Research Project Database
Code: CA-D-ARE-6585-H
1: CA-D-ARE-6585-H
Title: ECONOMIC APPLICATIONS TO ANIMAL PRODUCTION, TRADE AND THE CONTROL AND ERADICATION OF ANIMAL DISEASE
2: ECONOMIC APPLICATIONS TO ANIMAL PRODUCTION, TRADE AND THE CONTROL AND ERADICATION OF ANIMAL DISEASE
Country: United States
3: United States
Funding Organisation: National Institute of Food and Agriculture (NIFA)
4: National Institute of Food and Agriculture (NIFA)
Animal Group: Cattle
Pigs
5: Cattle
Pigs
Pathogen: Foot-and-mouth disease virus (FMDV)
6: Foot-and-mouth disease virus (FMDV)
Disease: Foot-and-mouth disease (FMD)
7: Foot-and-mouth disease (FMD)
Category: Disease economics, health economy (including cost/benefit analysis)
8: Disease economics, health economy (including cost/benefit analysis)
9: 81
Research Organisation: University of California, Davis
10: University of California, Davis
Number of Research Staff (FTE):  
11:  
Principal Investigator (PI): JARVIS, L.
12: JARVIS, L.
Cost (Euros):  
13:  
End Date (dd/mm/yyyy): 30-09-2020
14: 1601420400
Duration (months): 59
15: 59
Link: https://portal.nifa.usda.gov/web/crisprojectpages/1008533-economic-applications-to-animal-production-trade-and-the-control-and-eradication-of-animal-disease.html
16: https://portal.nifa.usda.gov/web/crisprojectpages/1008533-economic-applications-to-animal-production-trade-and-the-control-and-eradication-of-animal-disease.html
Project objectives and deliverables with estimated delivery dates for each deliverable (if possible): Non Technical Summary
Research and outreach on this project will focus on three projects: 1) estimating the economic impact of food and mouth disease (FMD) on international beef trade, 2) analyzing the reasons for the relatively limited use of rbST in US dairy herds, and 3) analyzing the scope for voluntary Regional Cooperative Programs (RCPs) to control PRRS in the swine industry. 1) The Effect of Foot and Mouth Disease, Importer Sanitary Policy and Implicit Commercial Policy on Beef Trade Flows and Export Prices in International Markets. I employ a two stage model to analyze the effects of FMD on international beef trade, considering FMD status of exporter and of importer, importer FMD sanitary policy, and other determinants of bilateral trade in beef. Combining the results from the two steps, I estimate the effect of FMD status in the exporting country on the export price obtained for 1990-2002, which provided the first direct econometric measurements of the effects of FMD on international beef prices.The purpose of the additional study is to 1) extend the data series to 2010, providing 20 years of observation (monthly data) and to analyze how the rapid expansion of beef trade during the last decade has affected the results, 2) further explore the difference in the results from the restricted and the global models, and 3) better identify the causes of the observed differences in the prices obtained by exporters in different markets, and 4) identify the effects of FMD-caused changes in trade flows on economic losses from FMD in both exporting and importing countries. Refinement of the results is important for identifying the effects of FMD on international trade. 2) Profitability and Uncertainty in the Adoption of rbST in US Dairy Herds. When developed in the late 1970s, recombinant bovine somatotropin (rbST) was one of the first biotechnology products in the agricultural industry. By transferring the gene responsible for somatotropin production in a cow to a bacterium and allowing the genetically altered bacterium to replicate many times over, scientists were able to produce commercial quantities of the growth hormone that could be injected into cows to stimulate milk production. After many years of controversy and testing, rbST was approved by the Food and Drug Administration (FDA) for commercial use in the U.S. in 1993. Monsanto introduced the product as Posilac in 1994. At the time of its introduction, several studies predicted that rbST would be a highly profitable technology at the farm level and most studies predicted that it would be adopted by a majority of dairy producers and would significantly increase production, possibly causing significant economic disruption to the dairy industry. That has not happened, primarily because rbSt has not been widely adopted.RbST has now been in use for 14 years. Although most new technologies have diffusion processes that require two decades or more for a ceiling use to be achieved, rbST use appears to have reached a much lower ceiling than initially predicted. Farm use of rbST at the national level leveled off about seven years after the product became commercially available and the proportion of dairies using rbST has remained nearly constant at approximately 17 percent for about 11 years. The number of cows treated has remained constant at about 33 percent of all dairy cows in the U.S.My research on this topic, carried out jointly with Leslie Butler (UC Davis) and Henry An (University of Alberta, Canada) analyzes the factors that have influenced farmer use of this biotechnology.3) Economic Analysis of Controlling PRRS via Volunteer Regional Cooperative Programs. PRRS is a highly contagious syndrome characterized by reproductive disorders in sows and respiratory disease in growing pigs, first reported in the US in the late 1980s and caused by the virus PRRSV (Perez, et al., 2015). PRRS does not affect human health, but significantly reduces animal productivity and can cause animal mortality. One study estimates that PRRS causes at $560 million in annual damages to the swine industry, which did not include the substantial costs borne by firms who attempt to reduce its impact by vaccinating animals and implementing more stringent biosecurity (Neumann, et al., 2015). The PRRS virus mutates quickly and existing vaccinations are only about 70% effective. The disease is highly contagious, airborne, and is carried by a variety of vectors, mainly involving humans and vehicles. It has proven impossible to date to eliminate the disease via either vaccination or stamping out. If PRRS cannot be eradicated, the next best solution is control, but control is costly. Thus, firms must seek a profit maximizing compromise between bearing higher costs to control the disease and suffering losses from outbreaks.PRRS is a non-reportable disease and efforts to control the disease are private and voluntary. However, given the high cost of the disease and the important interconnections among firms, input providers, a group of swine producers in Minnesota initiated a voluntary regional cooperative program (RCP), the first animal disease cooperative program of its type, in 2004. This program, now known as RCP N212, includes more than 500 swine producing firms, approximately a third of all swine producers in that region, in close interaction with the University of Minnesota. In subsequent years, swine producers in other regions of the US have formed additional RCPs.Producing units that enroll in RCP N212 are encouraged to share information about their disease status on a regular, frequently updated basis. The RCP also allows for the exchange of other information regarding firm activities that may be related to disease outbreaks and spread, e.g., purchase of inputs, including weaning pigs and gilts, feed, veterinary supplies, biosecurity investments and management practices, and transportation services involved in the purchase and sale of animals. It is hoped that RCP N212 will assist in the control of PRRS and, perhaps, its eventual eradication within the region.Because disease spread appears to depend on numerous factor that include a variety of interactions among firms and other industry components, disease control is likely to include the development of industry protocols, the sharing of information regarding disease prevalence and incentives to encourage private efforts to reduce spread. The diffusion of knowledge about disease status and the adoption of specific protocols by individual firms each have significant industry-wide benefits, i.e., externalities. Thus, it will likely be collectively important for the industry to develop explicit collective efforts to encourage individual firms to share information and to implement industry protocols. Over time, these efforts, and the data they produce, will hopefully provide additional insights leading to a reduction in both the costs of control and also losses due to outbreaks.RCPs are an important new instrument in efforts to control and/or eradicate animal disease in the US, but little is known about their growth, functioning and effects, or whether the framework so established will allow for improved cooperative activity, e.g., development of certifications to identify preferred actions by economic agents that may signal reduced risk of disease. I will evaluate the evolution and impact of RCP N212, jointly with Andres Perez (School of Veterinary Medicine, University of Minnesota).

Goals / Objectives
Research and outreach on this project will focus initially on three projects: 1) estimating the economic impact of foot and mouth disease (FMD) on international beef trade, 2) analyzing the reasons for the relatively limited use of rbST in US dairy herds, and 3) analyzing the scope for voluntary Regional Cooperative Programs (RCPs) to control PRRS in the swine industry. I have been working on the first two topics and am initiating a research program to focus also on the third topic (PRRS).1) The Effect of Foot and Mouth Disease, Importer Sanitary Policy and Implicit Commercial Policy on Beef Trade Flows and Export Prices in International Markets. I employ a two stage model to analyze the effects of FMD on international beef trade, considering FMD status of exporter and of importer, importer FMD sanitary policy, and other determinants of bilateral trade in beef. Combining the results from the two steps, I estimate the effect of FMD status in the exporting country on the export price obtained for 1990-2002, which provided the first direct econometric measurements of the effects of FMD on international beef prices.The purpose of the additional study is to 1) extend the data series to 2010, providing 20 years of observation (monthly data) and to analyze how the rapid expansion of beef trade during the last decade has affected the results, 2) further explore the difference in the results from the restricted and the global models, and 3) better identify the causes of the observed differences in the prices obtained by exporters in different markets, and 4) identify the effects of FMD-caused changes in trade flows on economic losses from FMD in both exporting and importing countries. Refinement of the results is important for identifying the effects of FMD on international trade. 2) Profitability and Uncertainty in the Adoption of rbST in US Dairy Herds. When developed in the late 1970s, recombinant bovine somatotropin (rbST) was one of the first biotechnology products in the agricultural industry. By transferring the gene responsible for somatotropin production in a cow to a bacterium and allowing the genetically altered bacterium to replicate many times over, scientists were able to produce commercial quantities of the growth hormone that could be injected into cows to stimulate milk production. After many years of controversy and testing, rbST was approved by the Food and Drug Administration (FDA) for commercial use in the U.S. in 1993. Monsanto introduced the product as Posilac in 1994. At the time of its introduction, several studies predicted that rbST would be a highly profitable technology at the farm level and most studies predicted that it would be adopted by a majority of dairy producers and would significantly increase production, possibly causing significant economic disruption to the dairy industry. That has not happened, primarily because rbSt has not been widely adopted.RbST has now been in use for 14 years. Although most new technologies have diffusion processes that require two decades or more for a ceiling use to be achieved, rbST use appears to have reached a much lower ceiling than initially predicted. Farm use of rbST at the national level leveled off about seven years after the product became commercially available and the proportion of dairies using rbST has remained nearly constant at approximately 17 percent for about 11 years. The number of cows treated has remained constant at about 33 percent of all dairy cows in the U.S.My research on this topic, carried out jointly with Leslie Butler (UC Davis) and Henry An (University of Alberta, Canada) analyzes the factors that have influenced farmer use of this biotechnology.3) Economic Analysis of Controlling PRRS via Volunteer Regional Cooperative Programs. PRRS is a highly contagious syndrome characterized by reproductive disorders in sows and respiratory disease in growing pigs, first reported in the US in the late 1980s and caused by the virus PRRSV (Perez, et al., 2015). PRRS does not affect human health, but significantly reduces animal productivity and can cause animal mortality. One study estimates that PRRS causes at $560 million in annual damages to the swine industry, which did not include the substantial costs borne by firms who attempt to reduce its impact by vaccinating animals and implementing more stringent biosecurity (Neumann, et al., 2015). The PRRS virus mutates quickly and existing vaccinations are only about 70% effective. The disease is highly contagious, airborne, and is carried by a variety of vectors, mainly involving humans and vehicles. It has proven impossible to date to eliminate the disease via either vaccination or stamping out. If PRRS cannot be eradicated, the next best solution is control, but control is costly. Thus, firms must seek a profit maximizing compromise between bearing higher costs to control the disease and suffering losses from outbreaks.PRRS is a non-reportable disease and efforts to control the disease are private and voluntary. However, given the high cost of the disease and the important interconnections among firms, input providers, a group of swine producers in Minnesota initiated a voluntary regional cooperative program (RCP), the first animal disease cooperative program of its type, in 2004. This program, now known as RCP N212, includes more than 500 swine producing firms, approximately a third of all swine producers in that region, in close interaction with the University of Minnesota. In subsequent years, swine producers in other regions of the US have formed additional RCPs.Producing units that enroll in RCP N212 are encouraged to share information about their disease status on a regular, frequently updated basis. The RCP also allows for the exchange of other information regarding firm activities that may be related to disease outbreaks and spread, e.g., purchase of inputs, including weaning pigs and gilts, feed, veterinary supplies, biosecurity investments and management practices, and transportation services involved in the purchase and sale of animals. It is hoped that RCP N212 will assist in the control of PRRS and, perhaps, its eventual eradication within the region.Because disease spread appears to depend on numerous factor that include a variety of interactions among firms and other industry components, disease control is likely to include the development of industry protocols, the sharing of information regarding disease prevalence and incentives to encourage private efforts to reduce spread. The diffusion of knowledge about disease status and the adoption of specific protocols by individual firms each have significant industry-wide benefits, i.e., externalities. Thus, it will likely be collectively important for the industry to develop explicit collective efforts to encourage individual firms to share information and to implement industry protocols. Over time, these efforts, and the data they produce, will hopefully provide additional insights leading to a reduction in both the costs of control and also losses due to outbreaks.RCPs are an important new instrument in efforts to control and/or eradicate animal disease in the US, but little is known about their growth, functioning and effects, or whether the framework so established will allow for improved cooperative activity, e.g., development of certifications to identify preferred actions by economic agents that may signal reduced risk of disease. I will evaluate the evolution and impact of RCP N212, jointly with Andres Perez (School of Veterinary Medicine, University of Minnesota). The three projects will result in professional journal articles to convey the findings to a broad professional audience. I will publish non-technical articles in lay publications, providing insights and policy recommendations that result from the analyses. And I will present the results in conferences nationally and internationally. Project Methods
1. Collection of data on beef prices and quantities traded for all major beef exporters and importers, 2) Construction of two stage panel data models to estimate the effect of FMD on access to different markets and the determinants of beef prices in different models, which will then be used to estimate the effect of FMD on the price received for beef in international markets, 4) Construction of models to estimate the dynamic effects of changing Argentine and Uruguayan exports on the international beef market and their use to study these effects under different plausible scenarios, 5) Use of existing model of FMD effect to simulate effect of changing industry procedures to reduce FMD effects, 8) Simulation modeling for evaluating the impacts on consumers and producers in both exporting and importing countries and regions that result from SPS-based embargoes or other regulatory policies on international trade of animals and animal products.2. Collection of data on factors determining profitability of rbST, mainly input and output prices, and technical parameters. Use of simulation models to calculate profitability of rbST use under different scenarios and calculation of expected profitability under different scenarios, weighted by time prices were in effect during last decade. Interviews with farmers and review of literature.3. Surveys to collect data from swine producers. Econometric and epidemiological analysis of factors influencing disease outbreaks and disease spread within RCP N212 area. Construction of models to allow simulation of disease outbreaks and disease spread under different assumed parameters resulting from improved information and cooperative action.
Progress 10/28/15 to 09/30/16

Outputs
Target Audience:Academic researchers, hog producers in the US, government researchers, and policy makers working on food policy as related to animal disease prevention and control, particularly as regards foot and mouth disease. Changes/Problems:Work has focused on the losses caused by PRRS in Minnesota, but I will return to research on rbST adoption. What opportunities for training and professional development has the project provided?Continuing education in research for Pablo Valdes-Donoso, who is completing a PhD and an MS degree based on his research on PRRS. How have the results been disseminated to communities of interest? Lovell Jarvis presented faculty research lecture to School of Veterinary Medicine, University of Minnesota, on "A review of the use of economics by economists and veterinarians to analyze animal health management." December 9, 2015. Pablo Valdes-Donoso presented a paper at the 4thInternational Society of Veterinary Epidemiology andEconomics (ISVEE14). November 2015, on "Measuring progress onporcinereproductive and respiratory syndrome (PRRS) control ata regional level: theMinnesota N212 regional control project(RCP) as a working example." Also, Pablo Valdes-Donoso presented papers to the Leman Conference, for hog producers, economists and veterinary researchers in Chicago, 2015 and 2016. Pablo Valdes-Donoso also presented a paper to a meeting of producers in the Minnesota N212 Regional Control Project in 2016. What do you plan to do during the next reporting period to accomplish the goals? Continuing education in research for Pablo Valdes-Donoso, who presented a paper at the 4thInternational Society of Veterinary Epidemiology andEconomics (ISVEE14). November 2015. Measuring progress onporcinereproductive and respiratory syndrome (PRRS) control ata regional level: theMinnesota N212 regional control project(RCP) as a working example. Expect to complete response to editor for paper "Measuring production losses from endemic animal disease: Porcine reproductive and respiratory syndrome," and work with Valdes-Donoso to complete his MS thesis in Agricultural and Resource Economics. Also hope to return to research on the adoption of rbST in California.

Impacts
What was accomplished under these goals? My co-author on these papers is Pablo Valdes-Donoso, a Chilean graduate student that I have mentored since he began his MS in Veterinary Medicine at UC Davis. He is now completing his PhD in Veterinary Medicine (epidemiology) and and a second MS in Agricultural and Resource Economics. In the last reporting period, we have published 1) a paper on the use of economics in the management of animal health issues in the Chilean salmon industry, 2) a paper on the use of a Regional Control Program to measure and control PRSS, a swine disease, 3) a paper using machine learning to predict swine movements within a regional program to thereby improve control of infection diseases that may be caused by animal movements, and 4) a paper measuring production losses from endemic Porcine Reproductive and Respiratory Syndrome (PRRS).
17: Non Technical Summary
Research and outreach on this project will focus on three projects: 1) estimating the economic impact of food and mouth disease (FMD) on international beef trade, 2) analyzing the reasons for the relatively limited use of rbST in US dairy herds, and 3) analyzing the scope for voluntary Regional Cooperative Programs (RCPs) to control PRRS in the swine industry. 1) The Effect of Foot and Mouth Disease, Importer Sanitary Policy and Implicit Commercial Policy on Beef Trade Flows and Export Prices in International Markets. I employ a two stage model to analyze the effects of FMD on international beef trade, considering FMD status of exporter and of importer, importer FMD sanitary policy, and other determinants of bilateral trade in beef. Combining the results from the two steps, I estimate the effect of FMD status in the exporting country on the export price obtained for 1990-2002, which provided the first direct econometric measurements of the effects of FMD on international beef prices.The purpose of the additional study is to 1) extend the data series to 2010, providing 20 years of observation (monthly data) and to analyze how the rapid expansion of beef trade during the last decade has affected the results, 2) further explore the difference in the results from the restricted and the global models, and 3) better identify the causes of the observed differences in the prices obtained by exporters in different markets, and 4) identify the effects of FMD-caused changes in trade flows on economic losses from FMD in both exporting and importing countries. Refinement of the results is important for identifying the effects of FMD on international trade. 2) Profitability and Uncertainty in the Adoption of rbST in US Dairy Herds. When developed in the late 1970s, recombinant bovine somatotropin (rbST) was one of the first biotechnology products in the agricultural industry. By transferring the gene responsible for somatotropin production in a cow to a bacterium and allowing the genetically altered bacterium to replicate many times over, scientists were able to produce commercial quantities of the growth hormone that could be injected into cows to stimulate milk production. After many years of controversy and testing, rbST was approved by the Food and Drug Administration (FDA) for commercial use in the U.S. in 1993. Monsanto introduced the product as Posilac in 1994. At the time of its introduction, several studies predicted that rbST would be a highly profitable technology at the farm level and most studies predicted that it would be adopted by a majority of dairy producers and would significantly increase production, possibly causing significant economic disruption to the dairy industry. That has not happened, primarily because rbSt has not been widely adopted.RbST has now been in use for 14 years. Although most new technologies have diffusion processes that require two decades or more for a ceiling use to be achieved, rbST use appears to have reached a much lower ceiling than initially predicted. Farm use of rbST at the national level leveled off about seven years after the product became commercially available and the proportion of dairies using rbST has remained nearly constant at approximately 17 percent for about 11 years. The number of cows treated has remained constant at about 33 percent of all dairy cows in the U.S.My research on this topic, carried out jointly with Leslie Butler (UC Davis) and Henry An (University of Alberta, Canada) analyzes the factors that have influenced farmer use of this biotechnology.3) Economic Analysis of Controlling PRRS via Volunteer Regional Cooperative Programs. PRRS is a highly contagious syndrome characterized by reproductive disorders in sows and respiratory disease in growing pigs, first reported in the US in the late 1980s and caused by the virus PRRSV (Perez, et al., 2015). PRRS does not affect human health, but significantly reduces animal productivity and can cause animal mortality. One study estimates that PRRS causes at $560 million in annual damages to the swine industry, which did not include the substantial costs borne by firms who attempt to reduce its impact by vaccinating animals and implementing more stringent biosecurity (Neumann, et al., 2015). The PRRS virus mutates quickly and existing vaccinations are only about 70% effective. The disease is highly contagious, airborne, and is carried by a variety of vectors, mainly involving humans and vehicles. It has proven impossible to date to eliminate the disease via either vaccination or stamping out. If PRRS cannot be eradicated, the next best solution is control, but control is costly. Thus, firms must seek a profit maximizing compromise between bearing higher costs to control the disease and suffering losses from outbreaks.PRRS is a non-reportable disease and efforts to control the disease are private and voluntary. However, given the high cost of the disease and the important interconnections among firms, input providers, a group of swine producers in Minnesota initiated a voluntary regional cooperative program (RCP), the first animal disease cooperative program of its type, in 2004. This program, now known as RCP N212, includes more than 500 swine producing firms, approximately a third of all swine producers in that region, in close interaction with the University of Minnesota. In subsequent years, swine producers in other regions of the US have formed additional RCPs.Producing units that enroll in RCP N212 are encouraged to share information about their disease status on a regular, frequently updated basis. The RCP also allows for the exchange of other information regarding firm activities that may be related to disease outbreaks and spread, e.g., purchase of inputs, including weaning pigs and gilts, feed, veterinary supplies, biosecurity investments and management practices, and transportation services involved in the purchase and sale of animals. It is hoped that RCP N212 will assist in the control of PRRS and, perhaps, its eventual eradication within the region.Because disease spread appears to depend on numerous factor that include a variety of interactions among firms and other industry components, disease control is likely to include the development of industry protocols, the sharing of information regarding disease prevalence and incentives to encourage private efforts to reduce spread. The diffusion of knowledge about disease status and the adoption of specific protocols by individual firms each have significant industry-wide benefits, i.e., externalities. Thus, it will likely be collectively important for the industry to develop explicit collective efforts to encourage individual firms to share information and to implement industry protocols. Over time, these efforts, and the data they produce, will hopefully provide additional insights leading to a reduction in both the costs of control and also losses due to outbreaks.RCPs are an important new instrument in efforts to control and/or eradicate animal disease in the US, but little is known about their growth, functioning and effects, or whether the framework so established will allow for improved cooperative activity, e.g., development of certifications to identify preferred actions by economic agents that may signal reduced risk of disease. I will evaluate the evolution and impact of RCP N212, jointly with Andres Perez (School of Veterinary Medicine, University of Minnesota).

Goals / Objectives
Research and outreach on this project will focus initially on three projects: 1) estimating the economic impact of foot and mouth disease (FMD) on international beef trade, 2) analyzing the reasons for the relatively limited use of rbST in US dairy herds, and 3) analyzing the scope for voluntary Regional Cooperative Programs (RCPs) to control PRRS in the swine industry. I have been working on the first two topics and am initiating a research program to focus also on the third topic (PRRS).1) The Effect of Foot and Mouth Disease, Importer Sanitary Policy and Implicit Commercial Policy on Beef Trade Flows and Export Prices in International Markets. I employ a two stage model to analyze the effects of FMD on international beef trade, considering FMD status of exporter and of importer, importer FMD sanitary policy, and other determinants of bilateral trade in beef. Combining the results from the two steps, I estimate the effect of FMD status in the exporting country on the export price obtained for 1990-2002, which provided the first direct econometric measurements of the effects of FMD on international beef prices.The purpose of the additional study is to 1) extend the data series to 2010, providing 20 years of observation (monthly data) and to analyze how the rapid expansion of beef trade during the last decade has affected the results, 2) further explore the difference in the results from the restricted and the global models, and 3) better identify the causes of the observed differences in the prices obtained by exporters in different markets, and 4) identify the effects of FMD-caused changes in trade flows on economic losses from FMD in both exporting and importing countries. Refinement of the results is important for identifying the effects of FMD on international trade. 2) Profitability and Uncertainty in the Adoption of rbST in US Dairy Herds. When developed in the late 1970s, recombinant bovine somatotropin (rbST) was one of the first biotechnology products in the agricultural industry. By transferring the gene responsible for somatotropin production in a cow to a bacterium and allowing the genetically altered bacterium to replicate many times over, scientists were able to produce commercial quantities of the growth hormone that could be injected into cows to stimulate milk production. After many years of controversy and testing, rbST was approved by the Food and Drug Administration (FDA) for commercial use in the U.S. in 1993. Monsanto introduced the product as Posilac in 1994. At the time of its introduction, several studies predicted that rbST would be a highly profitable technology at the farm level and most studies predicted that it would be adopted by a majority of dairy producers and would significantly increase production, possibly causing significant economic disruption to the dairy industry. That has not happened, primarily because rbSt has not been widely adopted.RbST has now been in use for 14 years. Although most new technologies have diffusion processes that require two decades or more for a ceiling use to be achieved, rbST use appears to have reached a much lower ceiling than initially predicted. Farm use of rbST at the national level leveled off about seven years after the product became commercially available and the proportion of dairies using rbST has remained nearly constant at approximately 17 percent for about 11 years. The number of cows treated has remained constant at about 33 percent of all dairy cows in the U.S.My research on this topic, carried out jointly with Leslie Butler (UC Davis) and Henry An (University of Alberta, Canada) analyzes the factors that have influenced farmer use of this biotechnology.3) Economic Analysis of Controlling PRRS via Volunteer Regional Cooperative Programs. PRRS is a highly contagious syndrome characterized by reproductive disorders in sows and respiratory disease in growing pigs, first reported in the US in the late 1980s and caused by the virus PRRSV (Perez, et al., 2015). PRRS does not affect human health, but significantly reduces animal productivity and can cause animal mortality. One study estimates that PRRS causes at $560 million in annual damages to the swine industry, which did not include the substantial costs borne by firms who attempt to reduce its impact by vaccinating animals and implementing more stringent biosecurity (Neumann, et al., 2015). The PRRS virus mutates quickly and existing vaccinations are only about 70% effective. The disease is highly contagious, airborne, and is carried by a variety of vectors, mainly involving humans and vehicles. It has proven impossible to date to eliminate the disease via either vaccination or stamping out. If PRRS cannot be eradicated, the next best solution is control, but control is costly. Thus, firms must seek a profit maximizing compromise between bearing higher costs to control the disease and suffering losses from outbreaks.PRRS is a non-reportable disease and efforts to control the disease are private and voluntary. However, given the high cost of the disease and the important interconnections among firms, input providers, a group of swine producers in Minnesota initiated a voluntary regional cooperative program (RCP), the first animal disease cooperative program of its type, in 2004. This program, now known as RCP N212, includes more than 500 swine producing firms, approximately a third of all swine producers in that region, in close interaction with the University of Minnesota. In subsequent years, swine producers in other regions of the US have formed additional RCPs.Producing units that enroll in RCP N212 are encouraged to share information about their disease status on a regular, frequently updated basis. The RCP also allows for the exchange of other information regarding firm activities that may be related to disease outbreaks and spread, e.g., purchase of inputs, including weaning pigs and gilts, feed, veterinary supplies, biosecurity investments and management practices, and transportation services involved in the purchase and sale of animals. It is hoped that RCP N212 will assist in the control of PRRS and, perhaps, its eventual eradication within the region.Because disease spread appears to depend on numerous factor that include a variety of interactions among firms and other industry components, disease control is likely to include the development of industry protocols, the sharing of information regarding disease prevalence and incentives to encourage private efforts to reduce spread. The diffusion of knowledge about disease status and the adoption of specific protocols by individual firms each have significant industry-wide benefits, i.e., externalities. Thus, it will likely be collectively important for the industry to develop explicit collective efforts to encourage individual firms to share information and to implement industry protocols. Over time, these efforts, and the data they produce, will hopefully provide additional insights leading to a reduction in both the costs of control and also losses due to outbreaks.RCPs are an important new instrument in efforts to control and/or eradicate animal disease in the US, but little is known about their growth, functioning and effects, or whether the framework so established will allow for improved cooperative activity, e.g., development of certifications to identify preferred actions by economic agents that may signal reduced risk of disease. I will evaluate the evolution and impact of RCP N212, jointly with Andres Perez (School of Veterinary Medicine, University of Minnesota). The three projects will result in professional journal articles to convey the findings to a broad professional audience. I will publish non-technical articles in lay publications, providing insights and policy recommendations that result from the analyses. And I will present the results in conferences nationally and internationally. Project Methods
1. Collection of data on beef prices and quantities traded for all major beef exporters and importers, 2) Construction of two stage panel data models to estimate the effect of FMD on access to different markets and the determinants of beef prices in different models, which will then be used to estimate the effect of FMD on the price received for beef in international markets, 4) Construction of models to estimate the dynamic effects of changing Argentine and Uruguayan exports on the international beef market and their use to study these effects under different plausible scenarios, 5) Use of existing model of FMD effect to simulate effect of changing industry procedures to reduce FMD effects, 8) Simulation modeling for evaluating the impacts on consumers and producers in both exporting and importing countries and regions that result from SPS-based embargoes or other regulatory policies on international trade of animals and animal products.2. Collection of data on factors determining profitability of rbST, mainly input and output prices, and technical parameters. Use of simulation models to calculate profitability of rbST use under different scenarios and calculation of expected profitability under different scenarios, weighted by time prices were in effect during last decade. Interviews with farmers and review of literature.3. Surveys to collect data from swine producers. Econometric and epidemiological analysis of factors influencing disease outbreaks and disease spread within RCP N212 area. Construction of models to allow simulation of disease outbreaks and disease spread under different assumed parameters resulting from improved information and cooperative action.
Progress 10/28/15 to 09/30/16

Outputs
Target Audience:Academic researchers, hog producers in the US, government researchers, and policy makers working on food policy as related to animal disease prevention and control, particularly as regards foot and mouth disease. Changes/Problems:Work has focused on the losses caused by PRRS in Minnesota, but I will return to research on rbST adoption. What opportunities for training and professional development has the project provided?Continuing education in research for Pablo Valdes-Donoso, who is completing a PhD and an MS degree based on his research on PRRS. How have the results been disseminated to communities of interest? Lovell Jarvis presented faculty research lecture to School of Veterinary Medicine, University of Minnesota, on "A review of the use of economics by economists and veterinarians to analyze animal health management." December 9, 2015. Pablo Valdes-Donoso presented a paper at the 4thInternational Society of Veterinary Epidemiology andEconomics (ISVEE14). November 2015, on "Measuring progress onporcinereproductive and respiratory syndrome (PRRS) control ata regional level: theMinnesota N212 regional control project(RCP) as a working example." Also, Pablo Valdes-Donoso presented papers to the Leman Conference, for hog producers, economists and veterinary researchers in Chicago, 2015 and 2016. Pablo Valdes-Donoso also presented a paper to a meeting of producers in the Minnesota N212 Regional Control Project in 2016. What do you plan to do during the next reporting period to accomplish the goals? Continuing education in research for Pablo Valdes-Donoso, who presented a paper at the 4thInternational Society of Veterinary Epidemiology andEconomics (ISVEE14). November 2015. Measuring progress onporcinereproductive and respiratory syndrome (PRRS) control ata regional level: theMinnesota N212 regional control project(RCP) as a working example. Expect to complete response to editor for paper "Measuring production losses from endemic animal disease: Porcine reproductive and respiratory syndrome," and work with Valdes-Donoso to complete his MS thesis in Agricultural and Resource Economics. Also hope to return to research on the adoption of rbST in California.

Impacts
What was accomplished under these goals? My co-author on these papers is Pablo Valdes-Donoso, a Chilean graduate student that I have mentored since he began his MS in Veterinary Medicine at UC Davis. He is now completing his PhD in Veterinary Medicine (epidemiology) and and a second MS in Agricultural and Resource Economics. In the last reporting period, we have published 1) a paper on the use of economics in the management of animal health issues in the Chilean salmon industry, 2) a paper on the use of a Regional Control Program to measure and control PRSS, a swine disease, 3) a paper using machine learning to predict swine movements within a regional program to thereby improve control of infection diseases that may be caused by animal movements, and 4) a paper measuring production losses from endemic Porcine Reproductive and Respiratory Syndrome (PRRS).
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