When Decisions Matter.

How Can an Avian Flu Outbreak Affect Poultry Grower Contracts?

Avian Influenza, more commonly known as “bird flu,” has not been found in Pennsylvania since 1984. In 2004, however, two (2) chicken farms in Delaware reported an outbreak of “low pathogenic avian influenza.”  That same year four (4) live bird markets in New Jersey reported a similar outbreak, due to the Delaware farms providing poultry to those markets.  None of those reported incidents led to any transmission to humans.

The major flu outbreak in the mid-west last winter and spring has many experts speculating that a resurgence could hit the Mid-Atlantic region due to migrating birds this fall. If and when avian flu does affect flocks in Pennsylvania, Delaware, New York, and New Jersey, it will be critical that poultry growers not only know containment and disinfection procedures, but also know and understand the terms of their contract with the processing company.

The key language to consult will be under provisions such as risk of loss, animal welfare, acts of God, or default. For example, contracts may indicate that the grower bears the risk of loss if a “catastrophe” occurs, where others may indicate that widespread disease (such as avian flu) is an “act of God” beyond the grower’s control and the grower is entitled to compensation. Often, contracts do not specifically define compensation terms when a flock is lost due to widespread disease. If the grower is found to bear the risk of loss, it could mean thousands of dollars in lost compensation plus costs for the grower.

Additionally, there are currently no available insurance programs in place that cover loss due to avian flu.

As an initial matter, poultry growers should consult the terms of their contract and contact our Agricultural Industry Group with any questions or concerns.

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