What do you make of DEFRA's proposals for compulsory insurance and levy to pay for disease surveillance and outbreaks?

 

 

 

 

I've only had a brief look at the proposals in the consultation document, so forgive me if I've got hold of the wrong end of the stick.

The levy proposals seem straightforward but the figures are interesting, particularly the estimated costs of collection.  I wonder how accurately they have estimated the cost of IT systems required.  Have they included the first figure they thought of?  If so perhaps they should treble it! 

Also the thoughts expressed on how to count the number of stock on which the levy would be paid seem a little vague and the consideration of a de-minimis number before the levy would be made.  The break even point (proposed levy less cost of collection) for sheep seems to be 177.  Having just totted up numbers for our BTv8 vaccine order, we come just on the limit. 

When it comes to the proposal for compulsory insurance to cover the cost of exotic disease outbreaks things seem to get very vague.  Disturbingly in the illustrations of the costs of past outbreaks, they include the 2007 FMD.  As this was entirely the fault of the government, I think any future outbreak with a similar cause ought to come entirely out of the public purse, not from the industry!

I had assumed, from the talk of the costs to industry of an insurance based scheme benefiting from both the keen pricing from competing insurers and from potential premium reductions for demonstrable biosecurity improvements, to suggest that farmers would only be charged by DEFRA, and therefore make claims on their insurance if their own livestock were diseased or killed in a wider cull.  It appears, however, from the little information given that this may not be the case.  It seems that what may happen is that, in the event of a disease outbreak, all keepers of stock susceptible to that particular disease may be charged for 50% of the cost of dealing with it.  Am I reading this right?  If so, what is the point of having private insurance and contributing to the profits of the insurers?  Why not just build the necessary funding in to the levy structure and once a reasonable fund has built up, adjust the levy amount to maintain the fund having dealt with any costs in the year?  On the other hand, if I'm wrong, what would your premium be if you farmed next to a government research lab?

 

 

Not being a stock farmer, I can only say that there are two problems.

Firstly, as this is a UK initiative, it imposes extra costs on UK producers. Will inported meat therefore have a levy on it to level up the playing field?

Secondly, it looks like this is a half-and-half job. So there is a cost, but the government will still be involved. As will a new quango probably made up of ex-Soil Association and PETA members! I'd rather pay twice the charge, and have the DEFRA lot f'off out of it. Its a half measure, so bound to end in disaster.

Sorry, to resolve the inported meat issue, who dont they impose a charge per kilo on all meat sold in the UK to cover this?

Jacobus:

If so, what is the point of having private insurance and contributing to the profits of the insurers?  Why not just build the necessary funding in to the levy structure and once a reasonable fund has built up, adjust the levy amount to maintain the fund having dealt with any costs in the year?

Good points here Jacobus. After spending the last four hours at briefings and wading through the consultation document, I'm still as perplexed as you! I could probably answer a few of your points, but I'm late for a meeting so I'll be brief now and come back later!

With regards to the insurance, it's apparently down to something called hypothication. The delay over this consultation being published is because the Treasury won't allow money to be collected if it can't see an end use for it. Hence collecting a levy in case a disease occurs isn't allowed, because money isn't allowed to sit in a bank account somewhere doing nothing.

The insurance idea is DEFRA's way of getting around the problem, but I can see loads of flaws in the idea - will bore you with my thoughts later

caroline stocks:

Jacobus:

If so, what is the point of having private insurance and contributing to the profits of the insurers?  Why not just build the necessary funding in to the levy structure and once a reasonable fund has built up, adjust the levy amount to maintain the fund having dealt with any costs in the year?

Good points here Jacobus. After spending the last four hours at briefings and wading through the consultation document, I'm still as perplexed as you! I could probably answer a few of your points, but I'm late for a meeting so I'll be brief now and come back later!

With regards to the insurance, it's apparently down to something called hypothication. The delay over this consultation being published is because the Treasury won't allow money to be collected if it can't see an end use for it. Hence collecting a levy in case a disease occurs isn't allowed, because money isn't allowed to sit in a bank account somewhere doing nothing.

The insurance idea is DEFRA's way of getting around the problem, but I can see loads of flaws in the idea - will bore you with my thoughts later

now there would be a cure for insomnia government meetings!

So in other words Mr Brown will want to make another bit up to allow him to use that money else where completely unrelated to agriculture and then say they haven't got much money to pay up in the event of an outbreak.

Also looking at the article quick if we are paying a levy and paying for insurance. Then in an outbreak half is paid by the insurance (which we pay for) and the other half by the government (which we pay for in levy and tax) where is the cost sharing (other than sharing with other farmer) and where does the government actually pay with out money that has come from the farmers being hit.

I not great at figures or political mumbo jumbo but even I can tell its a giant methane emitting cow pat.

Jacobus "On the other hand, if I'm wrong, what would your premium be if you farmed next to a government research lab?"

I would say it would probably be uninsurable or atleast you find it hard to find an insurer willing to take it on also I thing you treble is optimistic knowing the government it would run to atleast 5 times as much as the original figure.

sjk:

Also looking at the article quick if we are paying a levy and paying for insurance. Then in an outbreak half is paid by the insurance (which we pay for) and the other half by the government (which we pay for in levy and tax) where is the cost sharing (other than sharing with other farmer) and where does the government actually pay with out money that has come from the farmers being hit.

The levy will apparently be used for exotic disease (F&M, BTV etc..) suveillance and research, so the government will have to find half the compensation  costs for an outbreak from its own coffers - providing of course it has the cash (which we all know it doesn't!).

My view is that is if this is added to EID and all the other cost additions a lot of livestock keepers will just quit. Me included, move to arable on the good land and cut the grass on the rest. I hope they starve, they certainly deserve to. I would also like to know what % of a typical livestock farmers income the charges would be and how long before the charges are doubled/quadrupled due to administrative costs.

top tup:

The levy will apparently be used for exotic disease (F&M, BTV etc..) suveillance and research, so the government will have to find half the compensation  costs for an outbreak from its own coffers - providing of course it has the cash (which we all know it doesn't!).

they probably come up with another thing to tax us on to get the money to pay for it. ironic though that they don't like money just sitting in an account after they told a load of councils etc to make their money work for them who have now lost a large chunk of it.

also would that be like the National Lottery good causes money which they have used to pay for the olypics  and administrative costs. As following that trend they just take the money from somewhere else in their agricultural budget probably thr SFP they still hadn't beeen able to pay.

I wonder how long it'll be before they make Arable farms do something similar to protect against bad weather at harvest 

He his-self:

I would also like to know what % of a typical livestock farmers income the charges would be and how long before the charges are doubled/quadrupled due to administrative costs.

I'll see if I can work out the % of farm incomes (or at least, find someone who can use a calculater better than I can!), but I share your concerns about admin costs.

At the moment, DEFRA reckons it will cost them just over £15 to collect the levy. The theory is livestock numbers are registered and paid for once a year on the basis of the maximum number of livestock you expect to have on your farm at any one time.

I think even the least cynical amongst us would assume it's going to end up costing them more than £15 - what are the chances of something running that smoothly?!

I can already see a problem with cattle in that there's two different prices for beef (£1.20) and dairy (£4.80). Deciding when a dairy cow becomes a finisher is surely going to prove a nightmare for whoever's trying to work out how much a farm needs to be charged?

From a leaked policy document:

We all know that government departments take a lot of money to run, but they only need to spend money to look after the interests of certain members of society, so it's only reasonable that they should help pay for the running costs.  In the case of the Home Office, these costs are heavier than most.  They have to run the police and prisons for instance and we all know how much it costs to house a criminal each year, It's thousands more than the average citizen earns.  On top of that there are various incidental expenses such as DVDs and so on, but that's bye the bye.

The Home Office believes that a huge proportion of its costs arise because of people stealing things and it is determined to make the people who own things that can be stolen, pay for having their interests taken care of.  We believe that a cost sharing deal for owners of things could be an effective way of financing better prisons and more facilities for mandarins and ministers.

Our proposals are as follows:

Every person in England who owns anything should have to make a declaration each year as to the number and type of things he/she owns.  These declarations would form the basis for making an annual levy. 

There would be a variable rate of levy depending on the risks associated with each type of thing.  Houses for instance don't get stolen very often, so would only be levied at £5.  At the other end of the scale, cars, mobile phones and ministerial laptops are getting stolen all the time, so they should attract a levy of £500.

We would set up a quasi-independent body to manage and collect these levies under the designation Cost Of Criminal Underwriting for Prisons (COCUP).  This would create a large number of jobs for people who would otherwise be unemployed and provide many opportunities for consultants fees and IT contractors to whom the government owes many favours.

Penalties and enforcement - we envisage that there should be stiff custodial sentences for those who do not make returns on time or who do not pay the levy.  Enforcement would include the employment of an army of assessors who would accompany police when called out to crimes involving theft.  They would make an inventory of all the things present and not stolen as well as the things stolen which would be compared to the returns made by the citizen.  In the event of an under-declaration being discovered, the citizen would be shot out of hand.

 Impact assessment - it is believed that a side effect of the scheme would be a rapid reduction in reported crime.

He his-self:

My view is that is if this is added to EID and all the other cost additions a lot of livestock keepers will just quit. Me included, move to arable on the good land and cut the grass on the rest.

Like Hhs, I will, depending on final details, get out or keep a few 'off the system' stock to feed ourselves. Compared to Hhs however, my contribution to feeding the world is not great but what there is will be lost. Gone also will be my interest in the NSA. NFU and the Dorset Down Breed Society and maybe also my interest in this forum.

The vegetarian Hilary Benn will be happy however.

Jacobus I thought the reason why the Home Office went through loads of cash was so they could buy more porn!!

Also that the quango/department set up would allow some civil servants to look as though they have moved up the ladder by employing more people below them to sit on ther hands or in the case of the SFP department would allow them time to jump of filing cabinets in the nude!!!

If they want to risk access farms on bio-security and charge a levy accordingly ,it  is a bit rich coming from government that insists that a lorry trundles round every farm in the country and picks up the dead stock when it could  safely buried ON SOME holdings.

Don't always have to follow the Europeans

 

 

 

 

I'm probably a bit dumb but what about this one:

I have more than 177 stock in total - but the Other Half owns part of the land and has a separate SFP but no stock. What if we divided the stock up under separate names/companies to get below the threashold? One would have to see if the insurance worked out more expensive like that though. Who is going to insure this anyway? I can't see the insurance lot touching it with a barge pole.