Agricultural policy and social returns to eradication programs: the case of Aujeszky's disease in Sweden

Abstract

Economic-welfare analysis of animal disease prevention programs frequently ignore the constraints of the agricultural policy environment. Prevention programs affect producers, consumers and the government. The policy environment to a large extent determines the magnitude as well as the distribution of benefits of the program among these groups. The Swedish hog industry has been exposed to three major policy changes during the 1990-1995 period. These scenarios involve various degrees of government intervention in the agricultural sector including internal market deregulation and EU-membership. Aujeszky's disease is a virus disease with swine as the natural infection reservoir. Piglets are the most fragile and an outbreak of the disease results in symptoms such as shaking, cramps and convulsions with an increase in the mortality rate. Slaughter hogs suffer from coughing, fever and reduce their feed consumption. During the last 20-25 years the incidence of Aujeszky's disease (AD) has been increasing in Sweden. In 1989 an eradication program was undertaken. A model is developed to analyze social benefits of an eradication program given variations in agricultural policy. The model refers to the specifics of the AD-program implemented in Sweden. The expected benefits of the program are evaluated using a welfare-economic analysis applying cost-benefit analysis. Total benefits of the program are evaluated across herd and size categories and different regions. Data concerning the frequency of the virus among various categories of herds prior to enacting the program were used (Wahlström et al., 1990). In addition, data from an agricultural insurance company were used to estimate the conditional probability of an outbreak given that the herd is infected. Biological and technical parameter values were collected from a variety of sources. The results of the analysis indicate that the program is economically viable given a social rate of discount in the range of 3-5% without considering non-monetary aspects such as animal ethics. A scenario where the Swedish agricultural sector is deregulated provides the maximum benefits of the program. Consumers obtain about 50% of the benefits excluding program costs. The deregulation scenario would correspond closely to a case where a reformed Common Agricultural Policy (CAP) is applied across member countries. In the current case where Sweden is a member of the EU, the benefits are reduced mainly due to lower prices of inputs and pork.