Genetic Traceability Practices in a Large-size Beef Company in China
Introduction
The United States (U.S.) is relatively "behind" other countries in implementing a national animal identification (ID) and traceability plan. Other large beef exporters, including Argentina, Australia, Canada, European Spousal relationship, New Zealand, and Uruguay, all take government mandated systems (Schroeder and Tonsor, 2012). Despite the lack of a national beast ID and traceability program, U.Due south. beefiness has remained internationally competitive and mostly accepted every bit a condom source. This, forth with fright of increased cost and other long-term implications, has led some industry stakeholders to disapprove of potential government-mandated brute ID and traceability programs (Golan et al., 2004).
Beef production in the United states of america is highly segmented, which causes livestock to have several changes of ownership between birth and slaugher. The principal product of cow-dogie operations is weaned calves, which are subsequently sold to stockers, backgrounders, or feedlots. Some calves from cow-calf operations are transferred straight to feedlots at, or around, the time of weaning, in which case, they are referred to as "dogie-feds" that remain in the feedlot prior to existence harvested (Drouillard, 2018). The largest share of the calf population, ordinarily threescore% or more, is outset placed into a backgrounding or stocker functioning, or a combination thereof (USDA, 2018). Most cattle pass through a feedlot at some indicate earlier reaching slaughter. The segmentation, product differences, and geographical disbursement further complicates the tracing and tracking organization.
In addition, at that place are over 103 1000000 head of cattle in the The states, with 192,000 head and over two.vi billion pounds of beef exported in 2018 (USDA-NASS, 2018a,b). This high volume of production and global demand for U.S. beef complicates the ability to trace, or physically rail a product, through the typical U.S. beef supply chain.
Several studies, including Coffey et al. (2005), take assigned an opportunity cost to the expected impact of a affliction outbreak, specifically BSE (bovine spongiform encephalopathy), in the United States. These studies support the positive bear upon that a traceability program could accept on the U.Due south. beef manufacture in avoiding lost consign markets and loss of inventory. Measuring the potential impacts of an outbreak has been considered from many different perspectives and all suggest a significant negative touch on to the industry; so much then that the National Cattlemen's Beef Association included traceability in their Long-Range Programme for 2016–2020 (National Cattlemen'south Beef Association, 2017). However, determining the true costs and impacts of a traceability program within the United States is difficult due to the nature of the U.S. supply chain, simply is crucial as a national animal ID and traceability plan is eminent. Understanding the potential economic touch on of a traceability program is of import, especially in a large beef producing state such as Kansas. In addition, it is important to recognize which segments of the industry may be affected the most.
The objective of this report is to analyze the economic impacts of an animal ID and traceability organisation. Specifically, we calculate the direct costs of implementing an animal ID and traceability system, called CattleTrace, for each segment in the U.South. beefiness industry. Side by side, we incorporated the price estimates into a partial equilibrium model of the U.Southward. livestock and meat industry to determine the brusque- and long-run economical impacts to the various segments of the U.South. beefiness industry.
In 2018, a pilot program, chosen CattleTrace, was launched with the support of industry stakeholders to begin directing the beef industry toward a cohesive traceability program. In January 2020, a new initiative, U.S. CattleTrace, combined the efforts of CattleTrace, which includes multiple partners, including the Kansas Livestock Clan and others in Kansas, Missouri, Oklahoma, Kentucky, Oregon, and Washington, likewise equally traceability pilot projects underway in Florida and Texas (U.S. CattleTrace, 2020). The CattleTrace program extends from beginning-to-end of the beefiness industry and includes participants from all segments of product. Current participation from beefiness industry stakeholders includes many cow-calf producers, 12 livestock markets, 2 backgrounders, 16 feedlots, and 3 major packers (iv locations). While the CattleTrace program began in Kansas, multiple states are now office of the arrangement with various private and public organizations establishing partnerships in an effort to illustrate how a national beast ID and traceability program may look in the future. The post-obit analysis is based on the cost estimation of implementing a national animal ID and traceability program structured every bit CattleTrace.
CattleTrace is a voluntary program where cattle producers from all segments (cow/calf, backgrounders and stockers, sale barns, feedlots, and packers) tin can select to participate. At the cow/dogie level, producers must implement the use of UHF identification for all calves leaving the premises, and depending on size of the operation (economies of scale) either a wand tag reader or panel reader is required. Increased labor costs, tag costs, and reader costs are all taken into consideration likewise as a large body of assumptions on beast injury, human injury, and more. Backgrounders and stockers are assumed to need replacement tags likewise equally readers (wand or panel depending on economic science of scale) to meet the CattleTrace requirements. Sale barns volition require panel readers, with a higher quantity of panels required for larger facilities (economies of scale assumption). Feedyards are also expected to implement the utilize of panel readers and replacement tags if needed. All of these segments of the manufacture toll estimations make assumptions about labor requirements, injuries, and more based on an extensive literature review and industry discussion. At the packer level, software implementation and console readers are the biggest initial costs for the segment. All data is stored and managed by CattleTrace in a secure location.
Data and Methods
An almanac multi-market partial equilibrium model of the U.South. livestock and meat industry was employed to approximate the economic impacts of industry costs incurred through the adoption of CattleTrace. In general, as additional costs are incurred throughout a vertically-related marketing chain, livestock, and meat prices and quantities are impacted. Furthermore, changes in prices at the retail level for beefiness will influence the demand for substitute products (e.one thousand., pork, poultry, and lamb). A traceability system could also positively influence domestic and international need for U.S. beef. However, the extent of these potential changes is difficult to forecast.
The economical model utilized in this study is an updated version of the multi-market partial equilibrium model documented in Pendell et al. (2010), Pendell et al. (2013) and Dennis et al. (2018). An equilibrium deportation model (EDM) allows for the estimation of the potential bear on of a particular stupor on the market, in this case, how implementing an animal ID and traceability program will impact prices and quantities on the livestock and meat markets. Such a model allows for changes in both supply and demand across multiple markets, in this case between beefiness, pork, poultry, and lamb.
The EDM contains an underlying gear up of structural demand and supply functions. Afterwards totally differentiating the structural demand and supply functions and converting to an elasticity class, the result is an EDM of the U.S. livestock and meat industry (see Appendix Equations A1–A30). After solving for the changes in the endogenous prices and quantities, changes in consumer and producer surplus can exist calculated using equations (ane, two), respectively:
CS and PS are divers as the consumer surplus and producer surplus, respectively. P and Q indicate price and quantity, respectively. E represents a relative change operator. z and w are the exogenous demand and supply shifters, respectively. The superscript i denotes the marketplace level [r = retail, w = wholesale (processor/packer), s = slaughter (feeding), and f = feeder (farm)] and subscript k denotes the species (B = beef, K = pork, L = lamb, and Y = poultry).
The exogenous shock to the EDM model is the implementation of CattleTrace. The cost of implementing CattleTrace was estimated for each segment of the industry and took into account economies of calibration. The EDM model also relies on given elasticity estimates to properly estimate how the markets will respond to changes in supply and need. The base twelvemonth cost and quantity data are from 2018 and reported in Table 1 (Livestock Marketing Information Center, 2019). Tabular array A1 provides the remaining market parameters, including the supply and demand elasticities for the different commodities across the diverse sectors, which were retained as defined in Pendell et al. (2010) and Dennis et al. (2018).
Table i. U.S. prices and quantities used in assay, 2018.
The five segments of the U.S. beef industry in this study include: cow/calf, backgrounder/stocker, sale befouled, feedlot, and packer. The total cost estimates for each segment are $129.82 meg (cow/calf), $7.67 million (backgrounder/stocker), $6.44 million (auction befouled), $9.64 million (feedlot), and $0.51 million (packer) (Shear et al., 2019; Table 2). The five group subtotals were summed to obtain the almanac total toll for the unabridged beefiness cattle industry of adopting CattleTrace, $154.09 one thousand thousand. Costs associated with the cow/calf and sale barns sectors are aggregated in the feeder cattle sector, backgrounder and feedlots are aggregated in the slaughter cattle sector, and packer costs are referred to every bit wholesale costs in this economic analysis.
Tabular array 2. CattleTrace direct costs to industry and supply shocks used in fractional equilibrium model.
The annual beef manufacture CattleTrace costs are distributed every bit: $0.51 million to the wholesale beef sector, $17.31 million to the slaughter cattle production sector and $136.26 million to the subcontract sector (Table 2). Using 2018 boilerplate prices and quantities for each market level, these cost estimates represent the following percentage increases in CattleTrace costs relative to full value at each sector: 0.0009% at the wholesale beef level, 0.0333% at the slaughter cattle level, and 0.2548% at the subcontract level (Tabular array 2). The per centum changes in costs at each market level are estimated in a like manner for all scenarios.
Scenarios
Four scenarios are considered when quantifying the economic impacts of CattleTrace. The first two scenarios differ in the proportion of costs borne by the producer. The concluding two scenarios focus on U.South. beefiness demand responses past domestic and international consumers. Information technology is assumed that 100% of producers would adopt CattleTrace.
The scenarios are separated into four areas:
1) Furnishings of CattleTrace Costs with No Benefits
The impacts of increased costs resulting from CattleTrace are fake. This simulation assumes both domestic and international consumer demand for U.S. beefiness is unaffected past CattleTrace. In other words, nosotros estimate the impacts of the costs associated with 100% adoption of CattleTrace assuming that no benefits accrue to the U.S. beef manufacture.
2) Effects of a Government Price-Share of CattleTrace Costs with No Benefits
According to recent enquiry by Mitchell et al. (2019), "results show that policies would be nigh effective at reducing costs at the cow-calf level or offering cost-shares for feedlot producers who want to procure cattle with electronic traceability." Like to Scenario 1, we simulate the impacts of increased costs resulting from CattleTrace. However, nosotros assume 1/3 of the costs for RFID ear tags and electronic readers are borne past the producer while the government is responsible for the remaining 2/3 of those costs. Similar Scenario one, this simulation assumes both domestic and international consumer demand for U.S. beef is unaffected by CattleTrace. In essence, we measure how a government cost-share program for CattleTrace would impact the U.S. beef industry.
3) Increases in International Beef Demand Needed to Offset CattleTrace Costs
Adoption of CattleTrace, or any other creature identification and traceability arrangement, could increase foreign consumer confidence in the U.Due south. beef system. Nosotros estimate the increment in U.South. beef export demand (assuming constant domestic need) that would be needed to offset producer costs of CattleTrace adoption costs.
4) Increases in Domestic Beef Demand Needed to Offset CattleTrace Costs
Similar to Scenario 3, we approximate how much of a domestic beef need enhancement would exist required (assuming abiding export need) to get-go producer costs of CattleTrace adoption costs.
Results
Effects of CattleTrace Costs With No Benefits
As expected, changes in prices and quantities for the U.Southward. beef manufacture were much larger when compared to the pork, poultry, and lamb industries. This is because the U.S. beef industry is the only industry with an increase in costs every bit a result of CattleTrace. All changes in prices and quantities within the beefiness industry are consistent with an increase in CattleTrace costs at the wholesale, slaughter and farm levels. An increase in costs at the subcontract, slaughter, and wholesale levels shifts both the chief and derived supply functions, as well as, derived demand functions at the slaughter and subcontract levels. This results in retail and wholesale level beef prices to increase by 0.43 and 0.42%, respectively, while quantities refuse by 0.sixteen and 0.41%. Imported and exported wholesale beef, slaughter, and feeder cattle prices and quantities all decline. Slaughter cattle prices and quantities refuse by 0.xv and 0.34%, respectively, while feeder cattle prices and quantities autumn by 0.08 and 0.26%. Pork, poultry and lamb prices and quantities all increase, except for export quantities, by a modest amount, as consumers substitute abroad from beefiness to relatively cheaper poly peptide sources in response to increased retail beef prices.
Table 3 presents producer surplus impacts due to the costs implementing CattleTrace. Equally expected, the short-run impacts (year i) are much larger than the long-run impacts (year 10) equally producers are able to adjust to these changes in the long-run. In the short-run, the slaughter and feeder cattle sectors experience the largest losses at $271.7 and $238.0 million, respectively. The wholesale level loses $56.0 million. In the long-run, the feeder and slaughter cattle sectors lose $41.7 and $11.4 million, respectively, while the wholesale level lose $three.5 million in producer surplus. The cumulative discounted nowadays value of producer surplus losses over 10-years for the feeder cattle, slaughter cattle and wholesale beefiness sectors are $1,291 million, $ane,143 meg and $475 million, respectively.
Tabular array iii. Changes in producer and consumer surplus resulting from adopting cattletrace with no benefits (million $).
Effects of a Government Cost Share of CattleTrace Costs With No Benefits
Results are similar to the scenario when producers carry all CattleTrace costs, except the impacts are smaller in magnitude. This results in retail and wholesale level beef prices to increase past 0.27 and 0.27%, respectively, while quantities pass up by 0.10 and 0.26%. Imported and exported wholesale beef, slaughter, and feeder cattle prices and quantities all pass up. Slaughter cattle price and quantity autumn by 0.ten and 0.22%, respectively, while feeder cattle price and quantity fall past 0.07 and 0.16%. Pork, poultry, and lamb prices and quantities all increase, except for consign quantities, by a modest amount, as consumers substitute away from beef to relatively cheaper poly peptide sources in response to increased retail beef prices.
Tabular array 4 presents producer surplus impacts due to the costs implementing CattleTrace. Similar to the previous scenario, the brusque-run impacts are much larger than the long-run impacts. In the brusque-run, the slaughter and feeder cattle sectors experience the largest losses at $173.half dozen and $154.1 million, respectively, while the wholesale level lose $35.5 million. In the long-run, the feeder and slaughter cattle sectors lose $seven.4 and $25.five million, respectively, while the wholesale level lost $ii.three 1000000 in producer surplus. The cumulative discounted nowadays value of producer surplus losses over 10-years for the feeder cattle, slaughter cattle and wholesale beef sectors are $813 million, $733 million, and $304 1000000, respectively.
Table 4. Changes in producer and consumer surplus resulting from a government toll share of cattletrace costs (one thousand thousand $).
Increases in International Beef Demand Needed to Offset CattleTrace Costs
As about major exporting countries have traceability systems, implementing a national traceability program could open new markets or let for quicker entry back into the market afterwards a disease outbreak. This scenario was performed to make up one's mind the increase in international beef need needed and so that the U.S. beef producer sectors do not lose any producer surplus. A permanent 17.7% increase (equivalent to 558 million lbs.) in international demand for U.S. beef would be needed such that producers do not lose any surplus. To put this value into perspective, the quantity of U.S. beefiness exports varied from an increase of 21 to a 12% decrease between 2009 and 2018 (LMIC 2019). Furthermore, 28% (885 million lbs.), 20% (638 one thousand thousand lbs.), and 14% (449 million lbs.) of U.S. beef exports went to Japan, Republic of korea, and Mexico, respectively, in 2018 (Livestock Marketing Data Center, 2019). Thus, maintaining market access to a single consign market could completely offset U.S. beefiness producer costs of CattleTrace.
Increases in Domestic Beef Demand Needed to Starting time CattleTrace
Equally demand for transparency by U.S. consumers continues to increase, implementing a national animate being ID and traceability program could potentially take a positive touch on on consumer demand for beef. This scenario was performed to determine the increase in domestic beef need needed then that the U.S. beef producer sectors practise not lose any producer surplus. A permanent one.nine% increase (or 356 million lbs.) in domestic demand for U.S. beef would be needed such that producers practice non lose whatever surplus. Between 2009 and 2018, annual domestic retail beef demand, on average, varied between an increment of 4.14% to a decrease of 4.10% from the previous year. Thus, a pocket-sized increase in domestic consumer need for beef needed to offset the costs of CattleTrace has been experienced recently.
When considering economies of calibration, the toll of implementing CattleTrace ranged from $2.84 to $half dozen.06/caput for cow/calf producers. For backgrounders, the toll of implementing CattleTrace ranged from $0.41 to $0.83/head. The average cost for sale barns was $0.14/caput, and the price of implementing CattleTrace for feedlots ranged from $0.33 to $0.55/head. The average cost to packers ranged from $0.02 to $0.18/head. The overall direct cost to the beef industry was estimated to be $154.09 million.
A partial equilibrium model of the U.Southward. livestock and meat sector was used to evaluate the impacts of adopting CattleTrace on producers. Assuming no changes in domestic and international demand for U.South. beefiness, producers at the wholesale, slaughter, and feeder levels lose $475 million, $one,143 meg, and $1,291 million, respectively, in 10-year discounted cumulative producer surplus. If a government toll share program is implemented (i.east., ane/iii of the costs of ear tags and readers are borne by the producers while the other 2/3 of the costs are borne by the regime), the producers losses are smaller; feeder, slaughter and wholesale levels lose $813 1000000, $733 1000000, and $304 million, respectively. With a possibility of increasing consumer need as a issue of traceability, ii simulations evaluated the increase in international and domestic need required to offset the costs of CattleTrace to U.S. cattle producers. A 17.7% and 1.ix% increment in international and domestic beef demand would be required to completely kickoff the producer costs of CattleTrace, respectively.
Conclusion
This analysis is an overview of the costs and economic impacts of implementing CattleTrace, a ultra-loftier frequency based radio frequency identification (UHF-RFID) applied science-based traceability program. The main objectives of this assay was to provide an approximate of the directly cost to the industry for implementing CattleTrace, as well equally, estimate the economical bear upon of a national animal identification (ID) and traceability program for the beef industry. Determining the directly costs to the industry required estimating costs inside each industry sector.
This analysis suggests that your 'typical' small fluctuations in domestic and international beef demand on average could offset the direct costs to producers and the industry as a whole. These results may encourage more industry support for a national beast ID and traceability program; still some concerns, such as information management, cannot be addressed in this model and, therefore, remain as hurdles to the implementation of a national program.
Data Availability Statement
The raw information supporting the conclusions of this commodity will be made bachelor past the authors, without undue reservation.
Author Contributions
HS and DP contributed to the conception and design of the written report. HS compiled a rough draft of the manuscript, incorporating the results department compiled past DP. Both authors contributed to manuscript revision, read, and approved the submitted version.
Funding
The authors admit the financial assistance provided by Kansas Department of Agronomics. The views expressed herein are those of the authors and should non be attributed to KDA.
Conflict of Interest
The authors declare that the enquiry was conducted in the absence of any commercial or financial relationships that could exist construed as a potential conflict of interest.
Supplementary Material
The Supplementary Material for this article can exist found online at: https://www.frontiersin.org/articles/ten.3389/fanim.2020.552386/total#supplementary-material
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