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Abstract
Recent animal feed crises caused
substantial damage throughout food supply chains
and, consequently, initiated debates on the liability
insurance cover of animal feed companies. In this
framework, a quantitative risk analysis for wet
feed producers in the Netherlands is presented.
The simulation model developed is parameterised
by among others data from three Dutch wet feed
companies reflecting about 45% of the wet feed
market in the Netherlands. The model addresses
direct damage up to farm level. Default outcomes
per crisis show that the number of contaminated
farms is expected to be 117, with a variation from
19 farms in the 5% percentile to 331 farms in the
95% percentile. Projected direct damage per crisis
is on average Euro 0.9 million, ranging from Euro
0.09 million (5%) to Euro 2.8 million (95%). The
expected number of 117 farms consists of 15 sow
farms, 31 hog farms, 49 dairy farms and 22 beef
farms. Sensitivity analyses illustrate that the size of
farms supplied with wet feed and the number of
days in which contaminated wet feed is delivered
are key variables in determining the eventual size
of damage. Outcomes show the expected situation
for the entire wet feed sector in the Netherlands—
under the assumption that all wet feed companies
have about the same risk profile as the sample
companies whose data have been used to
parameterise variables such as mixing rates and
number of farms supplied each day. As the sample
companies cover 45% of the total volume of wet
feed in the Netherlands, their “share” in total
damage is expected to be about the same, i.e. 45%.
Similar conclusions hold for other wet feed
companies whose risk profile is comparable to that
of the sample companies. Outcomes are used in
supply chain and insurance discussions on
reviewing liability insurance covers of animal feed
producers.