A vertically linked dynamic partial equilibrium model to analyze market shocks caused by HPAI control in the Dutch egg production chain

To analyze the market effects of HPAI control in the Dutch layer sector an integrated modelling approach was developed to simulate these effects. This approach included (1) an extensive epidemiological simulation, (2) farm level costs calculation and conversion, and (3) partial equilibrium (PE) modelling of the Dutch layer sector. Model structure and behavioural equations of the latter are described. The basis for the analysis of model behaviour were simulated HPAI epidemics which resulted in changes of stocks, i.e. shocks. These epidemics were simulated for different regions, control strategies and severity. Using the epidemiological input subsequently model behaviour was analyzed on the impacts of supply and demand shocks, trade bans and channeling restrictions. The results showed a remarkable impact of the pyramidal production chain structure on the market effects: culling of parent stock during the epidemic could result in an under-capacity of subsequent levels of the production chain with associated price effects. In some cases, restoring the starting situation could take 3 years. Moreover, different and sometimes conflicting market effects per chain level could be observed. Finally, the impact of demand shocks and the potential for channeling to industrial processing of eggs was observed. The results were discussed in view of conceptual validity and internal model verification, data validity and operational validity. It was concluded that this modelling approach provides a suitable basis for extensive analysis of market effects of HPAI epidemics.