Two leading packing companies have prepared schemes to insure egg producers against the threat of salmonella.
Noble chief executive Peter Thornton announced at the BFREPA conference that the company would provide its producers with free salmonella insurance from the new year when changes to the national control programme will take effect. Following the announcement by Peter Thornton, Stonegate revealed that it had prepared a programme to cover members of its Columbian Blacktail producer group. Both announcements come in the wake of EggSell’s launch some weeks ago of an industry wide policy against the loss of income from both salmonella and avian influenza.
Peter Thornton drew applause from the audience when he announced to conference, "In the next couple of weeks we will be writing to producers to say that we are taking on salmonella insurance on behalf of the producer base. It will be a free of charge insurance scheme with effect from January," he said.
Noble has since provided the Ranger with more details about the scheme. The cover will be available to all producers subject to them testing salmonella free currently and subject to them having a satisfactory veterinary audit. Cover starts on January 1 and all producers will be covered if they are salmonella free, even though the round of audits may not be complete until March.
In the event of a confirmed positive test there would be two options available – immediate slaughter with compensation for the value of the stock or send the egg for heat treatment with compensation covering the loss in egg value. "The choice of either immediate slaughter or heat treatment of the egg is at our discretion and will depend upon circumstances at the time and will include discussion with the producer concerned," according to details provided by Noble.
In the event of slaughter, Noble says compensation will be paid as a lump sum "as soon as is practicable and normally within 30 days. The amount payable will be the stock value from the Defra tables for slaughter for disease control purposes. In the event of the heat treatment option the egg value difference will be paid via the producer’s normal egg payments."
Noble has confirmed that cost of cover to the producer is free and it says the only eligibility requirements are testing salmonella free currently and a satisfactory audit, although suspension from Lion will invalidate the insurance for the period of suspension. Noble says it reserves the right to refuse insurance to any producer who fails to take proper steps to control salmonella. "As with all insurance policies there is deductable excess which in this case is 10% of the value," said Noble.
Stonegate has taken a different approach to the issue. Divisional director Richard Kempsey said the company had considered making use of commercial cover but had decided in the end to establish a self-funded insurance scheme through the creation of a co-operative society. At the moment the scheme covers only members of the company’s Columbian Blacktail producer group who supply eggs for Waitrose. If it proved successful, however, the same approach could be used to cover other producers later, said Richard.
As with the Noble scheme, cover will begin on January 1, although there will be a cost incurred by Stonegate producers. Richard said rates would be 6.5p per bird per year. For that a producer who suffered a positive result would receive £1,500 towards the cost of second sampling. Richard estimated that the full cost of the second test could range from £1,500 to £4,000 depending on the number of birds and the type of test required. If the second test was positive, he said a producer would receive compensation for the stock based on Defra’s published avian influenza table, which was updated every two months.
Stonegate and Waitrose have paid for the cost of setting up the mutual society and will pay the ongoing administration costs of the scheme. The scheme, itself, will be run by the producers through four producer directors. Richard said producers could amend cover and rates in any way they wished as it was a self-financing scheme run for and by the producers themselves. So far 55 of the 105 members of the Columbian Blacktail group have joined.
The launch of the EggSell scheme was reported in Ranger last month. Stewart Elliott says the scheme is open to all egg producers. "It is available to producers on any method of production and anywhere in the country. It is also open to overseas producers. We have actually had a large amount of interest from abroad."
Under the EggSell scheme, a producer would pay 5.5p per bird per year for salmonella cover. "That is less than the cost of one egg. We think it’s affordable. The risk may be small, but if you do get salmonella it could finish you off," said Stewart, who said that the EggSell insurance cover would provide compensation for loss of income rather than just compensation for the value of the birds. The policy will also cover 75 per cent of the cost of a second test. The policy is backed by Lloyds of London. For an additional 4.5p per bird EggSell will provide AI cover.
Friday’s say they are exploring all the options at the moment. NFU Mutual is a company that received some implied criticism at the BFREPA conference when NFU president Peter Kendall was challenged about why the insurer would not provide cover for farmers against salmonella. He said it was a matter for NFU Mutual to determine what risk it was prepared to insure. NFU Mutual confirmed to Ranger that it would not provide salmonella insurance at the moment, although it would review its position again in 2009. The company would not give reasons for its refusal to provide cover.
BFREPA chairman Tom Vesey said he was delighted that insurance cover against salmonella was now available. "In principle it is an excellent idea, although producers will probably need to see the detail. There are a lot of factors involved and we probably need to see how things work out over the coming months."
