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The Bird Flu outbreak, with one producer potentially losing nearly two million chickens valued at R100 million, underscores the importance of farmers having insurance for unforeseen events like this.
The current outbreak, deemed one of South Africa’s worst, profoundly impacts the poultry industry. It poses significant threats to the economy and the nation’s food security, according to Hermanus van der Linde, CEO of IntegriSure Brokers.
The South African Poultry Association (Sapa) confirmed Avian Flu cases in South Africa this year surpass any year since the initial outbreaks in commercial farms in 2017.
South African poultry farmers now warn of potential shortages in chicken and eggs. Van der Linde emphasises the repercussions of these losses extend far beyond the farms, jeopardising the transport industry, food security, and the economy.
While one might assume that insurance could offer a lifeline for poultry farmers in such dire circumstances, Van der Linde reveals a different reality.
“In terms of insurance for poultry farmers, we typically consider two categories: fire and weather risks and business interruption. Coverage against fire and weather risks aligns with damage or destruction of chicken houses. Meanwhile, business interruption safeguards these farmers against fixed expenses, such as electricity costs and loss of profits following a catastrophic event like a fire or extreme weather incident.”
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Therefore, the current scope of cover leaves poultry farmers exposed and vulnerable as there is a noticeable absence of protection against pandemics like Bird Flu, he warns.
“With the possibility of more frequent Bird Flu outbreaks, the question is why the South African insurance industry has not shown innovation by providing cover against such pandemics as other countries have successfully found solutions to address these challenges.”
He says British poultry company, Noble Foods, for example, collaborated with NFU Mutual, an insurance company, to launch Bird Flu insurance schemes that provide business interruption cover after an outbreak.
“Amid this insurance gap, brokers play a crucial role in assisting poultry farmers during such outbreaks. While there might not be specific insurance products available to safeguard against pandemics like Bird Flu, brokers help farmers constantly assess their cover and risk exposure. This guidance can prove invaluable in navigating the complexities of the insurance landscape during times of crisis.”
While the South African poultry industry grapples with the devastating impact of the Bird Flu outbreak, it is essential to re-evaluate insurance policies and consider innovative solutions that can protect farmers, ensure food security and safeguard our economy, he says.
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