National Animal Identification System: USDA Needs to Resolve Several Key Implementation Issues to Achieve Rapid and Effective Disease Traceback
Published: 2007-07-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Livestock production contributed nearly $123 billion to the U.S. economy in 2006. In response to concerns about animal disease outbreaks, the U.S. Department of Agriculture (USDA) announced in December 2003 that it would implement a nationwide program--later named the National Animal Identification System (NAIS)--to help producers and animal health officials respond quickly and effectively to animal disease events in the United States. In this context, GAO determined (1) how effectively USDA is implementing NAIS and, specifically, the key issues identified by livestock industry groups, market operators, state officials, and others; (2) how USDA has distributed cooperative agreement funds to help states and industry prepare for NAIS and evaluated the agreements' results; and (3) what USDA and others estimate are the costs for USDA, states, and industry to implement NAIS. In conducting its work, GAO reviewed USDA documents; interviewed agency, industry, and state officials; and consulted 32 animal identification (ID) experts.
section_title: What GAO Found
paragraphs: In implementing the NAIS program, USDA has taken some steps to address issues identified by livestock industry groups, market operators, state animal health officials, and others. Nonetheless, the agency has not effectively addressed several issues that, if left unresolved, could undermine the program's ability to achieve the goal of rapid and effective animal disease traceback. Specifically, USDA's decision to implement NAIS as a voluntary program may affect the agency's ability to attract the necessary levels of participation. However, some industry groups believe that NAIS could succeed as a voluntary program, or that USDA needs to first resolve several issues before making participation mandatory. Agency officials are analyzing what participation levels are necessary to meet the program's goal and may introduce benchmarks to measure progress. In addition, several key problems hinder USDA's ability to implement NAIS effectively. USDA has not prioritized the implementation of NAIS by species or other criteria. Instead, the agency is implementing NAIS for numerous species simultaneously, causing federal, state, and industry resources to be allocated widely, rather than being focused on the species of greatest concern. USDA has not developed a plan to integrate NAIS with preexisting USDA and state animal ID requirements. As a result, producers are generally discouraged from investing in new ID devices for NAIS. USDA has not established a robust process for selecting, standardizing, and testing animal ID and tracking technologies. USDA does not clearly define the time frame for rapid traceback, possibly slowing response and causing greater economic losses. USDA does not require potentially critical information to be recorded, such as species or age, in the NAIS databases. USDA has awarded $35 million in NAIS cooperative agreements from fiscal years 2004 through 2006 to 49 states, 29 tribes, and 2 territories to help identify effective approaches to register premises and identify and track animals. However, USDA has not consistently monitored or formally evaluated the results of cooperative agreements or consistently shared the results with states, industry groups, and other stakeholders. As a result, USDA cannot be assured that the agreements' intended outcomes have been achieved and, furthermore, that lessons learned and best practices are used to inform the program's progress. No comprehensive cost estimate or cost-benefit analysis for the implementation and maintenance of NAIS currently exists. As a result, it is not known how much is required in federal, state, and industry resources to achieve rapid and effective traceback, or whether the potential benefits of the program outweigh the costs. Industry groups and state officials say the cost of implementing NAIS is one of their biggest concerns. USDA plans to hire a contractor to conduct a cost-benefit analysis, in part to more precisely forecast the economic effects of NAIS.

section_title: Letter
paragraphs: U.S. agriculture provides an abundant supply of food and other products  for Americans and others around the world, annually generating more than  $1 trillion in economic activity, including more than $68 billion in exports  in 2006. Because of the economic importance of the agriculture sector and  the risks to public health as well as the economy, we have designated the  federal oversight of food safety as a high-risk area. Within the broader  sector, livestock production contributed nearly $123 billion to the U.S.  economy in 2006, including $13.4 billion in livestock, poultry, and dairy  exports. One way to protect the health of livestock animals—which are  critically important to the integrity and safety of the nation’s food supply,  the well-being of Americans, and the U.S. economy—is through a national  animal identification (ID) system to trace back and contain diseases that  spread rapidly. Our recent work has described animal diseases and their  economic and, in some cases, human health consequences. For example, a  highly pathogenic strain of avian influenza has spread to nearly 60  countries over the past few years, resulting in the death and destruction of  millions of wild and domestic birds and infecting almost 300 humans,  more than one-half of whom have died—creating serious concerns that the  virus could reach North America at any time. In addition, the first known  U.S. case discovered in December 2003 of one cow infected with bovine  spongiform encephalopathy (BSE) caused the U.S. beef industry to lose  more than 80 percent of its export trade, or an estimated $2 billion,  between January and September 2004. Commonly known as mad cow  disease, BSE has been linked by scientists to a fatal neurological disease in  humans known as variant Creutzfeldt-Jacob disease. Another disease of  particular concern is foot-and-mouth disease (FMD), a highly contagious  livestock disease that does not typically affect humans and last occurred  in the United States in 1929. According to several estimates, the direct  costs of controlling and eradicating a U.S. outbreak of FMD could range  up to $27 billion in current dollars.
In response to concerns about such outbreaks occurring in the United  States and in recognition that speed and accuracy are critical factors in  controlling a disease, the U.S. Department of Agriculture (USDA)  announced in December 2003 that it would lead the design and  implementation of a nationwide program—later named the National  Animal Identification System (NAIS)—to enable USDA, states, and  industry to quickly and efficiently locate all infected and potentially  exposed animals and premises that have had contact with a foreign or  domestic disease of concern. USDA recognized that a fully functional  animal tracking system will keep the United States competitive in  international markets, can help reassure foreign consumers about the  health of U.S. livestock, and may satisfy other countries’ import  requirements. Internationally, some of the United States’ major trading  partners—such as the European Union (EU), Japan, and Canada—already  have mandatory national animal ID programs in place for certain species.  The Animal Health Protection Act authorizes the Secretary of Agriculture  to carry out operations and measures to detect, control, or eradicate  livestock pests and diseases, and USDA has delegated this responsibility  to its Animal and Plant Health Inspection Service’s (APHIS) Veterinary  Services. USDA cites this broad authority for implementing NAIS as either  a voluntary or mandatory program.
NAIS is currently being implemented for nine livestock species groups:  bison; camelids (llamas and alpacas); cattle (beef and dairy); cervids (deer  and elk); equine (horses, mules, donkeys, and burros); goats; poultry;  sheep; and swine. Since 2004, USDA has received input on the design and  implementation of the program from various stakeholders, including  industry groups, individual producers, livestock markets, slaughter  facilities (processors), and state animal health officials. USDA says that  because NAIS is a state-federal-industry partnership, the agency has used  stakeholder input to adjust the program as NAIS has evolved, and it  encourages continued stakeholder input.
NAIS consists of three components: (1) registering all “premises” that  manage or handle livestock, such as farms, feedlots, veterinary clinics, and  livestock markets; (2) identifying livestock animals; and (3) tracking  animal movements throughout the production process, from their  premises of origin to their slaughter or death. Initially, USDA stated that  NAIS would start as a voluntary program and later become mandatory,  but, in late 2006, the agency decided that NAIS would remain voluntary.  The agency also provided a timeline for implementation and set  participation benchmarks that called for gradually increasing the  percentages of premises registered, animals identified, and animals  tracked. By August 2005, all states had the capability of registering  premises, and, as of late May 2007, USDA reported that more than 390,000  premises, or 27.5 percent of the national estimate, were registered in NAIS.
Of the total $85.0 million funding made available for NAIS from fiscal years  2004 through 2006, USDA has awarded $35.0 million in cooperative  agreements to states, territories, and tribes to help identify effective  approaches to register premises and to identify and track animals. In fiscal  year 2007, Congress appropriated another $33.0 million to develop and  implement NAIS, and the President’s Budget in fiscal year 2008 requested  an additional $33.1 million for the program. Premises registration is  currently funded by USDA, states, territories, and tribes and, therefore, is  free to the producer. The costs of animal ID and tracking are to be borne  by the livestock industry and will vary, depending on the choices made by  individual producers.
In this context, we determined (1) how effectively USDA is implementing  NAIS and, specifically, the key implementation issues identified by  livestock industry groups, market operators, state animal health officials,  and others; (2) how USDA has distributed cooperative agreement funding  to help states and industry prepare for NAIS and evaluated the  agreements’ results; and (3) what USDA and others estimate are the costs  for USDA, states, and the livestock industry to implement and maintain  NAIS.
To address all three objectives, we reviewed USDA documents,  interviewed agency officials responsible for implementing NAIS, and  conducted site visits to selected livestock markets and cooperative  agreement field trials. We also conducted structured interviews in person  or via telephone with animal health officials in seven states. These states  were selected on the basis of their geographic dispersion; the range in the  number of premises located in each state; and, in some cases, their high  levels of livestock production. We also conducted structured interviews in  person or via telephone with, and reviewed documents from,  representatives from numerous stakeholder organizations, including  several NAIS industry working groups. In addition, for the first and third  objectives, we convened a Web-based panel of 32 experts to learn their  beliefs and opinions on various aspects of USDA’s implementation of  NAIS. We selected experts who were actively involved in the development  or implementation of NAIS and were knowledgeable of its details; who  had conducted research on animal ID, or had published in peer-reviewed  journals on animal ID; or who were recognized by their peers as an expert  on NAIS. For the second objective, we also reviewed USDA  documentation related to cooperative agreements signed between USDA  and states, territories, tribes, and industry groups from fiscal years 2004  through 2007. For the third objective, we asked USDA and others for any  NAIS cost estimates they had developed, and we reviewed federal  guidance for developing cost-benefit analyses. A more detailed description  of our scope and methodology is presented in appendix I. We conducted  our work from June 2006 to May 2007 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: The concept of animal ID is not new, in the United States or abroad. For  decades, American producers have kept records on, and used ID methods  for, livestock animals for both commercial and regulatory purposes.  Specifically, several USDA and state animal disease eradication  programs—such as programs for tuberculosis (TB) in cattle, pseudorabies  in swine, and scrapie in sheep and goats—include animal ID requirements.  Certain species and classes of animals require officially recognized ID  devices for interstate commerce, and all live animals imported into, or  exported from, the United States require official ID. Thus, many livestock  animals are already identified in the United States by ear tags, branding,  tattoos, or other devices. However, the use of ID devices varies by breed,  species, and state, and, until NAIS, no attempt had been made to create a  uniform animal ID system of national scope and across multiple species  using a universal numbering system and central data repository.
Due to serious concerns about the United States’ ability to safeguard its  livestock from the harmful effects of disease, in 2002, the National  Institute of Animal Agriculture—an organization of producers,  veterinarians, scientists, government representatives, and allied  industries—initiated a state-USDA-industry task force of approximately 70  representatives to create a national animal ID system. In 2003, USDA  expanded upon this work and established a development team consisting  of more than 70 industry associations, organizations, and government  agencies. That team ultimately produced the United States Animal  Identification Plan in December 2003, which provided the foundation for  NAIS. Although early versions of the plan focused on food animals only,  other livestock species were later incorporated. The plan was being  finalized when the nation’s first case of BSE was confirmed on December  25, 2003. Five days later, the Secretary of Agriculture announced measures  to guard against BSE and indicated that USDA would expedite the  implementation of a national animal ID system.
Since 2004, USDA has solicited public comments on draft NAIS policy  documents, held public listening sessions, and met with industry groups  and others in its efforts to design and implement NAIS. In addition, USDA  has received input from 10 working groups comprising producers,  academics, and others representing the various livestock species and  industry sectors currently included in NAIS. These working groups make  recommendations to the NAIS Subcommittee, a group of state and  industry stakeholders established by USDA in September 2004 to provide  regular, formal input to the USDA Secretary’s Advisory Committee on  Foreign Animal and Poultry Diseases (full committee) about how NAIS  should progress. The NAIS Subcommittee is also responsible for receiving  input from the National Institute of Animal Agriculture; the United States  Animal Health Association, an organization representing state  veterinarians and allied industry groups; and other organizations and  individuals. The full committee is a federal advisory group of state,  academic, and industry experts selected by the Secretary, which meets  once a year or as deemed necessary by the Secretary. While the NAIS  Subcommittee meets periodically, the full committee has met only twice— in September 2004 and September 2006—since the creation of NAIS.  USDA is not obligated to take action on the NAIS Subcommittee’s, full  committee’s, or others’ recommendations.
For the premises registration component of NAIS, states and tribes are  responsible for submitting premises information—given to them by  producers and others—to a central, Web-based USDA premises database.  In turn, USDA allocates a unique, 7-digit, alphanumeric, premises ID  number (e.g., A123B45). The premises then receives confirmation online  or by mail from the relevant state or tribe with its unique premises ID  number.
For the animal ID component, USDA published an interim rule, effective in  November 2004, recognizing the Animal Identification Number as a new,  official numbering system for individual animals in interstate commerce.  Producers and other NAIS participants can order ID devices from USDA- approved managers that are imprinted with a unique, 15-digit Animal  Identification Number for use on animals that move through the  production process as individuals, as is typical in the cattle, sheep, and  goat industries. Figure 1 shows a calf that is identified with tags in both  ears, with the calf’s left ear bearing an electronic tag and its right ear  bearing a visual tag. Both tags have the Animal Identification Number for  official ID purposes, and the visual tag also has a number used for the  producer’s herd management purposes. For animals of the same species  that typically move through the production chain as a group, such as  commercial poultry and swine, producers can instead identify the animals  with a group/lot ID number. Group/Lot ID numbers are self-generated by  the premises (not assigned by USDA) and are maintained at the premises  in management records.
Lastly, for the animal tracking component, USDA has developed the  Animal Trace Processing System to allow state and federal animal health  officials to request information, in the event of an animal health  investigation, from multiple private and state animal tracking databases  containing animal location and movement records. Producers and others  are responsible for reporting certain animal movements, such as when a  change of ownership occurs or when animals commingle with other herds  or flocks. Events that would enable state and federal animal health  officials to request information from this network of databases include an  indication or a confirmed positive test of a foreign animal disease, an  animal disease emergency as determined by the Secretary of Agriculture  or state departments of agriculture, or a need to conduct a trace to  determine the origin of infection for a domestic disease of concern. (See  app. II for a list of domestic and foreign animal diseases of concern  identified by USDA.)
section_title: Key NAIS Implementation Issues Are Unresolved and Could Undermine the Program’s Goal of Rapid and Effective Traceback
paragraphs: USDA has steadily increased the number of livestock premises registered  in the nation and has taken some steps to address stakeholder concerns in  implementing NAIS. However, the agency has not effectively addressed a  number of key issues identified by livestock industry groups, market  operators, state animal health officials, and others that, if not ultimately  resolved, could undermine the program’s goal of rapid and effective  traceback, thus hindering its success. USDA’s decision to implement NAIS  as a voluntary program without benchmarks to measure progress may  affect the agency’s ability to attract the necessary levels of participation to  quickly and efficiently locate all animals potentially exposed to a disease.  In addition, USDA has not prioritized the implementation of NAIS by  species or other criteria. Furthermore, USDA has not developed a plan for  integrating NAIS with other USDA and state animal ID requirements, nor  has it established a robust process for selecting, standardizing, and testing  ID and tracking technologies. The agency also does not clearly define the  time frame for rapid traceback. Finally, USDA does not require potentially  critical information for efficient traceback to be recorded in NAIS  databases.
subsections: section_title: USDA Is Implementing NAIS as a Voluntary Program without Participation Benchmarks
paragraphs: During the first 2 years of the program’s implementation, USDA stated  several times that participation in NAIS would initially be voluntary but  would eventually become mandatory to achieve full participation and,  thus, the goal of rapid and effective traceback. One of USDA’s first major  NAIS policy documents, the Draft Strategic Plan 2005-2009, released in  April 2005, stated that during initial implementation, participation would  be voluntary so that stakeholders could have the opportunity to obtain  experience with the program and provide feedback as successful and  practical solutions evolved. The plan also provided a timeline for  implementation, with premises registration and animal ID to be required  by January 2008 and the reporting of defined animal movements to be  required by January 2009, under what would become an entirely  mandatory program. The plan stated that this phased-in approach was “to  support the transition from voluntary to mandatory as full implementation  is achieved.” In addition, the plan also stated that, “While market forces  may eventually create more inclusiveness, the clear stakeholder support  for transitioning to a mandatory program and the urgency of achieving the  goal, suggest that setting a date for that transition would benefit the  program.”
Later, the April 2006 Strategies for the Implementation of NAIS set  benchmarks that were intended to gauge progress in attaining full  participation. These benchmarks called for gradually increasing the  percentages of premises registered, animals identified, and animals  tracked from January 2007 through January 2009. Specifically, for  premises registration, USDA aimed for 25 percent participation by January  2007, 70 percent by January 2008, and 100 percent by January 2009. In  addition, the implementation plan called for 40 percent of animals being  identified by January 2008, 100 percent of “new” animals less than 1 year  of age being identified by January 2009, and 60 percent of new animals  having complete tracking data by January 2009. USDA stated that it would  evaluate whether participation levels were increasing at rates that would  achieve full participation by 2009, and that, if this were not the case, USDA  would develop federal regulations to require industry to identify their  premises and animals.
In May 2006, in an announcement for NAIS cooperative agreements, USDA  stated that it anticipated promulgating regulations by early 2008 to require  participation in all three components of the program. Furthermore, in a  document supporting its fiscal year 2007 budget submission to OMB,  USDA stated that the intrinsic value of its investment in NAIS was based  on the assumption that there would be sufficient animal ID and movement  data available to support the program’s traceback goal. USDA also said  that if participation fell below expectations, traceback would periodically  fail because of the lack of animal tracking information from  nonparticipants.
However, in August 2006, reporting that 20 percent of the nation’s  premises had been registered, USDA decided that NAIS would  permanently remain a voluntary program. USDA officials told us that due  to opposition from some industry groups, it is imperative that industry  advance the program, rather than government regulations, to encourage  participation. Some industry groups believe that NAIS could succeed as a  voluntary program or that USDA first needs to resolve several key  implementation issues before making participation mandatory. For  example, officials from the National Cattlemen’s Beef Association told us  they believe that NAIS could be successful as a voluntary program, such as  the beef industry’s 20-year-old Beef Quality Assurance program, which  covers about 95 percent of cattle in feedlots and aims to reduce drug  residues and pathogen contamination. The association officials also told  us that if NAIS became mandatory, producers who have voluntarily  participated would lose the market advantage they currently enjoy through  higher prices paid at market or slaughter for animals they identify for  marketing or management purposes. Another industry group, the  American Farm Bureau Federation, which in 2006 supported NAIS being a  mandatory program, expressed its support in January 2007 for NAIS to be  voluntary, while cautioning that USDA should not make the program  mandatory until the agency has published a full cost analysis for the  program. The Livestock Marketing Association—a national trade  association representing over 700 livestock auction markets, dealers, and  other livestock marketing businesses—also wrote in comments to USDA  in 2005 that NAIS should remain voluntary until USDA addresses several  implementation issues, including the effectiveness and availability of  animal ID technology.
In November 2006, USDA also dropped its participation benchmarks from  the most recent policy document for the program, the draft NAIS User  Guide. Despite a steady increase in the number of premises registered  since USDA began reporting premises registration information in January  2005 and reaching the 25 percent target (nearly 360,000 premises) in early  February 2007 (see fig. 2), USDA officials told us they dropped the  participation benchmarks because meeting future benchmarks for all  components of NAIS was no longer realistic. Instead, the officials said the  agency is analyzing what participation levels for all components of NAIS  would achieve the “critical mass” necessary to have an efficient and  effective program. The officials added that the agency does not expect that  equal levels of involvement across all species will be necessary, and that  new, risk-based participation benchmarks for premises registration,  animal ID, and animal tracking may be developed accordingly, which  could vary by species. However, USDA has not determined what action it  may take if participation levels do not meet those new benchmarks.
Although it may be too soon to determine whether USDA’s current  approach will be successful, many industry groups, state animal health  officials, and the experts we surveyed say the program will likely need to  become mandatory to achieve the levels of participation that are necessary  to rapidly and effectively locate all potentially exposed animals in a  disease traceback. In the Draft Strategic Plan, for instance, USDA  reported that most individuals who spoke about this subject at the  agency’s 2004 listening sessions preferred, by a ratio of 3:1, a mandatory  program to a purely voluntary program. USDA also reported at that time  that a survey of National Institute of Animal Agriculture members showed  even stronger support, by a ratio of 8:1, for a program that is or will  become mandatory. In addition, state and industry officials we interviewed  said that as a voluntary program without benchmarks, NAIS has lost  momentum, deterred participation, and faces an uncertain future. For  example, officials from one major agricultural state told us that USDA’s  changed direction on whether the program would become mandatory has  challenged the state’s premises registration efforts, because many  producers are motivated by compliance with federal requirements, not  necessarily by NAIS’s traceback goal alone. These officials also said that  the lack of participation benchmarks had compromised the state’s  credibility with producers and its ability to make progress in  implementation. As of early June 2007, this state had less than 16 percent  of its premises registered, and the officials believed there is little incentive  for producers to participate in NAIS. Moreover, three states where  premises registration is mandatory by state law—Indiana, Michigan, and  Wisconsin—accounted for about 26 percent of USDA’s total premises  registered nationally as of that time.
Furthermore, a majority of the 32 expert panel members said that 81  percent to 100 percent of producers, livestock markets, and slaughter  facilities would need to register their premises to achieve the program’s  goal of rapid and effective traceback (see apps. III and IV for more details  about these experts and their responses to our questions). By contrast,  under a voluntary program, only 1 expert believed that producers would  achieve at least 81 percent participation in premises registration, while 11  experts believed that level would be achieved by livestock markets, and 20  experts believed that level would be achieved by slaughter facilities. For  the animal ID and tracking components, experts had similar views. For  example, a majority believed that 76 percent to 100 percent of producers,  markets, and slaughter facilities would need to participate in animal  tracking to make the program effective, while a minority believed that  level would be achieved in any of those sections under a voluntary  program. Overall, 27 of the 32 experts said participation in NAIS should  definitely or probably be mandatory.
Several other countries, including the United States’ major agricultural  trading partners and competitors, have instituted mandatory animal ID  programs for cattle and, in some cases, a few other species. For example,  the EU has mandatory programs in which all cattle born or moved across  EU state lines as of 2000 must be identified with two individual ear tags  and an animal passport, and member states must maintain computerized  databases that record births, movements, and deaths. Since several cases  of BSE were discovered in 2001, Japan has made a series of changes to its  food safety legislation, resulting in a mandatory system where all beef and  dairy cattle must be identified using an ear tag. Information is maintained  on an animal’s ID number, breed, gender, and production history from the  farm of origin through distribution to consumers. Similarly, in 2001,  Canada started a compulsory animal ID program that applies to all bovine  and bison and now requires that animals receive a radio frequency  identification (RFID) tag when leaving their herd of origin, which is  collected at slaughter or export. Canada later expanded its program to  sheep in 2004, requiring the use of visual ear tags. Brazil, the world’s  largest beef exporter, gradually phased in its mandatory ID program for  cattle and bison starting in January 2002; the entire herd is expected to be  identified by the end of 2007. Australia, the world’s second-largest beef  exporter, has developed a mandatory system that uses RFID to identify  and trace cattle from farm of origin to slaughter. Australia has been  moving toward a fully integrated program linking electronic ID devices,  product bar coding, and a central electronic database. Appendix V  provides more detailed information on select international animal ID and  tracking programs.
To increase participation in NAIS, several industry groups, state animal  health officials, and the experts we surveyed have also suggested that  USDA provide incentives, such as financial assistance, to industry to  implement the animal ID and tracking components. For instance, the NAIS  Cattle Working Group recommended in 2004 that USDA assume primary  financial responsibility for funding the initial development of the basic  infrastructure required for animal ID and tracking—including equipping  concentration points, such as livestock markets and slaughter facilities,  with RFID readers and software to capture the data electronically.  Livestock market operators and others also say such financial support  would be an attractive incentive because RFID technology, if effective,  would allow animal movements to be recorded as quickly as the current  “speed of commerce” and, therefore, would not slow down business  operations. The NAIS Subcommittee also recommended, in 2005, a cost- sharing arrangement between USDA and industry to fund the program’s  implementation. The Secretary’s Advisory Committee on Foreign Animal  and Poultry Diseases adopted these recommendations as well as the other  NAIS working group and Subcommittee recommendations presented at its  September 2006 meeting. One state that has already created a cost-sharing  incentive is Wisconsin, where the state contributes 50 percent, or up to $1,  of the cost of an RFID ear tag on a first-come, first-served basis under its  voluntary animal ID program. Wisconsin officials say the cost-sharing  arrangement is designed to make the program more attractive to the  state’s producers, and, as of early March 2007, the state had approved  reimbursing producers for a total of 30,000 tags for cattle, which was up  from 20,000 tags the previous month.
However, USDA officials told us that the power of producers to protect  themselves and their animals is a tremendous incentive for participation in  NAIS, and, as the program continues to be implemented and developed,  additional incentives will be realized by USDA, producers, and state and  industry partners. Nonetheless, whether NAIS is mandatory or voluntary,  the lack of participation benchmarks prevents USDA from measuring  progress in attaining the necessary participation levels for an effective  program.
section_title: Several Other Key Issues Hinder USDA’s Ability to Implement NAIS Effectively
paragraphs: Industry groups, market operators, state animal health officials, and others  have identified several other key problems that, if left unresolved, could  undermine the program’s goal, further hindering USDA’s ability to  implement the NAIS program effectively.
subsections: section_title: USDA Has Not Prioritized the Implementation of NAIS by Species or Other Criteria
paragraphs: USDA has not prioritized the implementation of NAIS by species or other  criteria. Instead, the agency is currently implementing NAIS  simultaneously for numerous species, regardless of their economic value,  their risk of diseases of concern, the potential human health impact of  these diseases, or other criteria. Consequently, federal, state, and industry  resources for NAIS have been allocated widely, rather than being focused  first on the species of greatest concern and allowing other species to be  included later, on the basis of lessons learned. In contrast, international  animal ID programs have generally started implementation with one  species (cattle) and, in some cases, later expanded to include a few other  species, such as sheep, bison, and goats, on the basis of disease risk,  economic importance, or potential human health impact. In addition, 21 of  the 32 expert panel members said USDA should definitely or probably  implement NAIS incrementally by species, while 8 experts said USDA  should definitely or probably continue with its current approach to  implement the program for numerous species simultaneously. Many of  the 32 experts suggested criteria that USDA could use to determine the  priorities given to each species in implementing NAIS, including whether it  is a food animal; its likelihood of capturing diseases of concern; the risk  that the animal will spread a disease harmful to human health; the relative  ease of implementation for a particular industry; and the industry’s impact  on the U.S. economy, including export value.
Prioritizing implementation for certain species before trying to apply the  program to numerous species would likely result in more efficient and  cost-effective implementation, on the basis of lessons learned and best  practices being identified. In addition, the industries currently covered by  NAIS appear to be at various stages of readiness to implement NAIS. For  example, the Bison, Camelid, Cattle, Equine, Swine, Sheep, and Goat  Working Groups have submitted reports to USDA with implementation  recommendations for their industries, but the Cervid and Poultry Working  Groups have not. Furthermore, according to industry representatives,  some industries, such as commercial swine and poultry operations,  already have widespread ID and tracking systems in place that would  allow traceback to occur within 48 hours, while other industries may not.
USDA officials pointed out that an animal ID program to support the  animal health needs of all livestock species would be unique in the world  and would place the United States in a position to set a new standard for  animal ID. Some industry groups have expressed their support for NAIS  being implemented for all species, since many transmissible diseases are  not species-specific. For example, the National Livestock Producers  Association, which represents about 200,000 producers across the country,  wrote USDA in 2005 that the true value of NAIS rests in its potential ability  to track all livestock animals, regardless of species, due to the extent of  their commingling and potential to spread disease. The association added  that NAIS would not be very effective or equitable if all species were not  included as soon as possible. Furthermore, 21 of the 32 experts we  surveyed said USDA should definitely or probably continue with its  current approach to include all species, rather than limit NAIS to one or a  few species. USDA officials also told us that establishing NAIS across all  species is critical, because many operations handle more than one species,  and that focusing entirely on cattle, as some other countries have done, is  a critical flaw since some animal diseases cross species lines. Nonetheless,  USDA officials told us they recognize that prioritizing program  implementation may be appropriate, such as by focusing on specific  diseases of concern or large commercial operations, and that the states  should determine their own priorities for implementation. These officials  also said future NAIS plans will more clearly identify higher-risk areas or  sectors within the species. In commenting on a draft of this report, USDA  told us it plans to develop, in collaboration with the species working  groups, a NAIS Short-Term and Long-Term Implementation Strategies  document that will contain actions for the remainder of 2007 through 2011.  Specifically, the agency stated that the short-term strategy, targeted for  publication in August 2007, will target species or industry sectors that have  the greatest need for advancing premises registration, animal ID, and  tracking. The long-term strategy will be distributed in early 2008 and will  call for an evaluation of participation through 2009 to determine what  actions, such as incentives, may be needed to accelerate participation in  the voluntary program.
section_title: USDA Has Not Developed a Plan for Integrating NAIS with Other USDA and State Animal ID Requirements
paragraphs: Although USDA aims to minimize the financial and practical impact on  producers and others in implementing NAIS, the agency has not developed  a plan to integrate NAIS with preexisting programs and systems. Many  producers are already required to participate in preexisting USDA and  state animal disease eradication programs that use specific ID devices  with different numbering systems or that require branding. For example,  the National Scrapie Eradication Program for sheep and goats requires  visual ear tags, and other USDA-state programs require ear tags for  brucellosis and TB in cattle and ear notches in swine. In addition, several  western states recognize branding as an official ID for disease control  purposes. As a result, producers have generally been discouraged from  investing in new ID devices for NAIS, according to industry groups we  interviewed, thereby inhibiting implementation of the program’s animal ID  and tracking components.
Importantly, while USDA published an interim rule effective in November  2004 recognizing the Animal Identification Number as a new, official  numbering system for individual animals in interstate commerce, this new  system does not replace other, USDA-recognized, official numbering  systems. The rule established that the Animal Identification Number may  be used for official ID in other disease eradication programs. Nonetheless,  USDA officials told us that they are evaluating how NAIS and other official  ID systems can be standardized and moved to a single numbering system,  to the extent practical, and that eventually, the agency expects Animal  Identification Numbers to become the standard national numbering  system used for certain species, individual ID methods, or both. USDA told  us that as of early March 2007, 1.3 million Animal Identification Number  RFID ear tags had been distributed, including some that are being used for  state disease eradication programs. For example, USDA reported that  about 500,000 tags had been distributed to Michigan producers, where the  state’s bovine TB eradication program requires all cattle to have RFID ear  tags prior to movement from their premises.
For NAIS not to impose undue costs on producers by requiring additional  ID devices, stakeholders say the program must be integrated with  preexisting programs and systems. However, USDA faces challenges in  integrating NAIS with other animal ID requirements. For example, Sheep  Working Group members told us that because the scrapie program already  assigns a flock ID number to each premises—plus a unique, individual ID  number to each animal—sheep producers do not see the need to  participate in NAIS, which involves different premises and individual  animal ID numbering systems. Another challenge is that brands identify all  animals raised by a specific producer as a group, not as individuals, and  the same brands are often used in different states or even in different  counties within the same state. USDA’s NAIS User Guide states that  registered brands are not considered to be an official, individual animal ID  as called for by NAIS because cattle typically move through the production  process as individuals. In addition, NAIS animal tracking requirements  may differ operationally from state brand laws and practices. For example,  New Mexico requires state authorities to inspect all livestock moving  across brand district lines, which contrasts with NAIS, where the  responsibility of reporting animal movement lies with the premises  receiving animals. New Mexico officials told us that if they were to  implement NAIS as envisioned, the time required for state inspections  would at least double if inspectors were required to read and report ID  tags. The Cattle Working Group recommended, in 2004, that USDA  develop protocols for integrating existing brand laws with NAIS individual  animal ID requirements and for the reporting of animals’ movements from  brand law states to nonbrand law states.
USDA officials told us that the need to have a single numbering system  across all species is less important than getting animals individually  identified and tracked using any official ID system recognized by USDA.  Furthermore, these officials said that while standardizing to a single  numbering system for animal ID may eventually be appropriate, USDA  recognizes there are differences among species and that cost, technology  capability, and practicality must be considered before phasing out existing  ID devices that have proven to be workable for producers. For example,  the 15-digit Animal Identification Number may not be the most practical  numbering system when used on visual ear tags for smaller animals since  the size of the tag does not lend itself to a 15-digit number. Nonetheless,  USDA officials are starting to address some integration issues. For  example, USDA officials told us in April 2007 that the agency has decided  to allow the official ID devices and numbering systems used by other  disease eradication programs for the purposes of NAIS as well, although  the agency has not yet communicated this development to industry. In  addition, in late 2006, a NAIS Brand State Working Group was formed, in  part to identify what brand concepts could integrate with NAIS. In  commenting on a draft of this report, USDA informed us that it will update  the NAIS User Guide in October 2007 to more clearly reflect the use of  other official ID numbers within NAIS.
section_title: USDA Has Not Established a Robust Process for Selecting, Standardizing, and Testing ID and Tracking Technologies
paragraphs: International programs have generally used specific animal ID devices for  their national animal ID programs, and some NAIS working groups have  recommended specific ID devices for their species, such as RFID ear tags  for cattle and RFID microchip implants for horses. However, USDA has  taken a “technology-neutral” position to allow market forces to determine  what devices are most effective and practical and to accommodate future  technologies. In a NAIS policy document on ID devices released in  February 2006, USDA stated that individual, visual ID devices are a  starting point to ensure greater participation among producers and  asserted that a neutral approach allows RFID; biometrics, such as DNA  and retinal imaging devices; and other potential technologies to be used as  supplemental identification. Nonetheless, that document also stated that  uniformity and compatibility of technology are critical to ensure that the  collection of animal ID data is practical and cost-effective throughout  production. Furthermore, USDA recognized the need to have ID  technologies that are compatible with Canada and Mexico. USDA also  stated that as NAIS is phased in, ongoing efforts to harmonize animal ID  with other countries will facilitate safe trade.
While not all species can use the same devices due to industry preferences  or physical limitations, such as small ears, USDA’s technology-neutral  approach means, for example in the cattle industry, that a producer can  choose to use visual ear tags; low- or high-frequency RFID ear tags; or  other advanced technologies, such as retinal imaging. There are costs and  benefits associated with any device. For example, visual ID devices are  less expensive but require manual recording, which may cause errors and  slow down the “speed of commerce” at livestock markets and slaughter  facilities. RFID systems, on the other hand, allow data to be captured  automatically into databases, but these systems are also not consistently  accurate and are more expensive—in terms of both the ID device and the  associated infrastructure (reader, installation, and computer use). With  such a wide range of options in animal ID and tracking devices, industry  groups and expert panel members told us that producers and market  operators fear that their choices may be inconsistent with others in the  marketplace, or that USDA will adopt specific devices in the future, and  they may find themselves having made the wrong investment decision. For  instance, a producer may find that the closest livestock market uses  electronic readers and cannot easily accommodate visual ear tags;  alternatively, the market may not have installed RFID reader equipment,  and the producer would not get the anticipated return on his or her  investment. From another perspective, a multispecies livestock market,  based on its customers, may face a dilemma of investing in equipment to  read and record visual tags, RFID tags, RFID implants, and other devices— or risk being unable to capture all information quickly and efficiently and  losing some customers. Consequently, producers, livestock markets, and  slaughter facilities have generally been discouraged from investing in ID or  tracking devices, thus inhibiting implementation of the animal ID and  tracking phases.
Asked whether USDA’s technology-neutral position encourages or  discourages producers’ investment in animal ID technology, 23 of the 32  expert panel members said this position definitely or probably discourages  investment, and 6 said it definitely or probably encourages investment. In  their written responses elaborating on this question, several experts said  USDA’s technology-neutral approach limits the interoperability  (compatibility) of different systems in place, thus reducing the viability of  a consistent, national traceback program. In addition, they wrote that it  has caused confusion, uncertainty, and a “wait-and-see” attitude in the  marketplace, and that it will take time to sort out efficient from inefficient  technologies. Conversely, other experts replied that USDA’s technology- neutral approach allows marketplace competition to advance new or  improved technologies and drive fair prices. Similarly, for animal tracking,  more experts replied that USDA’s approach definitely or probably  discourages investment by producers, livestock markets, and slaughter  facilities more than it encourages investment. For example, 22 experts said  USDA’s approach discourages investment by livestock markets, compared  with 2 who said it encourages such investment; 17 experts said it  discourages investment by slaughter facilities, whereas 4 said it  encourages that industry sector to invest.
While USDA has not selected specific animal ID devices, the agency has  published minimum standards for the various ID devices recommended to  date by the species working groups and the NAIS Subcommittee.  Specifically, USDA has established printing and performance standards for  visual and RFID ear tags that address characteristics such as durability  (expected tag life); tag loss; visual readability of the 15-digit Animal  Identification Number; and, in the case of RFID, electronic read rates and  ranges. USDA has published similar performance standards for RFID  implants, with additional characteristics addressing the migration or  breakage of the device and its being harmless to an animal. However,  USDA has not published standards for RFID readers and does not expect  to do so unless the agency purchases readers for use by animal health  officials, in which case it says it will define performance standards for  those specific environments. In addition, USDA has not established a  robust process to independently test and evaluate the performance of  animal ID and tracking devices.
Industry groups, expert panel members, and others told us that RFID  devices do not always perform well in production environments, such as  livestock markets, particularly with RFID readers being made by different  companies. For example, one NAIS pilot project found that in loading  cattle onto commercial trucks, RFID readers read only 70 percent of the  RFID ear tags, with variations among tag manufacturers ranging from 47  percent to 96 percent. As a result, stakeholders are lacking reliable,  independent information on the effectiveness of animal ID and tracking  devices, and without such information, they are reluctant to invest in these  devices.
It is common U.S. practice to select one technology for systems that need  to be widely implemented in different environments to ensure consistency  and interoperability across multiple users. We have previously reported  that a robust process for selecting technologies, setting and revising  performance standards, and testing and evaluating technologies against  those standards leads to the most effective and efficient use of  technology. For example, we have reported on the necessity of the  federal government’s selection and standardization of RFID cards and  readers for federal employees so that the ID cards can be read at any  federal agency across the nation.
Several expert panel members suggested that USDA provide funding for  independent, third-party evaluations of technologies and make results of  such work readily available; appoint a standards committee to evaluate  and make recommendations on the basis of sound science; or require  independent evidence that devices meet standards before approving them.  The NAIS Subcommittee also recommended, in 2006, that USDA establish  an objective process to (1) test the performance of ID devices to ensure  they meet NAIS standards in various production environments and over  extended periods and (2) evaluate new technologies as they emerge.  Typically, federal agencies rely on independent laboratories that are  certified by a government agency, such as the National Institute of  Standards and Technology, for such testing and evaluation.
USDA officials told us they are working with industry to determine better  ways to define performance criteria and establish a more thorough  process to test and evaluate ID devices, but they did not specify a time  frame for these developments. Toward this end, the agency held  preliminary discussions in mid-April 2007 with the American Society for  Testing and Materials’ Committee on Livestock, Meat and Poultry  Evaluation Systems to form a task force to fine-tune ID performance  standards for NAIS and help USDA put testing protocols in place. In the  February 2006 NAIS policy document on ID devices, USDA stated that  when NAIS becomes fully operational, the agency will develop an approval  process for official ID devices and more complete testing and evaluation  procedures. Manufacturers of Animal Identification Number devices,  regardless of any prior permission from USDA, will have to submit new or  appended applications to be considered for “USDA Approved” status.
Evaluations may include laboratory or field studies to verify compliance  with criteria and specification standards, either before or following  issuance of “USDA Approval Pending” or “USDA Approved” status for ID  devices.
section_title: USDA Does Not Clearly Define the Time Frame for Rapid Traceback
paragraphs: When USDA announced NAIS in 2004, the program’s traceability goal was  to locate all potentially exposed animals within 48 hours of a disease’s  discovery, and both USDA and states conveyed that message in their  outreach to producers and others. However, USDA’s most recent NAIS  policy document, the draft NAIS User Guide issued in November 2006, is  silent on this time frame and instead says NAIS will allow producers and  animal health officials to respond as “quickly, efficiently, and effectively as  possible.” By definition, traceback goals need to be time-sensitive and  cost-effective to efficiently target and evaluate the program’s success in  eliminating a disease outbreak. If rapid traceback goals are not clearly  defined, there could be a slower response to an animal disease outbreak  and, therefore, greater economic losses.
Of the 32 expert panel members, 25 defined rapid traceback in an animal  disease event as occurring within 48 hours, with 10 of the experts defining  it as 24 hours or less and 15 defining it as 25 to 48 hours. State animal  health and industry officials told us it is important that USDA  communicate a specific time frame to encourage participation, reinforce  the necessity of rapid traceback, and have a measure by which to evaluate  results. However, a senior USDA official told us that the definition of  “rapid traceback” may vary by disease, because some diseases spread  more quickly than others and some diseases are limited in how they can be  transmitted. For example, traceback for FMD might ideally occur within  12 hours because the disease spreads so rapidly. By contrast, because BSE  is transmitted only through animal feed containing certain contaminated  animal products, and scrapie is transmitted during the breeding season, a  longer traceback would be appropriate. In addition, the senior official told  us that until USDA collects baseline information on tracebacks for specific  diseases, the agency cannot determine time-sensitive, cost-effective  traceback goals for NAIS.
section_title: USDA Does Not Require Potentially Critical Information for Efficient Traceback to Be Recorded in NAIS Databases
paragraphs: When producers and other participants register their premises, they are  required by USDA to record only their name and contact information, with  species information being optional. In addition, when USDA-approved  managers distribute ID devices to a producer, they must record the  devices’ unique animal ID numbers, the premises ID number where the  devices were sent, and the date of distribution. However, USDA does not  require additional information, such as the species, date of birth, or  approximate age of the animals, to be recorded in NAIS animal ID or  tracking databases.
Information that may be critical for narrowing the scope of a traceback— thus saving time and resources and potentially minimizing the economic  impact—includes the species, date of birth, or approximate age of an  animal. Many diseases, such as bovine TB, affect only specific species or  generally affect animals of a certain age, such as in the case of Johne’s  disease, which is usually contracted at a young age. Consequently, if a new  case of these diseases arose in the United States, tracing other species or  animals of a different age may unnecessarily use federal, state, and  industry resources in locating animals and premises that may not be  affected—thus impeding the goal of rapid and effective traceback.  Similarly, most equine diseases of concern affect only equine species, and  exotic Newcastle disease affects only poultry, so tracing other species  would be an inefficient use of time and resources. Other state and federal  animal disease eradication programs require the recording or reporting of  this type of information. For example, the Bovine Tuberculosis  Eradication Program requires, for all TB-tested bison and cattle, the  reporting of the animal’s unique, official ID device; approximate age;  gender; and breed. In addition, the National Scrapie Eradication Program  requires goat flock owners to maintain a management and monitoring plan  that must record an animal’s gender, year of birth, and breed following the  discovery of scrapie within the flock.
The Cattle Working Group recommends that producers identify calves at  birth or at the earliest date possible to support animal disease issues when  the age of an animal is needed, noting that when the precise date of birth  is not known, the approximate birth date within 2 to 3 months should be  recorded. USDA officials acknowledged that although animal-specific data  can be valuable, the agency is collecting the minimum amount of  information needed for traceback to (1) respond to some producers’  concerns about protection of their proprietary information in NAIS  databases and (2) encourage participation. In addition, participants have  the option to record such information in ID and tracking databases, and  USDA encourages them to do so. Nonetheless, without this information  being consistently recorded in NAIS databases, USDA and state officials  may not be able to efficiently trace only those animals potentially affected  by a disease.
section_title: USDA Has Awarded NAIS Cooperative Agreements to Identify Effective Implementation Approaches but Has Not Formally Evaluated Agreements’ Results
paragraphs: USDA has awarded $35.0 million in NAIS cooperative agreements to  states, tribes, and territories to help register premises and identify and  track animals. However, USDA has not consistently monitored or formally  evaluated the results of these cooperative agreements. In addition, USDA  has not consistently shared cooperative agreement results with NAIS  stakeholders. USDA plans to increase its oversight and give states with  greater participation in NAIS some flexibility in using their cooperative  agreement funds.
subsections: section_title: USDA Awarded 169 Cooperative Agreements between Fiscal Years 2004 and 2006
paragraphs: To help identify effective approaches to register premises and identify and  track animals between fiscal years 2004 and 2006, USDA awarded 169  cooperative agreements, totaling $35.0 million, to 49 states, 29 tribes, and 2  territories. NAIS cooperative agreement awards ranged in size from $7,381  to $1.2 million, and the average award was about $207,000. In fiscal years  2004 and 2005, USDA did not require recipients to contribute to, or share,  costs (cost-share); however, in fiscal years 2006 and 2007, USDA required  certain recipients to demonstrate 20 percent in matching funds, through  cash or in-kind (noncash) contributions. For more information about NAIS  cooperative agreements’ funding by fiscal year, see appendix VI, table 2.  Cooperative agreements are typically funded for a 12-month funding  period, with recipients required to submit both quarterly accomplishment  and financial status reports.
USDA required all NAIS cooperative agreement recipients to submit  information to USDA in an initial work plan containing proposed project  objectives, species and industry sector focus, as well as milestones for  measuring progress. Although some premises registration cooperative  agreements proposed activities that would span across most species and  industry sectors covered by NAIS, other projects proposed focusing  premises registration activities on one, or a few, species and sectors of the  livestock industry. Of field trial cooperative agreement funding to test  animal ID and tracking solutions, all but two field trials intended to focus  on beef or dairy cattle; several proposed work on sheep; a few included  swine, cervids, goats, bison, and equine; and only one project intended to  focus some work on camelids. While no NAIS field trials proposed work  on the poultry industry, USDA has previously funded work, through funds  other than NAIS cooperative agreements, that examined the tagging and  record-keeping requirements that would facilitate tracking of birds in the  live bird marketing system. For information on species covered under  NAIS field trials, see appendix VI, table 3.
Field trial funding recipients also varied in the number of industry sectors  they intended to involve in cooperative agreement activities. Overall, more  than one-half of recipients intended to work with producers, livestock  markets, slaughter facilities, and feedlots. USDA did not require field trials  covering multiple species or industry sectors to include in initial work  plans information regarding how funding was to be spent on each species  or sector. USDA officials told us that they have not requested such details  because of the interconnectivity of the activities associated with  cooperative agreements.
Most of the cooperative agreement awards were focused on premises  registration. Specifically, of the $35.0 million awarded in fiscal years 2004  through 2006, USDA awarded 146 cooperative agreements totaling $23.4  million for premises registration efforts to 49 states, 29 tribes, and 2  territories. These premises registration awards provided funding for  activities such as hiring personnel to register premises, developing  educational materials, and providing outreach to producers and  nonproducer participants on the goals of NAIS. For example, 1  cooperative agreement awarded to the Navajo Nation was for the  development of communications in the Navajo language for outreach on  premises registration and animal ID. In addition, some of these  cooperative agreements funded limited animal ID and tracking activities,  along with premises registration.
In fiscal years 2004 and 2005, USDA also awarded field trial cooperative  agreements. Specifically, in fiscal year 2004, USDA awarded 16  cooperative agreements totaling $9.7 million to 15 states and 1 tribe. USDA  estimates that $1.8 million of the $9.7 million awarded was used to support  premises registration activities. The remainder was used for field trials to  develop, test, and offer solutions for applying animal ID devices and  collecting animal tracking information. For example, 1 cooperative  agreement with the Wyoming Livestock Board tested whether existing  brand inspection personnel and infrastructure could be used to track  livestock changing ownership and livestock entering into interstate  commerce through Wyoming livestock markets. In fiscal year 2005, USDA  awarded 7 cooperative agreements totaling $1.9 million to 6 states and 1  tribe for field trials to support research, including the assessment of  existing and novel ID technologies.
USDA anticipates awarding an additional $20.5 million in cooperative  agreements in fiscal year 2007. Of this, USDA anticipates awarding $14.5  million for continued support of premises registration, education, and  outreach activities under approximately 80 cooperative agreements to 50  states, 28 tribes, and 2 territories. As of March 2007, USDA had awarded 31  of the anticipated 80 cooperative agreements, totaling $6.7 million. The  remaining $6.0 million in fiscal year 2007 funding for cooperative  agreements will be provided for the first time to nonprofit organizations  for premises registration activities. In January 2007, USDA entered into a  cooperative agreement with the National Pork Board to begin work with  pork producers to encourage premises registration. Subsequently, in  February 2007, USDA announced that other nonprofit industry  organizations, historically black colleges, tribal land-grant colleges, and  tribal organizations were also eligible for these awards, which are  intended to support the continued registration of premises.
section_title: USDA Has Not Consistently Monitored or Formally Evaluated NAIS Cooperative Agreements or Consistently Shared Their Results
paragraphs: To date, USDA has not consistently monitored or formally evaluated NAIS  cooperative agreements and has not consistently shared their results with  state, industry, and other stakeholders. USDA officials told us that NAIS  program staff provided some oversight for field trial cooperative  agreements as well as for tribal premises registration cooperative  agreements. However, NAIS program staff do not directly monitor most  NAIS cooperative agreements; instead, USDA delegates administrative  oversight activities for each cooperative agreement to designated  representatives, mostly Area Veterinarians in Charge whose overall  responsibility is to supervise and perform the official animal health  activities of APHIS in the state concerned. These individuals are  responsible for direct administration of the individual state premises  registration and field trial cooperative agreements, including the  monitoring and assessment of agreements. According to USDA, it is  appropriate for these designated representatives to monitor cooperative  agreements because they are familiar with the circumstances associated  with implementing projects in a particular state. We have previously  reported with other government audit organizations that monitoring the  performance of federal awards helps to ensure that goals are reached and  required deliverables are completed. According to USDA officials, the  designated representatives responsible for monitoring cooperative  agreements have a multitude of competing responsibilities and thus may  not have sufficient time or resources to oversee cooperative agreements.
In addition, NAIS program staff did not conduct any formal evaluation of  NAIS cooperative agreements. Evaluating results against cooperative  agreement goals can help to identify ways to improve program  performance. USDA officials said that the quality of quarterly and final  accomplishment reports provided to designated representatives by  cooperative agreement recipients varied. They said that many times, these  reports identified what was being done, rather than what was being  accomplished. For example, one state premises registration project set  milestones for educating 60 percent of livestock producers and registering  40 percent of premises; however, the reported results included the  purchase of computers, number of presentations given to producer  organizations, and number of premises registration forms that were  printed for distribution. Furthermore, our analysis of available reports  indicated that results were not reported or were of limited value because  initial project goals and milestones presented in recipients’ work plans  were vague or unclear. In addition, several states indicated to us that they  had difficulty completing the work outlined in their cooperative  agreements within given time frames. For instance, one state told us that it  was difficult for it to hire an ID coordinator in its first year of cooperative  agreement funding, which meant the state was unable to use all of the  funds it was allocated. Thus, while USDA has awarded the majority of  cooperative agreement funds to support premises registration, the agency  has not been able to determine effective or ineffective approaches for  increasing premises registration, animal ID, or tracking.
USDA has formally shared few results of cooperative agreements with  NAIS stakeholders, hindering them from identifying approaches that have  worked to achieve NAIS program objectives, such as increasing outreach,  as well as ineffective approaches, such as the interoperability of RFID  devices and readers. To date, USDA has provided information regarding  NAIS field trial cooperative agreements on three occasions. In April 2005,  USDA released a document containing summary information on the goals  of the initial 16 field trials, including the types of technology tested and  industry focus. In June 2006, USDA released a preliminary progress report  for these first 16 field trials but stated in the report that due to the timing  of work plan submissions and the subsequent need for approved time  extensions to complete proposed projects, 10 of these 16 projects awarded  in fiscal year 2004 had not yet submitted final reports. In addition, USDA  stated in this report that to fully understand the projects’ results,  interested parties should contact cooperative agreement project  administrators to learn more about the projects’ specific activities.  However, the report did not include contact information. In May 2007,  USDA released a third and final report on the results of the fiscal year 2004  field trials and descriptions of the fiscal year 2005 field trials for  distribution to state, industry, and other stakeholders.
USDA started sharing the results of premises registration and outreach  cooperative agreements by publishing weekly premises registration  statistics, by state, beginning in December 2006 (for state premises  registration statistics, see app. VI, table 4). However, USDA has not  formally shared any information about the strategies used by the  individual state projects, nor has the agency communicated to  stakeholders successful or unsuccessful approaches to registering  premises.
While USDA states that some results of cooperative agreements have been  shared publicly at numerous stakeholder meetings, animal health officials  and industry representatives told us that not enough information exists  about the results of NAIS cooperative agreements, and that more sharing  of results, best practices, and lessons learned is needed. For example, a  researcher applying for fiscal year 2005 field trial funding told us it was  difficult to determine whether previous NAIS cooperative agreements had  included work similar to what the applicant was proposing. In addition,  industry groups, state animal health officials, and experts told us that  livestock markets would benefit from more information concerning the  retrofitting of animal tracking equipment.
section_title: USDA Plans to Improve Oversight and Give States with Greater Participation in NAIS Some Flexibility in Using Cooperative Agreement Funds
paragraphs: As we have previously reported, increasing oversight, linking funding to  performance milestones, and altering flexibility are accountability  mechanisms that can be used by agencies to encourage improved  performance during an award period. In fiscal year 2007, USDA plans to  increase oversight activities for some state cooperative agreements, on the  basis of state premises registration levels at the time of the November 2006  announcement. For example, the 27 states that had 25 percent or less of  their premises registered at the time of the cooperative agreement  announcement and were eligible for more than $82,000 in awards would  receive only 90 percent of reserved funding until a midyear review period.  According to USDA, designated representatives will determine the success  of cooperative agreements during this midyear review, largely on the basis  of the goals stated in the cooperative agreements’ approved work plans.  The 23 states with greater than 25 percent of premises registered, or  eligible for awards of less than $82,000, are eligible to receive 100 percent  of cooperative agreement funding without a midyear review (see app. VI,  table 5). In addition, all nonprofit industry organizations that receive  cooperative agreement funding in fiscal year 2007 will be eligible for 50  percent of approved funds, with an additional 25 percent of funds released  following each successful third- and fourth-quarter review of interim  reports required by USDA.
Moreover, USDA has linked funding to participation levels by providing for  increased spending flexibility for some state recipients of fiscal year 2007  premises registration cooperative agreements. USDA believes that  cooperative agreement funding may be more appropriately used by states  with greater numbers of premises registered to support the animal ID and  tracking components of NAIS. For example, the 14 states that have  achieved greater than 25 percent of premises registered may spend up to  40 percent of funds on animal tracking infrastructure, such as to support  NAIS’s integration with preexisting disease eradication programs or to  share in the cost of data collection equipment for livestock markets and  dealers. The 18 states that have registered between 11 percent and 25  percent of premises may spend up to 30 percent of their funding on animal  tracking infrastructure, while the 8 states that have registered between 6  percent and 10 percent of premises may spend up to 20 percent of funding  on animal tracking infrastructure. Finally, those states that have registered  less than 6 percent of premises are required to spend 100 percent of funds  on outreach and premises registration.
section_title: Total NAIS Program Costs Have Not Been Determined, but USDA Recently Announced Plans to Develop a Cost- benefit Analysis
paragraphs: USDA has not determined the program costs for NAIS but recently  announced plans to hire a contractor to conduct a cost-benefit analysis for  NAIS, in part to more precisely forecast the economic effects of the  program. The Senate Appropriations Committee and the House of  Representatives have raised concerns in recent years about how USDA has  spent funds to develop and implement NAIS. Finally, the views of our  expert panel members are mixed concerning NAIS’s potential impact on  the livestock industry.
subsections: section_title: NAIS Costs and Benefits Are Not Known
paragraphs: Although implementation of NAIS began in 2004, USDA has not developed  a comprehensive cost estimate or cost-benefit analysis for the program. In  addition, to our knowledge, no industry group, academic institution, or  state animal health agency has published a cost estimate for implementing  and maintaining NAIS. Without a comprehensive cost-benefit analysis for  NAIS, it is not known how much is required in federal, state, and industry  resources to achieve rapid and effective traceback, or whether the  potential benefits of the program outweigh the costs. In 2004, and again in  2006, the NAIS Subcommittee recommended that USDA prepare an in- depth, cost-benefit analysis for NAIS as part of the strategic planning  process. In addition, 29 of the 32 expert panel members said that USDA  should definitely or probably publish a cost-benefit analysis that contains  detailed NAIS cost and benefit information for the different sectors of the  livestock industry, states, and USDA. The NAIS working groups, other  livestock industry representatives, and state animal health officials we  interviewed said that the cost of implementing NAIS remained one of their  biggest concerns. For example, in comments to USDA in 2005, the  Livestock Marketing Association wrote that it is “highly critical of the fact  that too little has been known” about the potential costs of establishing a  national animal ID system and about who will bear those costs.  Furthermore, the association wrote that a cost-benefit analysis is “long  overdue” and that without better information, NAIS appears to be  prohibitively expensive for the livestock industry to implement. As a  result, without a reliable cost-benefit analysis that is consistent with  federal guidance, stakeholders are unlikely to participate in NAIS due to  their uncertainty that NAIS program benefits outweigh program costs.
USDA announced plans in March 2007 to conduct a cost-benefit analysis  for NAIS. USDA officials told us that the cost-benefit analysis will be used  for program planning and resource allocation, producer and industry  education, and public relations and outreach and to more precisely  forecast the economic effects of NAIS. USDA officials anticipate that the  cost-benefit analysis will be available in 2008.
As we have previously reported, measuring the economic performance of  federal programs, such as the extent to which program benefits exceed  costs (net benefits) or are achieved at least cost (cost-effectiveness), could  be a useful way to assess, in conjunction with other measures, the extent  to which federal programs are meeting the nation’s priorities. In addition,  OMB has established general guidance on conducting cost-benefit  analyses of federal programs to promote efficient resource allocation  through well-informed decision making. OMB suggests that agencies  follow this guidance in conducting analyses used to support government  decisions to initiate, renew, or expand programs or projects that would  result in a series of measurable benefits or costs extending 3 or more years  into the future. The USDA announcement suggests that the planned NAIS  cost-benefit analysis follow this and other available federal guidance.
section_title: Concerns Exist over How USDA Has Spent Funds to Develop and Implement NAIS
paragraphs: In fiscal year 2004, the Secretary of Agriculture transferred $18.8 million  from the Commodity Credit Corporation (CCC) to develop and implement  NAIS, as shown in table 1. Although approximately $85.0 million had been  made available for NAIS implementation by the end of fiscal year 2006,  USDA had obligated only about $61.1 million as of late March 2007; thus,  the agency has carried over about $23.9 million in unobligated NAIS funds  into fiscal year 2007. Because NAIS funding has been designated by  Congress to be available until expended, USDA can carry funds that it did  not expend in prior years forward into the current year. In addition to  these carryover funds, Congress appropriated an additional $33.0 million  for the NAIS program for fiscal year 2007. The President’s Budget  requested $33.1 million for NAIS in fiscal year 2008.
The Senate Appropriations Committee and the House of Representatives  have raised concerns in recent years about how USDA has spent funds to  develop and implement NAIS. For example, in the 109th Congress, the  House passed a fiscal year 2007 appropriations bill for agriculture (H.R.  5384) that included a provision prohibiting funds from being obligated on  NAIS until the House Appropriations Committee received a detailed plan  for NAIS “including, but not limited to, proposed legislative changes, cost  estimates, and means of program evaluation,” and that the plan be  published in the Federal Register for public comment. Although the bill,  with the provision limiting obligations, passed in the House, it did not  become law. USDA officials told us they have plans to obligate all  carryover funds in fiscal year 2007. These plans include awarding  additional cooperative agreements to states and industry organizations to  register premises; additional investments in information technology  development, maintenance, and operations; and communications and  outreach.
section_title: Expert Views Concerning Changes to the Livestock Industry Are Mixed
paragraphs: Questions have been raised about whether NAIS could lead to greater  contracting, vertical integration, or horizontal consolidation in the  livestock industry market structure, and whether NAIS could affect  prices at both the retail and producer levels. Expert panel members  provided the following views relating to changes in market structure as  well as to changes in costs and prices for various market participants due  to the implementation of NAIS.
The 32 experts were evenly split on whether contracting or horizontal  consolidation would increase as a result of NAIS—16 said those effects  would definitely or probably be more likely to occur, and 16 said those  effects would not occur or are probably less likely to occur.
Twenty experts said vertical integration would not occur or is probably  less likely to occur, while 12 said vertical integration is definitely or  probably more likely to occur.
Regarding price effects at the retail level of meat and/or animal products,  12 experts thought prices would be higher; 15 thought there would be no  effect; and 5 believed they would be lower.
When asked what would be the effect on prices paid to producers for  livestock if NAIS led to increased costs in livestock markets and/or  slaughter facilities, 21 experts believed that prices would probably or  definitely decrease; 8 thought there would be no effect; and 2 thought that  there would probably be an increase.
Similarly, when asked what would be the effect on prices paid to  producers for livestock if NAIS led to decreased costs in livestock markets  and/or slaughter facilities, 16 experts replied that prices paid to producers  would probably or definitely increase; 13 replied that there would be no  effect; and 1 respondent thought there would be a decrease.
section_title: Conclusions
paragraphs: NAIS provides USDA, states, and the livestock industry with a historic  opportunity for the United States to develop a comprehensive, coherent  program to identify the nation’s livestock animals and premises and  achieve the goal of rapid and effective disease traceback. In addition, a  successful program in sync with our international trading partners and  competitors could boost consumer confidence in U.S. animal products and  help maintain and expand market access. However, for NAIS to be fully  effective and efficient in responding to an animal disease emergency,  adequate levels of participation need to be achieved in all three NAIS  components—premises registration, animal ID, and tracking. If insufficient  numbers of animals are identified and tracked, the system will have gaps,  despite millions of dollars being invested in the program’s development.  Conversely, high levels of participation would better position the United  States to handle future animal health emergencies and minimize economic,  trade, and possibly human health consequences. USDA’s changes in  direction over the past 3 years have caused considerable confusion and  frustration among many NAIS stakeholders, and the program’s  implementation may be in danger of losing momentum. Most critically,  whether NAIS is voluntary or mandatory, the lack of participation  benchmarks makes it more difficult to gauge progress in attaining the  necessary levels of participation for an effective animal ID program and, if  there is insufficient participation, to develop strategies to achieve it.  Without meaningful progress, USDA’s expenditures on NAIS will continue  to be questioned.
In addition, if USDA does not resolve several key implementation issues,  the program will continue to face opposition by some industry  stakeholders, and participation in all three NAIS components could be  limited. Collectively, these unresolved issues will likely lead to ineffective  and inefficient implementation and prevent NAIS from achieving the goal  of rapid and effective traceback. First, prioritizing how NAIS is  implemented, such as by species, would allow USDA and stakeholders to  better allocate their resources and improve the program over time.  Second, the integration of NAIS with other USDA and state animal disease  eradication programs and branding systems would remove another hurdle  preventing participation in NAIS’s animal ID and tracking components.  Third, creating a robust process for selecting, setting standards for, and  independently testing and evaluating animal ID and tracking devices in  meeting NAIS standards is important to ensure effectiveness and  interoperability across the national program and, therefore, would  encourage investment. Fourth, identifying time-sensitive and cost-effective  goals for traceback, which may vary by disease, would allow stakeholders  to have common goals in responding to an event, potentially speeding up  response and, therefore, minimizing economic losses. Fifth, requiring the  recording of information in NAIS databases that may be critical for  efficient traceback, such as species, approximate age, or date of birth,  would enable animal health authorities to more quickly locate only those  premises and animals that are relevant in an investigation, thus minimizing  time and resources and hastening response.
Finally, we believe that if USDA were to provide industry, state, and other  stakeholders with key information on the results of cooperative  agreements, it would help identify the most effective and efficient means  to implement the program and likely increase participation and enable  producers, livestock markets, states, and other stakeholders to make  informed decisions about where to allocate scarce resources. Moreover,  for planning purposes in allocating federal, state, and industry resources, it  is important for stakeholders, Congress, and the public to know how much  it will cost to implement and maintain NAIS, compared with its benefits.  Without a reliable cost-benefit analysis, stakeholders are unlikely to  participate in NAIS due to their uncertainty about whether program  benefits outweigh the costs.
section_title: Recommendations for Executive Action
paragraphs: To achieve the program’s goal of rapid and effective animal disease  traceback, we recommend that the Secretary of Agriculture direct the  Administrator of APHIS to reestablish participation benchmarks to gauge  progress in registering premises and identifying and tracking animals;  monitor participation; and, if participation does not meet the benchmarks,  take further action, such as making participation mandatory or creating  incentives to achieve those levels of participation.
In addition, we recommend that the Secretary direct the Administrator of  APHIS to take the following seven actions to implement NAIS more  effectively and efficiently and achieve the program’s goal of rapid and  effective traceback:    set priorities, in consultation with the NAIS species working groups, state  animal health officials, and others, for implementing NAIS incrementally  by species or other criteria;   determine how NAIS will integrate with existing USDA and state animal  disease eradication programs and branding systems;   establish a robust process to select, standardize, and independently test  and evaluate the performance of animal ID and tracking devices to ensure  they meet minimum standards; identify—in consultation with the NAIS species working groups, state  animal health officials, and others—current baselines for animal disease  traceback, and develop time-sensitive, cost-effective goals for traceback  under NAIS, which may include separate time frames for specific diseases;   evaluate what information is critical for efficient traceback, such as  species, approximate age or date of birth, and require that participants  record that information in the NAIS animal ID and tracking databases; increase the monitoring of NAIS cooperative agreements, and evaluate and  publish the results of cooperative agreements on a timely basis; and   conduct the planned analysis of the costs and benefits of NAIS following  criteria established in OMB guidance for conducting cost-benefit analyses  for federal programs and publish the results for comment.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USDA for review and comment. In  written comments on our draft report, USDA stated that it appreciated our  comprehensive evaluation of NAIS and generally agreed with our  recommendations. However, regarding our recommendation that USDA  establish a robust process to select, standardize, and independently test  and evaluate the performance of animal ID and tracking devices to ensure  they meet minimum standards, USDA agreed with the need to establish a  more robust process for having ID devices tested to meet minimum  performance standards, but believed that these standards must be defined  through a consensus of affected stakeholders. USDA stated that as  performance standards are established, the selection of such devices will  then be warranted. USDA also stated that as part of the evaluation  process, it will specify the testing standards and then review the  manufacturer’s documentation of laboratory testing and field trials. In  addition, USDA stated that testing of such devices should be at the  expense of the device manufacturer.
We recognize the need for USDA to work with stakeholders before  determining which ID and tracking devices are most appropriate for NAIS.  However, the sooner USDA selects specific technologies, the sooner  producers, livestock markets, slaughter facilities, and others will likely  participate in the animal ID and tracking components of NAIS. As a  starting point, some NAIS working groups have recommended specific ID  devices for their species. It is common U.S. practice to select one  technology for systems that need to be widely implemented in different  environments, and we have previously reported that a robust process for  selecting, standardizing, and testing and evaluating technologies leads to  the most effective and efficient systems. During the course of our work,  we found that USDA’s technology-neutral position has caused producers,  market operators, and slaughter facilities to be generally discouraged from  investing in new animal ID or tracking devices for NAIS due to fear that  their choices might be inconsistent with others in the marketplace, or that  USDA might adopt specific devices in the future. The selection of specific  ID and tracking devices, therefore, would ensure consistency and  interoperability across the program’s many potential users, leading to  more efficient implementation. Furthermore, as stated in this report,  USDA has recognized the need for animal ID technologies that are  compatible with Canada and Mexico, and it also has stated that  harmonizing the United States’ program with other countries will facilitate  safe trade. Selecting technologies for NAIS that are in sync with our  trading partners and competitors could have positive trade implications  for the United States. Lastly, the selection of specific devices would inform  the cost-benefit analysis that USDA is currently conducting, which, in turn,  could affect participation levels. These reasons underscore the need for  USDA to select specific ID and tracking devices, on the basis of  independent, reliable information regarding their performance in meeting  minimum standards and of consultations with stakeholders.
In its written comments, USDA also provided points of clarification and  provided details about current and future actions that the agency plans to  take to address our recommendations, which we incorporated throughout  the report, as appropriate. USDA’s written comments and our specific  responses appear in appendix VII. In addition, USDA provided technical  comments that we incorporated throughout the report, as appropriate.
As we agreed with your office, unless you publicly announce the contents  of this report earlier, we plan no further distribution of it until 30 days  from the date of this report. At that time, we will send copies of this report  to the interested congressional committees, the Secretary of Agriculture,  and other interested parties. We will also make copies available to others  upon request. In addition, this report will be available at no charge on the  GAO Web site at http://www.gao.gov.
If your or your staff have any questions about this report, please contact  me at (202) 512-3841 or ShamesL@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix VIII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of our review were to determine (1) how effectively the  U.S. Department of Agriculture (USDA) is implementing the National  Animal Identification System (NAIS) and, specifically, the key  implementation issues identified by livestock industry groups, market  operators, state animal health officials, and others; (2) how USDA has  distributed cooperative agreement funding to help states and industry  prepare for NAIS and evaluated the agreements’ results; and (3) what  USDA and others estimate are the costs for USDA, states, and the  livestock industry to implement and maintain NAIS.
To address these objectives, we interviewed USDA officials responsible  for implementing NAIS and conducted site visits to selected livestock  markets and cooperative agreement field trials. We conducted structured  interviews in person or via telephone with animal health officials in seven  states: California, Iowa, Michigan, New Mexico, Texas, Vermont, and  Wisconsin. These states were selected on the basis of their geographic  dispersion; the range in the number of premises located in each state; and,  in some cases, their high levels of livestock production. We also conducted  interviews in person or via telephone and reviewed documents from the  NAIS Subcommittee and the 10 NAIS working groups that report to the  NAIS Subcommittee: Beef and Dairy Cattle Working Group, Bison Working  Group, Camelid Working Group, Cervid Working Group, Equine Working  Group, Goat Working Group, Market/Processor Working Group, Poultry  Working Group, Sheep Working Group, and Swine Working Group. We  also conducted structured interviews in person or via telephone and  reviewed documents from four industry organizations: American Farm  Bureau Federation, Livestock Marketing Association, National Cattlemen’s  Beef Association, and National Livestock Producers Association. In  addition, we reviewed documents from the United States Animal Health  Association Livestock ID Committee; the Ranchers-Cattlemen Action Legal  Fund -- United Stockgrowers of America; three NAIS opposition groups— NoNAIS.org, Liberty Ark Coalition, and the Farm and Ranch Freedom  Alliance; and other organizations that testified before Congress on NAIS in  recent years or spoke at USDA’s listening sessions in 2004. We attended  the NAIS Subcommittee meeting and a USDA meeting with state  departments of agriculture on NAIS held in August 2006 in Kansas City,  Missouri, and the Secretary’s Advisory Committee on Foreign Animal and  Poultry Diseases meeting in September 2006 in Riverdale, Maryland. We  identified and reviewed applicable laws, USDA policies, guidance, and  technical standards regarding NAIS. We also reviewed relevant GAO  reports and a Congressional Research Service report to Congress on  animal identification (ID) and traceability.
To determine how USDA has distributed cooperative agreement funding to  help states and industry prepare for NAIS, we reviewed USDA  documentation related to cooperative agreements signed between USDA  and states, territories, tribes, and industry groups from fiscal years 2004  through 2007. To determine which livestock species were the focus of  cooperative agreement field trials, we reviewed and systematically  recorded this information from cooperative agreement recipients’ work  plans; however, we did not independently assess whether the proposed  work with these species and industry sectors took place. To determine  how USDA has evaluated the results of cooperative agreements, we  interviewed NAIS program staff, reviewed guidance provided to recipients,  and reviewed quarterly and final reports submitted to USDA by  cooperative agreement recipients. Because some cooperative agreements  were ongoing and because other recipients did not report to USDA in a  timely manner, we could not examine a complete set of quarterly and final  reports for all recipients. We conducted a reliability assessment of the data  that USDA provided to us on the NAIS cooperative agreements and found  these data to be reliable for our reporting purposes.
For the third objective, to determine estimates of the costs to implement  and maintain NAIS, we asked representatives from USDA, industry groups,  academic institutions, and state animal health agencies for any NAIS cost  estimates they had developed. We identified and reviewed federal  guidance for developing cost estimates and cost-benefit analyses and  sound economic and cost accounting principles. We also reviewed NAIS  budget data from USDA for fiscal years 2004 through 2007, and conducted  a reliability assessment of these data and found them to be reliable for our  reporting purposes.
To help answer the first and third objectives, we convened a Web-based  panel of 32 experts on several aspects of NAIS. The process we followed is  based on GAO guidance for identifying experts for panels or other work  requiring expertise in a specific area. We identified potential panel  members by conducting a literature search to obtain the names of  individuals who had published on animal ID in academic journals and in  other relevant venues. We also asked for recommendations from  individuals we interviewed for other aspects of the job. We then selected  individuals who were actively involved in the development or  implementation of NAIS and were knowledgeable of its details; who had  conducted research, or were published in peer-reviewed journals on  animal ID; or who were recognized by their peers as an expert on NAIS.  Panel members were asked to fill out a Web-based questionnaire, which  asked for their beliefs and opinions on future participation in NAIS,  effective traceback, implementation of NAIS, the costs and benefits of  NAIS, the impact of NAIS on the livestock industry and consumers, ID  technology, and databases for tracking animals. Panel members had  approximately 3 weeks to fill out their questionnaires in December 2006  and January 2007. All panel members completed their questionnaires,  giving us a 100 percent response rate. The questions and aggregated  responses are presented in appendix IV. While we display only the  quantitative, closed-ended responses, we also relied on the responses to  the qualitative, open-ended questions to inform our findings in this report.  The views expressed by the panel members do not necessarily represent  the views of GAO.
We conducted our work from June 2006 to May 2007 in accordance with  generally accepted government auditing standards.
section_title: Appendix II: Select Domestic and Foreign Animal Diseases of Concern Identified by USDA
paragraphs: Can affect humans?
Horses, donkeys, mules, and goats  USDA identifies other domestic animal diseases of concern in federal regulations, including acute  swine erysipelas (affects swine), anthrax (all domestic species), bluetongue (all domestic species),  chlamydiosis (poultry), Eastern equine encephalomyelistis (horses), mycoplasma gallisepticum  (poultry), mycoplasma meleagridis (poultry), mycoplasma synoviae (poultry), salmonella enteritidis  (poultry), salmonella gallinarum (poultry), salmonella pullorum (poultry), scabies (cattle), infectious  salmon anemia, and spring viremia of carp. Additional foreign animal diseases of concern identified  by USDA include equine viral arteritis (horses, donkeys, mules, ponies, and zebra); hendra (horses);  nipah (swine and horses); Rift Valley fever (cattle, sheep, and goats); rinderpest (cattle, sheep, and  goats); Venezuelan equine encephalomyelitis (all equine species); and vesicular stomatitis (swine,  cattle, sheep, and goats).
section_title: Appendix III: Members of GAO’s Expert Panel on NAIS
paragraphs: This appendix provides the names and affiliations of 32 academic,  government, and other experts who, as members of our expert panel on  NAIS, completed a Web-based questionnaire from December 2006 to  January 2007 regarding USDA’s implementation of NAIS. We also spoke  with a select number of these experts regarding animal ID and tracking  technology, among other issues.
subsections: section_title: Expert Panel Members
section_title: Appendix IV: GAO Expert Panel Questions and Responses on NAIS
subsections: section_title: Expert Panel: USDA’s Implementation of the National Animal Identification System
paragraphs: We conducted the following survey as part of our review of USDA’s  implementation of NAIS. We received a 100 percent response rate from a  panel of 32 experts who filled out a Web-based questionnaire in late  December 2006 and early January 2007. For presentation purposes in this  appendix, we have combined the category “No expertise on topic” with  “No answer” and the category “50% or less” with “51 to 60%.” However,  when the experts filled out the questionnaire, those categories were not  combined. The views expressed by the panel members do not necessarily  represent the views of GAO.
section_title: Part I: Participation in the NAIS Voluntary Program
subsections: section_title: In this questionnaire, the term “producer” refers to all individuals engaged in the ownership, management, or marketing of any of the species of livestock included in NAIS. For example, in the beef cattle industry, this refers to cow-calf producers as well as stocker, backgrounder, and feedlot operators. While owners or managers of certain species, for example horses, may not typically be referred to as producers, these individuals are included in this definition of producer. This definition is consistent with USDA’s draft NAIS User Guide (pg. 5). The term “livestock market” refers to livestock auction markets, sale barns, and sale yards.
paragraphs: Q1. What do you believe will be the percentage of premises registered for each sector of livestock production under the NAIS voluntary  program?
Q2. What do you believe will be the percentage of animals identified (as individuals or, where applicable, as a group) for each species  of animal under the NAIS voluntary program?
Q3. What do you believe will be the percentage of animals tracked for each sector of livestock production under the NAIS voluntary  program?
The next four questions ask for your opinion on the participation levels in NAIS that are necessary for  producers and animal health officials to respond quickly and effectively to animal disease events by  tracing livestock animals throughout the production process.
Q4. USDA's draft NAIS User Guide does not define the time period for rapid trace back. In your opinion, what time period defines a  "rapid" trace back in an animal disease event?
Q5. What percentage of premises registered do you believe is necessary to achieve the NAIS program's goal of rapid and effective  animal disease trace back?
Q6. What percentage of animals identified is necessary to achieve the goal of rapid animal disease trace back?
Q7. What percentage of animals tracked is necessary to achieve the goal of rapid animal disease trace back?
section_title: Part III: Implementation of NAIS
subsections: section_title: NAIS is being implemented for all livestock species, including bison, camelids, cattle (beef and dairy), cervids, equine, goats, poultry, sheep, and swine. Countries that have already implemented national animal ID programs (e.g., Canada, EU, Australia) generally started with cattle and, in some cases, later extended their program to cover a few other species. No other country has attempted to reach the number of species that USDA aims to cover with NAIS, nor has any other country implemented a program for multiple species simultaneously.
paragraphs: Q8. What types of incentives do you believe could be used to achieve a high level of participation in the premises registration, animal  identification, and/or animal tracking components of NAIS?
Q9. In your opinion, should participation in NAIS be mandatory?
Q10. How would you characterize USDA's effectiveness in communicating roles and responsibilities for NAIS?
Q11. If you believe that USDA's communications are not as effective as they could be, please describe any actions that USDA could  take to make communications better.
Q12. In your opinion, should USDA limit NAIS to one or a few species or continue with its current approach to include all species?
Definitely  continue with  current  approach of  including all  Q13. In your opinion, should USDA implement NAIS incrementally by species, or continue with its current approach to implement NAIS  for all species simultaneously?
Definitely  continue with  current  approach of  implementing  for all species  Q14. In your opinion, what criteria should be used to determine the priority given to each species in implementing NAIS?
Q15. In your opinion, what priority should be given to each species in implementing NAIS?
section_title: Part IV: Costs and Benefits of NAIS
subsections: section_title: USDA has not released detailed information on the cost of implementing and maintaining NAIS for producers, livestock markets, slaughter facilities, states, and others that are subject to NAIS. In the November 2006 draft NAIS User Guide (pg. 12) USDA states that it plans to conduct a cost-benefit analysis that will help forecast more precisely the potential economic effects of NAIS.
paragraphs: Q16. Should USDA publish a cost-benefit analysis for NAIS that contains detailed cost and benefit information for the different sectors  of the livestock industry, states, and USDA?
Q17. Do you believe there are other actions that USDA should take to address the cost(s) of implementing and maintaining NAIS?
Q18. If you answered "Definitely yes" or "Probably yes" to question 17, what other actions should USDA take to address the cost of  implementing and maintaining NAIS?
Q19. Do you believe there are other actions that USDA could take to make known the benefit(s) of implementing and maintaining  NAIS?
Q20. If you answered "Definitely yes" or "Probably yes" to Question 19, what other actions could USDA take to make known the  benefit(s) of implementing and maintaining NAIS?
Q21. In your opinion, what overall, net effect (considering all costs and benefits) will NAIS likely have on producers, livestock markets,  and/or slaughter facilities?
section_title: Part V: Impact on the Livestock Industry and Consumers
subsections: section_title: This section asks about vertical coordination, which refers to the way products are exchanged between different stages of production in a market, such as between farmers, processors, and retailers. The three basic types of vertical coordination are: (1) open-production, where a firm purchases a commodity from a producer at the market price determined at the time of purchase; (2) contract-production (contracting), where a firm commits to purchase a commodity from a producer at a price established in advance of the purchase; and (3) vertical integration, where a single firm controls the flow of the commodity across two or more stages of production. There are also questions about horizontal consolidation, the process by which production is organized into fewer, but larger, plants or farms.
paragraphs: Q22. In your opinion, will NAIS make contracting, vertical integration, and/or horizontal consolidation in the livestock industry (all  species) more or less likely to occur?
Q23. In the textbox below, please provide a brief explanation for why you think NAIS will make contracting, vertical integration, and/or  horizontal consolidation more or less likely to occur.
Q24. In what ways, if any, should USDA address any of the effects NAIS could have on the industry due to contracting, vertical  integration, and/or horizontal consolidation?
Q25. In your opinion, will NAIS result in higher or lower prices for meat and/or other animal products?
Q26. In your opinion, if NAIS causes costs of livestock markets and/or slaughter facilities to increase, what effect will that have on the  prices paid to producers for livestock?
Q27. In your opinion, if NAIS causes costs of livestock markets and/or slaughter facilities to decrease, what effect will that have on the  prices paid to producers for livestock?
Canada and Australia have adopted standards that limit the acceptable identification and tracking  technologies to certain electronic devices for their national animal (cattle) ID programs. However,  USDA has taken a "technology-neutral" position so that many different types of ID devices, both  visual and electronic, are acceptable under NAIS. Some of USDA's NAIS Species Working Groups  have recommended specific ID devices for their industries, such as cattle RFID ear tags and equine  neck microchips, but USDA has not adopted these recommendations as NAIS standards.
Q29. Please use the space below to elaborate on your answers to Question 28.
Q30. Does USDA's "technology-neutral" position encourage or discourage investment in animal tracking technology (e.g., ID readers,  databases, and retrofitting facilities) by producers, livestock markets, and slaughter facilities?
Q31. Please use the space below to elaborate on your answers to Question 30.
Q32. Do you know of any specific problems regarding the interoperability (compatibility) of animal ID and tracking devices made by  different manufacturers? If yes, please describe below.
Q33. What actions could USDA take to address problems affecting the interoperability of animal ID and tracking devices?
Q34. Do you know of any specific problems affecting the accuracy of animal tracking devices? If yes, please describe below.
Q35. What actions could USDA take to address problems affecting the accuracy of animal tracking devices?
Q36. Do you know of any specific problems affecting the longevity of animal ID or tracking devices? If yes, please describe below.
Q37. What actions could USDA take to address problems affecting the longevity of animal ID or tracking devices?
Q38. Do you know of any specific problems affecting the ability of animal tracking devices to keep up with the “speed of commerce”  when animals change ownership? If yes, please describe below.
Q39. What actions could USDA take to address any problems affecting the ability of animal tracking devices to keep up with the speed  of commerce?
USDA’s original plan for animal tracking, the third component of NAIS, was for USDA to manage a  centralized database that would contain all animal movements input by industry in the birth-to- slaughter production process. To address concerns about the protection of proprietary information,  Secretary Johanns announced in August 2005 that USDA would allow data from approved state and  private animal tracking databases (ATDs) to be transferred to a USDA information system. However,  some industry groups and states have expressed concerns about the cost, quality, and timeliness of  this new, decentralized approach.
Q40. What actions could USDA take to address any concerns about the cost(s) of the decentralized approach?
Q41. What actions could USDA take to address concerns about the quality and timeliness of the decentralized approach?
Q42. Are you in favor of a national animal ID program?
Q43. Are you in favor of NAIS as it is currently planned?
Q44. If applicable, please explain any discrepancy in your answers to Questions 42 and 43.
Q45. What changes, if any, would you make to NAIS as it is currently planned? (Please limit to the 3 most important issues.)
Q46. If you have additional comments about NAIS that you would like to make, please do so here.
Cattle: premises  registration since  1960s; individual  identification in  2005.
Sheep and goats:  initial implementation  in 2006; full  implementation in  2009.
First phase (2002):  mandatory  participation only by  those exporting beef  to the European  Union.
Second phase  (2006):    mandatory  participation for all  foreign exports.
Third phase (2006):   mandatory  requirement for all  foot-and-mouth  disease affected  areas, regardless of  whether the product  is being sold  overseas.
Fourth phase (2007):  all beef producers  must participate,  regardless of  whether the product  is being exported.
Sheep and goats:  double  identification (two  ear tags or one ear  tag and a tattoo,  mark on the  pastern (for goats  only), or electronic  identifiers)
section_title: Appendix VI: Information on NAIS Cooperative Agreements
paragraphs: The Fort Belknap Indian Community of the Fort Belknap Reservation of Montana fiscal year 2006  cooperative agreement for $35,000 included funding for the following tribes: Fort Belknap Indian  Community of the Fort Belknap Reservation of Montana; Confederated Tribes of the Warm Springs  Reservation of Oregon; and Ute Indian Tribe of the Uintah & Ouray Reservation, Utah.
Swine Sheep Equine Poultry  Cervids  Goats Camelids  Swine Sheep Equine Poultry  Cervids  Goats Camelids  Fiscal year 2004 funding was provided for both field trials and premises registration activities. Fiscal  year 2005 funding was provided exclusively for field trial activities.
section_title: Appendix VII: Comments from the U.S. Department of Agriculture
paragraphs: The following are GAO’s comments on the U.S. Department of  Agriculture’s letter dated June 7, 2007.
subsections: section_title: GAO Comments
paragraphs: 1.  We added a statement about USDA’s developing, in collaboration with  the species working groups, a NAIS Short-Term and Long-Term  Implementation Strategies document that will contain actions for the  remainder of 2007 through 2011.  2.  We added a statement about USDA’s plans to update the NAIS User  Guide in October 2007 to more clearly reflect the use of other official  ID numbers within NAIS.
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Josey Ballenger and Heather  Hill made significant contributions to this report. Kevin Bray, Nancy  Crothers, John de Ferrari, Mary Denigan-Macauley, Barbara El-Osta, J.  Erin Lansburg, Allen Lomax, Lynn Musser, Shannin O’Neill, and Susan  Ragland also provided key assistance.