# 7. Estimating the costs of diseases and the benefits of their control

## 7.1 Introduction

This chapter deals with the methods whereby the costs of livestock disease as well as the costs of its control and the benefits arising from it can be assessed. Disease is only one of the many factors influencing the level of productivity in a production system and often cannot be considered in isolation. In order, therefore, to evaluate effectively animal disease control programmed the economics of the livestock production systems involved must be clearly understood.

## 7.2 Economic aspects of livestock production systems

### 7.2.1 Inputs and outputs

Describing the economic aspects of a livestock production system essentially involves the determination of the costs and quantities of the various inputs and outputs of that system. Two distinctions can usefully be made in the analysis of inputs or costs. Firstly, costs can be listed by item and the various factors of production (land, labour, capital) they apply to and, secondly, they can be classified by their degree of variability into variable and fixed costs.

Variable costs vary in the short run and directly with the amount of output produced, declining to zero if the output is zero.

Fixed costs vary only in the long run and are still incurred if output is nil. They are sometimes called overheads and cover such annual cost items as permanent labour, rent and rates, maintenance and running, and depreciation on durable goods which last for more than 1 year.

Sometimes an intermediate category of items is defined. These are integer costs, which vary with output in the medium term, such as large capital items.

The relationship of these costs to output is illustrated in Figure 11.

Figure 11. Variable, fixed and integer costs and their relationship to output.

A great deal of literature exists on the use of farm budgets for planning, control, analysis, and decision-making at the producer level. In farm budgets a distinction is made not only between economic and financial analyses, but also between financial and cash-flow analyses. In financial analyses, the actual financial position of the farmer is analysed. Depreciation, which reflects the annual reduction in value of durable goods or capital items, must be calculated. Several formulae exist, of which the simplest is:

Annual depreciation =( Replacement cost - Salvage value) / Years of productive kite

Here salvage value refers to the residual value of the machine when it is scrapped.

A similar approach can be used in calculating the replacement cost of livestock. The cull value is the salvage value. The replacement cost is the price of a new animal. The formula above gives the so-called "straight-line depreciation" and must be included in fixed costs in a financial budget. A financial budget also includes the value of produce consumed at the farm.

Cash-flow budgets cover cash depreciation receipts and payments. They exclude home consumption, and depreciation but include loan receipts and repayments. If the latter were included in financial budgets as well as depreciation on equipment, for whose purchase loans had to be taken out, there would be an element of double counting.

In Table 43 the main costs of livestock production are classified into variable and fixed cost items corresponding to the various factors of production.

Budgets are distinct from benefit-cost analyses as set out in Chapter 8, in that they are a form of annual analysts applicable to the individual farm, firm or institution. As such they are useful for decision-making on a year-to-year basis but not for sector planning and project analysis and will therefore not be discussed in detail here. In contrast, a benefit-cost analysis can be undertaken from an individual or a national point of view and covers a number of years.

Distinguishing between the variable and the fixed costs of production is important in the analysis of disease control projects, because changes in production levels due to disease losses or the removal of production constraints affect costs at different levels as well as output. Usually a reduction in mortality and morbidity will affect only the producer's variable costs, since these vary with the levels of output and thus usually with the number of animals. The variable costs most often affected are feed and veterinary costs.

Table 43. Al two-way classification of the main costs of livestock production.

 Factor of production Variable cost items Fixed cost items Labour Daily paid or casual labour wages, travel allowances, production-related bonuses Wages and salaries of permanent staff Land and buildings Seed, fertilizer, insecticide Maintenance of buildings; Rent and rates; Mortgage repayments or loan and interest repayments on borrowings in cash-flow budgets Capital Livestock Fodder, concentrates, health care The net cost of replacing livestock is subtracted from gross output in farm budgets Machinery Fuel and oil1 Maintenance and running of vehicles and machinery;Depreciation (financial and economic analyses);Interest (sometimes included); Loan repayments(cash flow only)

Theoretically these are variable, but are often included with maintenance in fixed costs in farm budgets, since, unlike other variable costs, it is difficult to allocate them to individual crop or livestock enterprises.

### 7.2.2 Factors influencing output and offtake

In most herd- or flock-based production systems where farmers rear their own replacement stock the choice between present and future consumption, between current income and investment, presents itself clearly. All producers choose to some extent between saving and investing for future consumption or consuming now. The livestock producer can make this choice at two levels:

· Livestock products, such as eggs, meat or milk, can be sold or consumed by the family or, in the case of milk, given to young animals, thus increasing their nutritional intake and probably having an effect on their survival.

· Animals can be kept or slaughtered. Females are almost always retained, though, in some systems, some are sold for meat before culling becomes necessary. Males can be retained for breeding, sold or kept in the herd as a reserve of cash, or to assist in maintaining a balanced herd.

The choice between keeping or slaughtering animals can be illustrated using the following production parameters (expressed throughout as percentages):

GP - gross productivity per 100 animals
AF - proportion (%) of adult females in herd
O - annual offtake rate
CR - calving rate
G - annual rate of growth
LB - live births (AF x CR x 100) per 100 animals
CM - calf mortality
CS - calf survivals (LB - CM)

Gross productivity can be expressed as births minus deaths. This gives the increase in numbers which can then be allocated between growth and offtake, i.e.:

GP = CS - AM = O + G

Without making any distinction between sexes in the surviving calves, this equation gives a rough estimate of the growth potential (from GP) of the herd at different offtake rates. It emphasises the trade-off between offtake now (O) and investment leading to growth (G) and hence offtake later i.e. the choice between present and future consumption. At this level gross productivity is fixed by the basic production parameters of calving rates and mortality. How the increase in numbers is allocated between offtake and growth is decided by the producer. While the equation is useful to make a crude initial estimate of the production potential of a livestock system, for more accurate estimates the reader is referred to Appendix 2, where livestock models are discussed.

### 7.2.3 The relationship between livestock prices and output

The prices which consumers or producers find acceptable for a particular item are related to the incomes or other benefits that buyers expect to gain from that item. In theoretical terms it can be stated that, in a free market the price of any input item which lasts for several years will approximate to the present value of the incomes expected from the use of that item over the years of its working life.

For livestock this explains, for example, why a female calf generally has a higher value than a male calf A heifer's price rises as soon as she is in calf and her fertility is proven. As a cow ages, its value declines. An example of how prices are expected to vary throughout an animal's life is given in Table 44.

Table 44. Derivation of price at different ages for male cattle destined for slaughter in a nomadic production system in Ma/i (1980 prices, MF 1000 = £1 or MF 420 = US\$ 1).

 Age Mortality per year Survival per year Probability of survival to age 7 Present value of selling price at age 7 discountedat 12% Actual price (years) (%) (%) (1)a (2) (1) x (2) 0-1 30 70 0.51 54 28 1-2 10 90 0.73 61 44 2-3 5 95 0.81 68 55 3-4 4 96 0.85 76 65 4-5 4 96 0.88 85 75 5-6 4 96 0.92 96 88 6-7 4 96 0.96 107 103 7-8 4 100 1.00 120 120

a The probability of a 0 to 1 year-old animal of surviving to year 7 is
7 x 0.7 x 0.9 x 0.95 x 0.96 x 0.96 x 0.96 x 0.96 = 0.51.
The probability of a I to 2 year-old animal of surviving to year 7 is
0.9 x 0.95 x 0.96 x 0.96 x 0.96 x 0.96 = 0.73 etc.

In the nomadic production system in Mali the purchased inputs are nil, so the price in each year can be seen as the product of both the expected probability of an animal surviving until it is slaughtered at 7 years and the present value in each year of the slaughter prices. This gives a good approximation to the actual price and helps explain the ob xxxserved fact (Crotty, 1980) that prices, even per kilogram liveweight, are considerably lower for young animals.

## 7.3 Estimating the cost of disease

The quantification of the losses due to individual animal diseases follows on from the disease investigation work undertaken. Once the actual disease prevalence and/or incidence and the nature and magnitude of the losses experienced in infected herds at the regional and national levels have been defined, the economic portion of the analysis proceeds to:

· Organise, classify and present the information on disease losses.

· Quantify losses in monetary terms, choosing prices that reflect the economic or financial nature of the analysis being undertaken.

· Identify and attempt to quantify the indirect losses attributable to a disease.

### 7.3.1 Quantifying the direct losses due to disease

Direct losses are those production losses directly attributable to the presence of disease. Depending on the information available, and the needs of the study, these losses can be estimated at various levels of detail, matching the complexity of the methods used to the sophistication of the data. Two main approaches exist for quantifying disease losses:

· Given a knowledge of the production parameters of the livestock systems, and the effect of disease on them, a livestock model can be built which looks at the values of output when the disease is present and when it is absent. Such a model would, by its nature, either involve projections over a number of years or the calculation of losses for a static livestock population in equilibrium.

The methods outlined in the following sections produce annual approximations as to the effect of a disease in depressing certain production parameters. Except in so far as price reflects future output, the dynamic effects through reduced fertility and delays in reaching maturity are not really included. A dynamic evaluation, either in the context of a static herd of fixed size or of a growing livestock population, will give the most accurate estimate of disease losses. For a given disease, the values of all production parameters in the absence and presence of that disease can be entered. The difference in output with and without the disease is then calculated using the model. This type of evaluation relies on a detailed knowledge of the production system and of the effects of the disease. Small differences in the various parameters can then be estimated and valued. The use of models is discussed further in Appendix 2.

· Estimates can be made of the annual level of losses associated with the disease. These can then be extrapolated over the period being studied, in line with the expected changes in livestock populations in the affected production systems and with the expected behaviour of the disease.

In calculating disease losses on an annual basis, two methods can be distinguished. Figure 12 gives a diagrammatic representation of these methods and lists the information required.

### 7.3.2 Methods for estimating annual losses

Method 1: Losses estimated as a function of the value of the animal

Mortality: Since Method I is based on the concept that price reflects the expected future income from an animal, the cost of mortality can be calculated by applying the price by age/sex category to the number of animals in each category, and to the percentage mortality in each category, if it is known how this varies between different age/sex categories.

The result is a weighted average cost per mortality. In Table 45 this has been calculated for the zebu cattle in Malawi. If the price for each age category is unknown, the age of the average animal or median age group can be applied to the price at that age, as an approximation (see Table 46). Usually some of the meat value of an animal can be salvaged after its death, or through emergency slaughter; this value should be deducted from the cost of mortality.

Morbidity: Similarly, if there are no detailed data on the effects of morbidity, its cost can be estimated as an overall lowering of output, expressed as a percentage of

· all future output from the affected animal, by using its price; or
· annual output from the average animal or the herd, in terms of milk, meat etc.

In Table 46 the losses due to trypanosomiasis in Mali have been estimated for two categories of cattle - transhumant and sedentary. The morbidity and mortality losses can be calculated on an annual basis and adjusted for future years to reflect:

· The growth of the animal population affected.

· Any change in the animal population away from or towards more susceptible animals.

· Any change in the disease picture, following from animal health measures, changes in management practices, cycles of disease occurrence etc.

Method II: Losses itemised in terms of the effect of disease on the final output of milk, wool, meat, young animals and draught power

Mortality: This can either be calculated as above, or the present value of expected output less costs is calculated for the age/sex group or for the average animal.

Morbidity: If this is known, the losses due to disease can be calculated via the observed effects of disease, such as:

- infertility
- abortion
- delays in reaching maturity (for reproduction or sale)
- lowered production of milk, eggs, wool etc.
- lowered draught power (which may affect the ability of a healthy animal or a pair of animals to work)
- lowered weight of fattened or culled animals etc.

Table 45. Calculation of the average of mortality in zebu cattle in Malawi (1981 prices, K 1.4 = £1).

 Category % mortalities Unit value (K)1 Weighted price (K) Calves 25 25 6.2 Cows/Heifers 55 110 60.5 Bulls 6 160 9.6 Work oxen and feeder steers 14 110 15.4 Total 91.7

Note: This calculation assumes that mortality is evenly distributed between all age/sex categories.

1K = Kwacha (Malawian currency).

The majority of the effects are most conveniently calculated in terms of lowered output. In some cases (delays in reaching maturity or slaughter weight) the loss may be more easily evaluated in terms of wasted inputs. A more sophisticated estimate would include the time value of the delay in reaching maturity calculated by discounting to obtain the present value of the costs and receipts involved. Losses in the final output can be evaluated on an annual basis and then adjusted for changes in animal numbers or in the disease picture as outlined above.

In the following example this approach was used to evaluate a sheep scab control project in Lesotho in terms of meat and wool lost. The prices quoted are in maloti (M). The total number of sheep in Lesotho is 1 200 000. The value of wool produced per sheep per year is 2.1 kg at M 1.74/kg = M 3.65. The cost of mortality per sheep is M 40 and the price received for an average animal slaughtered is M 50.

Example: Calculation of total annual losses attributable to sheep scab in Lesotho, using different assumptions.

Assumption A:

Annual incidence = 5.5% = 66 000 sheep
Mortality in infected flocks = 25% = 16 500 sheep
Remaining infected animals subject to losses = 75% = 49 500 sheep
Wool loss in infected sheep = 80%
Weight loss in infected sheep = 10%

 Losses due to mortality Cost Current annual wool loss (M3.65/sheep) 16500 x 3.65 = M 60225 Value of dead sheep (M40/sheep) 16500 x 40 = M 660 000 Losses in remaining infected sheep 80% loss in annual wool production (M2.92/sheep) 49 500 x 2.92 = M 144 540 Reduction in value of annual meat offtake due to 10% weight loss in 14% of sheep (M 5 per slaughtered sheep) 49 500 x 0.14 x 5 = M 34 650 Cost of total annual losses M 899 415

Assumption B:

Annual incidence = 1.4% i.e. 1/4 of level under A
Other losses as in A
Cost of total annual losses: 1.4/5.5 x 899 415 = M 224 854

Assumption C:

Annual incidence = 0.1% = 1200 sheep
Mortality in infected flocks = 0
Number of infected animals = 1200 sheep
Wool loss in infected animals = 50%
Weight loss in 14% of infected animals = 5%

 Cost 50% loss of annual wool production(M1.82/sheep) 1200x1.82= M2184 Reduction in value of annual meat offtake due to 5% weight loss in 14% of the infected sheep (M2.5 per slaughtered sheep) 1200x0.14= M 420 Cost of total annual losses M 2604

Two points are worth noting at this stage. First, the choice as to which method is used depends almost entirely on the sophistication of the data available. The first method is used for quick estimates or if little is known about the actual losses. The second method is suitable for more careful calculations when the epidemiology of the disease is better understood or specific investigations have been made.

The second point, namely that it is very easy to overestimate losses from an individual disease and hence the benefits of disease control projects, applies particularly to evaluations based on Method II. Focussing on a particular disease leads to a tendency to see it as perhaps more important than it actually is and to isolate it as the only cause of a particular production loss although a number of other factors, such as other diseases, nutrition and management, are involved. When evaluating losses due to diseases, it is extremely important to keep in mind what the ceiling or limit is on such losses. This ceiling should be identified and, if possible, quantified in general terms. For example, in a given production system overall annual mortality will frequently not exceed 10% of all animals. Some of these deaths will be due to accidents, starvation and the balance to a disease or, more often, to a combination of diseases and nutritional and management factors. Thus a single disease can only be responsible for a limited number of mortalities.

Similarly, within that system, output can only rise to a finite level, which is determined by the limits of the particular species and breed producing under the best possible conditions. The danger when itemising the effects of infertility, abortion, weight loss, lowered milk yield etc is that a slight overestimate of each item may accumulate, or double counting may occur when quantifying linked effects (e.g. abortion and milk loss), so as to attribute to a single disease responsibility for eliminating a vast proportion of an animal's total maximum production.

Table 46. Hypothetical losses associated with untreated cases of bovine typanosomiaisis: Sedentay and transhumant cattle, Mali (1980 prices, MF 1000 = £ 1 or MF 420 = US\$ 1).

a) Calculation of cattle values

 Sedentary herds Transhumant herds Male Female Male Female Average age 3 - 4 3 - 4 2 - 3 4 - 5 Value at average age (MF) 60000 75000 55000 100000 Ratio males/females (%) 30 70 33 67 Weighted average value (MF) 70 000 85 000

b) Possible outcomes of infections - high- and low- level possibilities

 Effect % affected Sedentary herds % affected Transhumant herds High level Low level High level Low level Rapid death within a year* 4 2 800 1 900 10 8 500 5 700 High weight and production loss** 20 7 000 4 900 30 12 800 8 900 Low weight and production loss*** 65 6800 4500 60 7600 5100 Recovery within a year; no loss 11 0 0 0 0 0 Totals 100 16600 11300 100 28900 19700

Assumptions used for high- and low-level estimates:
* High level = complete loss
Low level = 1/3 of value salvaged.
** High level = 50% loss in value of the animal
Low level = 35% loss in value of the animal.
*** High level = 15% loss in value of the animal
Low level = 10% loss in value of the animal.

### 7.3.3 Losses due to disease acting as a constraint on production

As well as causing direct losses, diseases can act as constraints on production by partly determining the producer's efforts to avoid as far as possible the risks of disease in his animals. Disease control policy may bring about changes in the location of production or in the production methods used.

If a disease control policy removes a constraint, the benefits resulting from such changes are called indirect benefits. The losses thus avoided are called indirect losses. Indirect losses are particularly important in cases where the existence of a disease poses an almost absolute constraint on certain types of production or on the use of certain animals in particular areas.

For example in eastern Africa, tick-transmitted diseases, particularly East Coast fever, may prohibit the introduction of improved, exotic breeds of cattle except under extremely efficient control programmed Tsetse-transmitted trypanosomiasis poses a constraint on both agricultural and livestock production tat several levels, often by limiting access to, and the full exploitation of, valuable land resources.

Quantifying such effects can be complex, but it is possible. It principally involves the estimation of changes in the income of the producer groups involved, which would arise if the disease threat were removed and the producers were able to improve existing systems of production or adopt new ones. These income changes can then be related to the effects of the disease control policy.

### 7.3.4 Other losses due to animal diseases

Zoonoses. While the effects of zoonoses on human production or output in terms of lost income and the costs of treatments can be quantified, the costs of mortality and human suffering are difficult to evaluate. As well as these direct losses, indirect losses may exist where the fear of contracting a disease limits human activity.

Trade effects. Outbreaks of some diseases, particularly foot-and-mouth disease, will have a major effect on the availability of export markets to a country. An estimate of costs can be made by assuming that after an initial loss of exports, an alternative market offering lower prices can be found.

### 7.3.5 Secondary effects, externalities and intangible effects

Secondary effects are effects arising upstream (e.g. in the feed industry) or downstream (e.g. in processing and marketing) of the affected production process, as the dependent industries also expand. These effects are seldom evaluated, and should be reflected in the prices of the products directly affected. They can be quantified by calculating the value added at every stage of the production process affected. This "method of effects" is widely used in francophone countries and, from the theoretical point of view, is analogous to calculating and using shadow prices to estimate the opportunity cost.

Externalities occur when the production or consumption activities of one group of individuals affect another without the results being reflected in the market, in costs or m receipts.

For example, pollution of a river by effluent from a firm causes damage which is not paid for by that firm. The shade given by a tree planted and owned by one individual is shared by others free of cost. One farmer's failure to vaccinate his livestock may put at risk the livestock of the whole community.

Externalities are said to be "internalized" when the costs or benefits involved are paid for in some way. For example, the firm could be required by law to install a plant for treating its effluent and rendering it harmless. The owner of the tree could charge people for sitting under it. Failure to vaccinate livestock could be subject to fines imposed by the community.

In a financial analysis, if the externalities are not "internalised", they are not reflected in the costs to individuals, since no one actually pays for them. In an economic analysis some estimate of their effect should be attempted where possible. For example, the cost of pollution of a river can be measured in terms of its effect on fish mortality or on human health. Failure to vaccinate has a quantifiable effect on the direct losses due to the disease.

Intangible of disease are effects that exist but are very difficult to quantify. An example is the effect of a disease risk to people and animals on the quality of human life. People's welfare and behaviour may be modified if they no longer need fear certain diseases (e.g. rabies or brucellosis) or losing their whole herd to rinderpest. Some aspects of this could perhaps be quantified, but generally it is acceptable to state that such effects exist and that they should be taken into consideration. This approach may also be the most practical way of dealing with some externalities.

## 7.4 The costs of controlling disease

### 7.4.1 Introduction

The costs of animal disease control will obviously vary not only with the disease and the type of control policy adopted, but also with the country and region in which the programme is being implemented. The reasons for this are easy to identify: different institutional frameworks, different salaries of those involved, different terrain and different production systems leading to very different transport costs. Nevertheless, it is possible to make some generalisations about the types of cost incurred and the components of these costs.

Non-medicinal prevention

This covers preventive care within the daily routine of an animal production system. The cost is the producer's time spent observing the animals, ensuring that they have a clean environment etc. Non-medicinal prevention can include attempts to contain particular diseases by controlling livestock movements, policing borders and building fences. At a more modest level, they include the costs of protective measures undertaken at markets, the disinfection of vehicles used for transporting livestock and their products etc.

Medicinal measures and the eradication of diseases

The direct actions taken against a particular disease may include:

· Identification of a disease through diagnosis and surveys.

· Treatment of the disease, which usually entails diagnosis, treatment and follow-up. Treatment is a function of the reported incidence of the disease, which in itself often reflects the distribution of veterinary facilities and personnel, and the capacity of the veterinary service to treat a particular problem. Treatments continue to be necessary for as long as the disease remains in the population.

· Prophylaxis or vaccination. This is repeated at specified intervals once the population to be protected has been determined, either as a result of an epidemiological study and/or the producer's decision as to which animals he can afford to protect.

· Vector control, which may be repeated at determined intervals if necessary.

· Use of disease-resistant animals, which may be considered a form of disease control policy requiring experimentation, surveys and folow-up. The costs continue over the whole period during which the animals are used and are calculated in terms of the difference in productivity between resistant animals and the alternative which would have been used.

Eradication normally involves an intensification of one or more of the methods outlined above, which may be combined with a test and slaughter programme. It always involves intensive surveillance and investigative work. The initial costs of eradication are high but should be substantially reduced once the objective has been achieved.

In examining and comparing different disease control policies, two aspects should be emphasised:

· The overall level of costs and their relation to the funds available.

· The timing of expenditures over the years. Treatments and prophylaxis typically involve costs over a number of years, while eradication demands a much higher level of expenditure but for a much shorter period. Surveillance and diagnostic work must accompany all policies. In all cases the present values of the costs, i.e. the sum of the discounted costs, need to be compared, not the simple sum of costs.

### 7.4.2 The components of disease control costs

Tables 47, 48, and 49 give examples of how the costs of disease control work are allocated between different items. The examples vary from eradication through vector control, as in the case of tsetse-transmitted trypanosomiasis in Nigeria, to eradication through identification and elimination of diseased animals, as in the case of brucellosis control in the U.K., and control of arthropod-related diseases by dipping, as in the case of sheep scab in Lesotho.

Table 47. Breakdown of costs of sheep scab control by dipping, Lesotho.

 Item %of total costs Dipping chemicals 38.2 Dip tank construction and repair 5.4 Dipping certificate books 0.2 Vehicle purchase 1.6 Vehicle running 9.0 Purchase and maintenance of mules and saddlery 0.2 Information and publicity 0.3 Subsistence allowances 4.7 Field staff salaries 20.5 Administration and senior staff 17.6 Miscellaneous 2.3

The major components of general costs usually are:

· staff costs, including administrative costs,
· labour costs, and
· vehicle depreciation and running costs.

Added to this are costs linked to the specific nature of the project, such as:

· dip tanks and dipping chemicals,
· insecticides,
· vaccines or drug treatments,
· syringes, needles, cool boxes etc. and
· incentive payments or compensation.

In the case of more routine work, especially vaccination, it is often useful to distinguish between:

· The cost of administering the treatment or vaccination, sometimes called the cost of intervention, which includes all the costs involved in running the veterinary service and of the facilities used for the relevant treatments or vaccinations (Table 50).

· The cost of specific equipment, such as drugs, syringes, needles etc. necessary for a particular treatment or vaccination.

Table 48. Breakdown of costs1 of tsetse eradication by ground spraying, Nigeria (1977/78 prices, N = £ 0.70 = US\$ 1.43).

 Year Land reclaimed (km²) Cost/km² (N) % of total costs Insecticide Labour Junior staff Senior staff Vehicle running Depreciation 1973 /4 13 300 48.3 17.2 42.4 15.5 2.8 3.8 18.3 1974/5 8390 73.2 18.8 41.7 13.8 2.5 3.9 19.3 1975/6 7622 113.0 16.1 44.7 20.9 2.6 2.1 13.6 1976/7 6 148 159.2 14.0 48.8 18.4 2.9 2.0 13.9 1977/8 1 271 293.8 13.5 25.4 30.0 1.6 6.4 23.1 Average 16.7 43.2 17.2 2.5 3.4 17.0

1 All costs calculated at constant (1977/8) prices; the increase is not due to inflation.

Table 49. Breakdown of costs of brucellosis control, U.K., 1973.

 Item Cost (£ '000) % of total cost Headquarters staff 89 0.5 Divisional staff 1 656 9.3 Local vet. Inspector's costs 1848 10.4 Blood tests at the Central Veterinary Laboratory 63 0.4 Divisional blood tests 200 1. I Milk ring tests 53 0.3 Computer 53 0.3 Mileage 17 0.1 Incentive payments 12027 67.5 Compensation (reactors end contacts) 1 137 6.4 Vaccine (S19) 203 1.1 Local vet. Inspector's costs (Free calhood vaccination scheme) 483 2.7 Total 17 829 100.0

### 7.4.3 The importance of fixed and variable costs in planning disease control policy

As in any costing exercise, in costing disease control measures it is essential to distinguish clearly between variable and fixed costs. Variable costs include the cost of:

· drugs for treatments, vaccinations, insecticides or acaricides;
· syringes, needles and other small equipment; and
· staff travel and subsistence allowances.

Fixed costs or overheads in disease control include:

· vehicle running (this can be regarded as a semi-variable);
· permanent staff salaries;