Bird flu outbreak cost economy P79 billion in 2017

MANILA, Philippines — The bird flu outbreak in 2017 cost the Philippine economy as much as P79 billion as consumers veered away from eating poultry products and shifted to more expensive meat while poultry producers suffered profit losses, a new study estimated.

A recent discussion paper published by the Japan-based National Graduate Institute for Policy Studies estimated the economic impact of the 2017 bird flu outbreaks in the country.

The study, conducted by Lary Nel Abao, Deborah Kim Sy, Nobuhiro Hosoe and Yuko Akune, pointed out that the profit and welfare impacts of the bird flu outbreaks in 2017 have not been quantified to date.

Based on their estimates, the bird flu outbreaks resulted in a welfare loss between P25 and P56 billion after consumers refrained from buying and consuming poultry products.

Meanwhile, poultry producers lost between P15 billion and P23 billion in profits as prices dropped after the bird flu outbreaks, according to the study.

One of the key issues identified by industry stakeholders during the 2017 bird flu outbreak was the plunge in demand for poultry products as consumers were afraid that they may contract the disease by consuming poultry products, particularly chicken meat.

The researchers estimated the welfare and profit losses by searching for combinations of productivity and demand shocks that will replicate the seven-percent observed price drop in 2017 due to bird flu.

The combined profit and welfare losses were equivalent to 0.24 percent to 0.48 percent of the country’s GDP in 2017 (at current prices), based on Philippine Statistics Authority (PSA) data. At constant prices, the estimated losses were 0.23 percent to 0.46 percent of the economy.

“While we presumed that the HPAI (highly pathogenic avian influenza) shock caused a price decline of seven percent, it might have brought a more significant price impact,” the researchers said.

“Our simulation results suggest that more severe consumer avoidance or lesser TFP (total factor productivity) decline could have intensified the negative price impact,” they added.

The discussion paper emphasized that consumer avoidance played a “significant” role in household welfare and producer profit losses. It noted that consumers’ fear of eating poultry products during an outbreak is “difficult for the government or even scientific evidence to control.”

The researchers recommended that the certain policy interventions aimed at addressing such psychological concerns should be part of the government’s bird flu protection program.

The bird flu outbreak in Central Luzon in 2017, which was the country’s first-ever confirmed bird flu outbreak, caused by the HPAI H5N6 strain resulted in the culling of over 600,000 birds, based on government estimates.