Economic impact of reduced milk production associated with Johne's disease on dairy operations in the USA

Abstract

Accurately assessing the economic impacts of diseases and other factors that affect milk production requires that the demand for milk be taken into account. Because demand for milk in the USA is relatively inelastic (i.e., consumers generally purchase a somewhat fixed amount over a given time frame, regardless of fluctuations in price), consumers tend to reap much of the benefit of enhanced production. An examination of the economic impacts of Johne's disease indicated that reduced milk production, associated with the determination of dairy operations as Johne's-positive, reduced consumer surplus by $770 million ± $690 million, and resulted in a total loss of $200 million ± $160 million to the US economy in 1996. Most of the economic surplus lost by consumers was transferred to producers, whose economic surplus increased by $570 million ± $550 million as a result of the reduced milk production associated with Johne's disease. Uncertainty analysis showed that the estimated reduction in milk production on Johne's-positive dairy operations accounted for most of the uncertainty in the economic-impact estimates. If Johne's disease had not been present on US dairy operations, then an additional 580 million ±460 million kg of milk would have been produced, but the price would have fallen by 1·1±1·0 cents/kg, and the total value of the milk would have decreased by $580 million ± $560 million.