I was invited to give a keynote presentation for the German languaged Epidemiology meeting which was held last week in Zurich, Switzerland. My presentation gave an overview of the decision problem in animal health and gives some examples of economic analyses that have been made at different levels of decision making. Specific items were: dry cow therapy, Q fever and BSE

1. Economic analysis for different
levels of decision making
Henk Hogeveen

2. Who am I
 Born on a dairy farm (1966)
 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)
 Professor in Animal health management
In between Wageningen University and Faculty of Vet. Med.
(since 2001)
@henkhogeveen
animal-health-management.blogspot.com

3. Outline
 Decision making on animal health
● The decision problem
● The levels of decision making
 Some examples of analyses
● Dry cow therapy
● Q fever outbreak
● Slaughterhouse measures to reduce the BSE load
 Final words

4. Economic effects of animal disease
Output
Milk
Meat
Eggs
Draft power
…….
Human
benefit
(utility)
After: McInerney, 1996
Input
Land
Labour
Capital

5. The field: Economic effects of animal
disease
Most economic work
Output
Milk
Meat
Eggs
Draft power
…….
Disease
1. Lower efficiency
2. Lower suitability for
consumption
3. Lower human well-being
Human
benefit
(utility)
After: McInerney, 1996
Input
Land
Labour
Capital
1.
2. 3.

6. Types of animal diseases
 Production diseases
● On-farm optimization
● Externalities
● E.g., mastitis, lameness, APP
 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, rabies, BSE

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

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

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

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

11. Outline
 Decision making on animal health
● The decision problem
● The levels of decision making
 Some examples of analyses
● Dry cow therapy
● Q fever outbreak
● Slaughterhouse measures to reduce the BSE load
 Final words

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

13. Levels of decision making
 Individual animals
● Treatment
● Culling
● Interaction
 Groups of animals (herd/farm)
● Prevention
● Eradication
 Sector
● Control
● Eradication
 Region
● Control
● Eradication
Type of disease
Production diseases
&
Endemic contagious
diseases
Contagious nofiable
diseases

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

15. Basic approach
 Normative modelling
● Relate costs of intervention
with animal health and
epidemiological consequences
● Cost-benefit analysis (alternative: cost effective or
cost utility analysis)
● Assuming profit maximising behaviour of farmers
● Basis for on-farm decision support tools
 Empirical modelling
● Use data to compare farms/animals/groups of
animals with and without intervention
● Experiments or existing datasets (accountancy data)

16. Challenges Handle multiple objectives
 Handle multiple objectives
● Internal (farmer)
● External (societal, chain)
● On-farm decision support models
● Capturing complexity
● Useful for farm-specific modelling

17. Outline
 Decision making on animal health
● The decision problem
● The levels of decision making
 Some examples of analyses
● Dry cow therapy
● Q fever outbreak
● Slaughterhouse measures to reduce the BSE load
 Final words

18. Dry cow therapy
 Individual cow decision
 Two modes of action:
● Cure of existing (chronic) intramammary infections
● Prevention of new infections during dry period
 Often herd decision (blanket dry cow therapy)
 Debate on selective vs blanket dry cow therapy

19. Stochastic model (Huijps et al., 2007)
 Cow as basic unit
 Dynamic around dry period
 Results summarized for whole herd
 Accounting for differences between pathogens
 Dutch circumstances

21. Selective dry cow treatment cheapest
Blanket Selective No
IMIdo (%) 15 (7.7, 23.1) 15 (7.7, 23.1) 15 (7.7, 23.1)
Treatment (%) 100 35 (23, 46) 0
IMI at calving 7.5 (3.1, 12.3) 12.3 (6.2, 20) 19.3 (12.3, 27.7)
Clinical mastitis (%) 1.8 (0, 4.6) 3.2 (0, 7.7) 5.1 (1.5, 10.8)
Treatment costs (€/cow) 10.1 (10.1, 10.1) 3.5 (2.3, 4.7) 0
Production losses (€/cow) 1.3 (0.5, 2.2) 2.1 (1.0, 3.4) 3.3 (2.0, 4.7)
Clinical mastitis (€/cow) 4.2 (0, 14.6) 8.1 (0, 22.9) 14.7 (2.0, 38.5)
Total costs (€/cow) 15.6 (10.6, 26.6) 13.7 (4.9, 29.4) 18.0 (4.1, 42.6)

22. New discussion on
antibiotic resistance
 Resistance of mastitis pathogens
● Self-interest
● No increase seen (Hogan, IDF-factsheet)
 Antibiotic resistance in humans
● Externality
● Dairy cattle has very minor contribution (Oliver et al., 2011)
 Decision of government
 In the Netherlands (self) regulation
● Maximum amount of antibiotics to be used (< 50 %)

23. Optimizing: linear programming
(Maas, 2014, MSc thesis)
 Farm level
 Cows with high SCC are treated
● Primiparous > 150.000 cells/ml
● Multiparous > 250.000 cells/ml
 Other cows selective
 Categorized at SCC level
 Optimization to minimize total costs of treatment and
mastitis around dry period
Based on: Maas, 2014, MSc thesis, in
preparation

24. We’re also interested in amount of AB

25. Constraining antibiotic use has economic
effects
€53
€51
€49
€47
€45
€43
€41
€39
Costs per lo w SCC cow
Percentage allowed antibiotics (%)
Average farm
Low BTSCC farm
High BTSCC farm

26. Outline
 Decision making on animal health
● The decision problem
● The levels of decision making
 Some examples of analyses
● Dry cow therapy
● Q fever outbreak
● Slaughterhouse measures to reduce the BSE load
 Final words

27. Q fever outbreak
 In 2005 Coxiella burnetii diagnosed in the
Netherlands as cause of abortion problems on a
dairy goat farm
 In 2007 the first Q fever outbreak in humans was
diagnosed
 Since then thousands of people got infected,
which reached a climax in 2009
Year and week of notification

28. Source:
www.eurosurveillance.org

29. Roest et al., 2011

30. Government involved
Control measures
• Vaccination programme
• Culling of (pregnant) goats from infected
farms
• Animal movement restrictions
• Breeding ban
• Bulk milk monitoring -> no good confirmation
• Extra hygiene programmes
Around 62,500 dairy goats were culled 
significant drop in milk production

31. Economic impact (Gonggrijp et al., 2014)
 How large was the negative economic impact for
affected farmers?
 Were other actors of the industry also negatively
affected by the control measures?
 Were the relations of the actors and their
behaviour in the industry still the same?
Objective:
Study the impact of Q fever control measures on
the Dutch dairy goat industry with the use of a
quantified value chain analysis

32. Value chain analysis
 Mapping the value chain
 Governance in the value chain
 Upgrading in the value chain
 Distribution of value in the value chain

33. Value chain analysis
 Information on the structure, the trade flows and all
the relations between the involved actors of a
livestock sector
 Often qualitative and descriptive
 In this value chain analysis focus on quantification

34. Preliminary map of the value chain

35. Final map of the value chain

36. The distribution of goat milk and milk equivalents 2009

37. Gross margins of the Dutch dairy goat
industry in 2009 - 2010
100
90
80
70
60
50
40
30
20
10
0
Goat farmers Milk collectors Prim. dairy
processors
Second. dairy
processors
(Feed) suppliers Meat
processing
Retail Total
2009
2010
Euro (€) x 10⁶

38. Gross margin results
 Decrease of gross margins in 2010 of the total
industry of -12% and -23% for farmers compared
to 2009
 Enormous difference in decrease between affected
farmers (-53%) and non-affected farmers (-12%)
 Primary dairy processors, meat processing and
retail not negatively affected

39. Outline
 Decision making on animal health
● The decision problem
● The levels of decision making
 Some examples of analyses
● Dry cow therapy
● Q fever outbreak
● Slaughterhouse measures to reduce the BSE
load
 Final words

40. 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

41. Are preventive measures cost-effective?
(Benedictus et al., 2009)
 Simulation modelling
● Static
● Stochastic
● Simulation
 Monte carlo model
● 1 iteration = 1 year
● Baseline: no intervention
● Alternative: one or more interventions

42. Model
 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 likely
51)
 Comparison: do nothing vs intervention

43. 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

44. 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

45. Costs (mln €)
Year
2002 2003 2004 2005
SRM removal
19.22 18.27 19.29 19.82
Post-mortem testing
38.16 29.56 26.57 21.12
Cohort culling
6.97 4.80 3.41 2.43
Total costs
64.34 52.64 49.27 43.37

46. Cost-effectiveness

47. Cost-effectiveness 2002-2005

48. Outline
 Decision making on animal health
● The decision problem
● The levels of decision making
 Some examples of analyses
● Dry cow therapy
● Q fever outbreak
● Slaughterhouse measures to reduce the BSE load
 Final words

49. Take home message
 Animal health management decisions are taken daily
 Economics are useful/necessary to support decisions
 A first step are “cost of disease” studies
● General interest
● Supporting stakeholders (negotiations)
● Start for “economics of intervention” studies
Cost-effectivity, cost-utility and cost-benefit
 Choose appropriate method for level of decision making
 More importantly: choose appriate approach in model:
animal vs farm vs sector vs society
 Combine economic modelling knowledge with domain knowledge

50. Thank you for
your attention