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ABA Report into the Efficacy of NLIS

ABA Watchdog

ABA Report into the Efficacy of NLIS

34.5% of slaughter cattle lose their lifetime traceability
“The Efficacy of RFID/NLIS for its Intended Purpose”
by
Paul Evans, GradDipStratMktg
&
Scott Paterson, BEng, DipManStud, DipFS15 June, 2009 Copies of this report are available from the ABA Office
EXECUTIVE SUMMARY BACKGROUND

Radio Frequency Identification (RFID) of cattle became compulsory throughout Australia on the 1st July 2005 and was phased in through the mid 2000s. Consequently, the National Livestock Identification System (NLIS) was modified to facilitate electronic tracking of each animal. The strategic objectives of NLIS were to:
* Identify individual animals at birth and track their movements until slaughter,
* Leverage Australia’s safe food image in global beef market by enhancing its world class Quality Assurance systems with accurate traceability functionality,
* Provide an accurate track and trace system, which would assist in the event of an exotic disease outbreak, and
* Develop a sustainable competitive advantage for Australian beef products, by maintaining and improving access to markets, especially in export arenas.
The Australian Beef Association (ABA) believes that cattle NLIS has lowered the industry’s profitability by increasing supply chain management costs and that increased export volumes at higher prices have not eventuated. According to the ABA, “over the last 12 months the association has received increasing reports concerning the accuracy of producers’ NLIS database accounts which, along with higher than expected tag loss rates, are seriously undermining the credibility of the system.”
It is against this backdrop that the ABA Board decided to engage consultants

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experienced in data analysis and strategic marketing (agribusiness) to investigate and report on the accuracy of the NLIS database in providing lifetime traceability for cattle movements.

CONCLUSIONS

Consultants Paul Evans and Scott Paterson, from Agribusiness Online, audited 17 PICs (properties) including a range of small, medium and large properties over most states of Australia. The audit covered around 57,000 tags, a statistical sample size about 20 times larger than the percentage of the population used for a Morgan Gallop poll. The report documents two different methodologies used by Agribusiness Online to cross check its results and conclusions, which can be summarised as follows:
* 34.5% of the study sample’s cattle slaughtered to date did not have lifetime traceability. Orange tags represented 18.4% of these, while white tags comprised the other 16.1%.
* Trend analysis conducted on the loss of traceability resulting from transfers on and off the 17 PICs, suggests that white tags will continue to lose traceability at greater than the historical rate of 16.1% which, in addition to the orange tags still in the system, foreshadows a total lost traceability rate of at least 22.3%, increasing with time.
* That figure does not take into account several substantial intangible losses of traceability that are not being captured by the NLIS database system.
* The economic drivers for the NLIS system are away from, not towards, meticulous NLIS administration practices by cattle producers.
* Since at least 20% of cattle do not have lifetime traceability, it is inaccurate and misleading to promote cattle RFID/NLIS as currently providing whole of life traceability, which it is unlikely to ever achieve, because the economic drivers built into the system are fundamentally negative.
* To rely on NLIS for credible information to effectively manage a highly contagious disease outbreak would be illusory and potentially dangerous for the industry.
* For control of contagious diseases with short incubations periods, it can be logically demonstrated that it would be much cheaper, more accurate and more effective to manage disease outbreaks by using an existing supply chain management program or converting NLIS to track consignments electronically.
* It appears that the strategic marketing objective of NLIS to create a sustainable competitive advantage in export marketing arenas using RFID technology to promote Australian beef products has not eventuated. Despite huge investments in the technology and consistent promotion of Australia’s beef products and systems Australia has not improved its overall market access. Meanwhile, other major beef supplying countries that do not have lifetime traceability, but have experienced exotic disease outbreaks in recent years, are regaining lost market access at Australia’s expense. It is therefore very difficult to make a case from this data that RFID/NLIS is delivering, or ever will deliver, a Preferred Supplier status to Australian beef exporters.


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