Identifying the significance of a Foot and Mouth Disease outbreak on the South African beef industry

Abstract

Foot and Mouth Disease (FMD) is a highly contagious viral disease endemic to South Africa (SA). As accepted by the World Organisation for Animal Health (OIE), South African had an FMD-free zone where vaccination was not practised, until an outbreak in January 2019, leading to the shutdown of SA’s beef exports. While bilateral agreements were made between certain of SA’s trading partners, the outbreak of FMD was generally regarded by industry role players as having a considerable impact on the beef industry of South Africa; however, the extent of this impact was not quantified. This study aims to quantify the impact that an FMD outbreak has on the average beef carcass price in SA. By making use of SA’s volume of beef exported as a proxy to indicate FMD (given that an FMD disease outbreak prevents the export of beef unless bilateral agreements are made between specific trading partners), ordinary least squares (OLS) regression indicated that exports do have a statistically significant impact on the average beef carcass price in SA. However, diagnostic testing on the results showed that the model contained defects and, therefore, was unsuitable for hypothesis testing. On this basis, while the study supported the need to quantify the impact of FMD outbreaks on the South African beef industry, it is recommended that further research is needed, especially noting the structural shift created by the outbreak, as the country’s FMD-free-zone status is yet to be reinstated at the time of writing this study.