UK poultry farmers stand to lose as much as £30 million
in a major outbreak of avian flu due to EU regulations affecting
government compensation. The regulations mean there is a potentially
significant gap between the compensation received for slaughtered
birds and the amount a poultry farmer could have expected to
earn for each bird.
In response, leading insurance broker Aon has launched an insurance
policy to bridge the gap between government compensation for birds
slaughtered at an infected farm and the profit from the wholesale
value of the poultry.
Poultry farmers are legally obliged to advise the government if
they suspect that their stock is infected with avian flu. The Department
for Environment, Food and Rural Affairs will immediately order
the farm to slaughter all poultry at the location, dispose of the
dead birds and clean up the site.
The government will compensate farmers per bird but, due to EC
regulations, are restricted to reimbursing the price of the chicken’s
market value on the day before slaughter. Aon research found that
the cost of a two day old chicken is just 34p in comparison to £1.21
for a fully grown two month old bird weighing 1350-1550g. Taking
into account that the farmer would not have about 75p of costs
per bird for feed, heat and light, according to Aon research, they
would lose out on 12p for each bird. With over 255 million birds
in the UK according to the GB Poultry Register, a widespread out
break of avian flu could cost the industry over £30 million.
Aon’s new policy will cover loss of income resulting from
interruption to a farmer’s business due to a bird flu outbreak.
As such, the policy will enable poultry farmers to claim the difference
in cost between the government compensation for the slaughtered
broiler chickens, laying hens or turkeys and the wholesale value
of the bird at two months. The insurance is available to farmers
through Aon and is underwritten in an exclusive facility with Lloyd’s.
Steve Hibbert, broking manager at Aon, said: “We’ve
already seen strands of avian flu in Suffolk, Merseyside and North
Wales threatening our poultry farmers in 2007. Before the next
strand hits the UK, we wanted to create a policy to protect poultry
growers from business ruin.
“An avian flu outbreak could have devastating consequences
on your profits but adequate insurance and a business continuity
plan can help prevent this. As the government will only provide
limited compensation to farmers, the new policy will address the
risk to your business and provide the funds to replenish your stock.”
Aon UK is ranked by A.M. Best as the number one global insurance
brokerage based on brokerage revenues and voted best insurance
intermediary, offering classic car insurance, high value home insurance,
and media insurance and construction site
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