The New South Wales (NSW) oyster industry is the state’s largest aquacultural sector, yet disease risks pose threats to the long-term sustainability and growth of the sector. Over the past two decades, oyster production has been particularly impacted by two biosecurity risks – the Queensland unknown (Qx) disease and Pacific Oyster Mortality Syndrome (POMS). Outbreaks of both diseases across various NSW estuaries has caused significant loss of stock, in addition to other financial consequences for oyster producers including restocking and clean-up costs.
There are currently no formal financial support arrangements available to oyster producers impacted by disease incursions. During prior outbreaks, producers have primarily relied on their own financial buffers, although a small amount of ad-hoc funding has been made available on occasions. For many producers, the costs of disease response are borne amid a period of no income, unless they have diversified their oyster stock by species and/or location.
It is in this context that the NSW Farmers Association (NSWFA) secured funds to investigate financial support mechanisms to bolster the long-term viability of oyster production, particularly as a changing environment increases the risk of disease outbreaks and non-disease supply shocks in the future. Deloitte Access Economics was engaged to investigate the feasibility of various financial support mechanisms and develop a shortlist of options that could potentially support NSW oyster growers. Through this process three shortlisted options were identified:
1) Tiered, shared-cost mechanism - A joint industry-government funded scheme. Government initially covers disruption response costs, part of which are later recovered from industry via a levy on production.
2) Industry-led common fund - Established by the oyster industry, growers pay into a common fund which is drawn down to cover costs in the event of a supply disruption.
3) Insurance - A market-based scheme developed by a private insurance provider, which compensates individual producers in the event of loss.