Elasticity and substitutability of food demand and emerging disease risk on livestock farms

Abstract

Disease emergence in livestock is a product of environment, epidemiology and economic forces. The environmental factors contributing to novel pathogen emergence in humans have been studied extensively, but the two-way relationship between farm microeconomics and outbreak risk has received comparably little attention. We introduce a game-theoretic model where farmers produce and sell two goods, one of which (e.g. pigs, poultry) is susceptible to infection by a pathogen. We model market and epidemiological effects at both the individual farm level and the community level. We find that in the case of low demand elasticity for livestock meat, the presence of an animal pathogen causing production losses can lead to a bistable system where two outcomes are possible: (i) successful disease control or (ii) maintained disease circulation, where farmers slaughter their animals at a low rate, face substantial production losses, but maintain large herds because of the appeal of high meat prices. Our observations point to the potentially critical effect of price elasticity of demand for livestock products on the success or failure of livestock disease control policies. We show the potential epidemiological benefits of (i) policies aimed at stabilizing livestock product prices, (ii) subsidies for alternative agricultural activities during epidemics, and (iii) diversifying agricultural production and sources of proteins available to consumers.

Keywords

• health economics
• veterinary epidemiology
• livestock production
• food safety
• game theory
• price theory