Cereal man faces bill for £300,000
Cereal man faces bill for £300,000
AN outstanding £300,000 supermarket claim against a cereal grower highlights the need to ensure farm insurance cover is adequate, says John ORorke of Scottish Quality Cereals.
The claim, still unsettled, arose four years ago when creosote-tainted grain sent coconut in a supermarket muesli rancid, explains Mr ORorke.
"The farmer seems to have cleaned out his shed very thoroughly, then used some railway sleepers as walling, which he creosoted. Unfortunately the grain went in before the creosote dried. Without proper cover he was left high and dry by his insurers.
Mr ORorke suspects some farms have insurance cover which does not include product liability. "But 70% of their produce ends up on supermarket shelves one way or another."
Due diligence
Membership of an assurance scheme is no defence against such actions, he admits. Neither is it a requirement that members have product liability insurance. But SQC registration helps growers meet their "due diligence" obligation under the Food Safety Act, he points out.
Product and public liability claims against farmers, through all insurers, is about £100m a year, says an NFU Mutual spokesman. "The figure has grown substantially in the past few years."
EU proposals to extend product liability legislation into agriculture and remove the need for claimants to prove negligence could increase the risks, he adds.
NFU Mutual says the average premium for combined public and product liability is £130 a year.
NFU Mutual recently raised its limit of indemnity from £5m to £10m, he adds. "Some other policies still only offer £1-2m which we feel is inadequate."
• Four years into the SQC scheme 52% of Scottish cereal farmers have signed up, says Mr ORorke. "That is 1520 on board and I am sure it will increase. This year, for the first time, maltsters and distillers are saying they wont issue contracts unless growers are in Scottish Quality Cereals."