Poultry is a sub-sector of the livestock enterprise that largely comprises rearing of birds for consumption of their meat or by-products like eggs. Although poultry farming can broadly be defined as the rearing of birds such as Ducks, Geese, Turkeys and Ostriches for domestic or commercial use, our focus is on chickens as they constitute the largest number of poultry birds on the global market. This article is meant to provide an appreciation of the significance of the poultry industry, the eminent danger it faces in the wake of global warming and how insurers are responding.
CLASSES OF CHICKEN
The rearing of chickens fall in three categories that comprise broilers, layers and parent stock. Broilers are reared primarily for their meat while layers are reared for egg production. The parent stock or breeding stock are reared for producing day old chicks that are sold for commercial production. Global significance of the poultry industry
GLOBAL SIGNIFICANCE OF THE POULTRY INDUSTRY
Chicken meat and eggs are globally consumed more than any other meat source due to a number of factors. One of the reasons is acceptability in regions that traditionally do not consume pig and cattle meat due to cultural and belief systems. According to the 2023 Food and Agriculture Organization (FAO) report, poultry meat production in 2022 was estimated at 139.22million tonnes, followed by pig meat at 122.59million tonnes. Beef and Buffalo meat production only accounted for 76.25million tonnes. The report further says an estimated 93.17million tonnes of eggs were produced globally in 2023 with volumes expected to grow by 5.2% by 2025.
The poultry industry is one of the major global contributors to employment and in addition provides humans with the much-needed nutritional value from chicken meat products. It is also a source of manure that offers a cheap source of organic fertilizer for most small and medium scale farmers.
IMPACT OF CLIMATE RISKS
The global impact of poultry production in mitigating food insecurity cannot be over emphasized. However, like all the other agriculture enterprises, it has not been spared by the ravaging effects of global warming. The changes in the weather patterns resulting in heat waves, droughts, floods and hurricanes is directly impacting the food source for chickens which are majorly cereals like maize. This is coming in form of reduced crop yields, decreased nutritional content and increase in outbreaks of pests and diseases. The high temperatures are also detrimental to the well-being of chickens as they suppress genes related to growth, reduce feed intake and enhance susceptibility to disease. Chickens regulate their bodies within a narrow temperature range and as a result do not cope well with extreme variations in temperature. The infrastructure for raising poultry has also not been spared by the ravaging harsh weather patterns causing damage to poultry housing structures.
MARKET RESPONSE
As poultry farmers grapple with ways to navigate effects of the changing weather patterns, a number of strategies with potential to mitigate these challenges are on -going. These include breeding heat stress and disease tolerant birds. These innovations are good and act as the first layer of defence but can never 100% full proof. Farmers are faced with challenges of disease-causing microorganisms that keep evolving in response to climate variations, thus continually posing challenges to any genetic improvements to the birds. Similarly, the ever-increasing temperatures are challenging the limits of the genetically improved breeds ability to withstand the extreme heat waves. This clearly shows the need for an extra layer of defense that can be triggered when the limits of innovation are breached. A layer that is also multifaceted and is able to provide protection from various potential risk sources. This is where insurance comes in.
THE ROLE OF INSURANCE
Insurance has been identified as one of the key considerations for mitigating the crippling effects of financial loss due to climate variability on poultry business. Poultry insurance policies are now being designed to address the challenges of climate change and thereby giving farmers leverage to rebound financially in case of loss. Most poultry policies are offered on an all-risks mortality basis with specific exclusions that are mostly due to poor management. This entails that most perils that can potentially impact production are covered. These include but not limited to loss due to, disease, illness, injury, accident or theft. Accident mostly cover loss as a result of impact due to special perils like fires and storms. Further insurers are now commonly offering cover for heat stress in response to the market needs.
Insurers have gone further by providing policies for farmers that not only protect birds but also protect all the infrastructure used for production under one package
Conclusion
In view of the immense economic role that the poultry industry plays on the global stage as outlined, it’s imperative that insurers and poultry players continue to collaborate and actively engage on finding solutions that speak to mitigating the ever-increasing challenges of global warming, including use of artificial intelligence.
In responding to these challenges, Klapton Re is strategically positioned to providing sound technical advice on poultry related risks as well as offering reinsurance solutions to protect the insurance market.