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Wednesday, July 07, 2010

Tracking Livestock:  How Much Of A Discount Or Penaltry Would Void Your Opposition?


The mad Canadian cow that wandered into a Washington State dairy barn in 2002 put the US beef market in cold storage for several years and then gave rise to one of the most hotly debated USDA proposals ever, the National Animal Identification System. NAIS brought out the conspiracy theorists and generated more comments than any other topic in the nearly five years that Farmgate has been part of Cornbelt agriculture. But hold on, NAIS is not on the table, but is still accumulating dust in the Washington bureaucracy. However, there is a new proposal being considered.

USDA is attempting to develop a program that is more flexible to administer, and will still achieve some of the same goals of tracking sick animals to control future outbreaks of disease where the need to quarantine is required. Whether animals will have to be identified and traced from seller to buyer is uncertain, says Kansas State livestock economist Glynn Tonsor. His fact sheet on a voluntary animal ID program indicates preferences for cow-calf producers, as a segment of the livestock industry. Those producers are the foundation for tracking beef cattle and Tonsor surveyed over 600 of them to determine their preferences of various alternatives.

In a recent issue of the Journal of Agricultural Economics, Tonsor says the survey, which was conducted through the mailing list of Beef Magazine, and may have been skewed toward larger producers as a result; found that only 35% would register their operation. Their foreign counterparts in nations where livestock movements are traced typically respond that “consumers demanded to know where their food came from and how it was produced.”

The alternatives included both discounts and price premiums for livestock that could or could not be traced, whether the program was managed by the government, private industry, or another entity, and what information producers would have to submit, such as age of the animal, production practices, genetic information and health records.

Tonsor found notable differences of opinion existed among the cow-calf producers, which was indicative of the original plan. At the outset, some producers were strongly in favor and others were strongly against, with little room to compromise. Tonsor says the continued dichotomy of opinion suggests opposition to animal ID and traceability if any system is developed. Asking producers what amount of money per head would make them willing to accept a traceability system, he found that a typical producer would accept a discount of $2.53 per head and be indifferent to the original NAIS proposal. However, that producer would require a $10.59 premium per head to participate in an advance traceability system. Tonsor found that producers would accept a 57¢ premium per head to accept a traceability system operated by private industry managers, but would required a $7.59 premium per head to accept a traceability system operative by private managers outside the livestock industry. In the same vein, Tonsor found that producers would provide age verification in return for a $38.53 premium, and detail their production practices in return for a $36.23 premium per head. However, he says producers responded that they would sell an animal without health records and be willing to accept a $45.37 price discount per head. Tonsor found the financial penalty value varies across producers, which he says indicates that a national program will encounter continued resistance.

For example, Tonsor says producers who oppose the traceability system, would go along with it if there was a discount of $118.52 per head. Those same producers would require a $17.41 to accept a tracking system operated by the government. Additionally those individuals would provide age and health information on an animal in return for a $151 premium for age papers and a premium of $208.05 to provide information about production practices and genetic information.

If a national program that is developed is voluntary, Tonsor says 26% of producers would participate in a program similar to the NAIS proposal, 17% would engage in a tracking system that was management by a non-governmental entity, and 57% would not participate in any system. He concludes that with traceability becoming more important in the beef industry to verify animal health, there is a need for a system that will be acceptable to producers.

Development of a national system to trace the movement of livestock to prevent disease outbreaks may ultimately be adopted, despite the failure of the NAIS system to gain producer approval. A new system will face significant challenges because of the wide disparity of whether producers will accept discounts or demand premiums in return for providing information about an animal. A survey has found that producers will accept rewards of some type in return for yielding information about the age of the animal, the method of production practices, and health information.

Posted by Stu Ellis on 07/07 at 01:41 AM | Permalink

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