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Economics of Antibiotic Use in U.S. Livestock Production, ERR-200, U.S United States Department of Agriculture Economic Research Economics of Antibiotic Use in Service Economic U.S. Livestock Production Research Report Number 200 Stacy Sneeringer, James MacDonald, Nigel Key, November 2015 William McBride, and Ken Mathews United States Department of Agriculture Economic Research Service www.ers.usda.gov Access this report online: www.ers.usda.gov/publications/err-economic-research-report/err200 Download the charts contained in this report: • Go to the report’s index page www.ers.usda.gov/publications/ err-economic-research-report/err200 • Click on the bulleted item “Download err200.zip” • Open the chart you want, then save it to your computer Recommended citation format for this publication: Stacy Sneeringer, James MacDonald, Nigel Key, William McBride, and Ken Mathews. Economics of Antibiotic Use in U.S. Livestock Production, ERR-200, U.S. Department of Agriculture, Economic Research Service, November 2015. Cover images: Vince Breneman, Economic Research Service (bag of medicated feed), Rich Nehring, Economic Research Service (pigs feeding), Jeff Vanuga, Natural Resources Conservation Service (beef cattle at feedlot), Shutterstock (chickens). Use of commercial and trade names does not imply approval or constitute endorsement by USDA. The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and, where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer. United States Department of Agriculture Economic Research Economics of Antibiotic Use in Service U.S. Livestock Production Economic Research Report Number 200 November 2015 Stacy Sneeringer, James MacDonald, Nigel Key, William McBride, and Ken Mathews Abstract Farmers use antibiotics to treat, prevent, and control animal diseases and increase the productivity of animals and operations. However, there is concern that routine antibiotic use in livestock will contribute to antimicrobial-resistant pathogens, with repercussions for human and animal health. Given these concerns, pressure to limit antibiotic uses for purposes other than disease treatment is mounting. Changes in use will lead to a series of adjustments in animal agriculture as producers change production practices, with poten- tial repercussions for prices and volumes in livestock markets. This report addresses the following questions: How widely are antibiotics used in the livestock industries? How could the current structure of the livestock industry influence the effects of restrictions on certain uses of antibiotics? How might the restriction of antibiotics affect production and costs at the animal and farm levels? How might those impacts affect production and prices in markets? Keywords: Antibiotics, livestock, United States, economics, prices, feed efficiency, produc- tion purposes, antimicrobials, growth promotion, policy analysis, disease prevention Acknowledgments The authors wish to thank Craig Lewis, Center for Veterinary Medicine, U.S. Food and Drug Administration; Neena Anandaraman, USDA, Office of the Chief Scientist; Wade Brorsen, Department of Agricultural Economics, Oklahoma State University; Helen Jensen, Department of Economics, Iowa State University; and an anonymous reviewer for their peer reviews. Policy reviews were also provided by Michael Jewison, USDA, Office of the Chief Economist; Amy Hagerman, USDA, Animal and Plant Health Inspection Service; and Sara Symons, USDA, Food Safety and Inspection Service. We also thank Courtney Knauth and Curtia Taylor in ERS for editorial and design services. Contents Summary . iv Introduction . 1 Antibiotic Uses in Livestock Production ............................................4 Public Health Concerns With Antibiotic Use in Livestock Production .....................4 Economic Aspects of Production-Purpose Uses of Antibiotics in Livestock Production .......5 Alternatives to Uses of Antibiotics for Production Purposes and Disease Prevention in Livestock Production .........................................................8 U .S . and European Policy Instruments . 10 FDA Approval Process for Antibiotics Used in Food Animal Production .................10 Monitoring Antibiotic Residues and Antimicrobial Resistance in Meat and Dairy Products ...10 Labeling Antibiotic Use in Meat and Dairy Products .................................11 U.S. Policy Actions To Reduce Use of Antibiotics for Production Purposes in Livestock Production ..................................................................12 European Policies for Reducing Uses of Antibiotics for Production Purposes and Disease Prevention in Livestock Production ...............................................14 Antibiotic Use in the Hog, Broiler, Beef, and Dairy Industries . 16 Survey Data on Antibiotics Used in the U.S. Livestock Industry ........................16 Industry structure and antibiotic use ..............................................17 Hogs. 19 Broilers .....................................................................27 Beef .......................................................................31 Dairy ......................................................................37 Research on the Economic Impacts of Use of Antibiotics for Production Purposes at the Animal and Farm Levels . 42 Research Methods for Estimating Effects of Production-Purpose Antibiotic Use on Productivity at the Animal and Farm Levels ........................................42 Animal- and Farm-Level Productivity Effects of Production-Purpose Antibiotics – Poultry ...45 Animal- and Farm-Level Productivity Effects of Production-Purpose Antibiotics – Hogs .....46 Animal- and Farm-Level Productivity Effects of Production-Purpose Antibiotics – Beef and Dairy ...................................................................47 Summary of Animal- and Farm-Level Productivity Effects of Production-Purpose Antibiotics ..................................................................47 —continued Contents—continued Effects of Production-Purpose Antibiotic Use and Discontinuation on Market-Level Outcomes . 49 Supply and Demand in the Livestock Sector ........................................49 Research on Market-Level Effects of Reductions in Production-Purpose Antibiotic Use ......50 Estimating Changes in Market-Level Outcomes From Production-Purpose Uses of Antibiotics ..................................................................51 Conclusions . 59 References . 60 Appendix A: Prior Research on the Effects of Using Antibiotics for Production Purposes at the Animal, Farm, and Market Levels . .. 72 Animal-Level Productivity Effects of the Use of Antibiotics for Production Purposes in Broilers ...................................................................72 Farm-Level Productivity Effects of Production-Purpose Antibiotics – Poultry .............74 Animal-Level Productivity Effects of Production-Purpose Antibiotics – Hogs .............74 Farm-Level Productivity Effects of Production-Purpose Antibiotic Use: Hogs .............79 Animal-Level Effects of Production-Purpose Antibiotic Use – Beef and Dairy .............80 Farm-Level Effects of Production-Purpose Antibiotics – Beef ..........................82 Market-Level Effects of Production-Purpose Antibiotics on Supply and Price .............82 Demand Effects of Production-Purpose Antibiotic Use or Discontinuation ................88 Appendix B: Market Model Description and Further Results . 90 Model Description ............................................................90 Further Results ...............................................................93 Summary United States Department of Agriculture A report summary from the Economic Research Service November 2015 United States Department of Agriculture Economic Research Economics of Antibiotic Use in Service Economic U.S. Livestock Production Research Report Number 200 Stacy Sneeringer, James MacDonald, Nigel Key, William November 2015 McBride, and Ken Mathews Economics of Antibiotic Use in U.S. Livestock Production Stacy Sneeringer, James MacDonald, Nigel Key, Find the full report William McBride, and Ken Mathews at www.ers.usda. gov/publications/err- economic-research- report/err200 What Is the Issue? The animal agriculture sector is a major user of antibiotic drugs for disease treatment, disease control, disease prevention, and “production purposes” (such as growth promotion). Routine use of antibiotics—in humans or animals—can encourage antimicrobial resistance, which can lead to significant human and animal health risks. In 2013, the U.S. Food and Drug Administration (FDA) issued final guidance on voluntarily phasing out the use of medically important antibiotics (those important for therapeutic use in humans) for livestock production purposes. This report addresses the following economic
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