* World Bank’s Forecast Study in Vietnam Released on October 12, 2005, with Three Different “Scenarios” (excerpt below) is a Noteworthy Reference.
The first avian influenza outbreak in 2004 caused poultry revenue in Vietnam to decrease by 15%. Since the poultry sector accounts for 0.55% of Vietnam’s GDP, the loss is approximately 0.08% of GDP. Specifically, 45 million poultry died or were destroyed during this first outbreak. The average price at poultry farms was 1 USD/kg, leading to losses of around 45 million USD during this initial flu outbreak. Knowing that Vietnam’s GDP in 2004 was 45.4 billion USD, the loss equates to about 0.1% of GDP.
Direct Losses in Agriculture
The first avian influenza outbreak in 2004 saw poultry revenue in Vietnam decrease by 15%. Since the poultry sector accounts for 0.55% of Vietnam’s GDP, the loss is approximately 0.08% of GDP. Specifically, 45 million poultry died or were destroyed during this first outbreak. The average price at poultry farms was 1 USD/kg, resulting in a loss of around 45 million USD in this initial outbreak. Knowing that Vietnam’s GDP in 2004 was 45.4 billion USD, this loss equates to about 0.1% of GDP.
There were other accompanying losses, particularly concerning eggs. The total egg production in 2004 fell to 3,939 million eggs compared to 4,852 million eggs in 2003 due to avian influenza. With the price of eggs at 5 cents each, the loss from eggs would reach 46 million USD. If we calculate the surplus value at a rate of 65%, the loss from eggs would correspond to 0.07% of GDP.
Looking further “upstream” in the poultry industry, there are also feed production, wholesale, and retail meat sales. If we assume the urban market price for meat chickens is 2 USD/kg, double the farm price, the surplus value of 1 USD would also be included in the GDP loss. Naturally, due to avian influenza, the pig farming sector saw a replacement, increasing the herd size by 12% in 2004 (compared to only an 8% increase in 2003), contributing an equivalent of 0.05% to GDP.
The direct loss in agriculture will be 0.12% of GDP.
Indirect Losses: Tourism and Inflation
The winter flu outbreak in 2004 did not significantly impact the tourism sector in Vietnam, mainly because other countries did not impose travel restrictions to Vietnam. Earlier, the SARS epidemic had reduced the number of tourists in the short term. If the winter flu outbreak in 2005 escalates, it would have a more significant impact if fears of human-to-human transmission spread widely.
Another indirect effect of the 2004 flu was rising inflation, primarily in the first six months of the year. Along with rising global oil and raw material prices, the increase in food prices (as substitutes for chicken and duck) pushed inflation to 9.5%. It is possible that rising food prices could help farmers increase their income.
Preventive Measures
1/ Culling and compensation.
2/ Biosecurity measures and control of poultry movement.
3/ Widespread vaccination of chickens and ducks…
The first two measures aim to reduce the spread of the virus among poultry and subsequently lower the risk of transmission to humans. The first measure determines whether farmers will report outbreaks in their flocks, which is crucial for controlling the outbreak. Due to increased compensation subsidies in June 2005 and rising market prices for chicken, farmers felt more encouraged to report outbreaks.
Vaccination measures are now being implemented, with plans to vaccinate 60 million birds by the end of November, at a cost of about 6 million USD. If vaccinations continue throughout the year, the budget will be around 22 million USD. The government recently decided to allocate 41 million USD per year for culling, compensation, biosecurity controls, and poultry movement.
It is possible that in two years, vaccinations may no longer be necessary. For now, vaccinating chickens will not fully prevent the spread among them. Therefore, estimating the damage will depend on the number of birds that need to be culled. There are three “scenarios” despite implementing a similar vaccination campaign for chickens:
a/ Success: culling is only 10% of what it was in 2004, with losses to agriculture also only 10%.
b/ Complete failure: culling and losses are equivalent to those of 2004.
c/ Moderate failure: culling and losses are only 50% of those in 2004.
Overall Losses to Society
Epidemiological control measures are similar to investments: they involve upfront costs but will reduce losses in the long run. Do not view subsidies and compensation as costs to society, even though establishing a new budget can be a burden for developing countries. In Vietnam, it can be roughly estimated that for every 1 USD spent on compensation for farmers, the actual social cost is only 50 cents (due to avoiding the direct and indirect losses mentioned above).
What is Needed for Success?
Why does the World Bank consider the possibility of complete failure? Because there are still risks that threaten to undermine these efforts.
The weekly magazine Newsweek on October 31, 2005, recounted a bitter detail from U.S. Health Secretary Leavitt’s survey trip on flu in Asia: “It is hard to make people aware that the risk can be everywhere, at any time when the annual per capita income is only 600 USD and an entire family relies on their flock of chickens and ducks.” In a press conference, the Secretary recounted visiting a family in Vietnam where a culling order was issued after signs of avian flu appeared. They disposed of the birds in a “haphazard” manner and then ate those that seemed healthy. Within a week, they fell seriously ill but recovered.
The report summarizes the glaring issue in the fight against avian flu in Vietnam: this is not merely a problem of a few chickens but a matter of livelihood. Many people live directly or indirectly off their poultry, and they have expressed concern: “We have not seen death yet, but we are seeing hunger!”
To convince people who are attached to their livestock (70% of the 12 million farming families raise chickens), the amount of compensation is one thing, but the “actual weight” of that compensation can be another matter altogether. There have been cases of farmers “taking advantage” or receiving “delayed” compensation. Could this be a major factor influencing compliance or non-compliance with culling orders?
DANH ĐỨC
