Millions of calves and adult cattle could have to be killed if foot-and-mouth disease reached NZ. Photo / Michael Craig
An outbreak of foot-and-mouth disease in New Zealand would push up world commodity prices, lower the exchange rate and threaten more than 80,000 jobs.
With border biosecurity and the agriculture sector on higher alert after an outbreak of the lethal cloven-hoofed animal disease in Indonesia, a Ministry for Primary Industries (MPI) report describes the grim economic outlook if the disease was found here for the first time.
The 2014 report included modelling of potential macroeconomic impacts by the NZ Institute of Economic Research of a large hypothetical foot-and-mouth (FMD) outbreak in 2011.
It concluded the net present value loss in real GDP in the eight years from 2012 to 2020 was estimated at $16.2 billion.
In addition there would be eradication costs of $1.16b and compensation costs of $31m.
The report is the latest assessment MPI publicly offers. It said Biosecurity NZ was currently reviewing the assessment.
The report said it was likely an FMD outbreak would cause a large loss of national income with most of the impact falling on the primary sector and agricultural processors like meat and dairy operations.
Export processing would be closed until New Zealand's trading partners accepted our products again.
Last year, 84,700 people were employed in New Zealand's agriculture industries, according to Statistics NZ.
Modelling suggested world prices for agriculture commodities would rise, and the New Zealand exchange rate fall.
In a large-scale scenario, livestock that would otherwise have been processed remain on farms and would have to be destroyed for animal welfare reasons by their owners.
Modelling showed that would comprise 16.5m lambs, 3.1m adult sheep, 3.1m adult cattle and calves and 356,000 deer.
A further kill of 10,775 sheep, 19,661 cattle and 331 deer would be required for disease control.
New Zealand also had populations of wild cloven-hoofed animals which could be FMD vectors, such as deer, goats and pigs.
Even for smaller outbreaks, the export earnings loss was estimated to be high.
A "small" outbreak would result in $2b of lost dairy export earnings and $2.7b in meat earnings in one year. In a "medium" scenario the corresponding losses were $3.2b and $3.55b.
The impacts would be felt across 106 industries, with farm level and processing industries worst hit, followed by industries that supplied goods and services, and household spending because of lower incomes.
Recovery timing after eradication of FMD in the country would depend on the attitude of trading partners.
If the South Island was kept free of FMD in a large outbreak scenario, the GDP loss was reduced by 3 per cent from $16.2b to $15.6b.
Meanwhile, Julie McDade, the business development manager and a qualified vet at one of New Zealand's biggest processors, Greenlea Premier Meats, believes the country's vets had a solid base of FMD knowledge, even though there'd never been an incursion of the disease.
McDade has seen and worked with FMD in Nepal where the disease was endemic. She was part of an MPI-organised vet visit there, as a meat industry representative.
She said a wide range of vets were on the visit from clinical, as were rural specialists to industry and Government vets. She said MPI had organised "numerous" of these experiences for New Zealanders.
"There is certainly a base of knowledge and there will be vets here who have overseas experience of it, for example in the UK."
McDade said an FMD outbreak would be "a major logistical event".
FMD was not a new threat to New Zealand. It was endemic in some parts of the world and the country has long had strict biosecurity safeguards against it.
But as McDade said, the chances of a Kiwi visiting a subsidence-level farm in rural Nepal were slim whereas Indonesia was a popular tourist destination.
"The other scenario that's more risky is someone bringing in meat products. (Even then) that meat would need to be fed to a pig. That's the worst-case scenario because pigs are foot-and-mouth factories. They produce so much more virus than a cow, sheep or goat."
And New Zealand's so-far successful, world-first eradication of the debilitating cattle disease mycoplasma bovis was no comfort in an FMD threat.
"It's a very different disease and the approach is quite different. Mycoplasma bovis is endemic pretty much everywhere and it doesn't lead to an immediate shutdown of animal industries, which FMD would. It doesn't have the devastating effect on exports.
"The minute FMD is detected, everything grinds to a halt."
McDade's boss, Greenlea managing director Tony Egan, said the FMD risk had always been there from overseas countries but the proximity of Indonesia and its tourism popularity made the current situation very concerning.
Greenlea had upped its precautions by raising awareness of the risk among farmers and staff visiting farms but "in an industry context".
"We have to be on our game. We need to be vigilant."
Asked about the potential financial impact on a meat processing operation, Egan said "it's the sort of disease where it's automatically an industry problem".
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