Veterinary services in the food animal sector have evolved from individual treatment of diseased animals and from the control of major infectious diseases by eradication, to collective prevention of diseases by vaccination and disease monitoring programs. This led to the development of integrated Herd Health and Production Management (HH & PM) programs. In an HH & PM program the technical and theoretical well-known approaches used in individual animal health care, are broadened to incorporate the herd or farm as the unit of interest. The primary goal is to improve productivity and profit by measuring, assessing and improving management performance. Economics is a science, which illuminates how people exercise choice in the distribution and consumption of products, and in the consequences of those decisions for individual and social benefit. Animal disease therefore has economic, as well as biological, impacts because it affects the well being of people. Economic analysis is frequently concerned with identification of the optimum level of output in relation to total resource use, and the most efficient combination of resources within that total. The criteria for efficiency are both economic and technical. Other factors have also increased veterinary interest in economics. First, government veterinary services are increasingly required to justify budgets, as the role of the public sector diminishes. Secondly, as the importance of agricultural output declines the economic justification for animal disease control is questioned more closely. Thirdly, diseases of farm livestock are barriers to international trade. This problem has become particularly acute with the harmonization of trade (which requires free movement of commodities) and the global attempts to liberalize world trade through the General Agreement on Tariffs and Trade (GATT). Fourthly, rising incomes and changing social values focus attention on qualitative aspects of food production, the welfare of animals, and diseases of companion animals. This necessitates a widening of economic perspectives from the initial, relatively narrow, evaluation of disease in farm livestock. The importance of financial evaluations in livestock enterprises has been partly responsible for the increased application of economic techniques to animal disease control at farm and national levels. In Pakistan, the principles of 'veterinary economics' (animal health economics) were first outlined and emerged as a specific area of interest in veterinary medicine since late 1980's. There has been a tendency to consider economic evaluations as separate, optional exercises, distinct from epidemiological investigations. However, this attitude is erroneous: economic assessments are integral parts of many epidemiological investigations, providing a complementary perspective to that of biological (i.e., technical) studies with which the veterinarian is more familiar because of his/her professional training. Planning, execution and control are components of every enterprise. However, the difference between a livestock and an industrials enterprise is that in the case of a livestock, the three management components are incorporated, in one person and in the case of an industrial enterprise divided among many individuals. Generally, disease in domesticated livestock populations reduces the quantity and/or quality of livestock products available for human consumption (i.e., benefit). Examples of such products range from meat and milk to pony rides and the companionship of pets. To be more precise, disease causes production from a given quantity of resources to be of lower quantity and/or quality than could be obtained in its absence. Disease increases costs in two ways. First, because resources are being used inefficiently, the products actually obtained are for an unnecessarily high resource cost: in the absence of disease, the same (or more) output could be obtained for a smaller (or the same) expenditure of resources. Secondly, there is a cost to people, who are deprived because they have fewer, or lower quality, products to consume; that is they obtain lower benefits. In summary, disease increases expenditures (production costs) and decreases output (consumer benefits). However, a clinical diagnosis should not be an end point but a starting point to search for underlying causal risk factor in management and in environmental conditions that are contributing to the disease and/or production deficiencies. Therefore treatment of a disturbance should always be accompanied by a change in managerial or environmental risk factors. A tool that veterinarians can use to assist farmers in improving their management practices is by implementing HH & PM programs in their services that have an in-depth relationship with livestock management. The relationship between the resources that provide the inputs to production and the goods and services that comprise the output is called a production and the goods and services that comprise the output is called a production function. Livestock production is a specific example of a physical transformation process. Disease impairs this process (i.e., reduces output) and sometimes results in death. Thus, there is a loss of efficiency that poses both technical and economic problems. Although the idea initially may seem unusual, technical and economic efficiency are seldom synonymous. Under normal circumstances of diminishing physical returns, they are the same only if inputs are costless. For example, it is efficient in an economic sense for a dairy farmer to aim for maximum milk yield per cattle only when the cattle feed is free. If the farmer has to pay for the feed that, of course, is invariably the case, then it can be shown that optimum economic efficiency is obtained when the yield per cattle is less than the maximum technical potential. Furthermore, the overall economic optimum (maximum profits) will change with variations in relative prices of both output and inputs and with methods of production. This observation is important in the context of animal disease, because the incidence of disease that is acceptable from an economic point of view may well change with relative prices and techniques of production. The total economic cost of disease can be measured as the sum of output losses and control expenditures. A reduction in output is a loss because it is a benefit that is either taken away (e.g., when milk containing antibiotic residues is compulsorily discarded) or unrealized (e.g., decreased milk yield). Expenditures, in contrast, are increases in input, and are usually associated with disease control. Examples of control expenditures are veterinary intervention and increased use of agricultural labour, both of which may be used either therapeutically or prophylactically. Note, therefore, that economic costs are more than just the sum of financial outlays, and it is important not to confuse the two. There is a requirement for improved disease reporting systems at the national level to identify problems, define research and control priorities and assist in the prevention of spread of infectious agents. The advent of low-cost computing following the microelectronic revolution offers powerful means of storing, analyzing and distributing data. Information can be transported rapidly using modern communications systems. These developments increase the scope for efficient disease reporting and analysis of the many factors that contribute to clinical disease and suboptimal production, both of which require increased statistical acumen among veterinarians. Epidemiology has developed to supply these contemporary veterinary requirements. Additionally, residues need to be identified and eliminated. This includes contamination of meat by pesticides and hormones as well as the more long-standing issue of antibiotic residues. The effect of diseases on production can be realistically estimated only in relation to decreased production in the herd of flock rather than in a single animal. The economic impacts of disease and of attempts at its control similarly are evaluated best in groups of animals. Veterinarians practicing in the livestock sector continue to control and treat disease in individual animals. Developments in molecular biology are improving diagnostic procedures, and offer new opportunities for vaccine production. Additionally, the multifactor nature of many diseases necessitates modification of the environment of the animal and management practices, rather than concentrating exclusively on infectious agents. In conclusion, the HH & PM practitioner should be involved in many aspects of livestock management, and be concerned with improvement of livestock productivity through better management. However one should realize that animal health is of primary importance to animal production. Consequently without an optimal health status of the herd it is impossible to improve animal productivity. Dr. Alamdar Hussain Malik is presently working as Secretary/Registrar, Pakistan Veterinary Medical Council with the mandate to establish uniform standards of basic and higher qualifications for graduates & postgraduate in veterinary and animal husbandry profession and to regulate the registration, practice and conduct of the veterinarians. Email: livestockvision@yahoo.com