Business Briefing: Counting the cost of foot and mouth

The true cost of a foot and mouth episode may take years to emerge, but previous examples can serve as a guide. The duration, scope and type of virus all determine how profoundly the farming, meat and tourism industries are affected.

What are current estimates of the impact?

The Meat and Livestock Commission puts the basic loss from the automatic three-month export ban on meat and livestock at £10m per week, but the scale of the outbreak has so far been minuscule compared to that of 2001. This time, just under 200 animals have so far been slaughtered, compared to as many as 10 million last time – at a total cost of anything between £7bn and £10bn from loss of exports, higher meat prices and compensation paid to farmers.

The Government has ordered 300,000 doses of vaccine to be produced, ironically by the Pirbright firm at the centre of the outbreak, the American-French company Merial Animal Health. This vaccine will not be cheap, but it will be less expensive than failing to prevent a full-blown epidemic.

Tourism suffered significant losses in 2001 and 2002, estimated by the then Countryside Agency at between £2bn and £3bn.

What are the effects of vaccinating livestock?

The UK would lose its status as a foot and mouth-free country and exports to non-EU countries of meat and livestock could be banned for at least six months. The current export ban is already affecting producers of beef, lamb and pork, who sell millions of pounds worth of meat to markets worldwide. Many have only recently begun to export to the same range of countries that they did before the 1996 BSE outbreak, so this new ban has come as a sharp blow.

How big is the industry overall?

The UK exported £504m in meat products and livestock last year. There are at least 3,000 farming members of the National Beef Association, and, in a pork-products industry worth £700m a year, five million pigs. Before the BSE outbreak, the UK exported more than 270,000 tonnes of beef around the world each year, worth £650m.

>What happens next?

Once the disease has been contained there will doubtless be an inquiry into the causes of the outbreak and how it can be prevented in future. Any farmers who have had their animals destroyed as part of the outbreak will be entitled to automatic compensation, but the full costs to the UK economy will depend on the damage to the country's export business and whether the ban is (as the industry hopes) lifted after just three months. Otherwise, the cost will potentially rise to billions, rather than merely tens of millions of pounds.