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Europe plans to load huge insurance costs on pig producers

by 5m Editor
19 May 2003, at 12:00am

UK - Europe is planning a directive on environmental liability that will weigh particularly heavily on intensive livestock producers.

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Under the new directive (which is at an early stage) all farmers would be encouraged to take out insurance against any action taken against them by government, or more likely the Environment Agency, to repair environmental damage.

But some pig and poultry producers would be given no choice in the matter: they would be required to have suitable insurance as a condition of their IPPC permit.

If such an open-ended insurance policy could be found, the cost would be untenable.

At the first reading of the European Commission's proposal for an Environmental Liability directive, members of the European Parliament have indicated they are prepared to take a tough line with polluters.

"There are currently some 300,000 sites in the community which have already been identified as definitely or potentially contaminated, posing significant health risks, and the loss of biodiversity has dramatically accelerated over the last decades," they say.

One of the fundamental principles of the proposed directive is that when a business has caused environmental damage, or the imminent threat of damage, it will be held financially liable - up to a certain limit - "in order to induce operators to adopt measures and develop practices to minimise the risks of environmental damage so that their exposure to financial liabilities is reduced".

The MEPs say it will be necessary to provide clear practical criteria for assessing the cost-effectiveness of restoring polluted sites. They propose using the mechanism of "best techniques available", as enshrined in the IPPC rules.

They say a suitable formula must be introduced "because it is uncertainty about this issue that will prove a major obstacle to businesses finding affordable insurance cover."

According to the MEPs, "The main problem is that of identifying criteria for measuring and/or quantifying the risk and/or the damage to the environment in order to make provision for the amounts to be insured and the cost of managing insurance cover."

Although it is early days, there is a real risk that pig producers with IPPC installations will be subject to compulsory insurance against environmental liability within three years of the adoption of the environmental liability directive.

NPA and NFU are deeply concerned by this development as the cost could be "exhorbitant".

Source: National Pig Association - 19th May 2003

5m Editor