Turkeys.

MN Impact: University of Minnesota Researchers Explore the Economic Impact of the 2015 Avian Influenza Outbreak on the U.S. Turkey Industry

November 18, 2019

Objective

Economists will study the economic impact of disease outbreaks and develop recommendations for new policies that will help protect producers (reported as the cost of the outbreak).

Issue

Minnesota ranks number one in turkey production, and Minnesota turkey farmers raise between 44 million and 46 million birds annually. Each year these birds generate more than $600 million in income for farmers, processors and other related industries. In 2015 Avian Flu spread to nearly 50 million birds nationwide and led to a major economic downturn in the country's turkey production.

What has been done

Metin Çakir and his team conducted first-of-its-kind research on Avian Flu outbreaks in the U.S. and recently published "The Economic Impacts of the 2015 Avian Influenza Outbreak on the U.S. Turkey Industry and the Loss Mitigating Role of Free Trade Agreements." This research develops a partial equilibrium model of the U.S. meat and poultry industry to simulate the impact of HPAI outbreak on the turkey industry. The model depicts farm and retail stages of the vertical supply chain for each of the sectors of the industry. In the case of turkeys, the model disaggregates the farm level production between the production in Minnesota and other states allowing researchers to analyze supply changes in Minnesota's turkey industry along with the potential changes in supply and demand for turkey in the rest of the United States. 

Results

Using a partial equilibrium model of the meat and poultry industry they found the cost of the outbreak to U.S. turkey producers was $225 million; $207 million of which was because of a loss in exports. Of the $225 million, $101 million is borne by the producers in Minnesota and $124 million is borne by the producers in other states outside Minnesota.

However, it could have been worse if not for implementation of regional bans by trading partners who have negotiated free trade agreements with the U.S. Their results show that for every percentage point of additional exports, U.S. turkey producers avoided a loss of about $6 million.

This study provides vital information to help evaluate and update policies that will keep the industry from crashing in the event of another outbreak.