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What will NAIT cost farmers Feds ask?

14 October 2008

What will NAIT cost farmers Feds ask?

Federated Farmers President, Don Nicolson today, “Farmers want to know what the proposed National Animal Identification and Tracing system will cost in total. This is on top of what they already pay for existing systems for food safety, biosecurity, farm productivity, consumer preferences, and facilitating trade.

“Unfortunately it is difficult to get a clear picture from the NAIT discussion document and associated Cost Benefit Analysis (CBA). In our view benefits are overstated and costs understated. NAIT confuses Present Value (PV) and Net Present Value (NPV). NPV figures are those that result when costs are subtracted from benefits. The table on page 3 of the CBA referred to all the figures being ‘NPV’ when they should in fact be labelled ‘PV’. The NPV for on-farm should be $273 million rather than $507 million described in the NAIT discussion document. This is a difference of $234 million – no small change (the $507 million refers only to the PV of benefits while the PV of the costs were $234 million). And any on farm gains from animal ID are available to farmers now, without NAIT being imposed.

Meanwhile the NPV for processors and intermediaries is not $17 million as stated in the NAIT document but about $800,000 (the benefits being $17.3 million and the PV of the costs $16.5 million). These values will also change with any suggested changes of assumptions and component estimates.

On page 3 of the CBA it states “If farmers were to receive zero benefit, the NPV would be negative”.

And it is not clear that Treasury’s Cost Benefit Analysis Primer has been followed as a CBA should analyse the costs and benefits of a proposal against the status quo, should include sensitively analysis on different discount rates and should include all costs, cash and non-cash. It does not appear that this has been done.

The NAIT discussion document mentions the cost of tags at $2.30 - $3.30 per animal, the establishment of the new bureaucracy in Wellington with costs of about $18 million up to 2010/11 and forecast ongoing operating costs of about $7.3 million per year.

This does not include the cost of adding in sheep, which clearly it is planned by NAIT and the Ministry of Agriculture and Forestry to do, just not now. The cost of wands, scanners, lost tag issues, enforcement, computers, online costs, software cost, IT incompatibility issues, transport operators cost, saleyards cost and any farm compliance or labour required are not included.

(See attached below what a farmer is required to do, which is not costed i.e. is currently calculated at zero cost)

“Make no mistake, farmers will pay for all the costs of the proposed NAIT system, both on and off the farm. This system will impose costs on everyone in the supply chain – saleyards, transport operators, show managers, processors, and pet show days. They will all pass those costs on to farmers through additional charges, or reduced prices.

“I have written to the NAIT chairman and said we are happy to help facilitate further consultation with farmers directly. Whatever the outcome of the consultation process on wether NAIT should proceed or not, farmers need answers about this significant proposal,” Mr Nicolson concluded.


Page 18 of the NAIT discussion document lists a number of requirements for farmers in charge of cattle and deer (note this does not include sheep)

• Register their property in order to interact with NAIT.
• Apply a NAIT tag to all their animals within three months of birth or at point of first contact with the animal and prior to the animal leaving the property.
• Replace lost tags and link the replacement NAIT tag back to the lost tag identifier (if possible) before animals are moved.
• Send information on individual animals that have been tagged to NAIT.
• Send information on movements of individual animals dispatched to another property, including the date of departure and destination property of animals (other than one-legged transaction) to NAIT
• Send information on movements of individual animals received on their property, including the date of arrival and the source property of animals (other than one-legged transaction) to NAIT.
• Send information on animals that die, are slaughtered on the property or go missing from the property to NAIT.
• Ensure any discrepancies with data supplied to NAIT are resolved and corrected.
• Assist with any data reconciliations required by NAIT.
• Continue to meet requirements set out in existing legislation in respect of completing ASD forms for Tb and market access purposes.

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