Farmers and agribusiness workers are set for a sharp rise in insurance premiums and litigation costs, according to City law firm Vizards Staples & Bannisters.

The warning follows a new EU directive which redefines the term 'product' to include primary agricultural products such as meat and eggs, in the wake of CJD and other food scares. The directive must become UK law by the end of this year.

Previously, basic agricultural products were not subject to the strict principals in current legislation and the directive aims to redress this in the interests of consumers. Agri-producers will find themselves in the same position as any other manufacturer of products which cause injury to consumers.

"For the insurance industry the effect of the directive opens up a whole market for product liability insurance," said Vizards partner Michael Mitchell. "In the medium to long-term the importance of risk management is increasingly crucial in this ever more litigious area."