ID And Traceability Cost Money, But Who Benefits And Who Should Pay? – for Aug. 2, 2010

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The U. S. has decided to not to proceed with the first version of its National Animal Identification System (NAIS), but if it implements another, it will have a good idea of the cost.

Ted Schroeder, a professor of agricultural economics at Kansas State University, described a detailed cost study to delegates at the International Livestock Identification Association meeting in Calgary last month.

“This program may no longer exist but the study is still useful for looking at costs,” Schroeder said. “The study went into agonizing detail to try and find true costs. Even animal welfare aspects were included along with species-by-species cases.”

The study came up with the following averages per sector for the American cattle industry. “These are direct annualized averaged costs, but keep in mind every operation is different and has different costs,” Schroeder said.

The study concluded that the cost would be $4.22 per cow, $.71 per backgrounder, $.51 per feedlot animal, $.23 per auction market sale and $.10 per head for packers for a total of $5.77.

Schroeder said that direct cost was only part of the potential economic impact for the U. S. cattle industry. “What will be the true market impact, for instance could it reduce prices for feeder cattle, there is a bigger picture,” he said.

It’s that big picture that concerns Schroeder. “What will be

Jill Hobbs of the University of Saskatchewan and Ted Schroeder of Kansas State University both spoke on ID and traceability issues at the International Livestock Identification Association meeting held at Spruce Meadows in Calgary.WillVerbove n

the perceived value of ID and traceability, will it be important to consumers and will they be willing to pay a premium?”, he said.

Trust equals value

Trust is an important perception with buyers, especially in global markets, said Schroeder, “New Zealand is seen as less risky than other countries, Canada follows and the U. S. not so much.”

The U. S may well have a trust issue since it abandoned NAIS and lags on traceability, said Schroeder.

“Did the Canada/China beef deal tell us something about trust?”, he asked referring to a recent agreement for China to accept Canadian boneless beef under 30 months, while the U. S. has yet to regain access.

“If we can’t trace our animals we are going to lose trust. This issue could cost the U. S. industry $3 billion in market access,” he said.

Jill Hobbs, an economics professor at the University of Saskatchewan, said that the issue goes further than the livestock industry.

“The objectives are emergency management, disease control and food safety, but which benefits the private good and which the public good,” she said. “The problem we have in Canada is that with traceability we have not done a cost/benefit analysis.”

Hobbs said it should be determined who benefits and how the cost can be shared. There is a need to understand what does the government gain, what does the consumer gain, and what does industry get, she said.

“There could be multiple goods from traceability and there could be incentives for various users,” she said.

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