Financial vulnerability of dairy farms challenged by Johne's disease to changes in farm payment system

S Shrestha, B Vosough Ahmadi, AS Barratt, SG Thomson, AW Stott

Research output: Contribution to journalArticle

Abstract

Johne’s disease is an endemic contagious bacterial infection of ruminants which is prevalent in the United Kingdom and elsewhere. It can lower financial returns on infected farms by reducing farm productivity through output losses and control expenditures. A farm-level analysis of the economics of the disease was conducted taking account of farm variability and different disease prevalence levels. The aim was to assess the financial impacts of a livestock disease on farms and determine their financial vulnerability if farm support payments were to be removed under future policy reforms. A farm-level optimization model, ScotFarm, was used on 50 Scottish dairy farms taken from the Farm Business Survey to determine the impacts of the disease. A counterfactual comparison of five alternative “disease” scenarios with a “no-disease” scenario was carried out to evaluate economic impact of the disease. The extent of a farm’s reliance on direct support payments was considered to be an indicator of their financial vulnerability. Under this definition, farms were grouped into three financial vulnerability risk categories; “low risk,” “medium risk,” and “high risk” farms. Results show that farms are estimated to incur a loss of 32% on average of their net profit under a standard disease prevalence level. Farms in the “low risk” and “medium risk” categories were estimated to have a lower financial impact of the disease (22 and 28% reduction on farm net profit, respectively) which, along with their lower reliance on farm direct support payments, indicate they would be more resilient to the disease under future changes in farm payment support. On the contrary, farms in the “high risk” category were estimated to have a reduction of 50% on their farm net profit. A majority of these farms (61%) in the “high risk” category move from being profitable to loss making under the standard disease scenario when farm support payments are removed. Of these, 15% do so because of the impact of the disease. These farms will be more vulnerable if changes were to be made in farm support payments under future agricultural policy reforms.
Original languageEnglish
Article number316
Number of pages9
JournalFrontiers in Veterinary Science
Volume5
Early online date18 Dec 2018
DOIs
Publication statusFirst published - 18 Dec 2018

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paratuberculosis
dairy farming
farms
profits and margins
disease prevalence
agricultural exhibitions
livestock diseases
agricultural policy
economic impact
economic analysis
bacterial infections

Keywords

  • Dairy
  • Economics
  • Farm-level model
  • Johne’s disease
  • Paratuberculosis

Cite this

@article{ce651df2e6074beea6ddfcc2a16b58fa,
title = "Financial vulnerability of dairy farms challenged by Johne's disease to changes in farm payment system",
abstract = "Johne’s disease is an endemic contagious bacterial infection of ruminants which is prevalent in the United Kingdom and elsewhere. It can lower financial returns on infected farms by reducing farm productivity through output losses and control expenditures. A farm-level analysis of the economics of the disease was conducted taking account of farm variability and different disease prevalence levels. The aim was to assess the financial impacts of a livestock disease on farms and determine their financial vulnerability if farm support payments were to be removed under future policy reforms. A farm-level optimization model, ScotFarm, was used on 50 Scottish dairy farms taken from the Farm Business Survey to determine the impacts of the disease. A counterfactual comparison of five alternative “disease” scenarios with a “no-disease” scenario was carried out to evaluate economic impact of the disease. The extent of a farm’s reliance on direct support payments was considered to be an indicator of their financial vulnerability. Under this definition, farms were grouped into three financial vulnerability risk categories; “low risk,” “medium risk,” and “high risk” farms. Results show that farms are estimated to incur a loss of 32{\%} on average of their net profit under a standard disease prevalence level. Farms in the “low risk” and “medium risk” categories were estimated to have a lower financial impact of the disease (22 and 28{\%} reduction on farm net profit, respectively) which, along with their lower reliance on farm direct support payments, indicate they would be more resilient to the disease under future changes in farm payment support. On the contrary, farms in the “high risk” category were estimated to have a reduction of 50{\%} on their farm net profit. A majority of these farms (61{\%}) in the “high risk” category move from being profitable to loss making under the standard disease scenario when farm support payments are removed. Of these, 15{\%} do so because of the impact of the disease. These farms will be more vulnerable if changes were to be made in farm support payments under future agricultural policy reforms.",
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Financial vulnerability of dairy farms challenged by Johne's disease to changes in farm payment system. / Shrestha, S; Vosough Ahmadi, B; Barratt, AS; Thomson, SG; Stott, AW.

In: Frontiers in Veterinary Science, Vol. 5, 316, 18.12.2018.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Financial vulnerability of dairy farms challenged by Johne's disease to changes in farm payment system

AU - Shrestha, S

AU - Vosough Ahmadi, B

AU - Barratt, AS

AU - Thomson, SG

AU - Stott, AW

PY - 2018/12/18

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N2 - Johne’s disease is an endemic contagious bacterial infection of ruminants which is prevalent in the United Kingdom and elsewhere. It can lower financial returns on infected farms by reducing farm productivity through output losses and control expenditures. A farm-level analysis of the economics of the disease was conducted taking account of farm variability and different disease prevalence levels. The aim was to assess the financial impacts of a livestock disease on farms and determine their financial vulnerability if farm support payments were to be removed under future policy reforms. A farm-level optimization model, ScotFarm, was used on 50 Scottish dairy farms taken from the Farm Business Survey to determine the impacts of the disease. A counterfactual comparison of five alternative “disease” scenarios with a “no-disease” scenario was carried out to evaluate economic impact of the disease. The extent of a farm’s reliance on direct support payments was considered to be an indicator of their financial vulnerability. Under this definition, farms were grouped into three financial vulnerability risk categories; “low risk,” “medium risk,” and “high risk” farms. Results show that farms are estimated to incur a loss of 32% on average of their net profit under a standard disease prevalence level. Farms in the “low risk” and “medium risk” categories were estimated to have a lower financial impact of the disease (22 and 28% reduction on farm net profit, respectively) which, along with their lower reliance on farm direct support payments, indicate they would be more resilient to the disease under future changes in farm payment support. On the contrary, farms in the “high risk” category were estimated to have a reduction of 50% on their farm net profit. A majority of these farms (61%) in the “high risk” category move from being profitable to loss making under the standard disease scenario when farm support payments are removed. Of these, 15% do so because of the impact of the disease. These farms will be more vulnerable if changes were to be made in farm support payments under future agricultural policy reforms.

AB - Johne’s disease is an endemic contagious bacterial infection of ruminants which is prevalent in the United Kingdom and elsewhere. It can lower financial returns on infected farms by reducing farm productivity through output losses and control expenditures. A farm-level analysis of the economics of the disease was conducted taking account of farm variability and different disease prevalence levels. The aim was to assess the financial impacts of a livestock disease on farms and determine their financial vulnerability if farm support payments were to be removed under future policy reforms. A farm-level optimization model, ScotFarm, was used on 50 Scottish dairy farms taken from the Farm Business Survey to determine the impacts of the disease. A counterfactual comparison of five alternative “disease” scenarios with a “no-disease” scenario was carried out to evaluate economic impact of the disease. The extent of a farm’s reliance on direct support payments was considered to be an indicator of their financial vulnerability. Under this definition, farms were grouped into three financial vulnerability risk categories; “low risk,” “medium risk,” and “high risk” farms. Results show that farms are estimated to incur a loss of 32% on average of their net profit under a standard disease prevalence level. Farms in the “low risk” and “medium risk” categories were estimated to have a lower financial impact of the disease (22 and 28% reduction on farm net profit, respectively) which, along with their lower reliance on farm direct support payments, indicate they would be more resilient to the disease under future changes in farm payment support. On the contrary, farms in the “high risk” category were estimated to have a reduction of 50% on their farm net profit. A majority of these farms (61%) in the “high risk” category move from being profitable to loss making under the standard disease scenario when farm support payments are removed. Of these, 15% do so because of the impact of the disease. These farms will be more vulnerable if changes were to be made in farm support payments under future agricultural policy reforms.

KW - Dairy

KW - Economics

KW - Farm-level model

KW - Johne’s disease

KW - Paratuberculosis

U2 - 10.3389/fvets.2018.00316

DO - 10.3389/fvets.2018.00316

M3 - Article

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VL - 5

JO - Frontiers in Veterinary Science

JF - Frontiers in Veterinary Science

SN - 2297-1769

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ER -