One Billion Chickens

Yesterday I read the Kompas daily headline on the impact of avian flu. I came across the statement made by an official from Coordinating Ministry of Economy as follows:

"At the moment, the production of chicken poultry reaches 1 to 1.2 billion chickens per year, or around 300,000 to 400,000 chickens per one cycle of breeding (three to four months). Due to avian flu, the consumption drops by 50-60 percent of that number".

One billion chickens! For one who doesn't fancy eating chicken, like myself, that's a flabbergasting number indeed.

But first, regardless of the validity of those numbers, can you spot something funny in above mentioned statement? Yes, 1.2 billions chicken (in a year) divided by four (one cycle) would never equal to 300,000. But let's just assume that he's been misquoted.

Now, check the one billion chickens production number.

From googling, Indonesia Poultry and Products Annual Overview - August 2005, released by US Department of Agriculture, Foreign Agricultural Services, reported that the estimate number of broiler chicken production in 2006 is 672,000 tons. Broilers consist of 60 percent of total chickens produced, the rest is local-breed variety. Combine the two, we have 1,120,000 tons chickens. Now, assuming average chicken's weight is 1.4 kg. So the number of chicken is 800,000 million. Not bad, we have 200 million chickens lost in calculation.

Next, 50-60 percent plunging consumption is a very big drop indeed, if that's the real case. In 2005, the avian flu human death announcement led only to 25 percent decline. I wonder why this year has bigger impact.

Furthermore, as the cost of production is IDR 8,000-8,500 per kg:

"... the minimum selling price is IDR 9,000 per kg. It's in a normal condition. (But) now to sell at IDR 3,500-4,000 only is already hard. As such, the loss might reach IDR 1 trillion. That's only taking account the direct impact to chicken farm, not yet the indirect one to restaurant, hotel, and traders".

OK, let's do simple math again. Let's say, the loss per chicken is IDR 5,000 (IDR 8,500 production cost minus IDR 3,500 actual selling price). If we put the total loss at IDR 1 trillion, it implies that we are talking about 200 million chickens. So the government assumes that they can contain the avian flu within less than one breeding cycle. The question, can the government do that?

To be fair, the one trillion IDR loss is, however, only half of the story because consumers will substitute chickens to other products --fish, meat, vegetables, instant noodles, etc--. There must be some gains in the latter's' business.

This, however, does not discard the fact that avian flu is a problem. A serious one.

avian flu

Kompas' Folly is Our Loss

Apologies for the long absence (or more appropriate, "Appy-polly-logies", since during the hiatus I watched one of Kubrick's classics* - again). But I digress.

I was not going to post anything until next week, but I came across this post by Roby Muhamad on the nexus of flu epidemic and population mobility in his blog.

Two very interesting issues to discuss here. First, the refusal by Kompas to publish his article, and in particular the reason given by Kompas - "tidak mengarah ke pemaknaan masalah atau membuka pencerahan baru".

The second thing to discuss is of course the article itself which I think merits much attention, to put it understatedly. The article is a more accessible version of an article that Roby and several co-authors published in the PNAS. In the latter, the authors' develop a model of an epidemic that takes account not only of the interactions within sub-populations (say, workplaces, villages, cities) but also the interactions between these sub-populations that can depend , among other things, on actual transportation networks.

The mobility of individuals to travel between population scales, from workplace to villages to countries and so on is essential during an outbreak. This is exactly why, in the Kompas-rejected article, Roby emphasizes the danger on focusing solely on hoarding vaccines while not paying enough attention to developing strategies to restrict the mobility of infected individuals. Their model also offers some explanation why the SARS epidemic that was estimated to have the similar basic reproduction ratio (R0) to that of the great flu epidemic in the 1918, resulted in very different final epidemic size. Thanks to those travel advisories, they argued. It's a cool paper even for those who are not too familiar with the literature (including yours truly).

The theme of the study is probably not entirely unfamiliar to economists who are studying the economic aspects of transmittable diseases such as HIV, malaria, a lot of whom have been focusing on the role of economic and behavioral factors, extended household networks, marriage market, in addition to the biological transmission rate. For most of us, however, this is quite an eye opener, especially since stories like this , this, or this , are abound. Which is why, Kompas' decision not to publish the article is lamentable.

More later..

*) It just so happens that Anthony Burgess, whose book "Clockwork Orange" was the source of the movie, lost his mother and sister when he was one year old, due to the great flu epidemic of 1918.

Avian Flu and Government Role

This is another example of "when we don't need the government, it's everywhere; when we do, it's nowhere". Ujang has raised the issue of Indonesia's avian flu problem some time ago. He was wondering what the government had done to tackle the problems. We learn from news that the death toll number keeps increasing. But there seems to be no clear policy on this.

In The Becker-Posner Blog, Posner argues that the spreading avian flu pandemic has much to do with government's planning failure. He even relates the failure to the same mistake with regards to handling the hurricane Katrina:

[W]e are seeing basically a repetition of the planning failures that resulted in the Hurricane Katrina debacle. The history of flu pandemics should have indicated the necessity for measures to assure an adequate response to any new pandemic, but until an unprecedented number of birds had been infected and human beings were dying from the disease, very little was done.

On its economics and how the government can help, Posner says (my emphasis added):

A specific problem with respect to preventing flu pandemics is the difficult economics of flu vaccines. Because of the frequent mutations of the virus, a vaccine may be effective for only one season, in which event the manufacturer must recover his entire investment in the vaccine in just a few months. The expected cost of the vaccine to the manufacturer is increased by his legal liability (a form of products liability) for injuries due to the side effects of the vaccine. If a large population is vaccinated, a percentage of the population, amounting to a very large number of people, will in the normal course experience illness in the months following the vaccination. Many of them will be tempted to sue, and uncertainty about the causation of an illness may enable a number of persons to recover damages who would have become ill anyway. This problem can be solved in a variety of ways: by requiring proof of negligence rather than imposing strict liability for side effects of vaccination; by increasing the burden of proving causation in vaccination suits; or by the government's undertaking to indemnify the producers for damages attributed to the vaccine. Even if such steps were taken, there would be a strong case for the government's financing vaccine development and procuring large quantities of vaccines for distribution as needed.

His co-blogger, Gary Becker agrees (again, my emphasis):

[T]he world's population would be willing to pay a lot for an effective vaccine against avian flu, but companies are given weak incentives to spend a lot on developing such vaccines. That is the challenge posed to effective public policy, and I agree with Posner that so far the US and other governments have failed to meet the challenge.

Bottom line: this is the case where we cannot rely on the private sectors. The incentives for them are just not enough. The government should take the lead. Sadly, as usual, governments are busy doing things they're not suppose to do. (Why is it for example, the government officials' salary more important than avian flu?)

Sorry, we're closed

While government offices were shut down and public services suspended during the long, long, long, Lebaran holiday, we wonder: how is that avian flu preparedness plan coming?