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Bird Flu Outbreak: Urgent need for insurance innovation to safeguard food security

Bird Flu Outbreak: Urgent need for insurance innovation to safeguard food security
06-10-23 / Chris Smit

Bird Flu Outbreak: Urgent need for insurance innovation to safeguard food security

Johannesburg - The current bird flu outbreak, described as one of the worst in South Africa, has had a profound impact on the poultry industry, posing significant threats to both the economy and the country's food security.

The South African Poultry Association (SAPA) confirmed that the number of avian flu cases in South Africa this year is higher than in any year since the first outbreaks were reported in commercial farms in 2017.

South African poultry farmers have warned of possible chicken and egg shortages with one poultry producer reporting a loss of almost two million chickens this year, worth more than R100 million because of the disease.

“The ripple effects of such losses extend far beyond the farms, threatening the transport industry, food security and our economy. A further pressing concern that needs to be addressed is that of appropriate insurance cover for poultry farmers caught in this predicament,” says Hermanus van der Linde, CEO of IntegriSure Brokers.

One might assume that insurance could provide a lifeline for poultry farmers in such dire circumstances. However, as van der Linde explains, the reality is quite different. "When it comes to insurance for poultry farmers, we typically look at two categories: fire and weather risks, and business interruption. Cover against fire and weather risks would coincide with damage or destruction of chicken houses. Business interruption covers these farmers against fixed expenses such as electricity and loss of profits after a devastating event such as a fire or extreme weather occurrence. The current scope of cover therefore leaves poultry farmers exposed and vulnerable as there is a noticeable absence of protection against pandemics like bird flu.”

In the face of more frequent bird flu outbreaks, it begs the question: Why hasn't the South African insurance industry shown innovation by providing cover against such pandemics? Other countries have successfully found solutions to address these challenges. For instance, British poultry company, Noble Foods, 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.

“As 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,” concludes van der Linde.

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