Thursday, September 24, 2015 Des Moines, IA. 3:30 5:00 p.m. POULTRY OPERATIONS

Transcription

1 Thursday, September 24, 2015 Des Moines, IA 3:30 5:00 p.m. POULTRY OPERATIONS Presented by Robin Souza, CPCU, CRM, CIC, AFIS, AINS, AIC Regional Agribusiness Specialist ACE Agribusiness This breakout session will focus on poultry coverage and risks associated with hatcheries or growers. Valuation, power interruption, buildings, loss of income, and coverage in transit will be highlighted. Specifics and demographics about the poultry industry will be discussed, as well as underwriting guidelines and the avian flu and its impact on the industry. Copyright 2015 International Risk Management Institute, Inc. 1

2 Notes This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex. 2

3 Robin Souza, CPCU, CRM, CIC, AFIS, AINS, AIC Regional Agribusiness Specialist ACE Agribusiness Robin Souza is regional agribusiness specialist with ACE Agribusiness. Prior to joining ACE, she was lead commercial/ag underwriter with QBE North American, where she was responsible for the commercial and ag underwriting team, new business production and renewal retention for an assigned territory, and training of current and new personnel, including assistance in development of workflow processes and guidelines. Prior to joining QBE, Ms. Souza was regional underwriting vice president/underwriting manager for Sequoia Insurance Company, agricultural underwriter with Allied Insurance/Nationwide and Allied/CalFarm Insurance, agriproducts underwriter with Commercial Union Insurance Companies, and underwriter for livestock mortality and farm with Hartford. Ms. Souza holds the Chartered Property Casualty Underwriter (CPCU), Certified Risk Manager (CRM), Certified Insurance Counselor (CIC), Agriculture and Farm Insurance Specialist (AFIS), and Associate Insurance Services (AIS) designations. She was named Rookie of the Year by the Insurance Women of Fresno in

4 Notes This file is set up for duplexed printing. Therefore, there are pages that are intentionally left blank. If you print this file, we suggest that you set your printer to duplex. 4

5 Poultry Exposures and Insurance Subtitle Presented by Robin Souza, CPCU, CRM, CIC, AFIS, AINS, AIS, AIC Poultry Poultry Risks 2 5

6 Poultry Poultry operations Most popular of the poultry operations would be chickens and turkeys: o Egg production o Bird production o Meat production However, poultry operations can also be ducks, geese, game birds, squab, exotic birds, pets, etc. 3 Poultry operations: end use Meat Eggs whole or liquid Manure for soil amendment Vaccine development Poultry 4 6

7 Poultry: Vocabulary Chicken is singular; chickens is plural Chick = young (baby) chicken Pullet = immature female chicken Cockerel = immature male chicken Hen = adult female chicken Cock/Rooster = adult male chicken Broiler = young chicken raised for meat Capon = castrated male chicken (requires surgery since the reproductive organs are internal) 5 Poultry Industry: United States The US poultry industry is the world s largest producer, its secondlargest exporter of poultry meat, and a major egg producer. US consumption of poultry meat (broilers, other chicken, and turkey) is considerably higher than beef or pork but less than total red meat consumption. The poultry and egg industry is a major user of feed grains. Source: NASS.USDA.GOV. 6 7

8 Poultry Industry: United States US poultry meat production totals over 43 billion pounds annually. Over four-fifths is broiler meat. Most of the remainder is turkey meat. A small fraction is other chicken meat. The total farm value of US poultry production exceeds $20 billion. Broiler production accounts for the majority of this value, followed by eggs, turkey, and other chicken. Source: NASS.USDA.GOV. 7 Poultry Statistics 2013 Top 5 Poultry States: Broilers 1. Georgia 1,334,600,000 Head: $4,609,963,000 Value 2. Alabama 1,048,600,000 Head: $3,558,553,000 Value 3. Arkansas 996,400,000 Head: $3,622,910,000 Value 4. N. Carolina 785,500,000 Head: $3,570,128,000 Value 5. Mississippi 734,000,000 Head: $2,713,304,000 Value 8 8

9 Poultry Statistics

10 Poultry Statistics 2013 Top 5 Poultry States: Eggs 1. Iowa 14,815,000,000 Eggs: $1,071,252,000 Value 2. Ohio 7,988,000,000 Eggs: $574,767,000 Value 3. Indiana 7,375,000,000 Eggs: $544,639,000 Value 4. Pennsylvania 7,365,000,000 Eggs: $581,124,000 Value 5. Texas 5,035,000,000 Eggs: $466,669,000 Value 6. California 5,050,000,000 Eggs: $380,038,000 Value

11 Poultry Statistics

12 Nationally, Indiana ranks: Poultry Statistics 2013 First in duck production (the two largest companies in the Americas are headquartered in Indiana) Third in egg production Third in turkey production 12 Poultry ops: egg collection Poultry Operations Purchase egg layers (chicks) within 1 to 2 days of hatching. Pullets are raised until weeks in age and then moved to a layer facility. Hens begin laying eggs around weeks; they will reach peak egg production around weeks in age. Majority of hens are between 100 and 130 weeks of age when they have reached the end of their egg production cycle

13 Poultry Operations Poultry ops: egg collection (cont d) In layer facilities, there are two primary methods for collecting eggs (1) in-line facilities or (2) off-line facilities. Hens lay their eggs onto an angled wire floor where the eggs roll to the front of the cage onto a nylon belt. Eggs are moved to either an egg processing facility or a storage cooler. In-line facility: eggs are processed on the premises Off-line facility: eggs are cooled/stored and then shipped to an egg processing facility 14 Poultry ops: bird production Poultry Operations The poultry industry breeds birds for both egg (layers) and meat (broilers) production. Operation is similar to egg production, but once the eggs are laid, they are not sold for human consumption. Eggs are incubated for about 21 days until hatching. Chicks are then sexed if bred for egg production; if meat production, sex is not an issue. Sold and shipped to customers

14 Poultry Operations Poultry ops: meat (broiler) production Chicks are delivered within 1 day of hatching Chicks are then placed in a poultry barn for raising to slaughter weight By raising chicks in a poultry barn, the light, ventilation, and feed can be controlled. Ready for slaughter between 5 and 7 weeks Shipped to contracted processing facility 16 Poultry Underwriting What does an underwriter think of when you say poultry operation? 17 14

15 Poultry Underwriting What to consider when reviewing a poultry risk Most poultry operations are located outside city limits on acreage with multiple poultry houses for production of birds or eggs. There may be dwellings occupied by the named insured or employees. Grain/feed storage tanks Multiple poultry barns 18 Poultry Underwriting Poultry risk considerations (cont d) Farm machinery to maintain the poultry houses and/or spread chicken manure. Liability Selling birds, eggs, meat, manure, etc. May also include trucks/trailers to use to move birds and/or eggs Umbrella limits 19 15

16 Poultry Underwriting Risk Review Type of operation Ownership Experience Financials Loss history Construction Age Protection Exposure Risk management Insurance to value Rate 20 Ownership Entity type Commercial grower Poultry Underwriting Foster Farms, Tyson, Zacky, etc. Experience Number of years in operation Recent change in type of operation Change in ownership or management Internet search 21 16

17 Financials Dunn and Bradstreet report Bankruptcies Loss history Poultry Underwriting Current loss runs from prior carrier(s) 3 5 years The more years, the better! 22 Construction Wood or metal buildings Age of buildings Updated Poultry Underwriting Heating, electrical, plumbing, ventilation, etc. Roof material and age 23 17

18 Protection Poultry Underwriting Paid public fire station within 5 miles As most poultry operations are outside city limits in rural areas On-site protection Fire protection, water, fire extinguishers, alarms Water availability Wells, fire department hookups, canals, lakes, ponds, etc. Security Cameras, alarms, fenced, restricted access 24 Exposure (surrounding area) Storage areas Poultry Underwriting Grain/feed, propane tanks, fuel, machinery Public access Can the buildings be seen from the road, restricted access Security Fenced, gated, surveillance, on-site residency 25 18

19 Poultry Underwriting Risk management Safety program in place Catastrophe plan Housekeeping: premises and buildings Maintenance schedules Bird disposal Rodent/pest control Controls regarding access to premises 26 Insurance to value Poultry barns Employee housing Poultry Underwriting Minimum 80 percent insurance to value, preferably 100 percent for replacement cost Most poultry barns are written actual cash value 27 19

20 Perils of concern Fire Due to the nature of the operation High accumulation of dust Poultry Underwriting Electrical can be compromised due to age, use, rodents, wear and tear, etc. Wind Poultry barns are long narrow structures, generally with roofs made of sheet metal panels. Weather fluctuations and wear and tear can cause panels to lift. 28 Poultry Underwriting Perils of concern Vandalism and malicious mischief Poultry risk can be targeted by animal rights groups Due to rural location, those who wish to vandalize can do so with minimal risk of being seen Nearly 1,000 Chickens Killed With A Golf Club At Foster Farms Plant In California The Huffington Post, Ed Mazza (10/01/2014) Animal Rights Group Liberates Chickens The New York Times 29 20

21 Farm Property Location, Location, Location Where is the property located? Farm risks will consist of acreage usually located outside city limits (rural) ag land, foothills, mountain, coastal, etc. Located near residential or school? Like operations surrounding? Brush area? 30 Poultry Issues Modern poultry production occurs primarily in enclosed buildings to protect the birds from weather, predators, and the spread of diseases from wild birds. This has allowed farmers to greatly increase production efficiency while significantly reducing the amount of labor required. As with pork production, this has resulted in environmental challenges with production of larger volumes of manure in much smaller areas

22 Odor and air emissions Poultry Issues Air quality concerns are a major environmental issue for not only poultry operations, but most Confined Animal Feeding Operations. Consider the type of operation (poultry, cattle, swine) Manure storage and management Housekeeping Land applications of manure Surrounding area 32 Biosecurity breaches Poultry Issues A breach occurs when a disease-causing organism is introduced to the flock, by a variety of ways: Birds within the flock or recently acquired from another flock Eggs from infected breeder flocks Human transmission by feet, hands, or clothes Dust, feathers, and manure on equipment and supplies Feral birds, predators, rodents, and insects Feed contaminated 33 22

23 California: Proposition 2 Poultry Issues Proposition 2, or the Standards for Confining Farm Animals, was on the November 4, 2008 ballot in California as an initiated state statute, where it was approved. Proposition 2 created a new state statute that prohibits the confinement of farm animals in a manner that does not allow them to turn around freely, lie down, stand up, and fully extend their limbs. The law is set to go into full effect on January 1, Voters in other states had previously voted to eliminate calf and pig crates, but Proposition 2 in California in 2008, was the first time voters were asked to eliminate the practice of confining chickens in battery (small, confining) cages Proposition 2 (cont d) Apply to all eggs sold Poultry Issues In the aftermath of Proposition 2 s victory, California state assemblyman Jared Huffman has introduced a bill in the state legislature that would require that Prop 2 s provisions apply to all eggs sold in the state, regardless of where the eggs are laid

24 Poultry Issues Bird flu strikes second California poultry farm Don Jenkins, Capital Press - Published: February 16, :30AM A second California commercial poultry farm has been stricken with highly pathogenic bird flu. It s the farthest south the virus has surfaced yet. The USDA reported to the World Organization for Animal Health that the outbreak began Feb. 2 with an increased mortality among chickens. The virus was confirmed Feb. 12, and the premises were quarantined. The flock included ducks, according to a report posted by the Organization for Animal Health. Canadian authorities reacted Friday by banning poultry raised, processed or shipped from California. Hong Kong banned poultry from Kings County. China and South Korea have enacted bans on U.S. poultry in response to previous cases. Bird flu has infected wild birds, non-commercial flocks and a game bird farm in Washington, Oregon, Idaho, Utah, California and Nevada since mid-december. The only previous commercial poultry flock infected in the U.S. was a 145,000-turkey Foster Farms operation in Stanislaus County. The virus was confirmed there Jan Poultry Issues Avian (bird) flu: where did it come from? Wild birds are affected by multiple number of flu viruses, just as humans and other animals are, but the viruses are usually exclusive to birds. The virus can, however, infect humans if they mutate. The first case of a person dying from avian flu was reported in Hong King in May Prior to that case in 1997, Avian influenza in humans usually caused only mild symptoms, such as pink eye

25 Poultry Issues A new strain: avian influenza A (H7N9) Human infections with a new avian influenza A (H7N9) virus were first reported in China in March Most of these infections are believed to result from exposure to infected poultry or contaminated environments, as H7N9 viruses have also been found in poultry in China. While some mild illnesses in human H7N9 cases have been seen, most patients have had severe respiratory illness, with about one-third resulting in death. cdc.gov 38 Poultry: Questions 39 25

26 Poultry: Thank you! Robin Souza, CPCU, CIC, CRM, AFIS, AINS, AIS, AIC Contact Info: (559) or 40 26