Marsh UK Advises on Foot and Mouth Disease Outbreak

August 9, 2007

Foot and Mouth disease (FMD) in cattle is a costly and tragic disaster – for the farmers and related industries, as well as the cows. A bulletin from Marsh’s London office notes that the “2001 outbreak resulted in £3 billion [$6.1 billion at today’s currency exchange rates] worth of direct costs to agriculture and £5 billion, [$10.17 billion] worth of indirect costs to other sectors like tourism (source: National Audit Office).”

The first line of defense requires the farming sector and related industries – transport, food processing, tourism and exports – to “focus on stopping the disease spreading and begin to apply the lessons learnt from 2001,” said Marsh.

The bulletin gave the following “Key points”:
— Comprehensive contingency plans must be in place, exercised and co-ordinated.
— The farming industry must be made less vulnerable by reforms in industry practice, which in turn will minimize the wider impact of an outbreak of FMD.
— A high level of biosecurity is essential.
— Reaction should be with speed and certainty by applying well-rehearsed crisis management procedures.

Marsh noted that the “incidence of accidental release of biohazardous materials is generally extremely low and the treatment of biohazards is very tightly controlled in the UK.” However, as FMD consists of multiple virus strains and can be transmitted through the air, it’s extremely important that it “does not escape from the facility.”

Of the four UK facilities that handle the virus, according to Marsh, only one is ‘low risk” on a scale of one to four. The Pirbright facility, from which the current outbreak seems to have come, “is probably classed as a Level Three risk. Laboratory personnel in a Level Three facility have specific training in handling pathogenic and potentially lethal agents, and are supervised by experienced scientists. All procedures involving the manipulation of infectious materials should be conducted within biological safety cabinets or other physical containment devices, and by personnel wearing suitable protective clothing and equipment.” Despite all these precautions, the virus apparently managed to escape.

As a result Marsh urged businesses, especially those in the agricultural or food-processing sectors, to review “their biosecurity regimes and contingency plans in anticipation of the current FMD outbreak escalating. Depending on the outcome of the current investigation medical research and pharmaceutical companies may also need to undertake further reviews of current containment measures.”

These contingency plans “should include immediate responses to government-imposed restrictions as well as longer-term business recovery,” the bulletin continued. “Reputation and market confidence will inevitably take a dip, even if the outbreak is isolated, and need to be addressed. Sourcing of alternative products or ingredients – where possible – should also be included in contingency planning.”

Marsh also notes that it’s not just the agricultural sector that is affected by an FMD or similar outbreak. All those involved in the “food chain,’ from “auction markets, slaughterhouses, livestock exporters, food processors and road hauliers” are at risk.

Tourism can also be “heavily affected.” Marsh said the industry “lost between £2.7 billion [$5.5 billion] and £3.2 billion [$6.5 billion] in 2001.”

Local conditions and society are also affected. In addition the “flooding of agricultural land in northern and western areas of the UK will add to the stress, difficulties and dislocation,” said marsh, and “the combination of flooding and FMD could also increase food costs nationally.”

While government backed compensation programs can help, Marsh indicated that they relate “only to the pre-slaughter market value of the animals slaughtered as defined by a DEFRA-appointed (Department for Environment, Food and Rural Affairs) valuer. It does not compensate for resultant economic losses. Many farmers will buy some form of FMD disease protection, which will also compensate for the value of the animals slaughtered but also interruption to their businesses following slaughter or movement restriction.”

In conclusion Marsh said there could well be “wider economic problems.” These could include “the loss of consumer confidence, loss of export markets, plus the resultant impact on tourism, which is not covered by insurance. Unlike 2001, the farming and leisure sectors also have to deal with the knock-on effects of the recent floods and their impact on British business.”

Source: Marsh UK

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