Sunday, June 25, 2006

Defra challenged over Tabular valuations.

A challenge to Defra's tabular valuations has been launched by West country law firm, Clarke Wilmot. The case has been brought on behalf of Devon dairy farmer, Graham Partridge who has 300 pedigree dairy cattle on his farm near Tiverton and who feels they are seriously undervalued by the new system.

Introduced in February, the tables cover 'average market value' of various class of livestock. Male or female, beef or dairy, an age banding and crucially, 'pedigree or non pedigree'. Thus an aged pedigree jersey cow would be 'valued' at the same rate as a young holstein in her prime. Conversely a old Dexter bull with minimal influence on beef values, would rate the same as a Perth show winning Charolais or Limousin. 'Market value' is exactly what it says. The price of that class of animal traded in the local livestock market, in the previous time frame. And therein lies the problem. Animals of high genetic merit are rarely traded in that marketplace. And on farm dispersals, breed 'showcase' sales and private sales are excluded from Defra's tables.

Little Ben, our remaining Minister is quoting - or misquoting - his two reports into cattle compensation, both of which concluded that the majority of valuations were OK. Reading was the first, the most recent Exeter, who followed Reading's format so as not to tread on any professional toes. Exeter found that 80 percent of the valuations were 'in line', and that, said the author, was "as good as it gets" on the scale that these compensation payments were made. (We think he meant there were a lot) He went on the describe as many 'under valuations' as over, with just one or two very high profile over payments, making headlines.

Mr. Partridge feels that Defra's valuation tables do not reflect the true value of his stock, and his lawyers will now use this case to bring a judicial review of the controversial new system.

In an ideal world, this situation should not have arisen at all, with farmers able to insure for any value above 'average' that they felt their stock merited. In fact a couple of years ago, our own Rear Admiral Ben, gave the following answer to just such a parliamentary question:

15th Dec 2003: Col 629W
Mr. Paterson.
To ask the Secretary of State for Environment, Food and Rural Affairs whether farmers are able to obtain insurance cover for TB infection in dairy cattle after a TB breakdown and subsequent claim. [141083]

It is government policy to pay compensation at 100 per cent of market value, with no upper limit, for cattle that are compulsorily slaughtered under TB control measures. Farmers therefore do not need to take out insurance on their animals. Theoretically, insurance can be bought to cover other consequential losses for which compensation is not paid, but that is a commercial matter between farmers and their insurers.
Section 34 (5) of the animal Health Act 1981, explicitly allows insurers to deduct the amount of Government compensation from the value of any payout they may make.

Insurance companies will make their own decisions on whether to insure, and about the size of the premiums, based on their assessment of risk.

Recent contact with the insurance industry in early 2003 indicated that, although companies were honouring existing policies, they are not offering new policies to cover TB in cattle herds, particularly in areas where TB is increasingly prevalent. This is because farmers do not wish to take cover in areas where the risk is low (such as Yorkshire) but do wish to purchase cover in areas of high incidence (such as the South West) However, the insurance companies consider that the financial risks in offering insurance policies in areas of high incidence are too high at present.

Quite explicit isn't it? Farmers need not take out insurance. Defra will pay 100 of valuation, but even if they wanted too insure, exposure to risk is likely to be too high for them to get cover. Last year, the cost of tb cover increased tenfold, and cover halved. That's if you were lucky enough to still have a policy in place, and not been unlucky enough to have made a claim.

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