SME businesses could be hardest hit
Specialist underwriter Crowe Livestock has warned that the recent foot and mouth outbreak has yet to reveal the full extent of financial casualties among industries that support farming.
While affected farmers and cattle owners will receive compensation from the government for animals that have been slaughtered compulsorily, no such compensation will be paid to support industries that have suffered financial losses. Their difficulties are compounded by a great variance in the take up of insurance among them. In fact, many may already be facing bankruptcy.
Ancillary agricultural industries such as livestock markets and abattoirs, hauliers, importers and exporters, are among those at risk. Despite the outbreak being contained to a small area in Surrey at present, the difficulty for producers is that the export of cattle could be banned for up to three months from the date of the last outbreak.
Many of the firms in these supporting industries are SMEs. Those without adequate business interruption insurance will struggle to survive with no cash flow during this period.
Emma Stamper, Managing Director of Crowe Livestock Underwriting said: “The latest outbreak of FMD has come at a difficult time for the farming industry on the back of recent flooding. The reopening of the Export markets for cattle in the last 12 months will obviously be affected by the continuing movement restrictions now in place.”
She added that even farmers that are entitled to compensation may struggle: “The latest outbreak will cause great difficulty to different farmers as government compensation does not take into account the financial losses attributed to movement restrictions causing livestock to be held on farms for longer than originally intended. This will lead to increased costs for instance in respect of feeding and providing additional housing. As a consequence of the huge costs associated with compensating farmers during the last outbreak in 2001, current compensation levels for animals have been vastly reduced. Crowe Livestock is able to provide bespoke insurance solutions to alleviate the financial burden of these unexpected losses.“
Crowe Livestock was founded in 1996, and works with over 60 brokers and agents to cover clients both in the UK and world-wide.