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Flashcards in Animal Health Economics of grazing animals Deck (13):

Define opportunity cost

financial income from the alternative use of resources in other activities - to that which you decide to do


Give 2 examples of extensice livestock systems that make use of underutilised resources

Sheep in wheat systems - Australia
Fattening sheep on turnip tops in UK


Of the overall total, approxiamtely what percentage of money is spent on Animal health in most livestock systems?

5-10% cost structure - i.e. often a small proportion of the cost of extensive livestock systems


What would good awareness of cost structure allow you to do?

reduce risks to client income
improve client's general income
improve wellbeing of client and family


What do gross margins include and not include?

Gross margin = Output - variable costs

Gross margins do not take into account fixed costs


What is the main EU agricultural subsidy scheme? Who administers it?

Single Payment Scheme (SPS)
2005 -2014
Administered by the Rural Payments Agency (RPA)

Previously was subsidies.


Define 'economic logic for investment'

Where avoidable losses are greater than the costs of a change in disease status, then the investment is worthwhile


What affects the severity of acute problems? 4

morbidity (affects production and recovery rates)
Downtime (the length of time from an outbreak to the return to normal production)
Frequency of events occuring


What is partial budgeting?
What is it based on? 4

A means of assessing change.

It is based on additional costs and additional benefits - it is a practical tool for the application of marginal costs and benefits. Limited time frame (one production cycle or one year)

It is interested in 4 basic items:
COSTS - new costs and revenue foregone
BENEFITS - costs saved, new revenue


What are 'new costs'?

those that directly relate to the implementation of an intervention or project (e.g. vaccines)


What is 'revenue foregone'?

the income that is sacrificed by making a change and relates to the 'opportunity cost' of the change (e.g. value of products produced from disease or dead animals)


What are 'costs saved'?

related to expenditure cause by the presence of a disease that will cease to exist if the disease is eradicated or be much reduced if the disease is controlled. These costs may have been paid by farmers and the government.


What is 'new revenue'?

the extra income generated by an animal health intervention that changes the animal health status. When calculating this, remember that extra costs need to be added to the 'new costs' for this.