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I can't see any justification for encouraging farmers to hide or mis-report serious problems like this. I am a vegetarian but I would rather my money paid Bernard Matthews to combat bird-flu than to hide it.

This article comes under the one about rational decision making, which I think is appropriate - if we accept the lesser cost of paying this man to deal responsibly with bird flu, we actually lose out less than if we incentivise dishonesty.

Evan,
I agree that it may be difficult to justify a subsidy from the taxpayer especially in view of the excellent point made by 'martin' above about Scilly Isles vet.

However, we should make a decision against criteria which would / could also be applied to all other farmers, and not just a 'turkey baron'.

Certainly 'the market' should take care of itself where possible, and business should take steps to mitigate risks where possible and insure themselves against things which are unpredictable.

The difficulty with Bird Flu / BSE and Foot and Mouth is that they can fall into the 'acts of god' / force majeure type exclusions which can't easily be insured against. It is very difficult to justify bailing out BM because they are a large, profitable company. I don't want to get into the potentially libellous area of whether their business practices mean they are 'authors of their own misfortune'.

However 'small' [independent] farmers, whilst also in 'business' don't have the scale of operation to be able to dictate terms of trade to their customers [e.g. supermarkets], so can't necessarily build in the margin of error for a contingency reserve to protect themselves against 'unforeseen circumstances'. Imposing the same discipline on them might make it impossible for them to stay in business.

BUT having a taxpayer willing to pick up the bill for BSE, and a state which is lax in regulating the supermarkets, AND the EU CAP subsidy is what has allowed the supermarkets to be able to exert this power in the first place.

To go back to 'martin's analogy, it does seem stupid not to be able to help keep a vet on the Scilly Isles, set against the vast amount of money spent on Common Agricultural Policy subsidies. But maybe the distortions of CAP, whilst helpful in some ways, cannot be a panacea for all the ills of farming, and are only postponing difficult decisions about whether we are really willing to pay for high quality food [like the French]. Or whether we want huge quantities of cheap 'fast food' like America.

Surely bernard mathews must have taken into account the level of risk in keeping that many turkeys in such close quarters etc. We have to assume that they realised the threat of a mass cull was possible and factored this into their calculations. We assume that Bernard Mathews did these calculations and realised the potential benefits (ie: profits) far outway the risk of a mass cull.

Part of why mass turkey farming is so profitable is because there is some risk involved. Bernard Mathews was speculating on the health of its birds in order to accumilate. Unfortunately for them this risk did not pay off this time. If we compensate them we eliminate the concept of risk and this goes against economic principle. Should we compensate the fund manager if the assets he invests in fail? Obviously not, so in the same way we should not compensate Bernard Mathews; its just nonsensical.

Both Mark and Ben seem to have made the same argument that to deny producers compensation in cases such as this is to risk them covering up an outbreak in future. Surely that argument means that you're offering compensation as an incentive to obey the rules of their own industry, and the law of the land. If they breach the law they will be prosecuted, that should be more than enough incentive, as should behaving in an ethically sound manner in the first place, and not covering up a potentially dangerous outbreak.

It does appear that we should look more closely at an industry that seems unable to support itself without heavy subsidies, as I believe to be the case for much of farming, and expects the tax-payer to foot the bill for its problems, as in this case.

Both Mark and Ben seem to have made the same argument that to deny producers compensation in cases such as this is to risk them covering up an outbreak in future. Surely that argument means that you're offering compensation as an incentive to obey the rules of their own industry, and the law of the land. If they breach the law they will be prosecuted, that should be more than enough incentive, as should behaving in an ethically sound manner in the first place, and not covering up a potentially dangerous outbreak.

It does appear that we should look more closely at an industry that seems unable to support itself without heavy subsidies, as I believe to be the case for much of farming, and expects the tax-payer to foot the bill for its problems, as in this case.

The argument some have made about farmers potentially failing to disclose outbreaks if they know there's no money in it for them is surely specious. In what other area of law do you get compensated for gambling against the odds and losing?


The UK livestock industry seems to be regulated to the extent that outbreaks can be traced back to their origin - so non-diclosure can simply be penalised, which is what the law is for.


I think the government's role in this is to be able to take a longer-term view than industry, and to legislate against short-term behaviours which are bad in the long term.


Rather than compensating farmers for losing their bet against outbreaks of disease, the Government should be discouraging this form of gambling, and promoting healthier and less risky food production.


And another thing... why are we still calling this a 'turkey farm'? It's a factory.

What an excellent business plan. If you can't sell your turkeys in a down market, infect them with a disease, do your civic duty and have the government come in to destroy them all and then collect automatic compensation. Kind of like insurance fraud. The best answer is some form of low cost insurance, probably government subsidized with strict regulation of farming conditions and investigation of the source of all outbreaks. It won't necessarily eliminate deliberate fraud but it will reduce it while it reduces the risk to farmers of bankrupcy and subsequent shortages when an unforseen outbreak occurs. This will also keep the price to the consumer lower by reducing risk. There should also be stiff criminal penalties for deliberately infecting your own livestock and filing a claim.

As Ben Roberts writes, it is vital to encourage producers to report animal sicknesses and compensation is a very effective incentive.

There is an issue of commons here - if one producer misbehaves by, for example, taking risks without being insured and then trying to cover up his actions to remain in business, the entire industry is put at risk of infection. But more than that, the entire industry faces lost sales through consumer distrust and possibly bans on sales of its products in countries abroad.

So, unless we are prepared to have mandatory insurance (which is very expensive for disease risk and, well, it's just another rule to break), then we need to retain something like this. And the consumer ends up paying, either through tax or through increased costs. It's probably much of a muchness (unless you're a vegetarian).

But there is also another oddity. Vegetable producers are not always given compensation when a disease is found. Just because they never have been. If then same public interest arguments apply, this is a very strange position.

Wouldn't the culling of these turkeys be covered by their Business Interruption insurance?

Not only are thousands of turkeys dragged through the miserable existence of battery production, now it seems I will be forced to pay through my taxes to support this evil trade. Can I have compensation from the taxpayer for the distress that this situation is causing me?

For me, the case in favour of compensation is based around a general legal (and perhaps now political) principle that the government should not deprive someone of their property without compensation. The cull at the Norfolk farm is an example of government taking property: although the outbreak was likely to kill most of the stock, ultimately it was the government that arranged the cull and the disposal of the carcasses. The parallel situation is the compulsory purchase of property for public works (such as roads): in the developed world, this invariably leads to compensation. BM's starting point is that they are their turkeys, and they can do as they please with them. The government have decided to direct BM how to deal with their own property, thereby depriving them of their ownership rights. This demands a compensatory response.

Compensation or not, you have to feel sorry for the man himself. 57 years building up a business from nothing, only to have, millions of pounds wiped off the value of his british family-owned company overnight.

I can see the argument both ways. Without compensation there may be some who do not report such incidents to help protect their own profits. However, this rule could apply to any industry so cannot see why this one should be a special case.

A half way measure could be a small tax/insurance contribution on profits from such producers. The money would help provide relief in such (As pointed out) increasingly occuring incidents. Though additional money may still be required from tax payers, we should not grumble too much as we save money due to the relatively low cost of mass produced meat.

Evan,

I've been involved with the bird flu outbreak in Nigeria.

Compensation here for culled chickens has just been increased from £1 to £2. The market value of healthy birds at market is between £2.50 and £3.50

My first response to compensation on bird flu (and therefore by proxy all animal pandemics that could mutate into human pandemics), is that culling would be under-provided without compensation.

This argument stands up to analysis when looking at Nigeria, Indonesia, China etc where many (though not all)poultry farmers are small scale and the cost of breaking the law will be perceived as being less than the benefit of not notifying the authorities and selling the infected birds quickly.

But Bernard Matthews is sufficiently big that the external cost of not culling birds (ensuring infected meat does not enter the food chain) is fully internalised. The reputational risk of not notifying the authoritiesis is prohobitively high to dismiss any other option. If found out the company would be shut down (although market forces would presumably do it anyway).

So what's the UK policy solution?

A one size fits all policy seems inefficient - either giving unnecessary money to big farmers or not giving enough to small farmers to ensure public safety.

I'd argue that a country should have a sliding scale. e.g. Full compensation for the first 500 birds culled, half compenastion for the next 500, and nothing after that.

In Nigeria, therefore, the one size fits all may be sub optimal, but it does still have the benefit of being easy to implement. And speed of compensation is arguably just as important as level.

Compensation is valid as the policy of culling is a Government initiative to have two outcomes:

1 - Protect the rest of the UK poultry industry
2 - Protect humans from the virus

If we did not offer compensation over time the number of farmers would decrease, exports would be destroyed and it would harm us all.
In any case culling turkeys probably has no affect on humans getting bird flu.

i dont think the tax payer should compensate bernard matthews,it just seems funny to me that another of his factories in hungary has it, now this one in england has now got it coincidence i dont think so.there have been no other cases reported in england or even norfolk. to me this is just greedy industrial farmers putting everything second to them making money.didnt they learn anything from b.s.e. and if they are found selling infected animals they should be charged with mansluaghter and never allowedinto any form of farming again.

IT'S CALLED INSURANCE!! Every other business has to have insurance to cover situations where they are unable to trade or stock is destroyed. BM should NOT be given our money.

If a kitchen has a salmonella outbreak they have to shut down, get their place in order and pass an inspection before they can re-open. if word gets around they will also suffer an ongoing loss of trade.

This nonsense that these businesses will not report if they can't squeeze compensation out of us is a thoroughly immoral and blatant attempt at blackmail.

Compensation is paid because the Govt. requires the healthy animals to be culled. The farmer has no choice, he cannot wait and see if they get disease. In a free market farmers could act differently. The compensation is to cover their losses for not being able to do so.

Compensation only makes sense on a small scale where livelihoods are directly at stake.

During the F&M crisis in 2000/1 that was largely the case. Many farmers were faced with ruin. Compensating for a "rather safe than sorry" slash-and-burn approach as was the case then, is different than an isolated outbreak of Bird Flu in Suffolk.

Unless insurers do not cover sickness in the livestock at all, there is no reason for a company as large as Bernard Matthews NOT to have insurance to cover that risk, especially at the scale that BM does have facilities and livestock numbers.

Another great topic to discuss!

I think that there is one key bit of information we need to add, knowledge.

Bernard should be compensated if the government surprised him.

Bernard should not be compensated if he was aware H5N1 exisited (and he did, he knew long enough in advance that he could weight up the likelyhood of having an infected bird and if this risk and its associated costs was too great he could have exited the poultry business) AND if he could have reasonably expected the cull of his birds if there was an outbreak (and surely this was no surprise either).

So I am against compensating Bernard, foot and mouth or BSE farmers, etc.

People who should be compensated are those who might not be so well informed (hoteliers is one example you cite). A prime example of people deserving compensation where the farmers impactd by fallout from Chernobyl. But I can't remember if they got anything...

I think you have taken a highly simplistic view of this.

The whole essence of the cull is to be ahead of the disease and that means killing animals which are perfectly healthy. If you don't want to pay compensation then don't kill animals which show no symptoms of the disease.

The primary decision is one of interventionism, not compensation. If the government wants to destroy an individual's property, be it their house to build a road or their animals to contain disease, it is required to compensate them, not to would put us into a totally different political system.

Your comments on pension funds is very different, in that the government's actions did not directly destroy personal/company property, in the case of pensions it appears to be they gave poor advice which the individuals concerned were not legally obliged to obey. Thus to link the two together simply because both articles have the word compensation in them is perverse.

Pensions is a debate about if the government should be held responsible for it's advice, not it's actions, thus it is an argument about moral responsibility.

Given the high moral position the present government seems to take when business or individuals make a mistake, it leaves them very little wriggle room