Computational Economic Analysis of Duck Production at the Farm Household Level in the Context of Highly Pathogenic Avian Influenza Subtype H5N1 in the Red River Delta, Vietnam

Abstract

Smallholder duck producers are considered to be more susceptible to contracting the HPAI H5N1 infection. Occurrence of the Highly Pathogenic Avian Influenza subtype H5N1 (HPAI H5N1) usually results in the complete loss of the producer’s entire flock due to high mortality rate and stamping out conducted to contain the virus. The extent of the economic loss from culling of the flock (stamping out) depends on the time of the disease occurrence during the production cycle. This study aims to explore the expected economic impacts of HPAI H5N1 on smallholder duck producers in the Red River Delta of Vietnam. A conceptual model is developed to describe how a producer responds at each week of duck production to maximize profit and evaluate expected profits/losses of the producer in light of HPAI H5N1. The results suggest that in the case of no disease occurrence, the optimal time to sell ducks is at week 10 of the production cycle when ducks reach the age of 8 weeks. Maximum profit gained is US$ 805.10 for a producer with an average flock size of 794 ducks. However, the producer would suffer serious losses once the disease occurs. The expected investment loss is far higher than the maximum profit received at each production cycle and is estimated to be 3 times higher (US$ 2665.19 expected loss vs. US$ 805.10 maximum profit). The sensitivity analysis results also show that with 95% confidence, the producer gains profit ranging from US$ 803.95 to US$ 821.25 in case of no HPAI H5N1 disease, but suffers expected losses ranging from US$ 2659.23 to US$ 2670.60 in case of the disease occurrence. This severe loss can have long term consequences and producers may face severe difficulties to recover without financial assistance.