Cattle Council Examination of ABA’s NLIS Cost Summary
(e-NLIS: electronic-National
Livestick Identification Scheme)
By: (Oscar Pearse, Policy Officer, Cattle Council of Australia)
The figure of $37.28/head being purported by the ABA as the cost of the National Livestock Identification Scheme (NLIS) to beef producers, demonstrates either a complete lack of understanding of what is required under a mandatory NLIS, or a deliberate attempt to mislead Australian beef producers. The figure of $37.28 /head quoted by ABA cannot be substantiated as the costs to producers under a mandatory NLIS scheme. It is also essential to recognise that risk-based pathways / exemptions have been established for the northern states.
There is no single figure which can be quoted as the cost of a mandatory NLIS to individual Australian beef producers. This will depend on the risk based pathways/exemptions which various states choose to introduce and more importantly the inherent variations of individual production enterprises i.e. breeding vs. finishing, or any variation in between.
The ABA originally developed their costings in a submission to the NSW Government as the cost to NSW beef producers of NLIS. However this has not stopped them quoting this figure in a broader context. What can be said, unequivocally, is that quantum’s of $37.28/head as some sort of indicative cost is definitively incorrect.
By quoting such wildly fanciful figures, ABA insults the intelligence of beef producers and confirms that it has no credibility. Trying to quote an average figure makes about as much sense as quoting an average property size or average weight gains – this will vary from property to property. CCA says that the industry should discuss the facts of NLIS and not the ABA fantasy
Independently verified, real life examples across a range of production systems will be provided over the next few weeks.
CCA’s Assessment of the ABA’s claims on the cost of NLIS is as follows;
1) ABA’s guesstimate of a $20/per head loss in weight gains as a result of additional livestock handling under NLIS – FANTASY. No producer will need to run extra musters to comply with NLIS as under mandatory NLIS. At worst, for producers where risk based pathways/ exemptions do not apply, NLIS devices only need to be fitted as cattle leave the property. A producer may voluntarily choose to tag earlier for management purposes, but this will be their decision.
The ABA guesstimate ignores those risk based pathways/ exemptions that have been agreed in northern states (Qld, NT, WA). For example in Queensland where cattle being consigned from property of origin to an abattoir or live export do not require NLIS tagging. Application of the NLIS tag under a mandatory scheme, will also replace an existing application of the tail tags (where currently required), when stock are consigned for sale.
2) ABA’s guesstimate of $1.40 per head cost for government administration and enforcement - FICTITOUS. NLIS is electronic and the UK system which ABA basis its guesstimate on, is paper based and bears no resemblance to the NLIS. ABA’s extrapolation of 50 Government staff being for enforcement and administration in a state such as NSW is invalid. Mandatory NLIS would require no more government enforcement then currently exists. However, it is likely that extra effort will need to be made by Government staff during the implementation period, particularly in awareness, training and education. It is expected that most of this will be achieved by re-direction, rather than additional staff.
3) ABA’s guesstimate of $2 per head for stock agent reading charges – MISLEADING. No meatworks in the country is charging anything to read tags. They are aware of the benefits for all sectors and are prepared to meet the cost in their sector. Some agents are trying to impose a uniform $2 / head costing, however others see a competitive advantage in not charging. The outcome will depend on market forces. In southern Australia where this aspect has received considerable discussion, some agents are gaining extra business by refusing to introduce such charges. It should also be noted that not all producers use agents, so the inclusion of this figure across the board is at best misleading.
4) ABA’s guesstimate of $4.00 per head for tagging and record keeping – INNACURATE. Again, the ABA figure disregards the fact that under a mandatory NLIS (where risk based pathways/ exemptions do not apply), a NLIS tag only needs to be applied when they leave the property of birth. In these cases, a NLIS tag can be fitted at any time to suit the management of the producer. They can be fitted just as the cattle leave, if that is a convenient time for that particular operator.
If a producer buys cattle, which subsequently lose a tag while on that property, a replacement tag only needs to be fitted prior to that animal leaving that property. Again ABA have also ignored the fact that where state risk based pathways exist, tagging may not be required at all. In situations where tagging is required, it will replace the tail tag requirement which currently exists.
5) ABA’s guesstimate of tag & tag replacement cost at $6 per head – MISLEADING. Figures quoted by ABA that stock will lose 1.5 tags per year at a cost of $4 per tag are farcical. Under a mandatory NLIS (where risk based pathways/ exemptions do not apply), tags only need to be fitted as cattle leave the property. Therefore it is hard to believe that each animal will loose 1.5 tags in transit. You would need to be the worst producer in the country to achieve ABA’s projected level of tag losses. If a producer does choose to tag earlier for management purposes, a level of tag loss will occur. The stringent NLIS Standards are being met with regards to tag retention.
The $6 per head costs for tags being quoted is even more farcical when you consider in northern states with risk based pathways/exemptions, every animal does will not need to be tagged. In these cases where tagging is not required, the cost is $0/head for tags not $6 as suggested by ABA.
The cost of NLIS tags varies across the country depending on the presence of tenders and state government subsidies. For example in Victoria where a State Government subsidy and tender exists, the price per tag is closer to $2.50. In other states the prices varies, but in all cases NLIS tags can be purchased for less than $4.00. Prices have fallen in recent weeks with a new competitor entering the market place. Tag subsidies of approximately 70 cents per tag already exist in WA and SA and the cost in Victoria is $2.50.
CCA and its state affiliates are also pursing those States who currently provide no assistance to producers for the cost of tags and also the Federal Government to provide a $20 million or 75 cents per tag subsidy. This is an area which will achieve greater attention, to drive the actual cost of tags to producers down.
6) ABA’S Guesstimate of $1.22/head cost for management tags for paddock & yard surveillance – FICTITIOUS. Again ABA either does not understand the requirements under a mandatory NLIS, or are deliberately misleading producers by making such statements. As previously stated (where risk based pathways/ exemptions do not apply), NLIS devices under a mandatory scheme only need to be fitted as stock leave the property. Also as previously discussed, in states where risk based pathways/exemptions exist, cattle in these cases will not need to be tagged at all.
Producers may voluntarily choose to fit matching management/NLIS tags for their own internal management purposes, but there is absolutely no compulsion to do this.
7) ABA Guesstimate that MLA management of the NLIS will cost $2.5 million per annum or 16 cents per head – RUBBISH. MLA currently spend about $2M per annum in total on NLIS. This includes the setting up and funding of demonstration sites, co-funding of field staff, attending field days, arranging workshops, publication of literature, staff costs etc. Included in this, is the cost of the database at $700 000 per annum, which is expected to grow to $1m per annum under a mandatory NLIS scheme covering the entire country. This is not an insignificant figure, but it is a fraction of the cost of that seen in other countries – because the Australian NLIS is the most advanced by utilising electronic identification. When fully operational under a national mandatory scheme, the cost would be closer to 4 cents per head. This cost is currently recovered under the transaction levy. Other funding options are always under review, but at this stage, industry has decided to keep control over the database whilst it is being rolled out nationally.
8) ABA guesstimate of $2.50 per head to purchases scanners and for yard modifications – MADNESS. ABA also guesstimates that all producers will need to purchases electronic scanners at $2000 each and spend $1000 in modifying their yards. Again this figure is grossly misleading. Under a mandatory NLIS scheme, producers consigning stock either to an abattoir or saleyard, will not have to read the tags electronically on their property. This will happen at the saleyards or abattoir, which will be required by legislation to read the tags.
Also as previously discussed, in the northern states such as Queensland, where exemptions are proposed for stock consigned form property of origin direct to slaughter or live export – tags do not need to be fitted. If tags are not fitted, perhaps ABA should explain how scanning would be required.
Where risk based pathways/ exemptions do not apply, producers selling cattle direct to other producers will have the choice of either buying a scanner and reading the tags themselves, or contract someone else to do this. In both cases there would be a cost with scanners currently available from around two thousand dollars. It should be noted that only a few percent of all cattle sales are direct producer to producer.
Some producers will voluntarily choose to purchase scanners (at varying costs) and make associated changes to their yards if required. But this is no different to the range of voluntary decisions, which the make every day based on their perceived benefit of doing so.
Benefits not only accrue to the whole industry in being able to track and trace livestock in an accurate and timely way, but the individual benefits that producers (including feedlots) if they choose to, can gain from using the RF technology on their own properties.
Producers who regularly identify their stock for management purposes, such as breeding records, calving records, health treatments, weight gains, etc., gain significant management efficiencies after installing a reader, but again this is voluntary. The development of software for a range of management tasks is moving ahead, and over time, more producers will voluntarily take advantage of this technolgy.
Oscar Pearse
Policy Officer
Cattle Council of Australia
PO Box E10 Kingston ACT 2604
Ph: 02 62733688 / Fax: 02 6273 2397 / Mob: 0409 654 015
opearse@cattlecouncil.com.au
www.cattlecouncil.com.au
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