National ID Costs & Benefits Analyzed

Forget for a moment the emotion and misinformation that characterizes the debate over the National Animal Identification System (NAIS). Ignore whether the currently

Forget for a moment the emotion and misinformation that characterizes the debate over the National Animal Identification System (NAIS). Ignore whether the currently voluntary system should be mandatory. Disregard USDA’s bumbling, fumbling, on-again, off-again implementation approach.

With enough producer participation, the system could return more economically than it costs. That’s according to the report, “Benefit-Cost Analysis of the National Animal Identification System,” released by USDA last week. See it at: Quibble with the specific numbers all you want, but the principles described deserve careful consideration from folks on either side of the NAIS debate.

Researchers describe several scenarios and levels of producer participation based upon either bookend traceability or full traceability.

Bookend traceability refers to identifying livestock individually (or as lifetime production groups where appropriate) at the point of origin and termination; no animal movement traced in between. Full traceability is just that, identifying and tracking animals from the time they leave their home of origin to their terminal destination.

Generally speaking, bookend ID and tracking would cost an average of $3.92/beef cow, according to the report; $4.22/cow for full traceability. Stocker producers and backgrounders would incur an average cost of 23¢/head for bookend identification and tracking, 71¢/head for full traceability (Table 1). Though significantly more than chump change, the costs pale compared to the potential losses and gains associated with too little livestock ID and traceability.

For instance, according to the report, “We are likely to lose export market access over time if we do not adopt NAIS practices, even without any major market or major animal disease event, because the international marketplace is making animal identification and tracing systems the norm and any country that does not conform will have less market access.”

If NAIS participation was what the report authors term status-quo – 0% participation for the purposes of their calculations – and market access is unhindered because of it, the cost and gains are obviously zero.

“If we do nothing and we lose market access, which we believe is likely, the beef industry will suffer losses,” say the report’s authors. “The losses would amount to $18.25/head if we do not adopt NAIS and we lose 25% of export market share (Table 2). To put this into perspective, this would be about like losing access to the South Korean export market at 2003 export market shares.”

Using that same scenario matched to varying degrees of full ID and traceability, the potential lost market share declines as adoption rate increases. Ultimately, say the authors, “A 23% increase in beef export demand would completely pay for 70% adoption of full animal ID and tracing in the U.S. beef herd over a 10-year period. No other benefits beyond these would be necessary to make the investment in NAIS economically viable.”

Again, that’s based on assumptions about the impact of full traceability on export demand. The report also offers economic insight to the impact on domestic demand. It also mentions, but does not quantify other benefits such as enhanced disease surveillance and the ability to more quickly contain and eradicate disease.