Animal Identification
WEMC FS#3-04 • Fall 2004
Kynda R. Curtis,
Ph. D.
Animal ID: Opportunities for Value-Added
Assistant Professor
and State Extension
Marketing and Production Efficiencies
Specialist
Overview
Department of
Resource Economics The implementation of traceability systems such as the National Animal Identification
University of Nevada
System (NAIS) proposed by the United States Department of Agriculture (USDA) is
Reno commonly motivated by the desire of governments and/or producer associations to
Reno, Nevada minimize liability and potential for bad publicity resulting from food contamination and
kcurtis@cabnr.unr.edu disease outbreaks. Indeed, traceability systems help reduce the costs of recalls by quickly
isolating the source and scope of a food safety issue, but traceability systems may also
provide additional benefits to all members of the food marketing system (producers,
processors, distributors, and retailers). Potential benefits include access to new markets,
access to new data sources that aid increasing the efficiency of animal production, and
increased revenue resulting from verified quality product price premiums.
Producers may use traceability systems to differentiate their products, which may
increase product value and lead to revenue gains through price premiums. Differentiated
products often contain quality attributes (both content and process) that cannot be
verified through physical inspection, and thus are virtually unknown to the consumer at
the time of purchase unless they are either labeled that they contain these attributes or the
information about the presence of the attributes is communicated to consumers in some
other way. Examples of such quality attributes include free-range, organic, natural, and
lean, as well as many others. The only way to verify these quality attributes is through
record-keeping, which establishes and preserves that the attribute(s) actually exist in the
product. Food traceability systems can be designed to provide the breadth of information
necessary for this type of quality attribute verification.
Why Might a National Animal ID System be Important?
Producers and/or governments often establish traceability systems such as animal
identification to facilitate traceback during food-borne disease outbreaks. Trace-
ability systems can help the food industry reduce costly recalls by minimizing
liability and the potential for bad publicity. Although governmental food
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safety standards in the United States have Even though food safety breakdowns in
reduced food safety hazards to a minimum the U.S. food system have and will continue to
(Ballenger and Blaylock, 2003), the introduc- occur (Salin and Hooker, 2001), most Ameri-
tion of new imports, or foods produced can consumers continue to have a high degree
overseas, and the increased use of technology of confidence in the federal government to
in food production, including biotechnology, assure food safety (Christensen et al., 2003;
provide for increased risk. Loureiro and Umberger, 2003). However,
For example, StarLink, a genetically- such confidence does not always hold for
modified corn product, had not been ap- consumers in other countries, especially in
proved by the U.S. government for human Europe, where some European governments
consumption because it contained a possible made public assurances to consumers that beef
human allergen (Cry9C). An environmental products were safe to eat during outbreaks of
activist group was able to prove that StarLink BSE. BSE outbreaks led to a virtual collapse
had been introduced into the human food in the European beef market and a shattering
supply chain in spite of government inspec- of consumer confidence in the ability or
tions. The result was a very broad-scaled and appropriateness of governments to make these
costly recall program, which by some estimates types of assurances when strong scientific
cost Adventis, the inventor of StarLink, $500 evidence emerged linking the human disease,
million to complete (Food Traceability Re- new Variant Creutzfeldt-Jakob Disease (vCJD)
port, 2001). In December of 2003, the with the eating of BSE-contaminated beef
USDA announced the first U.S. case of Bovine (Christensen et al., 2003).
Spongiform Encephalopathy (BSE), also The NAIS, the animal traceability system
known as Mad-Cow Disease, found in a proposed by the USDA, calls for establishing a
Holstein (dairy) cow in south-central Wash- system with the capability to track animals or
ington state. This discovery led to a two- groups of animals from slaughter back to their
month investigation, which ended with the herd or premises of origin. The tracking
traceback of only 28 of the 80 cows that system will include identification numbers for
entered the United States from Canada with the animal, the herd of origin, and the pre-
the infected cow. The incident closed several mises (farm) of origin (USAIP, 2004). Addi-
overseas markets for U.S. beef that previously tionally, a comprehensive record system of
had accounted for approximately 10% of U.S. animal movement will be developed. Officials
beef production (Lehner, 2004). One of the hope that the NAIS will assure consumers
largest of these markets, Japan, still remains both in and outside of the United States of
closed because Japanese officials claim that the the safety of U.S. beef products.
U. S. investigation following the discovery of
the BSE cow in Washington failed due to the
large number of cows that remain missing.
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How Might an Animal ID System more meals away from home, the control the
Impact My Bottom Line? consumer has over the food preparation
process is reduced, which increases consumer
Animal ID May Provide Access to New
uncertainty regarding the safety level of the
Markets and Price Premiums
foods they eat. Hence, consumers seek
Obviously, implementing an animal ID
assurances from the food industry regarding
and tracking system will entail significant costs,
the safety precautions and processes imple-
and producers and other members of the U.S.
mented, moving a larger portion of the
meat industry wonder if any of these addi-
burden of ensuring food safety to all levels of
tional costs can be recouped. The traceability
the food industry, including restaurants,
and record-keeping component of the NAIS
processors, and growers alike (Unnevehr,
may provide an attractive way for beef produc-
2003).
ers to differentiate their products and reap
An efficient food marketing system pro-
such benefits as increased sales, price premi-
duces food products with the characteristics
ums, and lasting consumer loyalty. Loader
consumers want at a price consumers are
and Hobbs (1996) speculate that traceability
willing to pay. When consumers receive
in the beef industry may have hidden benefits,
positive utility from food consumption (are
including the reorientation of the industry
satisfied with the characteristics of the food
towards the consumer.
they consume, can afford it, and are willing to
Consumers worldwide are increasingly
pay for it), then the consumer perceives that
concerned with the quality standards and
the food product has value and is willing to
other characteristics of the foods they con-
pay for that value. Quality characteristics in
sume. Studies show that this phenomenon
the beef industry may be process-oriented
can be attributed to rising consumer incomes,
such as use of growth enhancers, antibiotics,
especially in developed nations (Ballenger and
pesticides, feed, animal treatment, environ-
Blaylock, 2003). A study by Lino et al.
mental responsibility, and safety procedures, or
(1999) found that the Healthy Eating Index
they may be content-oriented such as the fat
(HEI), which measures an individual’s overall
content (lean), marbling, etc.
diet quality, increases as his/her level of
However, many of these quality character-
education and income rises, although income
istics cannot be discerned by physical inspec-
generally needs to be three or more times
tion at the time of purchase, creating a level of
higher than the poverty level for this to occur.
uncertainty for the consumer about whether
Higher income households tend to consume
or not these characteristics exist in the prod-
more fruits, vegetables, fish, and poultry and
uct. Characteristics that cannot be discerned
are also more likely to spend more money on
by physical inspection (sight, smell, etc.) but
high quality foods and meals away from home
are still present in a product are referred to as
than do lower income households (Ballenger
credence characteristics. For example, the
and Blaylock, 2003). When consumers eat
safety level of a food product (e.g., the pres-
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ence of E. coli) is not known by the consumer ness to pay premiums for enhanced assurances
at the time of purchase or consumption, and about food safety and other credence charac-
in many cases may not be detected immedi- teristics in meat products if this information is
ately after consumption due to the potentially communicated appropriately and effectively to
extended length of time between consumption them. For example, Dickenson and Bailey
and illness. Research confirms that consumers (2002) found that consumers in Logan, Utah
find it difficult to form meat quality expecta- had a positive willingness to pay for beef
tions through physical inspection of the products with food safety certifications and
product (Grunert, 2001), and that consumer other credence characteristics including
attitudes toward beef products are significantly humane animal treatment and traceability. As
influenced by verifiable health and safety a result, producers who incorporate traceabil-
evaluations (McCarthy et al., 2003). Further- ity and/or certification programs into their
more, consumers are often willing to pay price production and marketing processes may
premiums for enhanced safety assurances. For potentially improve market prices and market
example, Shogren et al. (1999) found that access for their products.
consumers would be willing to pay a 10%
What Types of Quality Assurances Do
premium for chicken that had been irradiated
Consumers Look For?
to reduce food related illness.
According to recent literature examining
Consumers are worried about meat qual-
consumer demand for beef products and what
ity, its origin, and its integrity from farm to
types of beef qualities consumers find most
table. Thus, they need additional assurances
important in their purchasing decision, the
about the product’s quality characteristics,
most important characteristic was the origin of
either from industry or governmental provid-
the beef, which related to the safety and/or
ers (Arana et al., 2002). The existence of
freshness of the product. Roosen et al. (2003)
credence characteristics must be communi-
found that consumers surveyed in France and
cated to the consumer in the form of a label,
Germany considered the origin of the beef
advertisement, certification, or some other way
product the most important component in
besides physical inspection by the consumer.
their purchasing decision over such things as
Traceability systems such as the NAIS and
fat content and price. A study by Becker et al.
certification programs that may evolve from
(2000) found that consumers considered the
the NAIS may provide consumers with lower
origin of the beef as the most important
levels of uncertainty regarding the quality
indicator of its safety. Consumers also indi-
characteristics of the meat products they eat
cated that the price was not a good indicator
than if no such system were in place. This
of quality, and hence, alternative quality
lower level of uncertainty should provide
measures were perused. A study by Bernues et
many consumers with an increased level of
al. (2003) suggested that consumers consid-
utility and could result in consumer willing-
ered the origin and expiration date, as well as
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information about the system of production (Ag Observatory, 2004). McDonalds hopes
and the traceability and quality control of the its traceability policy will instill consumer
beef, to be the best determinates of quality. confidence in its ability to contain food safety
Additionally, studies indicate that consum- problems quickly and manage any resulting
ers may be willing to pay a premium for beef ramifications.
products from preferred origins. Loureiro and In addition to food safety levels, consum-
McCluskey (2000) found that high quality ers often exhibit preferences for products
“Galician Veal” bearing the Protected Geo- produced using natural or organic methods,
graphic Identification (PIG) label brought a and the verification of these and other charac-
premium price in the market. Loureiro and teristics can be enhanced using traceability
Umberger (2003) found that consumers in systems. Natural production methods pro-
Colorado were willing to pay on average $184 hibit the use of animal byproducts or proteins
per household annually for a country of origin in feed. Feed is strictly vegetarian to include
labeling program, as well as $153 more per natural pasture grass, hay, and whole grains.
pound annually for steak labeled “U.S. Certi- In the case of organic beef, feed must also be
fied Steak.” Additionally, Umberger et al. organically grown. Additionally, antibiotic
(2003) found that consumers in Denver and and growth hormone use is prohibited, and
Chicago were willing to pay positive premiums only botanical pesticides are allowed. Organic
for country-of-origin labeling of beef; how- products must be inspected by USDA, certi-
ever, a primary reason for consumers’ interest fied “organic” by a third party, and contain a
in country-of-origin labels was because they USDA organic label on all packaging. Beef
believed the labels provided increased food products which hold a natural label must
safety. contain the USDA definition of “natural” on
Many of the quick-service restaurants, the packaging, but are not certified by a third
including McDonald’s, Jack in the Box, and party.
Red Lobster, covet meat from processors who Maverick Ranch has marketed both or-
ensure higher safety standards. Rewards for ganic and natural beef products for over five
meeting safety standards include guaranteed years. Although its natural beef products do
sales through marketing contracts and pre- not have the USDA certified organic label, it
mium pricing (Golan et al., 2004). Meat uses Guaranteed Analytical Labs to test for
processors who want to protect “high safety” antibiotics, growth hormone, or pesticide
markets will look to cattle producers who can residue on all of its carcasses. Additionally,
provide evidence of safety procedures in Maverick Ranch uses the Sanova food safety
production through animal identification and rinse on all of its beef carcasses. Sanova is a
record-keeping. In fact, McDonald’s plans to USDA-certified organic citrus rinse that
have a minimum of 10% of its U.S. beef eliminates 99% of the pathogenic bacteria,
purchases source traceable by the end of 2004, including Salmonella, E. coli, and Listeria.
and 100% source traceable in the near future Coleman Natural Meets also has a natural beef
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product produced in much the same way as Ranchers can use performance measurements
that of Maverick Ranch. Production processes at all stages of the production process (stocker,
include free-range grazing on natural grasses, feed lot, and carcass) to manage herds and sell
no use of hormones or antibiotics, and no use off low performing cattle before spending
of animal byproduct feeds. Coleman also additional dollars. Additionally, reproduction
adheres to humane and unconfined treatment of identified high performance genetics can
of its animals. Coleman uses a USDA-ap- increase herd performance over time, resulting
proved “natural beef” label. The USDA in cost efficiencies and improved profits.
strictly controls label use and conducts audits Ranchers Renaissance is a cooperative of
to verify the accuracy and completeness of ranchers, stockers, feeders, processors, and
Coleman records. (Visit http:// retailers that sells its beef under the
www.maverickranch.com and http:// Cattleman’s Collection, Harris Rancher, and
www.Colemannatural.com for further infor- Ranchers’ Reserve brands. Ranchers Renais-
mation.) sance has used electronic animal ID since its
Farmland Industries, Inc., a farmer-owned inception in 1997. The company states that
cooperative, was the first farmer-owned pork this is the most efficient and economical way
company approved to use the USDA-pro- to collect data on each animal. This informa-
cessed verified logo. Farmland’s process tion is then shared with all partners in the
verification system provides guidelines to production chain. The data collected includes
owner farmers regarding genetics, animal animal source verification, process verification,
nutrition, animal health and welfare, on–farm and genetic verification. Tom Woodward, a
food safety measures, and environmental manager for Broseco Ranchers and a member
resource protection. Owner farmers agree to of the Ranchers Renaissance cooperative,
restrict antibiotics and sulfa drugs, submit to attested that the use of electronic animal ID to
environmental audits, and practice humane track animal performance has increased rev-
treatment of animals. The verification system, enues by $2 to $3 per hundred-weight on
implemented through the America’s Best Pork each calf (McGinnis, 2004). (Visit http://
program, allows for 100% traceability of all www.ranchersrenaissance.com/index.html for
pork products in the program. (Visit http:// more information.)
www.farmland.com for further information.)
Summary
Animal ID May Aid in Production Today’s consumer is living longer at a
Efficiencies higher standard of living than ever before.
Traceability systems not only allow for the This trend has created a demand for high-
breadth of information needed for quality quality foods, high levels of food safety, and
attribute verification, but they can also provide convenience as demonstrated by the increased
the information needed to track an animal’s frequency of eating away from home. How-
performance from weaning to slaughter and to ever, there is currently consumer uncertainty
identify the genetics which are most profitable.
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surrounding the quality and safety levels of Arana, A., B. Soret, I. Lasa, and L. Alfonso.
beef primarily due to the credence nature of “Meat traceability using DNA markers:
many of the process and content attributes application to the beef industry.” Meat
and the difficulty the food industry has in Science. 61(2002):367-73.
verifying and communicating the existence of Ballenger, N., and J. Blaylock. “Consumer-
these attributes due to the liabilities associated Driven Agriculture: Changing U.S. Demo-
with credence claims. Traceability systems graphics Influence Eating Habits.” Amber
with control and verification measures may Waves. 1(2)(2003):28-33.
reduce consumer uncertainty. A study by
Becker, T., E. Benner, and K. Glitsch. “Con-
Latouche et al. (1998) found that consumers
sumer perception of fresh meat quality in
were waiting for greater traceability in the beef
Germany.” British Food Journal.
industry, and were willing to pay for it.
102(3)(2000): 246-266.
Hence, consumer-focused production can lead
to improved pricing (value-added) and access Bernues, A., A. Olaizola, and K. Corcoran.
to new markets, both in and outside the “Labeling information demanded by Euro-
United States. As exemplified by the “natu- pean consumers and relationships with
ral” beef product lines of Maverick Ranch and purchasing motives, quality and safety of
Coleman Meats, these two companies have meat.” Meat Science. 65(2003):1095-1106.
oriented their product lines to consumers Christensen, B.J., D. Bailey, L. Hunnicutt,
looking for natural- and/or organically- and R. Ward. “Consumer Preferences for
produced beef products. The traceability and Public and Private Sector Certifications for
control systems in place make it possible for Beef Products in the United States and the
these two companies to label their products as United Kingdom.” International Food and
such by passing USDA inspections and audit- Agribusiness Management Review. 6.
ing. In the case of Ranchers Renaissance, its 2003. Online. Available at http://
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