New Avian Influenza Indemnity Rule Finalized

August 14, 2018

Rule requires auditable biosecurity plans to be in place for larger-sized operations to receive indemnity payments.

Jacqui Fatka 1 | Aug 14, 2018

The U.S. Department of Agriculture’s Animal & Plant Health Inspection Service (APHIS) issued a final rule Aug. 14 outlining the conditions under which USDA will pay indemnity to farms affected by highly pathogenic avian influenza (HPAI).

The industry welcomed the rule. Tom Super, spokesman for the National Chicken Council, said, "We look forward to reviewing the final rule and hope this ensures timely indemnification payments for our growers and companies in the event of disease outbreak."

Chad Gregory, president and chief executive officer of the United Egg Producers (UEP), explained that the HPAI outbreak in 2015 was devastating for America’s egg farmers and for the industry overall. “United Egg Producers and its farmer-members take very seriously our responsibilities for biosecurity and disease prevention,” Gregory said.

Gregory said UEP, which represents about 90% of the nation’s egg production, recognized the critical need to provide industry leadership on the issue of indemnity. “Our organization created a dedicated Animal Health & Biosecurity Task Force to work closely with the National Poultry Improvement Plan (NPIP) to establish specific biosecurity principles, and we are pleased these principles are the foundation for audits in the final indemnity rule.”

“Egg farmers remain firmly committed to maintaining robust biosecurity practices on our farms to protect the health and well-being of our hens. We appreciate USDA-APHIS’s efforts in working with U.S. egg producers to ensure that comprehensive indemnities and compensation are available in the event of an HPAI outbreak,” Gregory added.

USDA said this final rule updates its February 2016 interim rule. First, it allows indemnity payments to be split between poultry and egg owners and their contracted growers and provides a formula for the split. The split payments for HPAI in the final rule are in line with the split payments for indemnity in the existing low-pathogenic avian influenza program.

APHIS said it apportions indemnity payments between owner and contractor based on the terms of the contract between the two parties and the duration of the period during which the contractor possessed the birds or eggs. Thus, the amount of the indemnity the contractor receives from APHIS will depend largely on the terms of the contract, APHIS said.

The Animal Health Protection Act only authorizes payment of indemnity to owners and contract growers of diseased birds or eggs that are destroyed and not to owners or contractors whose premises were indirectly affected.

The final rule also adopts biosecurity principles established by the National Poultry Improvement Plan (NPIP), a cooperative state, federal and industry program for controlling certain poultry diseases that developed a set of 14 biosecurity principles. USDA published the 14 principles in May 2017, and they now serve as the minimum biosecurity principles that any poultry operation should follow.

In the final rule, USDA addressed concerns stakeholders raised about the interim rule, including whether self-certification of biosecurity was adequate. As a result, USDA is now requiring audits to ensure that large poultry facilities practiced optimal biosecurity.

In the final rule, a facility that meets the minimum size requirements must have an auditable biosecurity plan. To be eligible for HPAI indemnity, the plan must address all 14 biosecurity principles in compliance with NPIP requirements.

Facilities will be audited at least once every two years or a sufficient number of times during that period to satisfy their Official State Agency. The audit will include, but may not be limited to, an evaluation of the biosecurity plan itself and documentation showing that the plan is being implemented.

“While it is true that weak biosecurity on a farm of any size could lead to spread of disease, the farms that were affected during the 2014-2015 outbreak were overwhelming large commercial facilities,” APHIS noted.

APHIS said approximately 18,900 operations will be subject to the biosecurity statement requirement out of the 233,770 poultry producers in the U.S. Those 18,900 operations, however, produce or house approximately 99% of the poultry in the U.S, APHIS said in the final rule.

“Exempting the smaller facilities, therefore, allows us to focus our resources on the operations that raise or house 99% of the nation’s poultry supply. While bird density on some smaller operations may be high enough to pose a risk of spreading HPAI due to environmental contamination when biosecurity is lacking, as noted above, 99% of the nation’s poultry reside and are raised on non-exempt operations,” the final rule explained.

While the loss of any size flock adversely affects the contractor, all flocks that were infected by HPAI during the 2014-15 outbreak were completely depopulated, including those owned by large-scale producers, APHIS explained. During the 2014-15 HPAI outbreak, 21 backyard flocks were infected, totaling approximately 10,000 birds, versus 211 commercial flocks totaling approximately 50 million birds. “In the aggregate, then, the impact on large commercial producers was much greater,” APHIS said in its rule.

APHIS's indemnity calculation formulas are the means by which APHIS determines the fair market value of birds and eggs destroyed due to HPAI and, thereby, the total amount of compensation due the indemnified party. This rule did not make any changes to that formula as addressing these calculators is beyond the scope of the current rule-making, APHIS said.