, Rinderpest

16. The management problem
Consequences
animal health
Epidemiological
consequences
Veterinary knowledge of diseases

17. The management problem
Consequences
animal welfare
Consequences
human health
Consequences
animal health
Epidemiological
consequences
Knowledge about externalities

18. The management problem
Consequences
animal welfare
Consequences
human health
Costs of
intervention
Consequences
animal health
Epidemiological
consequences

19. Decisons become increasingly complex
Decision maker
Objectives
Available resources
Consequences
animal welfare
Consequences
human health
Costs of
intervention
Consequences
animal health
Epidemiological
consequences

20. Levels of decision making
 Individual animals
● Treatment
● Culling
● Interaction
 Groups of animals (herd/farm)
● Prevention
● Eradication
 Sector
● Control
● Eradication
 Region
● Control
● Eradication

21. Levels of decision making
 Individual animals
● Treatment
● Culling
● Interaction
 Groups of animals (herd/farm)
● Prevention
● Eradication
 Sector
● Control
● Eradication
 Region
● Control
● Eradication
Farmer, supported by
advisor
Farmer’s organisation
Processors
Government
Decision maker

22. Outline
 Disease control: optimization
 Modeling disease
 The cow level: reproduction
 The herd level: trypanosomosis - costs
 The herd level: mastitis - prevention
 Final remarks

23. 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

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

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

26. 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

27. AHE is about money right?
 What about
● Human disease (zoönoses)
● Welfare
● The environment
● …….
 Express these in money ……

28. Different methods
 Cost-minization analysis
 Cost-effectiveness analysis
 Cost-utility analysis
 Cost-benefit analysis
Differ in: measurement of effect
utility

29. Cost minimization analysis
equal effectiveness of all programs under
review (same outcome)
 only monetary costs
● Net costs:
● Program costs (K)
● Monetary benefits (∆W)
{K - ∆W}

30. Cost effectiveness analysis
 Single non-monetary effect
● usually expressed in physical units such as e.g.:
● # infected animals;
● # days with illness;
● …
 All other effects expressed in monetary units
 Cost-effectiveness ratio
● Net costs:
● Program costs (K)
● Monetary benefits (∆W)
● Single non-monetary benefit (∆ SE)
{K - ∆W}
∆SE

31. Ranking the alternatives
Effectiveness
Costs
Low costs
High effective
High costs
Low effective
High costs
High effective
Low costs
Low effective
Maximal
acceptable budget
Minimal accepable
effectiveness
Not worth considering
Worth considering
Best possibilities

32. Cost utility analysis
 Variation of Cost effectiveness analysis, weighing
 Single combined measurement of non-monetary effects
into one single metric unit; e.g. QALY
 all other effects expressed in monetary units
 Cost-utility ratio
● Net costs:
● Program costs (K)
● Monetary benefits (∆W)
● Single combined non-monetary benefit (∆CE)
{K - ∆W}
∆CE

33. Cos benefit analysis
All effects are measured and expressed in monetary
terms
Some times difficult (e.g., animal welfare, human
health, etc. )
Evaluation: Net value
Benefit- cost ratio
{K - ∆W}
∆W
K

34. Outline
 Disease control: optimization
 Modeling disease
 The cow level: reproduction
 The herd level: trypanosomosis - costs
 The herd level: mastitis - prevention
 Final remarks

35. Two decisions around reproduction
 When do I start with
inseminations
 When do I stop with
insemination

36. 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
36
A complex
system of
dynamics and
interactions

37. 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

38. Stochastic dynamic modelling
• Breed
• Parity
• Month of calving
• Milk production
• Farm level
• Relative performance
• Persistence
Cow
START OF CYCLE

39. 39
Calf
Ovulation
Oestrus
detected
Insemination
Conception
yes
yes
yes
yes
no
no
no
no
cow
Probabilities
based on cow
factors

40. Average results
Voluntary waiting periods
6 wk 7 wk 9 wk 11 wk 13 wk 15 wk
First insemination
10.9 11.5 13.1 14.8 16.8 18.5
Calving interval
391 393 401 410 421 433
MP/cow/year (kg)
8200 8188 8157 8112 8056 7997
Insemations
1.89 1.86 1.78 1.74 1.70 1.69
Calves/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
40

41. Economic consequences
(€/cow/year)
Voluntary waiting periods
7 wks 9 wks 11 wks 13 wks 15 wks
Milk
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)
41

42. Average
0
10
20
30
40
50
60
6 7 8 9 10 11 12 13 14 15
VWP(weeks)
Netlosses(€/cow/year)

43. Outline
 Disease control: optimization
 Modeling disease
 The cow level: reproduction
 The herd level: trypanosomosis - costs
 The herd level: mastitis - prevention
 Final remarks

44. Trypanosomosis
 Model of Esther Wafula
 Calculations at the herd level (costs of disease)
 Basis is the individual cow
 Multi-process modelling: individual cows simulated at the
same time -> herd level
 Stochastic Monte Carlo model

45. Model structure

46. Parameterization
 Based on literature
 Data collection (interviews with experts)
 Own expertise

47. Prevalence over the year
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
Mixed production system
Clinical Subclinical Prevalence
0
10
20
30
40
50
0
5
10
15
20
25
Agro-Pastoral production system
Clinical Subclinical Prevalence 0
5
10
15
20
25
30
35
40
45
0
10
20
30
40
50
60
70
Pastoral production system
Clinical Subclinical Prevalence

48. Total costs (KES * 1.000 per farm per year)
1
2
3
4
5
6
7
8
9
10
Veterinary fees Extra
labour/feeds
Milk losses Cost of Drugs Mortality Traction Abortion
Costspercow(KES*1,000)
Pastoral production
system
Agro pastoral
Production system
Mixed Production
system
Total costs:
Pastoral production system: 679 (447-849)
Mixed production system: 234 (105-373)
Agro pastoral production system: 139 (60-222)

49. Outline
 Disease control: optimization
 Modeling disease
 The cow level: reproduction
 The herd level: trypanosomosis - costs
 The herd level: mastitis - prevention
 Final remarks

50. 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)

51. Remember this one?
High losses, low control
expenditures
Low losses,
high control
expenditures
Optimal
Preventive costs (€)
Failure
costs
(€)

52. 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)

53. 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
𝑆𝑀𝑙𝑜𝑠𝑠𝑖= 𝑘=1
𝑛
(−1 ∗ (0.78 + ln 𝑆𝐶𝐶 𝑘 𝑖 ∗ −0.20 ∗ 𝑃𝑒𝑟𝑖𝑜𝑑𝑖,𝑘
𝑆𝑀𝑙𝑜𝑠𝑠𝑗= 𝑘=1
𝑛
(−1 ∗ (1.62 + ln 𝑆𝐶𝐶 𝑘 𝑗 ∗ −0.20 ∗ 𝑃𝑒𝑟𝑖𝑜𝑑𝑗,𝑘

54. 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

55. 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

56. Failure costs vs preventive costs

57. Outline
 Disease control: optimization
 Modeling disease
 The cow level: reproduction
 The herd level: trypanosomosis - costs
 The herd level: mastitis - prevention
 Final remarks

58. Farmers underestimate costs of disease
0
20
40
60
80
100
120
140
160
180
200
0 20 40 60 80 100 120 140 160 180 200
Expected costs (€ per cow)
Realcosts(€/cow)
46 under estimators
Huijps et al.,

59. There is more than economics
 Money is only one motivator

60. Veterinarians and economics
 Important to know the economics of your services
● Production diseases
● Find optimum of control and failure costs
● Know that farmers underestimate losses
● To support decisions when resources are scarse

61. Veterinarians are no economists
 Yes you are right
 But you should know something
about it
 Understand farmers
 Understand the economics of your
advice
 Interpret calculations that are available
 Veterinarians should know something about
economics

62. Two courses on economics
 Part of MSc education Veterinary Epidemiology and
Economics, Utrecht University (www.msc-
epidemiology.nl)
 Economic concepts and theories for the veterinary
sciences
 Applied economic modelling for the veterinary sciences
 Available on-line: www.elevatehealth.eu

63. Thank you for your attention
 Change in output with different levels of veterinary input
and all other factors equal
@henkhogeveen
animal-health-management.blogspot.com
henk.hogeveen@wur.nl
h.hogeveen@uu.nl