Economics of disease

Henk Hogeveen

Who am I

Farm boy (dairy farm, 45 cows)

Animal science at Wageningen Univesity

●Epidemiology (simulation model of management around cystic ovaries)

●Economics (long term effect of herd health management programs)

PhD at Vet Medicine (AI programs to diagnose mastitis)

Working in field of animal health managementIn between Wageningen University and Faculty of Vet. Med.

●@henkhogeveen

●animal-health-management.blogspot.com

Current trends

Farmers management is more and more aimed at optimization of health, not maximization of health

Vets function on equal level: discussion instead directive

One additional argument: money

….. vets need to know about economics of disease and economics of management

Outline

Economics of disease

Production diseases

●Mastitis

●Reproduction

Final remarks

Resource input (R)

Milk

out

put

(Q)

Farm production

Farm with fixed land and buildings (constraints):

Output is a function of input

Resource input (R)

Milk

outp

ut

(Q)

Effect of disease

-More resources for same production

- Less production with same resources

- optimal level of production changes as well

I

What’s the point?

Production function differ from farm to farm, dependent on:

●Management skills

●Farm seize

●Intensity

●…..

And ….

●Effects of disease differ from farm to farm

●Effects of disease differ based on prices

Economic effects of diseases

Economic effects = losses + expenditures

Losses (decrease in production)

●Decreased production level

●Discarded milk

●Changes in milk price (milk quality)

●Culling

Expenditures (additional resources)

●Drugs

●Veterinarian

●Labour

●Preventive measures

IntroductionLosses

Expenditures

Optimization of expendituresand losses

Disease treatments

Treatment of clinical cases is an expenditure

●Used to optimize total losses

●Studies on optimal treatment are availablee.g. Steeneveld et al., 2011; 2007, Swinkels et al., 2005a; 2005b

But for prevention, treatment is seen as part of costs of a case (failure)

Therefore we optimize Failure costs vs Preventive measures

How to study economics of prevention?

Start with failure costs of disease●Losses●Associated expenditures (treatments etc)●Quite some information is known

Calculate costs of prevention ●Investments (depreciation & intrest)●Expdenditures●Labour (value?)●Relative straightforward work

Estimate economic improvement●Difference between old and new situation●Difficult !!!

IntroductionFailure

costs

Preventive measures

Old situation

New situation

Benefits

Costs

Benefits exceed costs

IntroductionFailure

costs

Preventive measures

Old situation

New situationBenefits

Costs

Costs exceed benefits

Modelling to estimate effects of diseases and disease control

Simulation model

Input data based on data, literature, expertise

Relatively cheap

Pragmatic approach

Bio-economic modelling: economics combined with detailed physiological basis

Models ……. do not capture the complexity of the real situation

Models……. are sometimes too good to be true

Outline

Production economics

Production diseases

●Mastitis

●Reproduction

Final remarks

Based on work of:

Huijps et al., 2008, 2010Hogeveen et al., 2010van Soest et al., 2011

Recent literature (€)

Bar

2008

Halasa

2009

Hagnestam-Nielsen

2009

Huijps

2008

Level Cow Cow Cow-year Cow

Milk production losses - 11 78 36

Labour - 11 - 4

Treatment - 14 - 15

Culling - 46 - 22

Death - 0 - 0

Veterinarian - 2 - 1

Milk quality - 0 - 0

Materials - 0 - 0

Diagnostics - 0 - 0

Total 61 84 97 78

Research

Default cost calculations

●Based on literature and expertise

●Clinical mastitis: Yearly incidence

●Subclinical mastitis: Bulk milk somatic cell count

●Conservative estimations

Data collection

●64 dairy farms

●Data entry at “open farm days”

●Assistance from researcher

Irish data (geary et al., 2013)

Theory vs practise (€/cow/year)

DefaultMean Low High

Production losses subclinical 16 36 6.8 72.4

Production losses clinical 23 10 2.5 22

Veterinarian (€/cow/year) 0.3 0.6 0 2.5

Drugs 6 10.6 3.5 26.7

Discarded milk 9 7.9 2.5 17.9

Culling 22 17.9 0 46

Penalties 0 0.30 0 2.4

Labour 4 3.8 0 15

Total economic losses 81 78 31.4 153.8

Farm specific

Theory vs practise (€/cow/year)

DefaultMean Low High

Production losses subclinical 16 36 6.8 72.4

Production losses clinical 23 10 2.5 22

Veterinarian (€/cow/year) 0.3 0.6 0 2.5

Drugs 6 10.6 3.5 26.7

Discarded milk 9 7.9 2.5 17.9

Culling 22 17.9 0 46

Penalties 0 0.30 0 2.4

Labour 4 3.8 0 15

Total economic losses 81 78 31.4 153.8

Farm specific

Total costs of mastitis

Failure costs + expenditures preventive measures

Questionaire dataset of 189 farms (Santman-Berends et al., 2011)

●General questions

●Livestock management

●Lactating cows

●Milking process

●Feed

Pathogens and clinical mastitis on 120 farms

MPR data

Calculations of failure costs clinical mastitis, subclinical mastitis

Preventive measures

Cleaning cubicles

Cleaning lanes

Drying off

Pre-stripping

Clean dirty udders

Milker gloves

Clean cluster after clinical case

Milk high SCC cow last

Post milking teat disinfection

Fixing cows after milking

Total costs mastitis (€/cow)

Average

5% percentile

95% percentile

Clinical mastitis 62 16 151

Subclinical mastitis 14 9 21

Failure costs mastitis 76 26 164

Prevention costs 88 43 131

Costs of masitits 164 99 281

Failure costs vs preventive costs

- 18 management measures (Huijps et al., 2010)

- Quantify effect- 436 scientific papers (1996-2006)- 43 relevant and useful

- Expert sessions- Effect 100 % contagious- Effect 100 % environmental- Efffect on BMSCC- Efffect on clinical mastitis

Cost-effectiveness of preventive measures

Additional

expenditures

Reduced

losses Net benefit

Milk cows with clinical mastitis last 37 16 -21

Milk cows with subclinical mastitis last 104 20 -84

Use of separate cloths during udder preparation 26 9 -17

Wash dirty udders during udder preparation 3 9 6

Prestripping 34 9 -25

Use of milkers’ gloves during milking 1 9 8

Post milking teat disinfection 31 31 -0

Back-flushing clusters after milking a cow with clinical mastitis 1 11 10

Back-flushing clusters after milking a cow with subclinical mastitis 123 15 -108

Replace teat cup liners in time 13 11 -2

Use of a treatment protocol 7 15 8

Application of blanket dry cow therapy 9 36 27

Keep cows standing after milking 2 12 10

Feed additional dry cow minerals 13 13 0

Prevent overcrowding 23 13 -10

Clean boxes 54 15 -39

Clean yards 51 8 -43

Optimize feed ration 24 13 -11

Outline

Production economics

Cost factors of production diseases

Production “diseases”

●Mastitis

●Reproduction

Final remarks

Based on work of:

Inchaisri et al., 2010, 2011, 2012

Two decisions around reproduction

When do I start with inseminations

When do I stop with insemination

Difficult calculation

Cow factors

●First ovulation

●Probability of detection

●Probability of conception

●Milk production level

●Reproductive disorders

Economical factors

●Milk price

●Costs of insemination

●Costs of culling

●Costs of calving management

31

A complexsystem of

dynamics andinteractions

Stochastic dynamic modelling

• Breed

• Parity

• Month of calving

• Milk production

• Farm level

• Relative performance

• Persistence

Cow

START OF CYCLE

33

Calf

Ovulation

Oestrusdetected

Insemination

Conception

yes

yes

yes

yes

no

no

no

no

cow

Probabilitiesbased on cow

factors

Average results

Voluntary waiting periods

6 wk 7 wk 9 wk 11 wk 13 wk 15 wkFirst insemination

10.9 11.5 13.1 14.8 16.8 18.5Calving interval

391 393 401 410 421 433MP/cow/year (kg)

8200 8188 8157 8112 8056 7997Insemations

1.89 1.86 1.78 1.74 1.70 1.69Calves/cow/year

0.93 0.93 0.91 0.89 0.87 0.84

Not pregnant (%) 0.018 0.019 0.021 0.025 0.030 0.037

34

Average

0

10

20

30

40

50

60

6 7 8 9 10 11 12 13 14 15VWP (weeks)

Net

loss

es (

€/co

w/y

ear)

Economic consequences (€/cow/year)

Voluntary waiting periods

7 wks 9 wks 11 wks 13 wks 15 wksMilk production

2.2 8.9 18.3 32.4 46.4

Calves 0.1 0.3 0.6 1.0 1.7

Culling 0.4 1.6 3.4 6.3 10.1

Inseminations -0.5 -1.6 -2.0 -2.8 -3.1

Calf Management

-0.1 -0.5 -1.0 -1.8 -2.9

Net total 2.1 8.6 19.0 34.2 52.2  (-16-22) (-11-32) (-6-53) (4-78) (13-106)

36

But 6 weeks not always optimal37

0

5

10

15

20

25

30

35

40

6 7 8 9 10 11 12 13 14 15

Per

cent

age

cow

s

Optimal VWP (wks)

Longer VWP when ….

Cow factors

●Parity = 1●Not Holstein Frisian●High persistence●Low production●Late peak in production●Calved in winter●Bad oestrus detection●Late first ovulation●Reproduction diseases

Economical factors

●Lower costs low milk production

●High costs of inseminations

●High costs culling

38

Outline

Production economics

Cost factors of production diseases

Production diseases

●Mastitis

●Metabolic disorders

Final remarks

Only two production diseases

What about

●Young stock raising

●Culling policy

●Claw health

●Metabolic diseases

●……….

Under estimation of costs by farmers

0

20

40

60

80

100

120

140

160

180

200

0 20 40 60 80 100 120 140 160 180 200

Expected costs (€ per cow)

Rea

l co

sts

(€/c

ow

)

46 under estimators!!!!!Mastitis

Herd health programs

Herd health & management programs are aimed at improving herd situations

Knowledge of economics is then essential

Improvement of disease situation improves value of herd health programs (see work of Derks et al., 2012)

There is more than economics

Attitude explains mastitis situation (Jansen et al., 2009)

Campaigns do have an influence (Jansen et al., 2010)

Cost factors are not regarded as being equal (Huijps et al, 2009)

Sometimes farmers behave irrational (Huijps et al., 2010)

Economics to support decisions

Production diseases costs much money

●Most expensive cattle disease present

●Costs are often failure costs

●Total costs (including prevention) are much higher

●Differences and underestimation between farmers -> farm specific calculations

More than only money to motivate farmers

Decision support is weighing costs of prevention vs reduction of failure costs

●That is up to you, veterinarians!!!

●Tool on www.wageningenur.nl/bec -> research -> decision support tools

Thank you for your attention

@henkhogeveen

animal-health-management.blogspot.com

On-line courses on Veterinary Economics on:

www.elevatehealth.eu