Management of Disease-triggered Shocks in Complex Value Chains: An Ex Ante Analysis of Market Effects of HPAI Control in the Dutch Egg Supply Chain

Abstract

External shocks, such as disease occurrence, can be very disruptive in complex food producing value chains. To analyze this, a vertically linked dynamic partial equilibrium model was used to analyze market effects of outbreaks of Highly Pathogenic Avian Influenza (HPAI) in The Netherlands. Various shock inducing scenarios were analyzed, e.g control strategy, demand shocks and trade bans. The results showed that in densely populated poultry areas (1) market effects usually outweigh direct control costs, (2) vaccination could help mitigating total disease costs, particularly if (3) channeling to industrial processing is included. Moreover, large, and in some cases opposing differences in market effects between the various stakeholders could be observed. The result suggest a number of important policy factors that should be considered in HPAI control, e.g. the poultry density, the production structure and differentiation of stakeholders, the dependency on international trade and the potential capacity of industrial processing of eggs. General implications for other food producing value chains are discussed.