UK poultry farmers stand to lose as much as £30m in a major outbreak of avian flu due to EU regulations affecting government compensation.

The regulations mean there is a significant gap between the compensation received for slaughtered birds and the amount a poultry farmer could have expected to earn for each bird, according to Steve Hibbert, broking manager at insurance broker Aon.

The government will compensate farmers per bird but, due to EC regulations, are restricted to reimbursing the price of the chicken's market value on the day before slaughter.

Aon research found that the cost of a two-day-old chicken is just 34p in comparison to £1.21 for a fully grown two month old bird weighing 1350-1550g. Taking into account that the farmer would not have about 75p of costs per bird for feed, heat and light, they would lose out on 12p for each bird.