The impact of diseases on international beef trade: Market switching and persistent effects

We quantify effects of disease outbreaks on agricultural trade with a gravity model of impacts of foot and mouth disease (FMD) and bovine spongiform encephalopathy (BSE) on beef trade. We account for official FMD status and for the impact of recent disease outbreaks. During and after a FMD outbreak, exporting countries substitute away from markets recognized as FMD-free toward lower value markets not recognized as FMD-free. Similarly, a country that has experienced BSE will export less to markets that have not experienced BSE and more to markets that have. Regaining official recognition of FMD-free status may aid recovery but does not negate the effects of a recent FMD outbreak. Models of FMD impacts should incorporate these market-switching effects, while analysis of FMD outbreaks should not focus solely on the loss of markets but rather should incorporate our finding that these loses are somewhat mitigated by market substitution. For countries not free of FMD, if the disease were to be eradicated an exporter should eventually be able to substitute towards higher value FMD-free markets. The value of this change in export market profile should be counted when considering the benefits of FMD eradication programs.