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Publication - Report

Strategic Research Programme 2011-2016: economic impact

Published: 1 Sep 2017
Part of:
Farming and rural, Research
ISBN:
9781788511711

Assessment of the economic impacts generated by the Rural and Environment Science and Analytical Services Division's research programme.

67 page PDF

1.0MB

67 page PDF

1.0MB

Contents
Strategic Research Programme 2011-2016: economic impact
5 Animal Health

67 page PDF

1.0MB

5 Animal Health

The livestock and wider agri-food sector is of fundamental importance to the Scottish economy. In 2016 the total value of livestock production in Scotland was estimated at around £1.6 billion [14] . Scotland has approximately 18% of the UK's cattle and 20% of the UK's sheep. A stable and secure food supply underpins all other sources of economic activity and is therefore critically important to the entire economy.

Animal diseases are one of the main threats to the livestock sector and have economic impacts on the agricultural and livestock sector as well as the wider economy. By way of illustration, an outbreak of foot and mouth disease in 2001 cost the UK between £6.0 and £9.0 billion, with £91.0 million paid in compensation to farmers [15] .

5.1 Contribution of the 2011-16 SRP

The MRPs play an important role in tackling animal diseases and preventing disease outbreaks. They do this by undertaking research to improve understanding of disease pathogenesis. With greater understanding and awareness of the diseases, the MRPs are then able to develop successful approaches for their improved control and prevention. This includes the development of diagnostic tests and the creation of novel vaccines with the ultimate aim of reducing livestock mortality and morbidity and/or reducing the cost of treatment and control of diseases.

Scientists funded by the 2011-16 SRP have been at the forefront of tackling Bovine Viral Diarrhoea ( BVD). The case study below describes this work and quantifies the contribution it has made to the Scottish economy.

Case Study 5‑1 - Bovine Viral Diarrhoea

Bovine Viral Diarrhoea ( BVD) is a major contagious endemic disease of cattle in Scotland. The main disease occurs when susceptible pregnant animals become infected with the virus, which can cross the placenta infecting and causing disease in the developing foetus. Once these calves are born, they are persistently infected with the disease and provide the major of route of spread for this virus. They often appear normal but are shedding the virus throughout their lives.

Many livestock farms have BVD among their highest economic and welfare concerns. BVD results in major economic losses for the cattle industry, through abortions, infertility and reproductive problems, deformed offspring and permanently infected animals.

Due to the hidden nature of BVD and the wide variety of disorders it causes, a key challenge for the MRPs was to assess the extent of the damage it does at farm level and make this apparent to farmers and vets in order to implement the best prevention and control responses. MRP researchers combined epidemiological and economic computer models to explore the relationship between disease spread and the actions of farmers (e.g. vaccination, removing persistently infected individuals) that might influence such spread. The economic aspects of the model compared these costs at whole farm level with the likely benefits. Although focused on farmers actions, this work helped to highlight the value of tackling BVD collectively.

SRP funded MRP research has led to and underpinned the establishment of a BVD eradication programme in Scotland. MRP research made the economic case for eradication at farm level, improved understanding of the epidemiology, transmission and host response to the virus and provided scientific evidence on how the disease can be prevented and controlled. From 2014 onwards, control measures to reduce the spread of infection have been introduced, including a ban on knowingly selling or moving infected cattle, requirements to declare a herd's BVD status before sale and restrictions on untested herds and animals.

The SRP funded research found that eradicating BVD could save the dairy industry about £38 million a year and reduce prices for consumers by an additional £11 million. This amounts to a total cost of £49 million over the period of a ten-year eradication programme. This implies that the annual benefit might be around £4.9 million. The total potential benefits of eradicating the disease have been attributed to the SRP because without the critical role played by SRP funded research policy makers and farmers would not understand the real costs of BVD, and it is therefore unlikely that the BVD eradication programme would have been established.

To date the eradication scheme has successfully reduced the proportion of herds with negative status from 28% in 2010/11 to 11% in 2016, so 61% of the annual impact has been achieved. This suggests that the impact of this work in 2016 could be worth £3.0 million each year to the Scottish economy and £16.3 million to the UK economy. However, the full effects of this research have not yet been fully realised.

Research at the MRPs is continuing in order to develop methods for tracing the source of the remaining infection so that the disease can be completely eradicated in Scotland.

Source: BiGGAR Economics

5.2 Expected Future Benefits

The nature of this type of research is that it takes significant time and several funding rounds to understand disease pathogenesis and to identify the most suitable potential solution. Vaccine development and approval, should it be the preferable course of action, is also a lengthy process. Therefore, one round of SRP funding supports continued development and progress in disease understanding and management but is unlikely to yield final solutions for all of the diseases being studied.

One example of this is SRP funded research on sheep scab, which has led to the development of an early diagnostic test for the disease and was launched commercially in 2015. Although it is too early for the impacts to have been realised, the diagnostic test will play an important role in early detection of the disease thereby helping to limit its spread as described in the case study below.

Case Study 5‑2 - Sheep Scab

Sheep scab is the most important ectoparasitic disease of sheep in the UK, is now endemic in the UK and is a notifiable disease in Scotland. Sheep scab is highly contagious; it is estimated that in affected flocks over 90% of sheep may be infested. It is therefore a major concern for Scottish producers with economic consequences resulting mainly from the costs of treatment, prevention, damage to wool and reduced quality of sheepskins.

SRP funded research at one of the MRPs has led to the development of a diagnostic test capable of accurately detecting sheep scab in infected animals, including in the pre-clinical stages. The test is therefore useful in identifying recently infected flocks before the infection is able to spread and cause production losses. In addition, the test can accurately detect that an infection is due to the scab mite and not another ectoparasite. This test is therefore highly useful in the rapid detection and treatment of infection thus limiting the spread of disease.

The sheep scab diagnostic is being offered free of charge throughout Scotland and strategic use of the diagnostic is helping to maximise impact. For example, the sheep scab diagnostic is being used to maintain freedom of disease on the islands of Mull and Iona. The way it is deployed means that only a relatively small number of tests have been performed (less than 200), but by strategic application of the test it is actually protecting 110 flocks of sheep on the islands. More widely, vets are using the new diagnostic blood test to determine whether or not flocks have scab, saving farmers money by enabling the targeting of treatments and avoiding losses from clinical and subclinical disease.

A report published by the Scottish Government estimated the current cost of sheep scab in Scotland at £0.6 million/year and the current cost of measures used to control the condition at £5.1 million/year, giving a total cost of £5.7 million. It was assumed, based on consultation with the MRPs that SRP supported research could reduce this cost by 50% and that 50% of this benefit may be attributable to the SRP. This suggests that the potential impact of this work could be worth as much as £1.8 million/year to the Scottish economy and £8.8 million/year to the UK economy. SRP funded research in this area is continuing in order to develop a vaccine.

Source: BiGGAR Economics

5.3 The Counterfactual

The case studies presented above demonstrate that addressing these diseases has the potential to deliver significant economic returns to the farmers concerned. It might therefore be argued that this would provide an incentive to the market to provide a solution and that the research funded by the SRP is simply displacing research that would otherwise be undertaken by the private sector.

Consultation with scientists undertaken as part of this exercise suggest that there is little justification for this argument. Developing a vaccine or control programme for any disease is a long-term process that generally requires years of development work. At the early stages of this process, when results (and potential commercial returns) are highly uncertain, there is little incentive for private companies to invest in the research. This early stage research is however essential because it provides the intellectual underpinning for future advances.

Rather than displacing private investment, the funding provided through the SRP therefore actually enables this type of research by addressing the market failure that would otherwise deter private investment. For this reason the impacts of this work can be considered additional.

Added to this it should also be noted that in order to generate a benefit, the vaccine and control solutions developed by the MRPs must first be adopted by the farmers concerned. Achieving this often requires behaviour change at an industry wide level, which is not something that the private sector would have the incentive - or capacity - to deliver. Research supported by the SRP plays an important role in delivering this behaviour change by enabling researchers to spend time engaging with farmers and influencing industry wide patterns of behaviour.

5.4 Summary of Benefits

Table 5‑1 summarises the benefits described in this chapter. It has been estimated that SRP funded research on BVD supported £3.0 million GVA in Scotland and £16.3 million GVA in the UK in 2016. Once the impact of this research has been fully realised and once the future expected benefits of sheep scab research are realised the economic impact could increase to £6.7 million GVA in Scotland and £35.7 million GVA in the UK.

Table 5‑1: Annual impact of animal health improvements - GVA (£ millions)

Scotland UK
2016
Bovine Viral Diarrhoea 3.0 16.3
Sheep Scab - -
Total 3.0 16.3
2026
Bovine Viral Diarrhoea 4.9 26.9
Sheep Scab 1.8 8.8
Total 6.7 35.7

Source: BiGGAR Economics

Research into animal diseases and the development of appropriate control and prevention measures is a long-term process. In addition, the benefits of the research take several years to realise as it takes time for widespread adoption of control and prevention measures. The impacts of BVD research described in this section were realised during the 2011-16 period but is a result of years of research effort so these benefits did not arise entirely as a result of the 2011-16 SRP. The sheep scab diagnostic has been developed directly through 2011-16 SRP funded research although the benefits will be realised in subsequent years.

It is also important to note that the two case studies highlighted in this chapter represent only a very small proportion of the research in animal diseases undertaken by the MRPs. The MRPs undertake research into a number of the most economically important and most widespread animal diseases, including:

  • liver fluke in sheep;
  • Johne's disease;
  • enzootic abortion in sheep;
  • intestinal parasites in sheep; and
  • respiratory disease in cattle.

The impacts of SRP supported research into animal diseases at the MRPs will therefore be much greater than those described above.


Contact

Email: Eilidh Totten, Eilidh.Totten@gov.scot

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
Regent Road
Edinburgh
EH1 3DG