Bovine respiratory disease (BRD) is one of the most common –– and one of the most costly –– diseases affecting North American feedlots. The USDA-APHIS (Animal and Plant Health Inspection Service) reports that more than 21% of cattle are affected by BRD, and previous estimates of the annual economic losses due to death, reduced feed efficiency and treatment cost related to the disease are between $800-900 million.
A recent study conducted by Dr. Dustin Pendell, associate professor of agricultural economics and faculty member with the Beef Cattle Institute, and Kamina Johnson, USDA-APHIS, focused on discussions surrounding new technologies and management strategies that could result in lower BRD prevalence.
“Kamina and I were interested in understanding how a new technology or management program with widespread adoption would affect the beef industry and allied industries,” Dr. Pendell says. A better understanding of the impacts of BRD on beef and allied industries should lead to better decisions being made.
Reduction of BRD prevalence in feedlots translates to an increase in the supply of beef due to lower morbidity and mortality, Dr. Pendell explains. “With an increase in beef cattle supplies, there is a higher demand for feedstuffs leading to higher feedstuff prices.”
Of course, increased cattle supply and downward pressure on beef prices means a loss in returns to beef cattle producers. The silver lining lies with consumers, who benefit from lower beef prices.
“The positive impact on consumers outweighs the negative impact on producers, resulting in an overall positive net impact to society,” Dr. Pendell says.
Early adoption has benefits
“With new technologies related to animal health issues, there will be some winners and some losers,” Dr. Pendell says. “Although the aggregated U.S. beef cattle industry sees a negative return, it is most likely that the early adopters will experience positive returns.”
Market impacts of reducing BRD in feedlots result in lower prices on beef cattle due to increased supply. More beef cattle means higher demand for feedstuffs (and higher prices for feedstuffs, providing greater profits to those producers). As the supply of beef cattle increases and puts downward pressure on the price of beef, consumers will substitute away from other protein sources (pork, poultry and lamb) to beef.
“This information will hopefully help the industry better understand how new technologies and management strategies that come online for BRD, or any other animal health issue, will impact not only their industry, but the allied industries as well in terms of both the magnitude and scope,” Dr. Pendell says.