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South Africans love eating chicken. In fact, they consume more poultry products annually than all other animal protein sources combined. Although highly profitable, poultry farming is a highly technical business and prone to many perils. That is why poultry farmers can never put their proverbial eggs in one basket and take out a one-size-fits-all insurance package for their livestock.
Providing specialist risk solutions for poultry farmers and processors over several years means we have developed a detailed understanding of the sector’s insurance needs. To insure poultry is much riskier, as poultry is more fragile. Chickens are prone to many infectious diseases, accidents, and natural disasters. To guard against epidemic outbreaks of diseases like bird flu, the government can also order the destruction of chickens in compliance with the requirements of any statute or such government department.
Santam unfortunately does not provide cover against diseases.
Knowing your broilers from your layers
Although there aren’t any specialist requirements when it comes to insuring a poultry farming operation, the risks of an egg farmer are quite different to that of a producer farming broilers. This means that brokers require expert knowledge about each industry to write business accurately. When providing insurance to egg producers, the “product” insured are mature hens called layers. The lay hen’s peak period for egg production is reached between the ages of three months to 12 months.
Santam Agriculture insures layer hens under the Fire section, along with the rest of the farmer’s property such as chicken sheds. With layers, compensation will only be paid out for insured losses or damage to the poultry if there is accompanying physical damage to the buildings or structures. Special perils such as storms, wind, floods, hail and snow are excluded if the poultry is younger than six weeks. For both layers and broilers, the insurer must be provided with a complete survey report and claims history for at least three years.
Insurance for broilers, on the other hand, is very different as these are chickens reared for consumption. The farmer buys day-old chicks or produces them in a hatchery by incubating fertile eggs. The day-old chicks are raised for about 36-42days, and at that time they are ready for slaughter or to be sold live.
Santam Agriculture insures broilers under the Business Interruption Section, by adding the value of the chicks of a single cycle to the gross profit. For broiler farmers, the birds can be insured from day one. Similarly, to layers, compensation will only be paid out for loss of or damage to the poultry if there is accompanying physical loss or damage to the buildings or structures as insured under the Fire section.
If a fire occurs in a broiler house, and a large percentage of the chickens ready for slaughter perish in the fire, the insured loses one cycle of his business (there are about six cycles in a year).
Chickens form part of the gross profit of a farmer’s business, but layer hens only produce the eggs that forms part of the insured’s profit. Egg producers can also take out Business Interruption insurance or loss of income, in the event of layer hens dying.
Santam Agriculture has received several enquiries about insurance for broilers since the beginning of last year. As the market grows, we enhance our product to better the farmer’s needs.
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