Title: Animal ID: Opportunities for ValueAdded Marketing and Production Efficiencies
1Animal ID Opportunities for Value-Added
Marketing and Production Efficiencies
- Prepared by
- Kynda R. Curtis
- Assistant Professor and State Specialist
- Department of Resource Economics
- University of Nevada Reno
- E-mail kcurtis_at_cabnr.unr.edu
Western Extension Marketing Committee
Western Center for Risk Management Education
2Presentation Outline
- Overview
- Why might a national animal ID system be
important?
- How might an animal ID system impact my bottom
line?
- Case examples
- Summary
- Web resources
3Overview
- Animal traceability system motivation
- Minimize liability and bad publicity of food
borne illness
- Traceability systems isolate source and scope of
food safety
- Reduce recall costs
- Additional benefits to all members of food
distribution system
- Access to new markets
- Price premiums
- Production efficiencies
4Why Might a National Animal ID System be
Important?
- Traceability systems such as animal ID
- Facilitate trace back during food-borne disease
outbreaks
- Minimize liability and potential bad publicity
- Governmental food safety standards in the U.S.
reduce food safety hazards
- Increased food safety risks
- Food imports (foods produced overseas)
- New food production technology
- Biotechnology
5Case Examples
- StarLink
- Genetically modified corn product not approved
for commercialization in U.S.
- Possible human allergen
- Environmental activist group proved StarLink
introduced into human food supply
- Resulted in costly recall program
- Mad Cow Disease (BSE) December 2003
- Holstein cow in south-central Washington State
- Resulted in two month investigation, 28 of 80
cohort cows traced back
- Many overseas markets now closed to U.S. beef
- e.g. Japan and Korea
6The National Animal Identification System (NAIS)
- Track animals from slaughter to herd or premise
of origin
- Identification numbers for animal, herd of
origin, and premise (ranch) of origin
- Record system of animal movement
- Assure consumers of U.S. beef safety levels
7How Might an Animal ID System Impact My Bottom
Line?
- Provide access to new markets
- Overseas markets
- Product quality attributes
- Provide access to price premiums
- Value-added markets
- Aid in production efficiencies
- Herd management
- Improved profits
8Consumers and the NAIS
- Food quality characteristics
- are important to consumers
- Rising consumer incomes in developed countries
- Studies show as income and education rises diet
quality improves
- Consume more fruits, vegetables, chicken, etc.
- Consumers now spend more money on quality foods
and food away from home
- Seek assurances from food industry regarding food
safety and other quality attributes
9Value-Added Markets
- Consumers willing to pay more for high-value
products
- Contain requested quality attributes
- Quality attributes/characteristics
- Process oriented
- Growth enhancers, pesticides, feed, animal
treatment.
- Content oriented
- Fat content (lean), marbling, bacteria and/or
disease free
10Credence Characteristics
- Many quality attributes are credence in nature
- Credence characteristics can NOT be discerned by
physical inspection
- Consumer uncertainty regarding the existence of
the attribute
- Seek quality assurances from industry and
government agencies
11Price Premiums
- Studies show consumers willing to pay premiums
for
- Food safety
- Specific nations/areas of origin
- Natural/organic production
- Humane animal treatment
- Traceability systems allow for process and
content attribute verification
12Case Examples of Companies Requiring Traceability
- McDonalds, Jack in the Box, Red Lobster
- Purchase meat from processors which ensure high
food safety standards
- Rewards include guaranteed sales contracts and
premium pricing
- Seek evidence of safety procedures through
record-keeping
- McDonalds plan to have 10 of beef purchases
source traceable by end of 2004
13Case Examples of Companies Using Traceability
- Maverick Ranch
- Natural and organic products
- 3rd party testing for antibiotics, growth
hormones, and pesticide residue
- USDA certified organic label
- Coleman Natural Meets
- Free range grazing, natural grass feed
- No hormones or antibiotics
- Humane animal treatment
- USDA approved natural beef label
14Case Examples of Companies Using Traceability
- Farmland Industries
- Farmer-owned cooperative
- USDA processed verified logo
- Process verification system
- Genetics
- Animal nutrition
- Animal health and welfare
- Safety measures
- Environmental protection
- 100 traceability of all products in program
15Production Efficiencies
- Traceability systems enhance producer ability
to
- Track animal performance from weaning to
slaughter
- Identify most profitable genetics
- Herd management
- Sell low performing cattle
- Reproduce identified high performance genetics
16Example Case of Production Related Efficiencies
- Ranchers Renaissance
- Cooperative of ranchers, stockers, feeders,
processors, and retailers
- Market Cattlemans Collection, Harris Rancher,
and Ranchers Reserve brands
- Use electronic ID system since 1997
- Efficient and economic way to collect data on
each animal and share with all partners
- Data includes animal source, process, and genetic
verification
- Increased revenues by 2-3 per hundred-weight on
each calf
17Summary
- Consumers seek high-quality foods
- Uncertainty surrounding quality and safety levels
due to credence nature
- Traceability systems may reduce consumer
uncertainty
- Consumers willing to pay for greater
traceability
- Access to new markets
- Increased pricing (premiums)
- Production efficiencies gained through increased
information
18Web Resources for Relevant Information
- Maverick Ranch
- http//www.maverickranch.com
- Coleman Natural Meats
- http//www.colemannatural.com
- High Plains Journal
- http//www.hpj.com
- U.S. Animal Identification Plan
- http//www.usaip.info
- Choices Magazine
- http//www.choicesmagazine.org