NAIS Will Render Average-Sized Producers Uncompetitive,

Will Lead to More Concentration, Vertical Integration

Billings, Mont. - As promised, R-CALF USA has launched a 12-day blitz of news releases to explain in detail many of the reasons our members oppose the U.S. Department of Agriculture's (USDA's) National Animal Identification System (NAIS).

With this effort, R-CALF USA hopes to bring to light many of the dangerous aspects associated with NAIS with regard to invasion-of-privacy issues, the likely acceleration of the ongoing exodus of U.S. cattle producers from the industry, as well as other concerns we believe USDA has not even begun to ponder. Click here to view the entire 13-pages of formal comments R-CALF USA submitted to the agency on Aug. 3, 2009, to, yet again, oppose the implementation of NAIS.

In the third installment of our NAIS Opposition Blitz, we explore how NAIS will render average-sized and mid-sized cattle producers uncompetitive vis-à-vis large-scale producers and will accelerate the ongoing exodus of U.S. cattle producers, leading to more concentration and vertical integration:

* Two Kansas State University cost studies show that costs associated with NAIS are substantially lower for large-scale operations when compared to small- and mid-sized operations. For example, a spreadsheet published by KSU shows that costs of electronic identification for a herd size of 100 head (at a cost per head of $15.90) are $9.76 less when the herd size increases to 400 head.[1] Another KSU study also shows that costs per animal become substantially lower as operation size becomes larger - the average-sized U.S. cattle operation (with fewer than 50 head[2]) would experience costs that are $2.12 higher per animal than would a producer with more than 50 head but fewer than 100 head.[3] Thus, the studies clearly show that NAIS would competitively disadvantage small- to mid-sized producers when compared to larger producers. This cost disparity will accelerate the ongoing concentration and vertical integration of the U.S. cattle industry.

NAIS cost studies fail to include costs of upgrading facilities in order to accommodate scanner reading protocols. Many cattle operations use only minimal cattle-handling equipment (for example: horses, trailers, portable panels and portable chutes) to move cattle long distances and this equipment is not suitable for affixing eartags or ensuring accurate scanner readings. As a result, more elaborate and costly facilities would be required to meet NAIS standards and these upgrades would further create economic burdens on U.S. cattle producers.

The cost/benefit analysis completed by Kansas State University (KSU) is fundamentally flawed: 1) There are approx. 95 million cattle in the U.S. cattle herd. The KSU study found that the average eartag price was $2.25. Thus, the study's conclusion that the total cost of NAIS would be $209 million would not even cover the price of one eartag for each head of cattle in the U.S. herd, let alone labor, equipment, and reading costs that would apply to each animal. 2) From 2000 through 2003, the U.S. slaughtered approx. 36 million head of fed cattle and cows and bulls each year.[4] Using the study's average NAIS cost per animal of $5.97 per head, the study's conclusion that the total cost of NAIS would be only $209 million per year would not even cover the cost of identifying each animal actually slaughtered during each of the four years in the middle of our current liquidation phase of the U.S. cattle cycle, which cost would be $219 million. Thus, the study erroneously assumes our U.S. cattle cycle is nonexistent and our herd size is static.

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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, non-profit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA represents thousands of U.S. cattle producers on trade and marketing issues. Members are located across 47 states and are primarily cow/calf operators, cattle backgrounders, and/or feedlot owners. R-CALF USA directors and committee chairs are extremely active unpaid volunteers. R-CALF USA has dozens of affiliate organizations and various main-street businesses are associate members. For more information, visit www.r-calfusa.com or, call 406-252-2516.