Animal disease outbreaks and upstream soybean trade

Abstract

Animal disease outbreaks have been extremely disruptive to global livestock industries in recent years. In light of the modern integration of international supply chains, to what extent have these disruptions been experienced by upstream stakeholders? This research investigates the upstream impacts of global animal disease outbreaks in the international soybean market. We employ a two-step procedure to deduce the impacts of animal disease on upstream soybean trade. We first use a standard, econometric gravity model to empirically estimate the relationship between observed trade and livestock production patterns (accounting for each country’s economic masses and trade frictions). We then conduct a counterfactual analysis with our estimated gravity relationships to assess the value of lost soybean trade using a global repository of disease-specific animal mortality data. Our results indicate that between 2005–2020, animal disease outbreaks have cost the international soybean market approximately $5 billion in lost trade. The average exporter loses as much as 2% of its export potential each year. These losses are primarily attributable to cattle disease outbreaks in East Asia and South America. Foot-and-mouth disease alone has cost the soybean trade market approximately $4 billion in lost trade over our sample period.