The U.S. Department of Agriculture’s Animal & Plant Health Inspection Service (APHIS) is updating its indemnity calculator formula for laying hens, effective Oct. 1, 2016.
“The updated formula was developed by USDA’s top economists and will more closely resemble a fair market transaction. It will more quickly align with changes in producer returns,” APHIS said in a statement.
The new calculator addresses concerns raised by egg layer producers following the 2014-15 outbreak of highly pathogenic avian influenza (HPAI). APHIS has worked to address these concerns and make the calculator more transparent.
The new calculator determines fair market value based on net farm income ratio, which is the amount of net income generated per dollar of farm revenue. The calculator will be updated on a quarterly basis.
Chad Gregory, president and chief executive officer of the United Egg Producers, said the organization's egg farmer-members appreciate the commitment of USDA to provide financial compensation to affected egg farmers through the process of indemnity, which was established to help farmers during an unforeseen crisis such as the 2015 avian influenza outbreak.
“Egg farmers recognize the indemnity funds are significant, and they take the responsible use of those funds very seriously,” Gregory said. “We are grateful that USDA-APHIS took the time to evaluate the indemnity program and establish an accurate calculation formula."
The HPAI outbreak in the spring of 2015 had profound impacts on poultry producers, allied industries and federal and state governments. Responding to gaps seen in indemnity payments realized during the outbreak, APHIS announced in February 2016 an interim rule that outlined conditions for the payment of indemnity claims for HPAI.
Part of the changes included a formula to allow indemnity payments to be split between poultry and egg owners and their contract growers.
During the 2014-15 outbreak, APHIS had been paying the full indemnity amount to the birds’ owners − usually the poultry company − with the understanding that parties that had entered into contracts with the owners to grow or care for the animals would then be paid by the owner in accordance with contractual agreements.
During the course of addressing the 2015 outbreak, APHIS said it determined that the existing regulations did not specify that the indemnity be split between owners and contractors. “Since both owners and contractors incur losses when a flock is depopulated, both should be compensated appropriately,” APHIS said.