The costs of the recent outbreaks of avian influenza (AI) in Indonesia have been in lives lost, birds culled and economic disruptions. Such losses have posed two economic dilemmas for the Indonesians. The first dilemma was that risks associated with the disease in the future are only understood in the most general way. A thorough risk analysis was needed as a basis for the Government of Indonesia to make sound judgments about how much effort to invest to fight the disease in future. The second dilemma concerned where any such effort should be directed. Good policy requires that money used to fight the disease is allocated between the various components of the AI program so as to achieve the best possible results.
Quantifying the full economic costs through socio-economic research had not been undertaken - despite the need for such costings to be included in decisions on allocating funds. This project aided the development of policy responses to the issues listed above. It targeted areas of uncertainty in relation to the direct and flow-on effects of a future outbreak and the intersection of policy initiatives relating to human health, bird management and indirect consequences to industries such as tourism.
Four household surveys are central to the study: (i) 200 Balinese medium-size producers of broilers & layers and (ii) 200 Lombok medium-size producers of broilers + layers (iii) 600 Balinese smallholder producers of kampung chickens and (iv) 600 Lombok smallholder producers of Kampung chickens. The first two surveys, (i) and (ii), have been completed and the third is underway. The results of the first survey have been written up in a report that has been circulated (via the Program Leader) to others in the Program working in the avian influenza area for comment. The data from the second survey has been collated and checked and a report is being written. The third survey is being undertaken now (Sept. 2007) and is running three weeks behind schedule because the Indonesian government “locked out” Europeans from the poultry areas following two human deaths on Bali. The questionnaire for survey 4 has been written and circulated to others in the project for comment.
Interviews are scheduled of upstream & downstream agents & government officials using open ended questions to develop an understanding of linkages to the AI poultry problem in the poultry industry. The interviews are completed and reports written to draft stage. The Lombok report is close to being finalised and more interviews may be needed in bali.
The survey data will be used in a model of relationships between social, economic, epidemiological and policy state variables and likelihood of infection using cross-sectional analysis in a probit framework. The analysis completed for data from surveys 1 & 2.
The development of a Computable General Equilibrium model capturing the indirect economic effects of the avian influenza epidemic based on secondary data is underway. The first report is completed and further refinement of the model being undertaken.
The development of either a new food model capturing international linkages in the world poultry products markets and simulation of international economic impacts of different epidemiological effects has been undertaken. The work is completed and a report written and presented at a conference to obtain peer review.
Workshops are planned for early next year, 2008. Planning is proceding on deciding the dates and guest lists.
The team used survey responses from 1600 households to identify farm-level financial losses from AI, exposure to extension, use of biosecurity and vaccination and to discern how farmers were making decisions. The team also undertook studies at national level to measure the impacts of AI on other industries through effects on consumers and the tourism, travel and construction industries. This information resulted in a range of suggestions for policy enhancement - for instance, government agencies should integrate management of AI at farm level with their management of other poultry diseases, also the effectiveness of extension campaigns could improve by using media and existing farmer networks rather than individual farm visits, and finally agencies should encourage biosecurity and vaccinations by farmers through improved extension and possibly subsidisation of farm chemicals.
Around 60 Indonesian staff from provincial-level Ministry of Agriculture agencies received training in epidemiological aspects of the AI, farm survey techniques and analysis of animal disease programs.
Information about AI obtained from the study was provided to a range of stakeholders through two workshops - the first in Bali and the second in Bogor (convened by the Centre for Agro-Economic Research in Indonesia (CASEP)). Publications have been produced in English & Bahasa. Fifty copies of the Bahasa report were distributed to appropriate Indonesian government officials, researchers and officials of NGOs involved in the AI response.
The direct effects of the epidemic are on farmers and others closely linked to the poultry industry such as input suppliers, processors, sellers and consumers. Improved government policies for controlling and managing spread of the disease will increase productivity in suppliers, leading to increased income. Consumers will benefit from reduced uncertainty and lower prices for substitutes for chicken perceived to be ‘tainted’. In this context, poultry products are a mainstay of the Indonesian diet so even small reductions in such losses would be important for reducing poverty. Improved management of AI will also reduce its indirect effects on related industries such as tourism, travel and construction.
Future research should broaden the study to incorporate provinces outside the eastern islands group. In particular there are likely to be potential gains from enhancing policy in Eastern Java, which is the ‘centre’ of the Indonesian poultry industry.