Mycoplasma bovis outbreak – compensation for farmers

On 26 March 2018 the Ministry for Primary Industries (MPI) announced that all cattle on the 28 properties infected by the mycoplasma bovis disease will be culled and the farmers compensated for their verifiable losses.  MPI confirmed that the depopulation of the 28 farms which it has previously designated as ‘Infected Properties’ (IPs) will result in the culling of approximately 22,300 animals and will require the farms to be disinfected and left empty of cattle for 60 days.

In issuing its statement MPI also confirmed that farms which have not been designated as IPs but which are currently under a ‘Restricted Place Notice’ or a ‘Notice of Direction’ will not be directed to cull their herds at this stage.

Compensation is available from MPI under the Biosecurity Act 1993 (Act) where a person suffers ‘verifiable loss’ as a result of MPI’s exercise of powers under the Act.  For example, compensation is available for losses resulting from farms being placed under a ‘Restricted Place Notice’ or a ‘Notice of Direction’ by MPI or from MPI ordering the depopulation of the 28 IPs.  In order to obtain compensation, a farm must show that it was unable to mitigate the loss by taking every step that is reasonable in all the circumstances.

The Act states that the amount of the compensation paid must “put the person to whom it is paid in no better or worse position than a person whose property or goods are not directly affected by the exercise of [MPI’s] powers”.

Whilst MPI has only issued very limited guidance regarding what losses farmers are able to claim compensation for, MPI has confirmed that:

  • Farmers will not be required to pay for the cost of the cull.
  • Where appropriate, farmers may receive interim payments while MPI works through their claims for compensation.
  • Farmers are able to claim for losses resulting from the destruction of property (such as the culling of cattle).
  • Farmers are able to claim for consequential losses which directly result from the exercise of MPI’s powers, including losses in gross profits. In order for MPI to assess losses in gross profits, MPI has requested farmers submit detailed financial statements showing their ‘business as usual’ sales volumes and gross profit for similar periods over the past 3 years, as well as financial statements showing sales and gross profits for the time the farm is affected by MPI’s exercise of power.

Farmers affected by the Mycoplasma Bovis outbreak should ensure they take all reasonable steps to mitigate their loss and must make a claim to MPI for compensation within 12 months.  It is vital that farmers keep detailed records of the losses they sustain, including financial records, invoices paid, photographs of property/cattle destroyed and relevant correspondence.

How can we help?

If you require assistance in resolving any difference of opinion or uncertainty about the amount of compensation offered by MPI, please feel free to contact us.

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