Economic effects of antibiotic use in poultry, pig production

The U.S. Food and Drug Administration (FDA) issued a final guidance on voluntarily phasing out the use of medically important antibiotics for the purpose of livestock production in 2013. However, a large number of poultry and pig producers were already not using antibiotics, and those producers will be better off in the long-run should regulations on antibiotic use in food animal production in the U.S. get tighter. This was the conclusion of a new report released by the U.S. Department of Agriculture (USDA) Economic Research Service (ERS) and discussed by Stacy Sneeringer, PhD, USDA ERS, during a webinar on “The Economics of Antibiotic Use in U.S. Livestock Agriculture.”
Farmers use antibiotics in livestock, Sneeringer said,  for four main purposes: to treat disease, control disease, prevent disease or increase productivity. However, these uses have also raised a number of public health concerns. These concerns–mainly that antibiotic use in livestock and humans can contribute to the emergence of organisms that are resistant to most or all antibiotics and that antibiotic use leads to difficult-to-treat illness or death in humans and animals – have led to recent calls for policy changes, including restricting or eliminating antibiotics for production use.
Sneeringer’s research, based on the most recent data from the Agricultural Resource Management Survey (ARMS) conducted every five to six years, looked at three main questions associated with the potential economic effects of a policy restricting antibiotics for production purposes in broilers and hogs:
1. Current extent of antibiotic use for production purposes and disease prevention
2. Effects of restricting production purpose uses on animals and farms
3. Effects of production purpose restrictions on prices and quantities produced of pork and chicken
For the broiler industry, the ARMS survey, most recently conducted in 2011, found that 48 percent of farmers surveyed used antibiotics only for disease treatment; 32 percent did not know if antibiotics were used only for disease treatment (such as in the possible case of contract growers who may not know what was in the feed previously); and 20 percent used antibiotics for purposes other than disease treatment. Additionally, between 2006 and 2011, the share of broilers raised without antibiotics except for disease treatment rose from 44 to 48 percent.
For the pig production sector, the ARMS survey, most recently conducted in 2009, broke out the market by nursery pigs and finishing hogs. In nursery pigs, 59 percent of farmers surveyed said they used antibiotics for disease prevention and 51 percent said they did not administer antibiotics for growth promotion. For finishing hogs, these numbers were 51 percent for farmers who administered antibiotics for disease prevention and 38 percent who did not administer antibiotics for growth promotion. And from 2004 and 2009, the share of finishing hogs sold or removed from operations administering antibiotics to promote growth fell from 52 percent to 40 percent, while the share of nursery pigs being administered antibiotics for growth fell from 29 percent in 2004 to 23 percent in 2009.
From the data, it is clear that some producers are following the 2013 FDA guidance and voluntarily restricting human-used antibiotics in their animals. But, research shows that if a policy further limiting antibiotics for animal production purposes is enacted in the U.S., it could impact not only the animals themselves, but also producers at the farm level and the market for poultry and pig meat.     

Animal-level effects of restricting antibiotics use

According to Sneeringer, limiting the use of antibiotics for production purposes could potentially have several effects on the animals, such as slower growth to market weight, more feed required per unit of weight gain, higher illness rates among all animals, a higher death rate in young animals, lower reproduction, and more animals weighing in at the high and low ends of the spectrum.
Despite these possible effects, the impact of using them in animals to begin with is not what it once was, Sneeringer said, pointing to previous research.
Experimental lab research shows that the effects of production-purpose antibiotics in broilers decline over time. In research published before the 1980s, there were high single-digit or double-digit percentage changes in animal growth and feed efficiency when antibiotics were used. On the other hand, in research published since the 2000s, she said antibiotic use in animals has only yielded low single-digit or less than 1 percent changes in growth and feed efficiency, and that these results were also seen in observational farm research.
“The theory in the literature is largely that the industry has evolved,” she said. “There has been rapid improvement in housing, equipment and practices... So, in that way, you have fewer bacteria in the barn and, therefore, to the extent that the growth-promoting antibiotics had a disease preventative effect, it’s no longer having those effects because you’re correcting for that.”

Potential impact on the farm

Of course, using fewer antibiotics will lower the cost of use for production purposes should they be banned, but, according to Sneeringer, this could alternatively lead to higher veterinary costs for disease treatment as well as higher input costs. At the farm level, she said a ban on use of antibiotics for production purposes could mean more feed required, a greater number of young animals purchased, the need for more expensive biosecurity measures, adjustments in housing to create more space per animal and declining economies of scale. Plus, producers could be hit with higher expenses – both in the form of labor costs for more management and penalties at market for animals outside of range for operations using mechanized processing as a result of having a greater number of animals at extreme ends of the weight scale.

Effects at the market level

At the market level, a ban on antibiotics used in poultry and pigs could impact both supply and demand, though Sneeringer said the impact largely depends on the extent of the effects on the animal and the timespan in which production-purpose antibiotics would be potentially banned.
On the supply side, a 1-3 percent decline in productivity from not using antibiotics for production purposes could lower the quantity of animals produced and increase the price of producing poultry and pigs. Another concern at the market level, she said, may be that a ban may make the U.S. market less competitive in the global market if producers have a higher cost of production.
As for the effects on demand, Sneeringer said that U.S. consumers may demand more meat, although this is highly dependent on consumer knowledge and preferences for meat. More widely supported, she said, is the possibility that foreign buyers who previously rejected U.S. poultry and pig products due to the production-purpose use of antibiotics may begin allowing them.
Overall, Sneeringer’s researched showed only a muted effect at the market level should production-use antibiotics be banned in the U.S. with the effect on price and quantity of less than 1 percent. Producers who are not using antibiotics before a restriction would be imposed should see a greater quantity produced compared to those producers using antibiotics who may see a decline of about 1.5 percent in quantity produced due to lower reproduction and higher mortality rates.