Economic impact of highly pathogenic avian influenza outbreaks in Western Java smallholder broiler farms

Pramuwidyatama, M.G.; Indrawan, D.; Boeters, M.; Poetri, O.N.; Saatkamp, H.W.; Hogeveen, H.


Highly Pathogenic Avian Influenza (HPAI) H5N1 is considered endemic in most parts of Indonesia and constitutes an important risk for broiler production, especially in Western Java which has the highest poultry population in the country. Most broiler farms in Western Java are smallholder farms that operate under different business types: independent (i.e., revenues based on market price and live bird weight), price-contract (i.e., revenues based on a contract selling price and live bird weight) or makloon (i.e., revenues based on a management fee per sold bird). Many studies focus on the epidemiological impacts of HPAI at the regional level, and insights into the economic impact at the farm level are scarce, especially in the Indonesian context. Meanwhile, a single HPAI outbreak could disrupt smallholder broiler farmers' primary source of income. Therefore, this study aimed to evaluate the economic impact of HPAI outbreaks under different response scenarios (i.e., no action, stamping out, and early selling) on typical Western Java smallholder broiler farms. Furthermore, the effect of different farm business types and the existence of a sick-bird market on the economic effects of HPAI outbreaks were evaluated. We developed a dynamic stochastic bio-economic simulation model to simulate epidemiological and economic impacts of HPAI outbreaks on a typical Western Java smallholder broiler farm during one production round. Our results show that the economic consequences of HPAI outbreaks for independent and price-contract farms are considerable, ranging from, on average, 1.2-62.7 million Indonesian Rupiah (IDR) losses (€76.9 to €3919), depending on the moment of and response to infection, compared to an expected gross margin of 5.3 million IDR (€331) under normal circumstances. The economic loss for makloon farms was substantially lower than for other business types, reducing their incentive to implement biosecurity. The economic impacts were sensitive to changes in a diverse set of parameters, including disease transmission rate, detection threshold, and stamping-out compensation. The losses in a scenario with stamping out were higher than in other scenarios, especially when stamping out happened near the end of the production round. Moreover, reacting to an outbreak by selling chickens early gave the lowest economic losses, incentivizing farmers to engage in behavior with a high disease transmission risk. Therefore, the results of this study suggest that it is important to consider the economic perspective of individual farmers when designing HPAI mitigation programs. Financial incentives for farmers to control HPAI differ largely between farm business types.