The Economic Effect of Avian Influenza on Poultry Production in Southwest Nigeria

1. Introduction
With the global spread of highly pathogenic Avian influenza (HPAI) across several countries since 2003 and especially, the confirmation of the epidemic in Nigeria, there is a new attention focused on the sub-sector by the Government of Nigeria (GoN) and the international community. As part of this new initiative, FAO intends to collate the available current information in order to provide an overview of the poultry sub-sector in Nigeria. Avian influenza (a killer virus) initially was recognized as a highly lethal, systemic disease (i.e. highly pathogenic or highly virulent avian influenza) from the late 1870s to 1981.HP AI was known by various names including fowl plague (most common),fowl pest, peste aviaire; gelugel pest, typhus exudations gallinarium, and Brunswick bird plague (WHO,2004).

Avian influenza was reported as HP AI (“fowl plague”) in 1878 by Perruacito in Italy .Initially the disease was confused with the acute septicemic form of fowl cholera until 1880 when Rivoltgo and Delprato differentiated the two based on clinical and pathological features. In 1901, Centanni and savonuzzi determined the cause was a filterable agent, but the virus was not classified as an influenza virus until 1995 (WHO, 2006).

On February, 2006, Nigeria officially announced cases of highly pathogenic avian influenza (HPAI) virus in poultry in Jaji village of Kaduna state after the disease was first discovered at Sambawa farms in January, 2006.
The economic growth and public health implications of the diseases are being addressed by the US agency for International development in collaboration with the Nigerian government which consequently resulted to a training workshop in south-West city of Ibadan following its outbreak in May 2006.This study therefore distinguishes itself from other studies with its main objective encompassing the determination of the effect of avian influenza outbreak on poultry producers. It helps to consider the effect of price of poultry products, labour, amount spent on drugs, veterinary attention, quantities of water used on the output of poultry products.
2. Theoretical framework
Avian influenza (bird flu) is a viral disease caused by avian flu virus of the family orthomyxoviridae and genus (type) influenza virus A, characterized by respiratory distress, reduced feed and water intake. In egg laying birds, there is a decline in egg production and quality. (Brooks et al 2004). Migratory water fowl-most notably wild chicks are the natural reservoir of avian influenza viruses and these birds are also most resistant to infection. Domestic poultry, including chickens and turkeys are particularly susceptible to epidemics of rapidly fatal influenza (WHO, 2004). Direct or indirect contact of domestic flocks with wild migratory water fowls has been implicated as a frequent cause of epidemics. Live bird markets have also played an important role in the spread of the epidemics (WHO, 2004).
Recent research has shown that viruses of low pathogenicity can, after circulation for sometimes short periods in a poultry population, mutate into highly pathogenic viruses. During a 1983-1984 epidemic in United States of America, the H5N2 virus initially caused low mortality approaching 90% .Control of the outbreak required the destruction of more than 17million birds at a cost of nearly US and 65million.During a 1999-2001 epidemic in Italy, the H7N1 virus, initially of low pathogenicity , mutated 9months to a highly pathogenic form. More than 13million birds died or were destroyed. Apart from being contagious, avian influenza viruses are readily transmitted from farm to farm by mechanical means, such as contaminated equipment, vehicles, feed, cages, or clothing. Highly pathogenic viruses can survive for long periods in the environment, especially when temperatures are low. Straight sanitary measures on farms can however, confer some degree of protection (WHO, 2004).

A review of reported cases of avian flu on poultry and human
The discovery of Avian Influenza in Nigeria has been verified by WHO. It was found in domestic birds on a large commercial farm in northern part of the country. About 14 nations are now affected and the high alert status regarding avian influenza remains. Economic analysis has focused on the impact of the outbreaks rather than the long-term effects of pandemic avian influenza, with smaller but repeated outbreaks over a number of years. To date, the number of recorded human illness and deaths is very small and all have been traced back to contact with poultry or uncooked poultry products (ESCAP, 2005).

Avian influenza is capable of causing some of the most dramatic loses and costs of any poultry disease. Half of 22 outbreaks occurred between 1959 and 1991, but the ten most recent have occurred within the last 13 years (Poultry International, 2004). These viruses are normally species-specific, meaning that viruses infect an individual species (humans, certain species of birds, pigs horses, and seals) stay ‘’true’’ to that species, and only rarely spillover to cause infection of other species. Since 1959, instances of human infection with an avian influenza virus have been documented on only 10 occasions (CDC, 2006).
Symptoms of human (H5N1) infections include high fever, and flu likes symptoms: Diarrhoea, Vomiting, abdominal pain, chest pain, and bleeding from the nose and gum have been reported in some patients (CDC, 2006). In late December 2006, two people died in Lagos state, Nigeria of bird flu-like disease after eating sick birds, but they were not confirmed as avian influenza positive. However, in January, 2007, a 22 year old female victim died in Lagos state of confirmed avian influenza infection after processing and eating sick birds. So far all evidence of people who have been infected with avian flu indicates that close contact with dead or sick birds is the principal source of human infection. Other risk factors of human infection include slaughtering, defeathering, butchering and preparation for consumption of infected birds. The disease in humans follows an unusually aggressive clinical course, with rapid deterioration and high fatality (CDCs, 2006).

Therefore based on the literature review stated above, it becomes imperative to undertake a specific study of the economic effect of avian influenza on poultry production in south west Nigeria, in order to suggest possible measures poultry producers could take to combat and prevent future spread of the pandemic virus.
3. Sampling techniques and analysis of data
The sample population for the study consists of all the poultry farms who are basically engaged in the raising of poultry birds. Purposive sampling was done because only the affected farmers were targeted using snow balling approach. Thirty-one affected poultry farmers were selected from Oyo and Ogun states. Ten from Ogun state and twenty-one from Oyo state. This was purposefully selected because literatures have revealed that bulk of the poultry farmers in these areas have gained experience in poultry production overtime
The data used for this study were mainly from primary sources which were collected from the poultry farms in the study area with carefully structured questionnaires. The questions were answered by the poultry farmers who have access to the required information on the economic effect of avian influenza on the poultry farmers’ production capability; thus helping to achieve the objectives of this study.
Discontinuous regression analysis is used in this study to know if there is significant difference between the output of poultry production before as against after the spread of the virus while Gross Margin is used in analyzing the net returns of poultry farmers before and after the virus spread. These two are expantiated on below.

Gross Margin Analysis
The turnover from the poultry farmers was used as the measure of their business performance.
Gross Margin= TR-TVC
Hence GM = PxQ- TVC
Where GM= Gross Margin
P= Price of Output
Q= Quantity of Poultry Products
TVC= Total Variable Cost.

Discontinuous Regression Analysis
This was used to analyze the factors affecting the output of the poultry farmers’ poultry products
In implicit terms, the functional form is given as;
Y = f(X1, X2, X3, X4, X5, X6).
Explicitly, it can be stated as;
Before; Y1= ?0 + ?1X1 +?2X2 +---------+ ?6X6 + ei
After; Y1 =?o + ?1X1 +?2 X2+---------+?6X6 + ei
Where X1, X2, X3, X4, X5, X6 are independent variables
Y = output of poultry products per day
X1 = prices of poultry products per day
X2 = labour (man hr per day)
X3 = Amount spent on drugs per day
X4, = Quantities of water used per day
X5 = Amount spent on vet per day
X6 = Quantities of feed used per day
4. Results and discussion
There are only limited works on the economic effects of avian flu in the affected countries of the world. However, this study investigates the extent of the damages of the outbreaks on poultry farmers in south-west Nigeria as reflected in the results below.
The formula for analyzing Gross Margin Analysis is:
Table 1: Total Revenue of Poultry Producers before as against after the Outbreak
Before the outbreak After the outbreak
Egg Sales 34523548000 839800
Broiler Sales 624276000 48000
Spent Birds 4120000 278500
Total Revenue 35151944000 1166300
Source: Field survey, 2007
From the table above, it can be deduced that the total revenue of poultry products before the outbreak of the influenza virus was far greater than what it was after the outbreak. This is due to the fact that poultry producers lost confidence in their consumers and couldn’t make as much as they were earning before the outbreak.
Table 2: Total Variable Cost of Poultry Producers before as against after the Outbreak
Before the outbreak After the outbreak
Cost of Birds 289420000 1350000
Cost of Feed 1157400 7500000
Cost of Water 470600 2250000
Electricity Cost 101000 1800000
Cost of Feed 470600 1200000
Maintenance Cost 183000 4000000
Tax 88680 790
Fuelling Cost 423100 26000000
Interest 25000 -----
Total Variable Cost 292250700 40100790
Source: Field survey, 2007
The above table revealed that the poultry farmers could not invest so much into poultry production because of the losses incurred as a result of the outbreak. It is discovered that before the outbreak, the poultry farmers were able to invest much in poultry production but immediately the outbreak occurred, the poultry farmers couldn’t invest as much as they could have invested after the outbreak.
Table 3: Gross Margin Analysis results
TR 35151944000 1166300
TVC 292250700 40100790
GM 34859693300 -38934490
Source: Field survey, 2007
Hence, GM before the outbreak = 3485963300
GM after the outbreak = -38934490
From the above, it can be deduced that poultry farmers were making a great net profit before the outbreak but immediately after the outbreak they ran into a great loss (negative gross margin) thus affecting their profitability which occurred as a result of the great havoc invoked by the deadly virus which affected the poultry farmers directly and indirectly.
The effect of avian flu on poultry production performance is examined with the aid of discontinuous regression analysis. Six variables are adopted as explanatory variables for the variation that exists in the output of poultry products before and after the outbreak of the avian influenza virus on poultry production. Considering the number of significant variables, double log function was chosen as the lead equation for this study as it provided the highest number of significant variables. The result is given in the table below.
Table 4: Discontinuous Regression Analysis results for before and after
Variables Co-efficient Standard Error
Prices of poultry products -0.8506
(-3.24*) 0.261902
Labour 1.31
(9.57*) 0.1371
Amount spent on drugs -0.33
(-2.01*) 0.166
Quantities of water used 0.277
(1.47) 0.187
Amount spent on veterinary attention 0.422
(0.57) 0.483
Quantities of feed 0.232
(0.56) 0.408
Constant 4.826
(2.64) 1.82
Source: Field survey, 2007 *Significant at 5%
R2 = 0.8417
Adjusted R2 = 0.82447
F = 48.75
The discontinuous regression analysis was estimated using chow test through the strata software. From the table, the positive and highly significant coefficient of labour confirms the expected positive relationship between the output of poultry products and labour; which signifies that labour is a very important factor in explaining the changes in the output of poultry farmers. However, the coefficient of prices of poultry products and amount spent on drugs are negative but statistically significant showing that they are inversely related to the output of poultry products. It signifies that an increase in the prices of poultry products and amount spent on drugs results to a decrease in the output of poultry products.
The coefficients of quantities of water used, amount spent on veterinary attention and quantities of feed are positive but not statistically significant which shows that both of them are not good explanatory variables in getting the output of poultry products in the study area.

In addition, from the table, adjusted R- squared indicates that 82 percent of the variation on output of poultry products (dependent variable) is explained by the explanatory variables while the remaining 18 percent is explained by the error term.
Chow Break point test for the discontinuous regression in table 4
Table 5: Chow breakpoint test: 31
F-statistic 2.875308 Prob. 0.0137
Log likelihood 21.71082 Prob. 0.00285

Source: Field survey, 2007
Hypothesis testing;
Ho: ?o = ?o {There is no significant difference between the output of poultry products before
and after the out break}
H1: ?1 =?1 {There is significant different between the output of poultry products before
and after the outbreak} .
The table shows log-likelihood function which is estimated to be 21.7 for all the poultry farmers in the study area. It is observed that all the estimates of standard error is statistically significant and different from Zero at (=0.01). This indicates that a good fit of correctness of the specified distribution assumption of composite error term.
From the working hypothesis, the value of Y is not equal to zero that is Y?0; therefore, the null hypothesis Ho: ?o = ?o is rejected. We therefore accept the alternative stating that there is significant difference between the output of poultry products before the outbreak as against after the outbreak.

5. Policy issues, implications and recommendations
A key policy question for Nigeria government and any other countries on bird flu outbreak is how to win the trust and confidence of the population consuming poultry, minimize panic and disruption and indeed mobilize the public as a key partner in beating the disease. Attention to the avian flu disease in Nigeria calls for serious concern for human health as well as for agricultural sector (especially the poultry industry that is in crisis). Rapid elimination of the H5N1 virus in bird populations should be given high priority as a matter of international public health importance.

More seminar or workshop should be done in order to train farmers on how to prevent the deadly virus from invading the poultry farmers’ flock in order to be more productive and also avails them the opportunity to be able to cope with the stress of the environment. The outcome of the seminar or workshop should be well packaged so that it will be simple for the farmers to adopt.

The veterinarians’ needs adequate experience in the production of influenza vaccines to a considerable extent, particularly as vaccine composition changes each year to match changes in circulating ones due to antigenic drift. However, at least four months would be needed to produce a new vaccine, in significant quantities, capable of conferring protection against a new virus subtype. Poultry farmers should therefore be encouraged on the need for diversification as they will have something to fall back on in case the spread occurs again.

Akintunde O 2006: "450, 0000 birds lost to killer bird flu". Thursday Nigerian Punch newspaper, June 8, 2006 pp 20
Alexander, D.J, (2000): The history of avian influenza in Poultry- world report, Pages 7-8
Brooks, G.F, Butel, J, Morse, S (2004): Medical microbiology. The McGraw hill
Companies inc. all rights research Pages 536-546
Centers for Disease Control and Prevention 2006 Avian Influenza Infection in Humans August 9
CDC (Centres for Disease Control and Prevention), (2006): Avian influenza: Current situation page 1 and Avian influenza (bird flu) Fact sheets 1-6.
ESCAP (2005): Socio-economic policy Brief: issue no 1
FAO (2005): Avian Influenza fowl plague (http://
Poultry International (2004): avian influenza-lessons for the future Pages 16-20
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