Economic effects of herd breakdowns on farms in the south west of England

Economic effects of herd breakdowns on farms in the south west of England

The case studies which are reproduced below are extracted, with permission, from the report; 'Economic Impact Assessment of Bovine Tuberculosis in the South West of England ' dated September 2010 by Dr Matt Lobley, Allan Butler, and Michael Winter. The document is available to read in full at http://centres.exeter.ac.uk/crpr/publications/pdfs/Econ_Imp_Assess_%20bTB_SWEng.pdf) - a CRPR Research Paper - No 30. The full report contains a lot more information and is a recommended read for anyone interested in the subject. The main emphasis of the report was on the economic impact of bTB. The personal effects on the families have not been documented in each of the case studies but section 7 of the report discusses the social impact and the quotes from the farmers involved are set out following the case studies below.

What is clear from reading the case studies reproduced below are the additional and consequential costs and issues involved, including animal welfare issues, testing difficulties, additional and indirect costs and the disruptions to other activities with increased testing. The compensation received for slaughtered animals does not cover the indirect costs involved. The feeling of helplessness is a common thread.

Introduction to the case studies

The report identified that bovine TB (bTB) presents a significant challenge to beef and dairy farmers. In 2009 7,449 herds were subject to movement restrictions in Great Britain because of bTB. Of these, 52% were in South West England and 20% were in Devon alone. Over 25% of holdings with cattle in the South West are likely to suffer a bTB breakdown within the course of a year. The case studies below are based on study interviews with South West farmers and undertaken specifically for the full report.

A case study methodology was employed to enable an in-depth examination of the economic impact of bTB on dairy and beef farms. In late March and early April 2010, eight in-depth interviews were conducted with farmers that had recently endured or were still enduring a bTB breakdown and these form the basis of the case studies reproduced below. The case study farms were selected to represent a range of different farming attributes.

The report stresses that it is important to recognise that the costs of bTB ripple out across the businesses impacting on labour, feed and bedding costs, creating animal welfare issues and causing unintended contraventions of regulations, such as organic certification requirements and cross-compliance. Furthermore, bTB also has implications for the well-being of farmers and their families as well as for the wider economy and community.

Farm TB1 (commercial beef)

This beef and cereal farm produces finished beef from a suckler herd and from purchased calves. Of the 304 hectares farmed, 182 hectares is rented in. In terms of land use, 36% is used to grow arable crops with the remainder comprising of grassland for the cattle. The beef enterprise is the most important in terms of value of output, with the arable enterprise described as loss making. In terms of bTB, this farm has spent by far the most time under bTB restrictions. Indeed, from January 2002 until February 2010, other than an 11-month bTB free period in 2004, the farm had been constantly subject to movement restrictions.

The long-term nature of bTB restrictions meant that, compared to other farms in this case study analysis, it had adjusted its business model to farm in a manner that minimised the impacts of the disease. However, two particular costs standout; costs associated with testing and costs related to livestock production losses.

Most farms during a bTB breakdown are required to test cattle every 60 days. However, TB1 negotiated a 90-day testing regime because of the longevity of their breakdown and the large number of cattle (approximately 800) present on the farm. This provision saved the farm £4,742 in additional testing per year. Therefore, without a 90-day testing period the farm’s annual cost of testing would have been £14,227 rather than the £9,485 reported in Figure 3. The cost per animal, over a year was £11.89, which compared with other farms in the case study analysis was relatively low. This partly reflected the use family members and staff already employed on the farm. An additional cost identified by this farmer related to reduced live weight gain. TB1 argued that the testing of his animals reduced the weight gained by his animals, which he estimated cost his business £5,040 per annum.

As a commercial cattle finisher, TB1 bought in cattle from two farms that were also under bTB restrictions. This reduced the need to replace stock slaughtered because of bTB. Indeed, it was part of the farmer’s normal business management practice during the period of the bTB breakdown, (when the farm is not under bTB restrictions, the farmer sources stock in the same manner but from non bTB farms, from similar distances away). As such, no cost was associated with movement restrictions and only minimal costs were associated with sourcing replacement stock. The stock that TB1 bought in went into designated isolation buildings on the farm. Once tested, cattle with negative test results mixed with the other cattle. In selling livestock, TB1 favoured sales direct to a local abattoir (regardless of bTB status). Therefore, other than weight gain losses noted above, no additional losses were associated with sales.

Farm TB2 (heifer rearing/dairy)

Comprising 51 hectares of grassland (with 12% rented in), this case study represents a relatively small farm. Furthermore, it shows how bTB can have a catalytic influence on the direction of the farm business. At the time of the last bTB breakdown (in December 2008), this case study was a 100 cow dairy farm and it is analysed in this respect. However, while bTB was a contributing factor to the ending of dairy farming, it only brought the decision forward rather than being the main driver behind the farm’s structural change.

Presently, the farm comprises two enterprises: the rearing of dairy replacements (Holstein-Friesian) and a retained herd of 40 beef cross calves from the original dairy herd. The farm is a family partnership between the farmer and his wife with only one part-time employee. The only breakdown that this farm suffered lasted for 10 months between December 2008 and October 2009. During this period, the farm had 35 reactors and 20 inconclusive reactors, with 25 confirmed with bTB lesions.

By far the greatest cost for TB2 was the loss of milk production as yield dropped by 280,000 litres. At a price of 24.5ppl, this represented a loss of £68,600 in income. It is interesting to note that the compensation received for the slaughtered animals (£72,600) covered little more than the loss of milk income. TB2 did not replace lost stock but instead exited milk production. However, changing from dairying to rearing dairy replacement heifers was not a direct consequence of bTB but the disease acted as a catalyst. The farmer was aware that his dairy enterprise did not have a longer-term future but the shock of his first and only bTB breakdown brought plans to cease milk production into fruition. While like-for-like replacement of cattle did not occur because of the change of enterprise, costs of finding new stock for the heifer rearing enterprise occurred in its place (£561). In terms of the farm’s beef enterprise, TB2 reared dairy cross beef calves. The imposition of movement restrictions restricted the sale of 30 calves aged between 3 weeks and 3 months and these were kept for an additional 10 months. This cost the farm business an additional £7,699. Other costs included the administrative costs associated with bTB breakdown.

For TB2 the mandatory element was the second highest compared to the other case study examples, but less time was spent involved in voluntary activity, which therefore kept the overall cost of administration down. Finally, costs of £550 were incurred by raising water trough heights and fencing around a wildlife area in response to the bTB outbreak.

Farm TB3 (pedigree beef)

The third case study farm is the most complicated in terms of land tenure and business structure, operating three different units, including a hill farm (32 hectares of SDA land). This farm extends to 324 hectares, most of which is owned, although one-quarter is rented. The farm also has access to a further 41 hectares of common grazing with whole year grazing rights but this is only utilised during the summer months. In terms of farm type, this is a beef, sheep and arable farm with beef being the most valuable output. The beef enterprise consists of 140 pedigree suckler cows and four beef bulls. As a family partnership, three family members work on the farm as waged employees. Three part-time staff are employed on a self-employed basis.

Detected through carcass tests at an abattoir in January 2010, this farm’s latest bTB breakdown was on-going at the time of the research having had 12 reactors and 4 inconclusive reactors. While this was the farm’s latest breakdown on the home farm, it has had bTB on at least one of its three holdings for the past six years. Unlike case studies TB1 and TB2, the loss of carcass and stock value were this farm’s greatest costs. Due to its latest breakdown, the farm missed its ‘six monthly window’ of being clear of bTB because of some unexpected reactors during the winter months. As a result, the business was unable to sell its beef bulls, resulting in overcrowding of intemperate animals and a loss in their value of approximately £200 (£9,600 in total) because of fighting and the carcasses being over age. However, the breeding bull enterprise has cost the farm £15,000. The sale of six breeding bulls reached only half the value expected for each bull (£3,000 instead of £6,000).

Testing cost this farm £996 per test, and their current breakdown had already cost them £4,980. This however, was likely to increase since the breakdown had not run its course. As noted, the farm was unable to sell its beef bulls and as a result had incurred an additional cost of £3,539 in extra feeding, bedding and labour costs over a two-month period. With three separate holdings, the cost of applying for movement licences were as time consuming as other bTB associated paperwork. Mandatory administration costs therefore cost TB3 £158, although this is the third lowest in the case study farms. While this farm spent £252 in search of replacement stock, the sale did not continue since a pre-movement test on the vendor’s farm proved positive.

Other costs proved much more difficult to determine. For example, the costs of under utilizing or over-grazing pasture on land not adjacent to the main farm. TB3 with its three separate holdings experienced stock management problems between farms. Finally, the cost of labour for cleaning an isolation shed was just over £48 for four hours of work using hired equipment at a rental rate of £60.

Farm TB4 (upland beef)

This is an upland beef and sheep farm supplying pedigree stores to market. The family run farm employs no labour and consists of 233 hectares of owned land with 30 hectares away from the homestead. While beef is the most important agricultural enterprise in terms of value of output, more significant to the business as a whole is income from non-farming activities (camping and holiday accommodation) on the farm. The beef enterprise consists of 76 pedigree suckler cows with the last bTB breakdown beginning in April 2009. The costs of increased testing and those associated with movement restrictions by far contributed the most to TB4’s total bTB breakdown costs. With each bTB test costing £949, over the period of the breakdown this accrued to nearly £3,000. During the breakdown, the inability to sell store cattle led to the over- wintering of additional young stock. This accounted for an extra £3,033 in bedding, feed, and labour costs.

Unlike the other case study farms, TB4 did not incur any costs associated with mandatory paperwork, arguing that these were no more than those normally related with the administration of the farm business. However, the principal farmer voluntarily travelled to meetings connected with bTB and took part in other research that resulted in a cost of £913, the second highest among the case studies. Farm TB4 invested in the following two biosecurity measures: raising the height of water troughs, which cost £150; and strip grazing with a back fence that required the purchase of additional electric fence equipment at £300. Finally, the cost of labour of cleaning an isolation shed was just over £24 for two hours of work using existing farm equipment and detergents.

Farm TB5 (pedigree dairy)

With 330 pedigree dairy cows and 225 dairy followers, this case study represents the largest dairy farm, in terms of animal numbers. In terms of area, it has 223 hectares, of which 142 are rented. However, unlike the other dairy farms in this study, this farm grows a substantial quantity of fodder maize (113 hectares) with the remainder grassland. As well as dairy, this farm has approximately 60 beef cattle that are a by- product of the dairy enterprise. In terms of number of cattle slaughtered as a result to bTB, this was the most affected farm. Detected through a pre-movement test, this farm’s last breakdown began in January 2009 and was on-going. It had suffered six breakdowns in the past 10 years.

Significant costs included lost income from reduced milk sales; additional feed and bedding costs because of movement restrictions; and the cost of new stock. Of these, the greatest cost was the loss of milk production income. With so many cows and heifers slaughtered and the inability to replace lost stock with cows of the same milk producing calibre, milk sales were reduced by 351,500 litres (a loss of £86,118). Included in this, was an estimated 2,000 litres loss in milk production associated with testing and test reading days (over eight days). This loss alone equated to £3,920.6 The imposition of movement restrictions prevented the sale of dairy-bred beef cattle, which increased feed, bedding and labour costs by an additional £52,875. This high cost was related to keeping an additional 150 calves for a 15 month period. Presumably, at some point in the future some of these costs would be recouped when the cattle are sold. Thirdly, TB5 spent £40,000 in buying replacement dairy stock. Sourcing the correct stock was an issue for TB5, who reported that his pedigree dairy herd was in the top 1% of its breed. Therefore, while he spent many hours searching for stock of sufficient quality at a cost of £985, he argued that the stock he bought was not of the same milk producing quality.

The cost of testing for bTB, while much less than some other costs, nevertheless cost this farm £9,122 since January 2009, with each test costing £1,140. This was the second highest in all of the eight case studies partly because of the time required to test all the cattle (approximately 670) on the farm.

Farm TB6 (commercial dairy)

This case study demonstrates the affects of bTB on a small family dairy farm. Operating a closed herd policy with just 80 dairy cows, this example illustrates the vulnerability of dairy farms that have no other enterprise. The breakdown on this farm began in April 2009 and was clear after a further three tests.

Similar to TB5, the largest cost to TB6 was the loss of income from reduced milk production of 56,420 litres a cost to the farm of £14,542. Of this, TB6 estimated that production dropped by two litres per cow over the initial two milkings after testing (1,920 litres costing £471). The inability to afford the required number of replacement stock because of insufficient compensation meant that this farm had five fewer productive animals. As a result, the estimated financial loss from this was £14,072 since the cattle bought in have averaged 2,000 litres less per annum than those that they replaced. Furthermore, while marginal, their milk price was reduced by 0.1ppl because they were not able to meet a milk company target. Finally, in terms of milk production, this farm also lost £109 from its European Dairy Premium because of reduced milk production. In total, TB6 bought six replacement dairy cattle at a cost of £7,200 with a further £743 spent on their sourcing.

With the lowest costs associated with testing and reading the test at £285, the cost of testing was £1,710 over the period of the breakdown. However, while the cost per test was the least in comparison with the other case study farms, in terms of cost per animal per test, at £1.95, this was not the case. The cost of administration costs for mandatory paperwork and meetings was £177. On the other hand, £988 was incurred in voluntary costs mainly due to expenses connected to meetings on bTB. Finally, TB6 is a small farm of approximately 40 hectares without the capacity to retain excess stock. This farm had looked into sending both its beef and dairy male calves to a licensed rearing unit. For the beef calves, TB6 felt that this undervalued their calves by between £30 and £50 per calf. However, unable to find a rearing unit that would take their Holstein Friesian bull calves, TB6 had no options but to shoot their newborn calves at a cost of £12 per calf.

Farm TB7 (commercial dairy and beef)

This is the largest farm in the sample at 332 hectares. Farmed as a family partnership, it has 150 dairy cows, 182 dairy followers, and rears finished beef steers using male calves from the dairy enterprise. This latter enterprise is relatively new and was introduced to the farm’s activities partly in response to bTB breakdowns. Its most recent breakdown beginning in February 2008 and this farm was still under restricti

ons in April 2010.

On this farm, similar to TB5 and TB6, reduced milk production accounted for the largest cost (see Figure 9). In this case, restocking occurred through the addition of surplus home reared heifers but this took time (for heifers to calf and start contributing) thus reducing milk production by 256,200 litres at a cost of £56,364. Unlike TB5 and TB6 however, TB7 suggested that milk production was not affected on test and reading days. The cost of movement restrictions in this case is less straightforward compared to the other case study farms. TB7 decided to start a cereal-beef enterprise for slaughter rather than shoot unsalable calves. Therefore, the estimated annual variable cost of this enterprise at £11,190 accounts for the additional feed,7 bedding and labour requirements.

With testing and reading costs at £634 per test, TB7 spent nearly £7,000 on tests over the period of their breakdown. Furthermore, TB7 noted that there were hidden costs on testing and reading days as lunch was given to all those involved, which was estimated to be £20 per test and £440 over the bTB breakdown.

Other costs included £10,240 spent on biosecurity measures, with £9,500 paid for the double fencing of a single field, £500 on fencing walkways, and £240 on raising troughs. Further costs included the purchase of a handling system at a cost of £2,500, feeding additional staff on testing days, and for fuel needed to transport the cattle handling equipment around the farm.

Farm TB8 (organic dairy/cheese producer)

The final case study encompasses a number of different characteristics. As a relatively small County Council rented farm (44.5 hectares), it specialises in producing organic milk from 38 rare breed cross dairy cows. The milk was processed into different types of cheeses, including unpasteurised, for a local market. In addition to the dairy and cheese-making activities, the farm has access to common grazing upon which it grazes store cattle. The date of the most recent breakdown on this farm was October 2009.

While the costs are lower, compared to other case study farms, particularly dairy farms, this case study demonstrates how additional costs due to bTB can become binding. On farm TB8, margins were extremely tight and therefore cash flow became problematic. The greatest cost, which affected cash flow, was the lost income from reduced milk production. The processing of most of the milk from this farm into cheese continued as normal. However, with five dairy cattle slaughtered the quantity of milk sold into the liquid market was reduced by 35,200 litres at a cost of £7,963. The inability to sell sore cattle because of movement restrictions required additional feed, fed in fields, and labour costs totalling nearly £3,000. The next highest cost was the cost of testing. At £874 per test, four tests cost the farm £2,623. To protect feed, TB8 bought a second-hand secure metal container as a wildlife proof store at a cost of £2,000.

The social impacts of bTB on farming families and their communities

These manifest themselves in many ways. In this research, the analysis of eight case study farms is likely to only touch on some of the difficulties that farming families face. Nevertheless, it does provide a window on to some of the key social impacts. In particular, the case studies exemplify the stress and upset that the disease can bring to the farming industry. Some quotes from the farmers are set out below.

“At the moment I’m clear of TB so I’m quite … I’m fine. It’s if you’re under restriction you are purely thinking TB. There’s no other … you can’t think of anything else. You can’t trade, trying to think of a way of getting out of the problem of TB. How you are going to try and manage the stock.”

“Well it’s the extra work load; the worry of where you’re going to find the money to feed the extra cattle and that sort of thing. The stress is bloody horrific. And trying to get round to doing them out all winter. We kept 48 all winter and it was a bloody mess.”

Alongside such management difficulties are the feelings of helplessness against the disease:

“Everyday because you’re losing stock so management decisions are being made because of TB and not to manage the farm, so when you’ve got a chunk of animals taken out. All other disease we manage it, with TB we’re not allowed to. It’s mastitis, lameness, it’s all about prevention, you just don’t keep treating it; you manage the cause. Whereas with TB you just keep taking stock out; it’s an unmanaged disease which we can’t control.”

“It’s very frustrating because it limits your ability to do things I suppose on the farm … It’s not like you can go out there and deal with the source put it that way. You are expected to stand there and let it ravage your business and nobody is doing anything. And I think that just makes you very angry.”

Furthermore, watching cattle slaughtered as a ‘bystander’ is deeply upsetting for many farmers and their families, for whom breeding cattle is more than a business:

“Cattle breeding, pedigree breeding is bit of a … it’s more than a hobby … Yeah but it’s a gut feeling when you’re seeing good cattle go and you’re not able to do much about it; it hurts. When you see 18 good prime cattle being herded in the yard to be shot on the farm; it hurts.”

“Yes, it’s made me miserable. It’s made me miserable; it’s made me wonder why we do it. And it’s made me very sad that we’ve lost these lovely animals. But it’s made me cross.”

“It obviously affected [his wife] because we’re a husband and wife partnership etc. and she had to deal with the same sort of things which … we both had to pick the cows out and send them off for slaughter or whatever. With regard to the girls is probably wasn’t as much as an impact on them because none of them actually work here and if they’d been younger I would have said it would have had more of an effect.”

The strains and stress that this can place the farming family under can be considerable, particularly for the principal farmer:

“It does affect us in that we’re a bit ratty really with ourselves. You know, I’m not nice to live with if I’m … a pre pre-movement test I’m not nice to live with. For .... I’m just worried with the consequences”

“You can’t describe it. The main stress, the main person that is stressed is [her husband] and because he is stressed we’re all affected by it. We all hate it when anything happens to the animals.”

“Yes it has because you’re not exactly in the best of moods.”

Although the loss of cattle is understandably upsetting, some farmers adopt a more ‘philosophical’ approach. For example, TB7 recognise the strain that being under bTB puts on them personally but since members of the family have had their own personal health scares, they are less inward looking, suggesting that “there is always somebody worse off”. Whereas TB1, a farm that has been under bTB restrictions for much of the period between 2002 and 2010, understands the difficulties that some farmers have but personally tries not to be affected by the effects of the disease:

“I don’t get anxious thinking there’s going to be masses of reactors or anything like that; I just take it as it comes. But I wouldn’t say you’ve got a cloud over you you’re … there was a time you were embarrassed to say ‘I’m under TB restrictions which you aren’t so proud of that for somebody who’s not. But you get used to it then obviously.”

It is not only the farmer and his family that can feel the effects of bTB but also employees of the farm. TB1 had nothing but praise for his staff and the understanding that had prevailed over the long period that the farm had been under movement restrictions. However, TB5 noted how the disease had led to “low staff morale” since they had as much contact with the cattle as the farmer and this sentiment was echoed by TB3:

“They [the employees] are involved with them as well and they’re not happy about it. How much sleep they lose at night I don’t know but it doesn’t help.”

The greatest social impact on employees occurred on TB2. As this farm gave up milk production to concentrate on heifer rearing, the farmer had no choice but to release two of his staff:

“I disposed of two of the relief milkers and one guy that still helps me he’s obviously drastically slashed his income.”

Finally, there was a mixed reaction from the case studies as to whether bTB affects the wider rural community. Most interviewees regarded the wider farming community to be supportive, although this was not universal with TB8 reporting that suspicion amongst graziers of common land occurs if one or other of them go down with the disease. In the wider non-farming community, as might be expected given that they encounter the consequences of the disease relatively infrequently, there is less understanding, as TB2 highlights:

“On the farming community, yes. One the wider community … the actual farming specific you know, the hands on that have to do the work and deal with the consequences then yes it does have a massive impact, you know we’re a rural community, village community, on the wider community probably no. There is a lot of sympathy for you or whatever but aside from that then no not really.”

TB4 argued that understanding from the wider non-farming community only came if a farmer spoke with them and made them aware of the consequences of the disease. This point was powerfully illustrated by TB7 in relating a story about a television reporter that came on to her farm.

“The TV people came out to one of our pens and like it or not, we called it, at the end of the day it was called ‘death row’ because that’s where they were. And of course this TV chap came out and he said [can I see some cows] I didn’t think about it and I said I’ll take them up to death row. And he [the TV reporter] said that I hadn’t thought about it like that. And I said, well if they’re in that pen now there’s only one way they’re going. Coz he walked up round and saw them and he had a hell of a job to do ... he had a hell of a job, he was breaking down and everything ... and the [the cows] did look in their prime and they were quiet and were coming up and licking him. He just couldn’t, he could not believe that these animals [would be slaughtered] and I said to him that most of them have got a calf inside them. And he said, they’re going to kill them! When she gets shot there’s only one thing that happen to that calf. And he said, what happens? Well it suffocates in the end because there’s no oxygen for them ... He said I can’t believe this and I said yes, this is what people don’t see.”