An Impact of Johne’s Disease on a Large-Scale Dairy Farm - A Case Study Using Cash Flow Analysis

The expansion of animal diseases could cause the damage for long time. The work and cost of disinfection can be considerable, depending on the scale of production. Moreover, unstable cash flow will be caused. The manager or owner has to pay the expenditure on wages, feed and things like that for milk production, even if the shipment of milk isn’t allowed. Information on the change in performance after the infection of Johne’s disease for farmers is limited. Effective information must be provided like what changes, how it changes and what kinds of disinfection measures are effective after outbreak. The outbreak of infections is a destabilizing factor in the normal cash flow of dairy farms. The farm targeted for this study is a dairy farm in Hokkaido, Japan. That had, as o f 2010, about 300 cows and 50 ha of grass land. Three family members and some hired workers were engaged in dairy farming. The first cow infected with Johne’s disease was confirmed in 1999 and more than 200 cows were culled for disinfection. The accounting data that showed the change in the performance of this farm were used in this study. Stable cash flow is needed for stable management. Cash flow analysis is used in this study to illustrate the change in the performance after an outbreak of Johne’s disease in dairy farming. The cash flow statement is mainly used in accounting and acknowledged in international accounting standard. The depreciation cost of cow made from increased culling of infected animals creates a surplus of cash flow from operations. However, a decline in compulsive and/or voluntarily culled cows, therefore a decline in sales of cow reduces cash flow from operation and free cash flow. Outbreaks of Johne’s disease seriously impact the cash flow of large-scale dairy farms.