Processing Travis Choat

Slide1: 

Animal ID 'Beyond Animal Health' A Packer’s Perspective Travis Choat – Director of Technical Services/Live Operations Smithfield Beef Group

Slide2: 

Animal Health Perspective: 

Animal Health Perspective

National Animal Identification System: 

National Animal Identification System A national program intended to identify specific animals in the United States and record their movement over their lifespans. To enable 48-hour traceback of the movements of any diseased or exposed animal. This will help to ensure rapid disease containment and maximum protection of America's animals.

Impact: 

Impact Exotic disease outbreaks recently have had catastrophic economic effects. Examples of outbreaks that have occurred within the last 5 years: Avian influenza in Asia, Europe, and Canada; Foot-and-Mouth disease (FMD) in Europe, Asia, South America, and Africa; Classical swine fever in Europe; Newcastle disease in the United States; Tuberculosis in the United States BSE in the United States (an outbreak of 2)

Impact: 

Impact Cost of the control of these outbreaks; Indirect costs The disruption of trade; Loss of domestic sales and demand; Disruption of related industries; Disruption of tax base; Disruption of tourism. Public health implications; Animal welfare impact; Loss of improved genetics; Social and political ramifications.

U.S. Beef Exports: 

U.S. Beef Exports Exports dropped 82% industry wide from 2003 to 2004 Smithfield Beef Group exports dropped 77% from 2003 to 2004

The Cost: 

The Cost Detrimental to Canadian Cattlemen Detrimental to U.S. Packers

Other zoonotic diseases: 

Other zoonotic diseases The more common preventable diseases that affect animals and humans cause even greater death losses in humans. Rabies, Japanese encephalitis, Brucellosis, Tuberculosis WHO reported that rabies infection results in 55,000 human deaths per year. Mo Solman – APHI

Disease Control : 

Disease Control Prevention of introduction by stopping it at the source Disease awareness; Active programs for the detection of suspected cases; Development of contingency plans; Vaccination, selective culling, and eradication; Stamping out and its limitations; Other approaches now are being developed and used.

Prevention, Prevention, Prevention: 

Prevention, Prevention, Prevention

We should be looking to Prevention as well!: 

We should be looking to Prevention as well! Every time we have an incident that links beef to something complex and/ or dangerous we lose consumer trust

Beyond Animal Health: 

Beyond Animal Health To participate in markets that require traceability To enable transfer of economic signals throughout the supply chain Verify credence attributes

Smithfield Beef Group’s Objectives: 

Smithfield Beef Group’s Objectives To participate in markets that require traceability To enable transfer of economic signals throughout the supply chain Verify credence attributes

Emerging Beef Markets that Require Traceability: 

Emerging Beef Markets that Require Traceability Japan Other Pacific Rim Countries? Korea Taiwan Hong Kong

Japan QSA/BEV?: 

Japan QSA/BEV? QSA= Quality System Assessment Program QSA for a specific claim NHTC BEV = Beef Export Verification Programs

QSA Approval: 

QSA Approval Train Implement Audit/Review Record Smithfield’s Supply Chain Responsibility

An Affidavit is a Communication Device Only!: 

An Affidavit is a Communication Device Only! Supplier Evaluation Procedures Training

Domestic Programs: 

Domestic Programs A premium for meat/trim from source verified cattle NOT SOURCE VERIFIED COMBOS! Premiums to help support animal tracking initiatives

Smithfield Beef Group’s Objectives: 

Smithfield Beef Group’s Objectives To participate in markets that require traceability To enable transfer of economic signals throughout the supply chain Verify credence attributes

How can traceability help: 

How can traceability help Wiemers (2000) described need for a National Livestock Identification System based, in part, on private need – to assist producers in maximizing the profit of their agriculture enterprise and assuring its sustainability by identifying those animals that consistently grow as quickly as possible, eat the least amount of feed, require the least amount of medical treatment, produce the best grading carcass, produce the most meat, milk, eggs, etc…

Current tools for communicating economic signals: 

Current tools for communicating economic signals Grid Marketing Contractual agreements Alliances

Slide23: 

Product and Information Flows in a Commodity Beef System Source: Dr. Vern L. Pierce

Individual animal Management: 

Individual animal Management NASS

Simulate Vertical Coordinationand Reap the Benefits: 

Simulate Vertical Coordination and Reap the Benefits Vertical coordination refers to the means used to synchronize vertical stages of the food chain Reasons food chains have become integrated Lower costs by improving productivity Improve and ensure quality throughout the chain Control risks associated with markets and food safety Enhance responsiveness to demand Source: Cast, 2001

Currently we are not sending all the right signals: 

Currently we are not sending all the right signals We depend on marbling for palatability Over feeding to reach choice Waste corn Pay to put on pay to take off

We manage eating quality with marbling instead of managing palatability in other ways: 

We manage eating quality with marbling instead of managing palatability in other ways Genetics Implants Aging Interventions

The Impact of Health on Performance, Profits, and Carcass Quality: 

The Impact of Health on Performance, Profits, and Carcass Quality Sick* Healthy Head 3,202 9,393 Death Loss 3.4% 0.5% Average Daily Gain, lb. 2.78 2.96 Total Cost of Gain, $cwt. $65.96 $56.68 Medicine Cost/hd $31.97 $0.00 Net Return/hd -$31.97 +$61.23 *Average In Weight of Sick Steers = 571 lbs. Source: Texas Ranch to Rail Summary, 1992-1996.

The Impact of Health on Performance, Profits, and Carcass Quality: 

The Impact of Health on Performance, Profits, and Carcass Quality Sick* Healthy Quality Grade Choice 29% 39% Select 63% 56% Standard 8% 5% *Average In Weight of Sick Steers = 571 lbs. Source: Texas Ranch to Rail Summary, 1992-1996.

The Impact Individual Animal Management: 

The Impact Individual Animal Management Difference in Value Healthy +$61.23 Sick* - $31.97 Difference $93.20 *Average In Weight of Sick Steers = 571 lbs. Source: Texas Ranch to Rail Summary, 1992-1996.

Slide31: 

Un-weaned 6 weight calves in auctions across the nation sold at a $10.00-$15.00 discount to comparable weaned and vaccinated calves, not counting additional penalties if the bawlers were extremely fleshy as in many cases. Cattlenetwork.com (9-26-2005)

Slide32: 

Benchmarking What is working / what is not Eliminate duplication of animal health and growth promotion programs Target market endpoints to minimize WASTE!

Smithfield Beef Group’s Objectives: 

Smithfield Beef Group’s Objectives To participate in markets that require traceability To enable transfer of economic signals throughout the supply chain Verify credence attributes

Credence Attributes: 

Credence Attributes Golan et al. (2004) believe that many valuable animal attributes are not evident to the naked eye – or even to specialized equipment. E.g., up-to-date vaccination, proper medical care, animal welfare provisions, avoidance of growth promotants/ antibiotics/ animal byproducts and specific feeding regimes

Consumers are ever more interested in Knowing “where did it come from”: 

Consumers are ever more interested in Knowing 'where did it come from' Perception is Reality Just recently, government officials in a lesser developed country of Africa refused to accept free grain from the US because they feared the potential effects of consuming genetically modified food more than they feared the certain effects of starvation ILC, 2005 (G.C. Smith andamp; L. Saunders) THE WORLD IS FLAT!

Credence attributes: 

Credence attributes As societies and their people become more affluent, they can 'afford' to become progressively more choosey about what they eat …and, in developed countries, they do! ILC, 2005 (G.C. Smith andamp; L. Saunders)

Currently, we can’t compete if they decide to choose “traceable”: 

Currently, we can’t compete if they decide to choose 'traceable'

So What Are We Waiting For?: 

So What Are We Waiting For?

Total Annual RFID System Cost, $/Head (Examples): 

Total Annual RFID System Cost, $/Head (Examples) Third Party Data Collection Companies Source: StockerUSA

We have shown that we are willing to invest Dollar$ on Identification when it serves a purpose!: 

We have shown that we are willing to invest Dollar$ on Identification when it serves a purpose! Industry economics (NASS) ~7.5 Mil Cattle branded annually * $5.00/hd lost value = $37,500,000 $37,500,000 lost value / 104,500,000 cattle = $0.35/hd US

Slide41: 

'From our expectations (of the National Animal Identification System), yesterday would have been a better timeline to implement the mandatory identification system.' Robert Cannell – Director of U.S. Supply Chain Management MeatNews.com June 20, 2005

Slide42: 

Slide43: 

Bottom Line: We need a system It will only be successful if we all participate It is going to have startup problems Yet it will serve many purposes

Is our preparation progressing at the same rate as the risk??? : 

Is our preparation progressing at the same rate as the risk???