ASF Outbreak in the U.S. Would Cost Billions, Researchers Say
A new study says an African swine fever (ASF) outbreak in the U.S. could cost $50 billion. Keeping this deadly disease of pigs out of the country is critical, the costs associated with an ASF outbreak in the U.S. would be significant.
The study, conducted by agricultural economists at Iowa State University, estimates that the economic impact of a hypothetical ASF outbreak could cost the swine industry as much as $50 billion over 10 years when factoring in the impact of the loss of pork export markets.
In 2019, U.S. pork export sales reached an all-time high of $6.95 billion mt (5.89 billion pounds), with exports accounting for 26.9% of the market. The export market returns an average $53.51 per head back to U.S. pork producers, according to the U.S. Meat Export Federation (USMEF).
“Pork production in the U.S. exceeds domestic consumption by 25% to 30%, so it’s important to have export markets open as they are imperative to the vitality of the American pig farmer,” said Dr. Dermot Hayes, Iowa State University agricultural economist and one of the authors of the study.
A comparison of two scenarios
In the study, two scenarios were compared to a baseline scenario (where ASF does not exist) to estimate the impact of industry downsizing on the U.S. economy. In the two-year scenario, it assumes the U.S. gets the disease under control quickly and reenters the export market within two years. Meanwhile, the all-years scenario assumes the disease spreads to feral swine and the U.S. is unable to eliminate the disease over the 10-year projection period; and exports never resume.
According to a study summary, if ASF were identified in the U.S., export markets would immediately close to U.S. pork, including ASF-positive countries such as China and the Philippines, which prohibit the importation of pork from any country with the ASF virus. U.S. live hog prices would drop by 40% to 50% to sell the surplus of pork intended for export. The oversupply of pork in the domestic market would lead to price reductions of other proteins. Lower demand for grain would reduce feed prices, the report said.
In the all-years scenario, the study shows hog prices fall by about 47% in the first year of the outbreak; however, prices eventually stabilize, coming in 1.8% lower than the baseline by the end of the 10-year projection period because pork exports continue to remain at zero. In the two-year scenario, hog prices decline by 47% initially and then climb back to baseline levels as soon as pork exports start to recover.
In the all-years scenario, pork production declines by almost 30% even as margins return to baseline levels. The two-year scenario shows a very small contraction in the industry over the long term, given exports eventually return to normal levels, the report showed.
Comparing revenues between the baseline and the two scenarios shows a dramatic decline in the first few years. Revenues rise in the two-year scenario but reach baseline levels only in the last three years of the projection period. In the all-years scenario, they remain well below the baseline and never recover.
“Ensuring a two-year scenario versus the all-years scenario means a $35 billion difference to the industry because we avoid downsizing,” said Dr. Hayes.
What does this mean for the pork industry?
Access to electronic data for all types of movement will be a crucial step to stopping the spread of ASF. Movement data will be needed for people, pigs, vehicles, equipment and feed for each site within your operation, said Dr. Howard Hill, DVM, PhD.
“The data will need to be shared quickly with state and federal animal health officials, your veterinarian, as well as neighboring producers to help each other contain the disease,” Hill said in the report.
This information will be required to prove negative status of farms in order to keep the industry moving and maintain business continuity.
“Keep in mind that at any point in time, we have more than one million pigs on the road being transported in the United States. We need a method to quickly identify infected pigs and the pigs that have been in contact with infected pigs, so they can be euthanized. This would allow the industry to regain export markets before downsizing occurs, thus saving billions in losses,” Hill said in the report.
For more information or to read the full study, go to ASFImpact.com.The study was funded by Iowa State University and BarnTools, a digital biosecurity platform company; and is an update to “Economy Wide Impacts of a Foreign Animal Disease in the United States” published in 2011 and funded by the National Pork Board.
