January 2012 - Vol 98 No. 1 

AI insurance for poultry industry

by DAVID SCHMIDT
ABBOTSFORD – The Risk Mitigation Steering Committee (RMSC) is recommending the regulated poultry industry establish a captive insurance company to develop an avian influenza (AI) insurance program. The company would be owned and controlled by the industry, meaning any profits would accrue to the growers.
The RMSC was formed in 2008 to find ways to protect producers from losses should there be a repeat of the 2004 AI outbreak. With the support of the B.C. Poultry Association, the RSMC has now hired consultant Harvey Sasaki to work though the details.
“We anticipate the start-up costs would be about $50,000 and administration costs would be about $100,000,” RMSC chair Michel Benoit told turkey growers, December 6.
Premiums will vary between sectors (turkey, chicken, layer and hatching egg) according to how much risk exposure there is in each group. That exposure has been reduced dramatically since the RMSC began investigating an insurance program as the Canadian Food Inspection Agency (CFIA) has since changed its compensation formula to better reflect actual costs.
“CFIA has closed the gap on costs in its compensation,” Benoit says, noting the biggest improvements are in the table and hatching egg sectors. “Broilers did well in 2004 and the new formula won’t change it much. Table and hatching eggs had major losses and the new formula reduces the gap but still has a large shortfall for young flocks. Turkeys fare the best under the new CFIA model but they, too, have a shortfall at the beginning of the flock.”
As a result, the industry has revised its funding requirement from about $10 million to just over $7 million.
Because of the small size of the sector and the minimal compensation now required, turkey growers would only have to put up $250,000 of the total, Benoit said.
“We already have $750,000 in reserve so your levies shouldn’t change,” he told turkey growers.
If implemented, the program would require mandatory participation by all registered poultry and egg producers. Because that is the case, Benoit said a vote will be held among all producers before the company is actually established.

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