No sooner have most people pronounced NAIS dead-on-arrival, than a number of recent events may have breathed life back into the U.S.A.’s National Animal Identification Scheme. A combination of market forces aligned with a simplified tracking technology, and some rare positive news may have reinvigorated USDA’s moribund, voluntary animal traceability initiative.

First the news headlines. Even though the U.S. House of Representatives had voted to cut off funding for the NAIS as part of the Farm Bill, a joint House-Senate conference committee agreed a few weeks ago to continue funding the program to the tune of $5.3 million for fiscal year 2010-2011. This funding is a reduction from the $14.2 million authorized for last year and less than the $14.6 million the Senate approved, but the program will continue. However, a growing number of Congressional members have made it clear they want to see effective leadership from USDA to dispel some of the more egregious NAIS rumors running unchallenged in the countryside (e.g., backyard farmers with only a few chickens for home use or sale to friends will have to tag and track each animal). They also want to expand the number of farms and ranches that have registered with the NAIS premises database from the current anemic 35% to closer to the 90% needed for an effective national system.

The second piece of good news for NAIS supporters is that U.S. District Judge Rosemary M. Collyer in Washington, D.C., dismissed a civil suit filed by the Farm-To-Consumer Legal Defense Fund and a group of Michigan cattlemen against the USDA and the Michigan Department of Agriculture (MDA) over the National Animal Identification System (NAIS). The group’s suit, filed last September, sought to enjoin the implementation and enforcement of NAIS. The suit was dismissed primarily because Judge Collyer ruled the program was voluntarily adopted by state departments of agriculture and was not federally mandated.

Even with a bit of good news, the anti-NAIS forces continue to rally their troops by claiming that NAIS is overly burdensome, and is unnecessary because existing livestock records, such as brands, ear tags, veterinary logs and auction barn records do a good job of tracking cattle movements. Dr. George Teagarden, the Kansas state veterinarian, agrees that the current, fragmented record-keeping system can be used “to find the animals in question, but it can be months after the fact.” According to Dr. Teagarden, this time lag isn’t nearly fast enough and he cautions, “A highly contagious animal disease will devastate this country.” He underscores this dire prediction by noting that in Kansas in a single month cattle from all 48 of the Continental U.S. states arrive at least once a month. The speed of commerce is way too fast to be handled by the fragmented, paper-based system. Dr. Teagarden advocates a mandatory ID and traceability program that is consistent across state lines, and notes, “What voluntary system do any of you know that ever worked?”

Apparently, a number of national governments agree with Dr. Teagarden, and recently several have made or are poised to move their systems from voluntary to mandatory. Within the last few months these key countries have made major moves towards mandatory traceability; moves that are likely to impact USA policy and USA producers.

Brazil. Brazil has just announced that by 2011 all livestock producers will be required to participate in a mandatory traceability system. The new system will rely on simpler technology than the current, voluntary SISBOV system which is RFID-based, and every segment of the Brazilian supply chain, from cow-calf operator to slaughter facility including transporters will be required to provide a complete chain of custody records. Real-time electronic record-keeping is not being mandated, but standardized record-keeping whose data can be transmitted via Internet portals to centralized databases will be used. The SISBOV system will continue to exist for those who want to use it, but the expectation among Brazilian officials is that most producers will use the standardized, simplified paper-based system.

Korea. South Korea has instituted a traceback system on domestically raised beef, and has indicated that it would require traceback on imported product by 2010.

Japan. The Japanese government has had a domestic animal identification system in place for several years, and on three different occasions the then-minority political party, the Democratic Party of Japan, had unsuccessfully tried to pass legislation that would require the same level of traceability for imports. In August the DPJ successfully became the controlling party for the first time in a long period, and newly appointed Prime Minister Yukio Hatoyama has vowed to once again try to revise the Beef Traceability Law. He doesn’t have control of the Upper House of Parliament, but he may be able to persuade his two coalition partners to go along.

How do these foreign government actions impact the U.S. meat industry? The Brazilian action probably has less direct impact on the US than do the Asian actions, because the Brazilian action was aimed at broadening acceptance of Brazilian beef in the EU. There will be some impact, though, because the largest of the Brazilian meat companies, JBS, is also one of the major U.S. meat producers so there will likely be some technology transfer from Brazilian ranches to their U.S. counterpart.

The Asian country actions, though, are likely to have a major impact for USA producers because both Korea and Japan are major importers of American meat. According to Ken Stielow, Chairman of the Cattleman’s Beef Board – Beef Checkoff program, “Exports are key to the future of the US beef industry.” The National Cattleman’s Beef Association (NCBA) monetizes this statement by indicating to its producers that widening exports to Japan could “add $50 per head to your bottom line”. Losing the Japanese market has been shown to cost producers about $180 per head. And since the margin of profit per head in a good year fluctuates between $50 to $100 per head, the economic impact of the export market is hard to deny. Additionally, when you multiply these numbers by 35 million animals harvested annually, the impact on the entire agri-food sector is significant.

This impact can be further seen in the fluctuations of the price per head producers receive for their cattle as exports either rise or fall. Sales of beef to Korea rose sharply in Q3 of 2008 as beef trade resumed and producer prices rose as well. Since then, US beef exports have sharply slowed down with weekly shipments of beef muscle cuts to Korea in August 2009 at 725 metric tons per week compared to 3,031 metric tons per week at the same time last year. It is believed the Korean market alone could grow to become a one billion dollar per year market which would further boost cattle prices for U.S. producers. So, the impacts from the Korean and Japanese domestic initiatives may have far reaching impacts on the U.S. producer if those countries successfully impose the same rules for imports as they have for domestic product.

A major key to Brazilian acceptance of a mandatory livestock traceability system by Brazilian legislators was the simplification of the system of initially registering an animal and then tracking its movements from birth to export. The predecessor voluntary system in Brazil known as SISBOV is an RFID-based identification system with real-time electronic data collection and transmittal. While effective, this system is technologically sophisticated and beyond both the economic means and technological understanding of a large percentage of Brazilian producers. Embracing and actively promoting a simplified registration and tracking system by USDA, we believe, will go a long way towards helping reduce opposition to NAIS.

Even with all of these developments, make no mistake — NAIS is still on life support, and it may st

ill die. But when the market
place speaks and producers begin to feel the pinch or bulge in their wallets, or, God forbid, we have the type of catastrophic event Dr. Teagarden prophesies, even the most hardened producer will either adapt to the new reality or leave the business. Simplified technological approaches may help tip the scales, and we have seen within our own animal tracking commercial activities over the last eleven years that our simplified technologies are the ones most often embraced. As is so often the case, technology can pave the way towards adoption or rejection.