Avian Influenza (Bird Flu) is a highly contagious viral disease affecting domestic poultry and wild birds. It is a significant concern to poultry farmers in South Africa. South Africa’s recent Bird Flu outbreak highlighted the need for appropriate insurance for these events.

The South African Poultry Association (SAPA) has confirmed that South Africa’s 2023 Bird Flu outbreak led to more incidents of the disease than any other year since initial outbreaks in 2017, with one producer losing close to two million chickens, valued at R100 million. The current outbreak has been called South Africa’s worst, profoundly impacting the poultry industry, and posing significant threats to the economy and the nation’s food security.

The increase in extreme climate events has affected natural and human systems’ ability to adapt, and may in turn increase the risk of diseases in animals. Collaboration between government, farmers, and the insurance industry, as well as learning from previous outbreaks and SAPA’s 2022 Code of Practice, can help to mitigate this risk and improve the stability of the poultry industry.

Effective important controls can, for example, decrease the scale and spread of Bird Flu. The Animal Diseases Act, 2002 as well as its regulations provide the legal framework for these disease control measures.

Under the Act, an ‘animal’ includes a bird, as well as its carcass. In terms of the Act, diseased birds may be subject to compulsory slaughter, with owners being entitled to the bird’s fair value. Where an animal is killed to limit the spread of a controlled animal disease, compensation will amount to 100% of the animal’s fair market value.

In Minister of Agriculture v Bluelilliesbush Dairy Farming (270/07) [2008] ZASCA 60 (29 May 2008), the Supreme Court of Appeal considered compensation following an outbreak of bovine tuberculosis where 7 000 cattle were slaughtered by the State in terms of the Act.

The Department of Agriculture’s Director of Animal Health had decided that only the animals’ slaughter value (being the abattoir price) would be paid because they were infected with TB and could never productively be used again. The respondents objected to the calculation because it would result in only one-fifth of the cattle’s productive value being paid.

The court found that the cattle’s full productive value (and not only their slaughter value) should be paid.

Very few South African insurers offer Animals and Livestock Insurance. A farmer may take out insurance over and above the compensation in terms of the Act, to reduce loss because of compulsory slaughter. There are various options available, such as:

– all-risk basis insurance for farm assets and electronic equipment, registered stud animals, covering transit risks, theft, lightning, infertility, heartwater, red water fever, blue tongue, gall-sickness, plant poisoning, and external accidents, injuries or diseases, medical assistance and funeral cover for farm workers;
– public liability coverage against legal liabilities for property damage or bodily injury to third parties;
– business interruption coverage for loss of profit and fixed costs due to insured events that interrupt trade; and
– gap cover following a government slaughter order and compensation.

There are however common exclusions contained in Animals and Livestock insurance policies. These include the death of an animal due to pre-existing conditions, intentional acts of harm by the owner, death due to natural causes or old age, deaths during high-risk activities such as extreme sports, and certain types of diseases or natural disasters such as pandemics and floods.

Notably, Bird Flu is often not covered.

Other countries have provided solutions for pandemics like the Bird Flu outbreak experienced in South Africa. Australia has for example launched the first business interruption insurance cover for Bird Flu. A British poultry company has similarly collaborated with its insurer to launch a similar scheme.

While compensation under the Animal Diseases Act aids suppliers, it is often not enough to cover the actual loss sustained during a Bird Flu outbreak. The South African poultry industry needs an innovative solution to improve its resilience and sustainability.