more pro-id stuff...check down near the bottom for confirmation of NCBA's direct involvement with the USAIO.
Beef Today - - - March 2006
Little Tag, Big Check
by Steve Cornett
The politics of a mandatory national animal identification program may seem to be twisted in a Gordian knot, but that hasn't kept the beef industry from experiencing a bull market in electronic identification systems.
There are lots of reasons people like individual ID programs, such as age and source verification programs, preconditioning programs and branded beef programs, for their cattle.
It's not just the tags, of course. The tags are the key to a new industry structure that promises to change the beef business. Whether the government persists or not.
And who knows about that? USDA's National Identification System seems to be getting tugged like a rabbit leg at a coyote den. (See USDA's New Plan, page 14).
Here is the deal: A calf with a $1.50 ear tag in his ear and a simple set of records has been fetching $25 or $30 more than a calf without a tag. Folks have noticed, and they are buying more tags than ever.
To quote from a recent news release: "Digital Angel. . . announced that the total sales of its electronic RFID [radio frequency identification] livestock tags increased by 73% in 2005."
That's one player. The market-leading Allflex has, by industry estimates, probably sold more than twice as many tags as Digital Angel. The electronic ear tag business is hot in the U.S.
Kevin McGrath at Digital Angel estimates that there were 8 million electronic tags sold in North America last year. That's a long way behind the more than 100 million visual tags, but it's gaining fast—and it represents a significant inroad into a market with a little more than 40 million calves born each year.
Those little electronic ear buttons are now a primary management tool on most of the leading-edge operations seeking to share information up and down the chain of ownership.
If you don't consider just increasing awareness ("I don't know what you can say about ID that hasn't already been put out there," said Denny Baustert of Y-Tex to a reporter.) then there are two catalysts involved in the explosive growth in sales. The first is the attention created by the discussion of the ever-pending national ID program. The other is Japan's demand for age verified cattle—and the Quality System Assessment (QSA) programs USDA set up to allow its stamp of approval on verification programs.
That's not to say the mandatory program isn't coming. Congress has said it should. USDA has a multi-year, three-pronged plan. First, you register premises. Then, you implement individual identification. And then, say in 2009, you begin tracking movement of all species of animals from cows to the lower life forms.
Good intentions. That's the plan. Meanwhile, hundreds of producers have found several reasons to use electronic ID (EID), and with most of the reasons, EID pays for itself without being forced by the government or anybody else.
But there's little doubt the biggest push came from the Japanese government's demand that only cattle under 20 months of age—and, therefore, safe from BSE—would be eligible for sale to that country.
USDA followed with a program that prescribes a system that cattle producers must follow if they are to qualify for the agency's Export Verification Plan.
That plan does not demand individual animal ID. It allows for group movement. But, with individual ID, there is increased automation and more flexibility in marketing.
An individual rancher can ship all of his cattle with their records intact, however, the records will be of value to buyers only if the buyers choose to maintain that group as a group. Once that animal is sold from the group, he is once again a commodity product.
So, if the buyer pays the $25 per head extra for, say 100 head of USDA's Export Verification Program eligible calves, he would have to either keep them together through harvest or put on his own individual ID.
Nobody knows for sure what birthday records will ultimately be worth to the cattle industry. Packers expect that they will see more and more demand in the domestic industry for source-verified cattle. McDonald's already pays extra for traceable information on cows, and the restaurant chain told journalists last fall that it will continue to push the industry to deliver more information.
Wal-Mart, which is the country's biggest beef retailer, is right behind McDonald's. Other retailers have their own programs and are looking for new partners.
On top of that, most of the value-added cattle sales and vaccination and preconditioning programs pay for individual ID. It seems certain to be a technology whose time has come—and calves with EID will have more value from now on—either in the form of premium, as it is now, or discounts against non-ID cattle, as most expect in the future. That's one reason so many groups quickly filed to gain USDA's QSA status.
The QSA program requires record-keeping and information streams that will assure auditors that the cattle coming out of the program are really eligible.
The bigger picture. This technology is not, by the way, just about cattle. The cybermagic of RFID is being adopted in a number of industries as illustrated in the following information found on the Texas Instruments Web site:
"The wireless technology that Texas Instruments RFID provides enables consumers to pay for gas, food and other items at the checkout counter with a wave of their hand. Now, customers do not even need a wallet because they can use their mobile phone or a special key chain to pay for their purchases. The benefit of this technology not only allows for quick purchases, but it enables businesses to learn about their customers through the collection and storage of essential information about purchasing patterns. Companies can use this information to individualize services for each customer, which creates customer loyalty, lowers costs and boosts profitability. Customers feel more comfortable with RFID since it is more secure than traditional monetary transactions.
"Along with many other applications, this same type of technology can also be used to allow for personnel access, ticketing, pay TV, gaming and pay phone applications."
So there's nothing unique about the technology. What excites a lot of producers is the promise it holds for the beef industry's ability to manage cattle—in addition to the government's evolving plans for a national animal ID program. It is, after all, common knowledge that a mandatory animal ID system is inevitable.
If inevitable means 100% certainty, maybe the more apt description is probable. This step for the beef industry is turning out to be hard to take. Part of the problem is politics. Part of it is technology. Part of it is just trying to deal with the complexity of the U.S. livestock industry. The argument in favor of national ID is strong, at least from the perspective of the cattle business. Nobody doubts there is a lot of value— or would be in the event of a national emergency like a foot and mouth outbreak—in a system that would let USDA trace cattle within 48 hours.
That might allow officials to minimize the spread of diseases and save the industry millions of dollars. But what it takes to get there is a bit of a challenge. The first—and seemingly easiest—step is a system that registers where animals are and where they have been. That's the premises program, and something more than 250,000 operations have already registered. Only North Carolina and Wisconsin have mandatory registration. Texas had been on schedule to implement a premises program July 1, but the state's animal health commission voted in February to postpone.
The commissioners' reconsideration was based on the opinion of about 80 people—which is a lot of people at a Texas Animal Health Commission meeting—who turned out to complain about the prospect. The showing caught commissioners by surprise, but they went ahead and voted not to immediately proceed with the mandatory premises registration they had been planning for several years.
As a result, it seems, a backlash has kicked up. Some of the opposition is from organized groups. Horse, poultry and other species organizations have their doubts about the practically and, to them, the value of such a program.
The power of the Web. On top of that, there has been a more underground movement. There are several Web sites devoted to what the bloggers seem to think is a government conspiracy. "Does anyone else find this scary? Sounds like humans will be next?" someone asks on one site. A message posted at www.noanimalid.com suggests "An ear tag never stopped (sic) a disease, but working together we can stop the ear tag."
On the Web site www.nonais.com, which the author describes as "my effort to spread the word of how harmful the USDA's National Animal Identification System (NAIS) is to small farmers, homesteaders, pet owners and consumers," readers are urged "to contact your local radio stations as well as national radio station personalities to let them know the danger that the USDA's National Animal Identification System (NAIS) poses to our liberties." The blogosphere attack comes alongside more serious concerns from within the various livestock industries. The National Cattlemen's Beef Association (NCBA), working with policy seeking a national program, has tried to lead a multi-species effort to develop such a program.
NCBA, worried about the government maintaining a database that would probably hold personal information and might be subject to the Freedom of Information Act, joined the National Bison Association to form the U.S. Animal Identification Organization (USAIO), which recently contracted with Bearing Point to develop a database.
NCBA's plan is that USAIO will be the official database. The organization was created as a separate entity and will operate independent of NCBA—a move that supporters hope will deflect opposition from R-CALF.
NCBA's idea didn't work, though. R-CALF says it doesn't want for-profit corporations to have access to information that is collected under government programs.
Gary Wilson, who coordinates the ID program for the Ohio Department of Agriculture and serves as co-chair of the cattle species working group for NAIS, says there are three roadblocks at the moment: Politics, of which we have spoken at length here; technology—he says the industry needs better readers for sale barns and other points of concentration; and funding.
USDA plans to put $100 million into ID programs, says Agriculture Secretary Mike Johanns, but it is mostly in the form of demonstration grants. The agency is reluctant to help pay for the actual startup costs on ranches or at sale barns.
The livestock marketers are not happy with that approach. Last fall, the Livestock Marketing Association and the National Livestock Producers Association asked Congress for more help. The sale operators worry that they will be required to spend thousands of dollars on equipment to help their customers comply with a national ID program. And, they worry that many producers will simply expect them to "handle" the ID paperwork and tags for them.
All that is background noise to what is happening in the industry without a government mandate. Several sale barns—like Superior Livestock Auction, the satellite/Internet/direct sales group honored with NCBA's annual Vision Award this year—have enthusiastically adopted the technology and used it to assist in value-added sales of various sorts.
As these programs spread through the industry, they promise to bring still more converts to identification programs. At the same time those converted producers are pushing source verified, individually identified animals into the market, the Japanese and McDonald's will be pulling on the other end. It all makes individual animal ID something producers must pay attention to because, really, just how many new technologies have added $25 per head to an animal's value?
Getting Started
Most of the cattle harvested in the U.S. each year would be under 20 months of age and, thus, eligible for the Japanese market. That's why so many feeders are paying extra for calves with age verification. But most calves—even this year—will probably not have the records they need.
So what should you do to take advantage of it?
Leanne Saunders at IMI Global says it isn't that difficult. She recommends the first step should be contacting one of the feedlots and other organizations that have jumped through USDA's hoops to develop official Quality System Assessment programs. Log on to www.ams.usda.gov/lsg/arc/evjapanlisting.htm for an updated list.
Those organizations have developed plans that allow them to assure the government that they can do what they say they're doing—that they have a monitored, audited, system—that assures cattle have been treated as the owners claim they have.
Saunders says she would ask each of them what sort of program he has and "what they can offer me and what they will require me to do." Any of them, Saunders says, will be able to offer a helping hand. However, each of them offers access to different markets. The key will be finding one that fits your program and marketing goals
They have little credibility left with setting up their independent entities......