Disease outbreaks in the agri food chain have been making headlines for years and can have devastating impacts on the infected sector. Mad cow disease (BSE) nearly destroyed the UK beef industry in the 1990s, the physical, financial and reputational damage was immense, with China only lifting an import ban earlier this year.
The recovery had barely started when the 2001 Foot and Mouth outbreak hit farmers. Two very different diseases but with the same economic effect on the producers business (and those businesses relying on their supply) and one the farmer cannot possible hope to recover from without financial support.
Farmers have recently faced similar challenges from a wide range of disease perils: African Swine Fever (pork), Avian Influenza (poultry), Xylella fastidiosa (olives) to name just three.
These diseases, and others, will persist for years to come, and weak spots in biosecurity make dealing with them more difficult for agricultural producers. Shoring up defences will give the sector much-needed resilience, but success depends on input from international governments all the way down to individual farmers.
Agricultural disease affecting crops and/ or livestock is not a local issue. Whether as individual consumers or commercial food and agriculture businesses, the ingredients we use and the food we eat come from all over the world.
Agricultural produce moves faster and farther than ever before and the timeframes available to identify and contain a disease before it enters supply chains is shrinking.
Animals are moved more regularly, whether on farms or to and from auctions and abattoirs. Increased transportation and supply chain complexity increases the potential spread of disease and makes containment more difficult.
Warmer temperatures, driven by climate change, enable some diseases to live for longer outside of the host animal, again increasing their ability to spread. Similarly, pathogens that infest host organisms at higher temperatures produce offspring that cause higher infection rates and thus spread much faster.
This aspect of global warming has had little media attention but has the potential to significantly accelerate future epidemics.
Such epidemics will also be assisted by the depleted defences that many livestock herds now have after years of breeding for production have diminished diversity levels to historical lows.
Research by the Food and Agriculture Organisation of the United Nations found that almost 100 livestock breeds worldwide became extinct between 2000 and 2014. In addition, 17% of the world’s remaining farm breeds are at risk of extinction.
Animals bred purely for production have very little genetic diversity when compared to local breeds. This inbreeding makes them more vulnerable to bacterial or viral infections and researchers say it could spell long-term disaster for the farming industry.
These are only some of the issues that contribute to the accelerated spread of agricultural disease and increase the potential risks faced by the entire sector. But there is also a lot that individual producers, agricultural conglomerates and governments can do to mitigate potential losses.
ROLE OF REGULATION
Regulations can be effective, but only if they recognise the current reality. Following the Foot and Mouth outbreak in 1967, the UK altered their regulations. However, the regulations remained unchanged between 1967 and the 2001 outbreak whereas farming practices swiftly altered. When the 2001 outbreak occurred, there was a slow response time to isolate infected animals and by the time action was taken, the disease had already spread significantly.
It is important to keep in mind the recent outbreaks of Foot & Mouth disease in the UK and the slightly more historic outbreak of ‘Mad Cow Disease’ which shows that despite the maintenance of high quality regulatory standards the risk nonetheless exists and indeed can be extremely costly to eradicate. (ie. Foot and Mouth leading to the cull of 10 million animals in the UK 2001 outbreak Mad Cow Disease leading to the slaughter of 4.4 million animals).
BEEFING UP BIOSECURITY
The gap between the best and worst biosecurity practices worldwide is s imply too wide. Even in the most developed markets with the tightest regulations and the toughest sanctions, some farmers and food companies are well wide of the mark.
It is imperative that governments and industry bodies push for increased standards at every turn. Simple measures carried out consistently and diligently make a huge difference.
When animals are moved, for example, the facility they have vacated should be washed down and sanitised before animals are returned to that location. Is protection in place to stop wild birds mixing with commercial flocks and spreading disease?
At a national level, regulation can mandate required operational standards and the Danish government is currently considering erecting a border fence to prevent wild boars entering the country and spreading African Swine Fever to commercial herds.
New Zealand have worked on successfully eradicating the pests that spread Bovine TB. Whilst the costs have been significant, the results have shown a significant reduction in Bovine TB. By comparison, the UK opted for the culling of infected and exposed cattle with little success in reducing the number of cases of Bovine TB. This lack of success was so significant that the decision was made to begin culls of a potential disease carrier – Badgers. The total cost of the badger cull to date is estimated at GBP 40million, opinions of the success of this policy are divided with the government and farmers at odds with some scientists and the general public.
EDUCATION AND COOPERATION
Agricultural risk management strategies and insurance remain relatively low profile outside of North America and Western Europe. The majority of farmers outside these territories have no financial backstop in place when disease strikes.
This is something the insurance industry is trying to change by promoting better risk management and improving risk transfer products.
Better risk management procedures will also make access to insurance cover easier for farmers. For example, most livestock insurers exclude cover for notifiable diseases at the first time of asking, but this can be written back into policies for those that demonstrate they have robust biosecurity measures in place.
JLT Specialty work with farmers to understand their risk management practices and where it is clear there is a demonstrable high standard of husbandry, biosecurity, animal health, welfare and a track record of excellent in farm management, they will negotiate with insurers to include bespoke extensions that will provide farmers with a wider level of cover.
Similarly, government support is vital. Crop insurance in its current form can often amount to a significant percentage of a farmer’s turnover and is unaffordable to many. However, government-backed schemes and subsidies in North America, China and India have significantly improved penetration, giving individual farmers a means to protect their livelihoods and stay in business.
The industry is also exploring new approaches to cover such as parametric policies that pay out a predetermined amount if a specific event occurs. This can work for farmers where the spread of a specific disease is expedited by certain climatic conditions. This simplifies the insurance both pre and post claim, although such policies are not mainstream.
Similarly, insurers are designing non-damage business interruption policies that will respond if farmers suffer revenue falls as a result of disease. Again, these policies are not widespread, but they underline insurers’ ambition to create financial solutions for the agricultural sector.
Disease affects crops and livestock in every country in the world, while longer and more complex supply chains mean the knock-on effects are not just felt locally. The faster the global agricultural sector can close the gap between the most and least bio secure operations, the better it will be able to combat this issue to everyone’s benefit.
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For more information please contact Simon Lusher, Head of Food & Agri on +44 (0)20 7459 5550.