The economic cost of the foot and mouth disease outbreak in South Africa

In the wake of a recent Foot and Mouth Disease (FMD) outbreak in South Africa’s Limpopo province, some Southern African countries placed a ban on all meat imports from South Africa. Countries like Nigeria have also strengthened surveillance at ports of entry to prevent importation of dairy or meat products from South Africa.

FMD, a viral disease caused by an aphthovirus within the Picornaviridae family is a highly contagious disease that can be transmitted directly or indirectly to healthy animals through direct contact and contaminated objects. FMD does not affect humans but poses a threat to cloven-hoofed animals such as cattle, goats and sheep, as it causes lesions and lameness in them.

Following the outbreak, Namibia’s Ministry of Agriculture, Water and Forestry issued an immediate suspension of imports and in-transit movement of cloven-hoofed animals and their products from South Africa. Botswana and Kingdom of eSwatini, formerly Swaziland, also suspended meat imports from South Africa. Zimbabwe’s Minister of Lands, Agriculture and Rural Resettlement, Perrance Shiri told Reuters that they were also in the process of banning affected meat and livestock imports from South Africa.

The impact of the ban is being seen in stores, especially in Namibia where Spar, a global retail store, issued an apology for having a shortage of meat products.  Namibia has learnt the hard way from the first-hand experience of foot and mouth disease that cost the country about $13 million to control in 2015. Although the impact is being seen in Southern African countries, the pain would be felt more in South Africa, a major meat exporter in the region.

This is not the first of such outbreak from South Africa. In October 2017, there was a listeriosis outbreak, with more than 1,060 documented cases and 216 deaths. Many countries during that period banned imported beef from South Africa to curb the spread.

South Africa is Africa’s highest beef exporter and the 15th highest in the world with a 60,000 export volume and a 0.6 percent of total world export. The majority (60 percent) of South Africa’s cattle is produced by about 50,000 commercial farmers while the remaining 40 percent is produced by 240,000 emerging and 3 million communal farmers.

The economic cost of FMD to South Africa

Disease outbreaks increase the cost of animal production, reduce milk and beef yield, cattle sales, farmers’ incomes, and affects the agricultural industry which in turn affects the economy.

Last year, after South Africa was hit by listeriosis, an investigation into the economic and employment effects of the outbreak was launched. The country’s Department of Trade and Industry discovered that the demand for processed meat decreased by 75 percent, costing the agricultural industry R800 million ($57.75 million) monthly.

According to South Africa’s President Cyril Ramaphosa, over 2,000 people lost their jobs after the outbreak and although the foot and mouth disease does not infect humans, the outbreak would still have an effect on people and the economy.

Given the ban of South African beef by some countries, it would take a while to regain the trust of these countries and get them to reinvest in South African beef, even when the country is declared FMD free. Tiger Brands, the company identified as the source of listeria in South Africa is still having perception challenges even after South Africa has declared it is free of listeriosis. Investor confidence is low and the same thing might repeat itself in the case of the foot and mouth disease as the outbreak could possibly impact the market value of South African beef.

A year and two months after the listeria outbreak in the country, South Africa suffered two successive quarters of negative growth, with the agricultural sector performing poorly to see the country slip into recession. A slowdown in the agriculture sector was noted as the main driver for the overall economic decline. Although the country has emerged out of the recession with a 2.2 percent economic growth, the World Bank still predicts a tepid growth of 1.3 percent for 2019. This growth prediction, however, was before the foot and mouth disease outbreak, which could have a significant impact on the South African agricultural industry.

Farmers, on the other hand, would incur the higher cost of the FMD outbreak as they lose most of their livelihood. According to a 2016 survey by PMC, farmers with small and medium herds incurred higher control costs, while large herds experienced the highest milk losses -meaning that all in the cattle marketing chain incur losses during FMD outbreaks. However, smallholder farmers will be affected the most. In 2011, about 6.5 million sheep, cattle and pigs were slaughtered in the United Kingdom to prevent the spread of foot and mouth disease.