National livestock identification system

Client: Qld Department of Primary Industries and Fisheries (DPI&F)
Sector: Queensland beef production

Synergies was engaged by the Queensland DPI&F to consider the implications for Queensland of the introduction on an enhanced National Livestock Identification System (NLIS). The study conducted by Synergies examined a number of facets of implementation of the NLIS, including the costs and benefits relating to market access, disease outbreak, productivity improvements and stock theft.

Australia is the world’s top beef exporter and Queensland is a critical contributor to this ongoing prominence, accounting for more than half of Australia’s production volume. An enhanced National Livestock Identification System (NLIS) was introduced in Queensland in 2005.

The study undertaken by Synergies focused on the assessment of the costs and benefits to the beef industry from the implementation of NLIS. The identification system was designed to deliver benefits in relation to food safety, product integrity, disease management and market access. Capital, operating and transaction costs were identified across the beef production sector, including in relation to producers, sale yards, feed lots and abattoirs. The cost estimates were derived from a workshop involving DPI&F personnel which was convened by Synergies.

The analysis of benefits found that the NLIS could be expected to provide substantial economic advantages that would easily exceed the expected annual cost of the system. The NLIS would enable producers to maintain access to premium markets. The cost of being excluded from these markets could be as high as $625million annually, however NLIS would cost just $32.5million.

Using a simplified model, Synergies found that benefits from reduced duration and intensity of disease outbreaks could be in the order of $85 million per annum. In addition, improving farm management could yield short term gains in the order of $50 per beast and the impact of stock theft could be reduced by up to $2.5million a year.

The study concluded that the NLIS represents a relatively cost-effective insurance mechanism for the beef industry that yields very substantial dividends in the form of protecting Queensland’s current market position in world markets, at least for the time being.. It also concluded that the net benefits that will accrue to the industry from implementation will exceed the implementation costs of the scheme many times over.