[Senate Hearing 108-606]
[From the U.S. Government Printing Office]



                                                        S. Hrg. 108-606

          DEVELOPMENT OF A NATIONAL ANIMAL IDENTIFICATION PLAN

=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON MARKETING, INSPECTION, AND PRODUCT PROMOTION

                                 of the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION


                               __________

                             MARCH 4, 2004

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


  Available via the World Wide Web: http://www.agriculture.senate.gov


                                 ______

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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                  THAD COCHRAN, Mississippi, Chairman

RICHARD G. LUGAR, Indiana            TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky            PATRICK J. LEAHY, Vermont
PAT ROBERTS, Kansas                  KENT CONRAD, North Dakota
PETER G. FITZGERALD, Illinois        THOMAS A. DASCHLE, South Dakota
SAXBY CHAMBLISS, Georgia             MAX BAUCUS, Montana
NORM COLEMAN, Minnesota              BLANCHE L. LINCOLN, Arkansas
MICHEAL D. CRAPO, Idaho              ZELL MILLER, Georgia
JAMES M. TALENT, Missouri            DEBBIE A. STABENOW, Michigan
ELIZABETH DOLE, North Carolina       E. BENJAMIN NELSON, Nebraska
CHARLES E. GRASSLEY, Iowa            MARK DAYTON, Minnesota

                 Hunt Shipman, Majority Staff Director

                David L. Johnson, Majority Chief Counsel

               Lance Kotschwar, Majority General Counsel

                      Robert E. Sturm, Chief Clerk

                Mark Halverson, Minority Staff Director

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

Hearing(s):

Development of a National Animal Identification Plan.............    01

                              ----------                              

                        Thursday, March 4, 2004
                    STATEMENTS PRESENTED BY SENATORS

Talent, Hon. James, a U.S. Senator from Missouri, Chairman, 
  Subcommittee on Marketing, Inspection, and Product Production..    01
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    07
Baucus, Hon. Max, a U.S. Senator from Montana....................    08
Nelson, Hon. Ben, a U.S. Senator from Nebraska...................    02
                              ----------                              

                               WITNESSES

Hawks, Hon. Bill, Under Secretary, Department of Agriculture, 
  Marketing and Regulatory Programs, Washington, DC..............    04
John, Mike, Vice President, National Cattlemen's Beef 
  Association, Columbia, Missouri................................    29
Lehfeldt, Bob, American Sheep Industry Association, Lavina, 
  Montana........................................................    34
Marsh, Bret, First Vice President, U.S. Animal Health 
  Association, 
  Indianapolis, Indiana..........................................    16
Ostberg, Ronald, Montana Farmers Union Member, Scobey, Montana...    35
Philippi, Joy, National Pork Producers Council, Bruning, Nebraska    31
Schmitz-Hsu, Fritz, Former CEO, Tierverkehrsdatenbank AG, 
  Switzerland....................................................    21
                              ----------                              

                                APPENDIX

Prepared Statements:
Talent, Hon. James...............................................    44
    Hawks, Hon. Bill.............................................    49
    John, Mike...................................................    77
    Lehfeldt, Bob................................................    93
    Marsh, Bret..................................................    67
    Nelson, Hon. Ben.............................................    48
    Ostberg, Ronald..............................................    96
    Philippi, Joy................................................    83
    Schmitz-Hsu, Fritz...........................................    71
Document(s) Submitted for the Record:
    Roberts, Hon. Pat............................................   100
Questions and Answers Submitted for the Record:
Harkin, Hon. Tom.................................................   102


 
          DEVELOPMENT OF A NATIONAL ANIMAL IDENTIFICATION PLAN

                              ----------                              


                        THURSDAY, MARCH 4, 2004

                                       U.S. Senate,
        Subcommittee on Marketing, Inspection, and Product 
 Promotion, of the Committee on Agriculture, Nutrition and 
                                                  Forestry,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:05 p.m. in 
room SH-216, Hart Senate Office Building, Hon. James Talent, 
[Chairman of the Subcommittee], presiding.
    Present: Senators Talent, Harkin, Baucus, and Nelson.

 STATEMENT OF HON. JAMES TALENT, A U.S. SENATOR FROM MISSOURI, 
             CHAIRMAN, SUBCOMMITTEE ON MARKETING, 
 INSPECTION, AND PRODUCT PROMOTION, COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    Senator Talent. All right; we will convene the subcommittee 
hearing.
    I want to thank everyone for coming to the hearing to 
discuss this important subject, the development of a national 
identification program. I do not need to tell people in this 
room how important the issue is. I do want to start by saying 
the United States has the safest food supply in the world. I 
have said that many times before and will continue to say it on 
occasions like this. It is still true today.
    A national animal identification plan is not a new idea; in 
fact, over the last few years over 75 livestock-oriented 
organizations have been working on a framework for a national 
system. The finding of the imported dairy cow with BSE on 
December 23 has accelerated the consideration of such a system.
    Shortly after the announcement of that, Secretary Veneman 
testified before the full Committee that she was committed to 
developing a national program. Additionally she told the 
Committee that USDA had sufficient statutory authority to 
establish a mandatory or voluntary national ID plan through the 
Animal Health Protection Act. I am pleased with her and the 
Department's timely response and attention to this issue.
    We have assembled a great panel of experts today. Each one 
has an interesting perspective on this issue as well as a depth 
of knowledge on the animal industry in general. I look forward 
to hearing from each of them. I believe, and I do not want to 
put words in their mouths, but I believe each witness is going 
to agree that a reliable national ID system in the United 
States is not something that is going to happen overnight. You 
cannot turn on a national animal ID program like a switch.
    Owing to the large number of animals and diverse production 
systems in the United States, a national identification plan 
will not be simple to develop, and successful implementation of 
an ID system will require significant resources in both time 
and money. As an example, there are 68,000 cattlemen in 
Missouri. We are proud of each and every one of them. Each of 
these producers will need a premise identification number in an 
ID system, not to mention the sale barns, packing plants and 
veterinarians.
    Distributing a premise identification number to each of 
these producers will take several weeks or more, and that is 
just Missouri. There are 1.2 million cattlemen in the United 
States, which means that we are faced with a major task in 
developing and implementing a national ID system.
    We need program that quickly traces animals backward and 
forward but is not costly or burdensome to producers regardless 
of whether it is a small herd of 30 animals on 80 acres in 
Missouri or a herd of 1,000 with a grazing allotment in the 
West. Right now, the United States has an opportunity to build 
a plan that will strengthen our animal health capabilities as 
well as consumer confidence if we do it right.
    I am pleased that the Secretary considers this an important 
subject and believe she has the authority she needs to 
implement it. I have spent some time working on this issue with 
producers in Missouri, and they recognize the need for a 
national animal ID program as it relates to animal health, but 
they still have very valid concerns and questions regarding 
privacy, cost and impact on the way animals are marketed in the 
United States. I hope we can address some of these concerns 
today.
    We are going to start with the Undersecretary for Marketing 
and Regulatory Programs, Bill Hawks, who has been a frequent 
witness before the committee.
    It is great to have you with us. Not only does Secretary 
Hawks have responsibility for APHIS, the agency which will be 
involved with a national ID program, but he has also worked in 
the cattle business, and he knows first hand how an ID program 
would impact our farmers and ranchers.
    I also want to mention the piece of good news and 
congratulate the Secretary for his good work in the 
negotiations with Mexico. I am pleased to hear they are 
reopening the border. That is great news for the producers, and 
I am hopeful that our other trading partners will soon follow 
suit.
    [The prepared statement of Senator Talent can be found in 
the appendix on page 44.]
    I want to recognize Senator Nelson for an opening statement 
and also recognize his great work on this issue.
    Senator Nelson.

   STATEMENT OF HON. BEN NELSON, A U.S. SENATOR FROM NEBRASKA

    Senator Nelson. Well, thank you very much, Mr. Chairman, 
and I thank you for holding this very important hearing. I look 
forward to the panels' comments. Unfortunately I am going to 
take leave of time for a minute and co-chair a Personnel 
Committee of the Senate Armed Services Committee hearing. I 
have perfected a lot of things but being in two places at once 
is not one of them yet. I am optimistic.
    Senator Talent. Senator, there will probably be a 30-second 
ad in your next campaign complaining that you have not yet 
figured out how to be in two places at one time.
    [Laughter.]
    Senator Nelson. Well, thank you and thank the panel for 
coming to the Subcommittee today to offer your views on a 
national animal identification program, and because of the 
timeliness of this issue, I appreciate your collective 
commitment to appear before us today.
    Work on a national animal ID program has been progressing 
through its early stages of development for the last several 
years, with the issue being thrust forth in the public radar 
due to the first detection of BSE in the United States last 
December. Although I wish we were addressing this matter under 
different circumstances, I do believe it is critical that we 
use the momentum for change generated by the BSE case to move 
forward in working through the various concerns surrounding an 
animal ID program with one goal in mind: full implementation of 
a quality program at the earliest possible date.
    Let me emphasize that I do not want to cut corners, because 
that will only lead to problems down the road. As our producers 
and ranchers languish under closed export markets, there is a 
costly lesson to be learned. Therefore, we must move without 
delay to create a program that will play a contributing role in 
improving food safety and animal health while at the same time 
providing a valuable tool in protecting the livestock industry 
from foreign animal disease outbreaks.
    Today, I will be particularly interested in comments from 
our panelists on three topics. First, I would like to know the 
panelists' views on where we will find the funding for this 
program. USAIP has estimated that once the ID program is fully 
in place, costs could approach $122 million annually, with ID 
tags accounting for nearly $100 million of that amount. The 
National Farm Animal Identification and Records Program, FAIR, 
and another USDA-funded ID pilot program estimates that its 
program could cost $540 million over a 5-year period.
    Currently, USDA has $33 million in the fiscal year 2005 
budget to accelerate development of an animal ID system. This 
is only a fraction of the total cost. In order to alleviate the 
concerns of producers, especially smaller producers, that they 
will be majority of the development and annual management costs 
of the program, we have to find an adequate cost share balance 
between the livestock industry and the public.
    Second, as you know, producers are concerned about public 
scrutiny and Government intrusion of their records. In general, 
there is a strong support for a program where only the 
appropriate state and Federal officials would have access to 
the animal ID information through the performance of their 
duties, with ample safeguards to protect that information from 
any damaging effects caused by public disclosure.
    Therefore I am interested in the panelists' views on the 
best way to protect private and proprietary information with a 
national animal ID system but also in the context of the 
public's right in many cases and always its desire to know. 
Finally I believe that in conjunction with the implementation 
of an animal ID program, we should restore the original 
September 2, 2004, deadline for mandatory country-of-origin 
labeling as directed in the Farm Bill. As you move farther away 
from the Beltway, the support of COOL grows like a wildfire on 
the prairie, and I have personally experienced this wave of 
sentiment in my state.
    In my opinion, I find that both this animal ID probably and 
COOL go hand-in-hand. and I would appreciate the panel 
addressing this issue as well.
    I believe today's hearing is not only appropriate and 
necessary but should be considered a sign of this subcommittee 
and the larger Ag Committee's dedication to finding a positive 
outcome in the debate over animal ID protections.
    I commend your hard work and dedication to this issue, and 
I look forward, Mr. Chairman, to a continued level of 
coordination and communication as we work with the USDA, 
Congress and the various working groups joining together to 
find a resolution to this matter that works for everyone.
    Thank you very much.
    [The prepared statement of Senator Nelson can be found in 
the appendix on page 46.]
    Senator Talent. Well, I am grateful to the Senator for his 
comments, and I understand entirely if he has to go to another 
hearing. Staff tells me, Ben, that we seem to have picked the 
busiest afternoon so far in this year for this subcommittee 
hearing.
    Senator Nelson. I shall return.
    Senator Talent. OK; great.
    Senator Talent. We will go right to our first panel, which 
consists of the Hon. Bill Hawks, who is Under Secretary in the 
Department of Agriculture for Marketing and Regulatory Programs 
and, as such, is a very busy man, and so we are grateful to 
have him here with us today.
    Mr. Hawks, if you would give us your statement.

        STATEMENT OF HON. BILL HAWKS, UNDER SECRETARY, 
           DEPARTMENT OF AGRICULTURE, MARKETING AND 
              REGULATORY PROGRAMS, WASHINGTON, DC

    Mr. Hawks. Yes, sure. Thank you, Mr. Chairman and Senator 
Nelson.
    It is certainly a pleasure to be here with you today. The 
advent of the increased animal disease outbreak around the 
world over the past decade, especially the recent BSE-positive 
cow found in Washington state have intensified the public 
interest in developing a national animal identification program 
for the purpose of protecting animal health.
    While there is currently no national animal identification 
system in the United States for all animals of a given species, 
some segments of certain species are required to be identified 
as part of a current program disease eradication activities. In 
addition, some significant regional voluntary identification 
programs are in place, and others are currently being developed 
and tested.
    The investments made by USDA in identification projects as 
well as private sector investment in these and other projects 
have generated base and experience that provide a platform on 
which to build a national system. As an example, the National 
Farm Animal Identification Records, or FAIR, program is an 
animal identification program supported by USDA's APHIS and the 
Holstein Association, USA, Incorporated, a nonprofit breed 
registry organization led by dairy producers.
    APHIS also provided funding for the Wisconsin Livestock 
Identification Consortium Initiative, an industry-managed and 
controlled information system. In addition to programs directly 
funded by USDA, a more comprehensive U.S. animal identification 
plan has been developed by an industry-state-Federal 
partnership including more than 100 animal industry and state 
and Federal Government professionals representing more than 70 
associations.
    This plan is the United States Animal Identification Plan, 
or USAIP. While implementation details of the plan are still 
being worked on, the USAIP describes an information system and 
infrastructure to enable the identification of all animals and 
premises potentially exposed to an animal with a disease of 
concern within a 48-hour period.
    Species-specific working groups are currently working with 
the framework of the USAIP to develop animal identification 
implementation details for those breeds and species. Governance 
of USAIP is planned as a joint Federal-state responsibility, 
with oversight and input from industry. The USAIP notes that 
costs would be substantial and recommended both public and 
private funding to cover the cost of the program.
    The United States is not alone in developing animal 
identification systems. Most developed countries have either 
already adopted or are planning to adopt some system of 
identification and trace the movement of livestock within their 
borders. The European Union has adopted the most comprehensive 
program of animal identification and tracking. The Canadian 
Cattle Identification Program is an industry-led initiative to 
promote beef consumption through assurance of efficient 
traceback and containment of serious animal health and food 
safety problems. Australia has also developed a national 
livestock identification scheme for identifying and tracing 
livestock.
    There are a number of important lessons that have been 
learned from the work that has been ongoing within the United 
States and the rest of the world. First, it is critically 
important to get support from the industry as we shape an 
animal identification system for the United States. Second, 
there is no one-size-fits-all technology. Third, both public 
and private funding will be required for any system to become 
fully operational.
    We believe that in designing a U.S. system, important 
factors to consider are the diversity, the complexity of our 
animal industries, and the lack of experience with animal 
identification for a large number of producers. This extreme 
diversity and complexity make immediate scaling up of a current 
project that has been funded by USDA difficult if not 
impossible until a thorough evaluation of those projects for 
potential use on a national scale and for a significantly 
broader scope than initially tested can be conducted.
    In addition to the large number of animals, producers and 
nonproducers that must be accounted for in a national system, 
there is also a decided lack of experience with the individual 
animal identification in the United States, and where it 
exists, the systems are quite diverse. A large number of 
producers, especially calf operators, do not currently 
individually identify their animals. Thus, a major component of 
a national system will be educating livestock producers and 
processors as to how the system would operate and their 
responsibilities. To meet the educational needs of the 
livestock producer and processor, USDA will need to work in 
concert with states, organizations and other stakeholders.
    Another issue is the authority of USDA to implement a 
national identification system. The Animal Health Protection 
Act enabled the Secretary to prevent, detect, control, 
eradicate diseases and pests of animals in order to protect 
animal health, the health and welfare of people, the economic 
interests of livestock and related interests, the environment 
and the interstate and foreign commerce in animals and other 
articles.
    The Animal Health Protection Act gives the Secretary broad 
range of authorities. We believe the provisions of the Animal 
Health Protection Act provide the Secretary with ample 
authority to establish and implement either a mandatory or 
voluntary system of animal identification.
    The National Animal Identification System would provide 
information on animal numbers by location and the movement of 
those animals over their lifespan. The potential disclosure of 
individual producers and processing plant information give rise 
to concerns about the accessibility and confidentiality of 
individual records contained in the national animal 
identification base base. Federal legislation addressing the 
confidentiality and accessibility of information in a national 
identification base base may be needed to address the concerns 
of livestock producers and processors and expedite the 
implementation of a national identification system.
    Our goal is to create an effective, uniform, consistent and 
efficient national system. We believe this goal can be achieved 
by adhering to several key objectives. First, the system should 
allow producers, to the extent possible, the flexibility to use 
the current systems or adapt new ones.
    Second, this flexibility can best be achieved by having a 
system that is technology-neutral so that all existing forms of 
effective technology and new forms of technologies maybe 
developed in the future may be utilized.
    Third, the national identification system should use and 
buildupon the excellent base standards developed by the USAIP.
    Fourth, the system must not preclude producers from being 
able to use it with production management systems that respond 
to market initiatives.
    Fifth, the architecture for the national animal 
identification system must be designed so that the system does 
not unduly increase the role and size of government. The 
President's budget proposal for fiscal year 2005 requests $33 
million to fund that year's activities for system 
implementation. No funds have been appropriated for fiscal year 
2004. Since we plan to initiate an implementation during fiscal 
year 2004, we are considering alternative methods of funding 
including emergency funding from the Commodity Credit 
Corporation.
    USDA plans to move forward with implementation of a 
national animal identification system in 2004 first on a 
voluntary basis and eventually with a requirement for premises 
and individual animal identification for all animals. Although 
we are still developing our specific timeline for 
implementation and deciding on funding mechanisms, we can 
provide some preliminary and general indication of activities 
for 2004.
    Our implementation would begin with an assessment this 
winter and spring of existing premise and animal number 
allocated systems in use. Based on that review, we would select 
the most promising infrastructure to fund and develop the 
national premise allocator number and repository system and an 
animal identification allocation number and repository system.
    We believe these national systems could be in place by late 
summer to begin allocating premise identification numbers to 
cooperators, states, tribes and certain other entities that are 
ready to register premises. We would envision providing some 
funding through cooperative agreements to states, tribes and 
other entities. At this point, we do not envision Federal 
funding being used for individual eartags or other such 
devices. However, funding of select electronic readers could be 
accommodated under the agreements with some cooperators.
    During the summer and into the fall, we would also focus on 
identifying qualifying third parties such as private industry 
and trade associations that have identification products or 
programs, so they could be integrated into the national system 
later this fall. By late fall, we would then be in a position 
to issue premise and animal identification numbers to third 
parties to begin receiving that information.
    Many issues must be resolved before we can accomplish this 
task just identified for 2004 and beyond. We look forward to 
working with the national producers, the industry and Congress 
to be successful in creating a national animal identification 
system.
    Thank you, Mr. Chairman, members of the Committee, I would 
be happy to respond to questions.
    [The prepared statement of Mr. Hawks can be found in the 
appendix on page 49.]
    Senator Talent. Senator Harkin has arrived. I want to 
recognize him--I see Senator Baucus as well. Well, Tom, you are 
ready to go, and you have a brief one. Why do you not just go.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING 
   MEMBER, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

    Senator Harkin. Very brief, yes, thank you very much, Mr. 
Chairman, and thank you for the opportunity to look into the 
development of a national animal ID system.
    The need has become abundantly clear since the discovery of 
BSE in Washington State. It is also clear that technology 
exists to implement the program. As I have done previously, I 
urge the USDA to move forward with a system to protect animal 
health, public health, and to ensure confidence by both 
domestic and foreign markets.
    Given the significance of all of these concerns, USDA must 
develop the program in a very transparent manner. One of the 
first things USDA needs to do is announce its plans to ensure 
that those affected by the program, including livestock 
producers and other industry participants and consumers, will 
have an opportunity to observe and comment on the critical 
decisions USDA faces.
    There is going to be some controversial decisions ahead. 
The only real way to build consensus through the industry is to 
provide those affected with a voice in the process. As the 
system is designed, USDA needs to make sure that it protects 
the ability of farmers and ranchers to be independent. The last 
thing we need is a system that locks a producer into delivering 
to one packer or vertical chain having a unique animal 
identification system and thus take away the producer's ability 
to seek other buyers.
    A system need not be designed to encourage this kind of 
vertical integration, and I urge the USDA to be cognizant of 
this issue as it moves forward. A national animal ID system 
raises a host of other questions that I look forward to 
learning about today and in the near future, such as how it 
will be funded, how will confidentiality and liability issues 
be addressed, what is the timeline for implementation?
    I look forward to working with my Senate colleagues, USDA 
and members of the livestock industry and the public to ensure 
a workable, cost-effective animal ID system.
    Thank you very much, Mr. Chairman.
    Senator Talent. Thank you, Senator.
    Our ranking member is here. Senator Baucus.

   STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM MONTANA

    Senator Baucus. Thank you very much, Mr. Chairman.
    Clearly, this is a good opportunity to try to find the best 
way to set up a national ID system that is going to work. I 
just have a couple of points. First, thanks for holding the 
hearing. There is always a silver lining in every cloud. You 
have the BSE cloud here, and I guess one potential silver 
lining here is it almost forces us now to come up with some way 
to minimize to a higher degree the recurrence not only of BSE 
but other diseases and other problems that may or may not 
happen.
    I am no great animal pathologist, but certainly, it just 
seems that as the world becomes more complicated, and there is 
more interaction among more people, more animals, people and 
animals and so forth, different kinds of little viruses or 
bacteria develop and become sometimes immune more quickly than 
we would like, and it is a very uncertain world, and in some 
sense, even more uncertain every day.
    The degree to which we can sort of get this right, as right 
as we can get it, clearly the greater the service we will be 
providing.
    A couple other points here. This gives us an opportunity to 
a lot of good questions of people. I firmly believe in the old 
John Locke sunshine idea, that the more people vigorously 
debate a certain point of view, the more likely it is that the 
truth is going to emerge. It is old fashioned, but I believe 
it. I hope that that is a consequence of this hearing.
    We have some real experts here. I know, Mr. Hawks, thank 
you for testifying, but in addition to that, from my home 
State, Ron Ostberg of the Cattle Producers is going to be on 
the third panel from Scobey, Montana; also, Bob Lehfeldt, a 
sheep producer from Lavina, Montana.
    I say they are experts because they are. They are the front 
line. They are the producers. They are the ones that whose 
livelihoods are at stake here. They are the people of the soil, 
just really good, good, good people. I know both of them quite 
well. One is a cattle producer, as I mentioned, the other in 
sheep. My family raises both cattle and sheep, and I have known 
them for years, and they are honest, common sense, no nonsense 
guys.
    We are also proud in the West, as you know, Mr. Chairman 
and Mr. Hawks, that we have an ID system already in place. It 
is called hot iron brands. It works pretty well. Cattle are 
IDed at birth, basically, or not quite at birth but in the 
calving and get also eartagged most of the time. It worked in 
this case, too, and herdmates of the Canadian-found BSE case 
were discovered traveling through Montana. Because of Montana's 
branding laws, these animals research tracked within less than 
24 hours.
    We are just saying and asking, as we put this together, 
that I know you will, Mr. Hawks: include producers; include 
people who really are directly affected by this directly. We 
cannot have something top down here. It is got to really work 
from people at the bottom up.
    We also have some additional tracking systems. It is not 
just branding. We have something called the Montana Beef 
Network, which uses radio frequency identification and a 
computer base base. I have forgotten the number; it is 14,000 
head have already been identified in Montana with this system. 
It is something we developed at home. It is a separate, 
additional kind of technology.
    We do not want to reinvent the wheel here, but we want to 
be able to look at different technologies, not get too locked 
into one. We want to be sufficiently flexible here to allow 
existing tracking programs to be utilized as well and also 
safeguards to prevent any point in the supply chain from 
demanding one certain technology and limiting producer choice.
    In addition, it is important to remember that--let us not 
be kneejerk here. Let us be thoughtful. The questions that 
Montanans are asking, when I surveyed folks at home, are, 
first, cost. What is the cost of all of this going to be? Who 
is going to bear the burden? How is the cost going to be 
distributed, and how much Uncle Sam, how much producers, how 
much others in the system? We have to think that through and be 
up front about it.
    Next are privacy questions: Who is going to have access to 
details of a rancher's operations? Ranchers are very concerned 
about--they want to do the right thing, but on the other hand, 
they do not want some ID system to enable, either under FOIA or 
something else, to find everything under the sun about a 
rancher's operations. It is not really relevant, but we want to 
make sure that that is not an unintended consequence of all of 
this.
    The third general set of questions revolve around the 
integrity of this system: what safeguards will be enacted to 
maintain the integrity of a national ID system?
    Mr. Chairman, I guess, thank you for holding this hearing. 
Thank you, Mr. Hawks, and I also want to thank my good friends 
from Montana who are here, because I appreciate your taking the 
time to come all the way to Washington, DC I know it is not the 
first item on your agenda to get on an airplane and come to 
Washington, DC, but thanks a lot for coming, and thank you 
again, Mr. Chairman and Mr. Hawks.
    Senator Talent. Well, I thank the Senator for his comments.
    Bill, the good news is, as I listen to the opening 
statements, we seem to be speaking more or less off the same 
page in terms of the concerns, and all of us are really 
reflecting what we are hearing back home from our producers. 
Now Senator Harkin and Senator Baucus came in as you were 
ending your comments, and they both raised a concern that I 
had, which was timing for a rollout or what you are considering 
doing, and you discussed that in your testimony.
    Would you just take a minute and repeat what you are saying 
regarding your plans, at least for 2004?
    Mr. Hawks. Sure.
    Senator Baucus. Mr. Chairman, if I might, I ask to be 
excused here. I have a bill I am managing on the floor. It is a 
jobs bill trying to lower taxes on Montana and national 
domestic production so that we can get more products produced 
in America and more jobs in America.
    Senator Talent. Completely understand, Senator, and if you 
have any questions for the record, we will sure put them in. I 
note that I picked a very busy day for this, so I will say to 
Senator Harkin, it is my intention after he answers this, and I 
am going to ask a little bit about confidentiality, to defer to 
you for any questions you may have--just really wanted to--OK, 
well, why do not you answer that one and then I will just defer 
to Senator Harkin, let him ask his question in case he has to 
go.
    Mr. Hawks. We recognize the fact that it is going to be 
difficult to ramp this up immediately, and so, our plans are 
this summer of 2004, we would be able to do the premise 
identification and then earlier in 2005 to be able to do the 
individual identification. That is a ramp-up process.
    We want to be evaluating the systems that we have already 
invested in to try to determine which ones of those are the 
best candidates to be the national repository, and that is 
really our plan, to start in fiscal year 2004 with the premise 
ID and then move into the individual ID shortly thereafter.
    Senator Talent. Why do not I just recognize Senator Harkin 
to get a question or two, because I am here anyway, and I do 
not know if you need to go.
    Senator Harkin. I really appreciate that. Thank you very 
much, Mr. Chairman.
    Mr. Secretary, and I really thank the Chairman for giving 
this opportunity to ask a question here. I just basically--I 
had a lot of questions I will submit for the record, but one we 
have to clear up, as I have been doing my job and going to 
these meetings and stuff around the Hill today, I heard a 
report that came out, and I want to make sure we can get it 
clarified here, concerning USDA's position on whether the 
program would be mandatory, and it comes out--I guess you 
testified before a House Ag Appropriations Committee meeting 
this morning.
    What I am hearing is that you said it would be up to 
industry on whether to make this program mandatory. You cited 
the possibility that a large retailer like Wal-Mart might 
mandate animal identification. As all of the testimony that has 
been submitted today indicates, an animal ID system is needed 
for health reasons, and also given that some of the animal 
health issues concern diseases that can cross from animals to 
humans, obviously BSE, it is also a public health concern also.
    Again, I wanted to give you a chance to clear this up--
these are just reports that are coming out--and clear up 
whether or not the determination of animal health and public 
health policy would be left to a few large private entities or 
how this is going to happen, and I just wanted to give you the 
opportunity to clear up some of these rumors. There are reports 
that are going around.
    Mr. Hawks. Sure, there is obviously a lot of confusion in 
the way those questions were asked, maybe in the way the 
questions were answered on my part as well. Let me first 
emphasize the fact that it is our desire for animal disease 
control and eradication purposes to have animal identification. 
Preferably, we would like to see this market-driven. Therefore, 
we would like to see a voluntary system work. We really do not 
care whether it is a voluntary system, whether it is a required 
system, but the desire is to get a system in place.
    If the system can be 100 percent voluntary, that would 
certainly be my preference to have that system in place. That 
is really where we would prefer to go. Whatever method we get--
and this is for animal disease control purposes and eradication 
purposes.
    Senator Harkin. Well, Mr. Secretary, again, I understand; 
let me just throw again--a follow-up question on that again is, 
since there are public health concerns associated with this, 
because some of these diseases can cross over to humans, in 
those cases, I am not certain that just simply leaving it to 
the market might be sufficient. I can only assume that in your 
developing this, you are bringing in entities like the CDC; you 
are bringing in other public health agencies to take a look at 
this and to have their input into a system that might be 
designed.
    Mr. Hawks. Senator Harkin, the animal identification 
component that we are working on now is we are structuring it 
as designed for animal disease control. That is the animal 
disease, animal health officials are the ones that we 
anticipate having access to this system.
    Senator Harkin. Maybe I am not asking my question right. 
What I am saying is that you are developing an animal ID 
system. There are a number of reasons why this is being done. 
One is for consumer confidence here. It is for making sure that 
our markets overseas, that we can have something our customers 
want overseas; after all, the customer is always right, as they 
say.
    Then, there is another element to that. That is public 
health concerns, in terms of animal diseases that can cross 
over into the human area. In that case, it is not simply just a 
market system; it is a public health concern, and that is why I 
am asking if you are going to bring in public health officials, 
Center for Disease Control people--that is really our public 
health entity in America--and others to have some input into 
this process, and as I said in my opening statement, to make it 
transparent and open.
    Mr. Hawks. Senator, it is certainly a transparent and open 
process as we move forward here, and it is our desire to have 
100 percent compliance with this, and as I was saying, we would 
prefer to have it on a voluntary basis. As far as having the 
transparency that you are talking about, having the opportunity 
for whomever to participate in this, whether it is the CDC, 
whether it is your producers in Iowa, whether it is the 
producers in Missouri, whether it is the State health 
officials, the animal health officials or whomever, it is 
totally open, totally transparent.
    Senator Harkin. Well, I hope so, and I hope that you are 
giving due concern to the public health aspect of this also, 
because if a system is designed, at least, Mr. Chairman, I 
feel, wherein the public health concern area has not been 
involved and open, and they have not had their concerns heard 
and contemplated, that we might have some problems with that.
    Senator Talent. Senator, if you would just yield for a 
question.
    Senator Harkin. Sure.
    Senator Talent. You got a partial answer, but I am not--
Bill, is it fair to say that, in terms of your current plans, 
you are open to the CDC commenting, but you do not have 
specific plans to go seek them out, which is what you are 
asking. Is that a fair summary?
    Mr. Hawks. That is correct; it is certainly open, 
transparent. Anyone who would like to participate, that is 
exactly----
    Senator Talent. I do not want to put words in Senator 
Harkin's mouth, but he is saying you might want to make certain 
that they come over and give you a few comments, since there 
are health----
    Senator Harkin. You got your finger on it. The Chairman put 
his finger on it.
    Mr. Hawks. They are certainly welcome at the table, 
Senator.
    Senator Talent. OK.
    Senator Harkin. Well, I am urging you to not say you are 
welcome; I am urging you to seek out our public health agency, 
CDC; bring them in on this from the beginning in this process 
and not wait for them.
    You are right, Mr. Chairman, you figured out what the 
disconnect here was.
    Senator Talent. Yes, I was just looking at the outside of 
the conversation; I thought I could expedite things.
    Senator Harkin. That is great.
    Mr. Hawks. Sometimes, we need outside help.
    Senator Harkin. I am urging you to bring them in and be 
proactive in bringing them in. I guess that is what I am 
saying.
    One last thing I would just say, Mr. Chairman.
    Senator Talent. Sure.
    Senator Harkin. I have heard from some groups that 
represent small farmers, small processors, that they do not 
feel that they are having an opportunity to be heard. There is 
a concern, as I said in my opening statement, that somehow, we 
may be going to a system that is vertical; that large 
processors would have a certain system, and that if you do not 
meet that, you are out of it and there is a great concern among 
independent producers about that, so----
    Mr. Hawks. Senator, I would certainly take the opportunity 
to respond to that.
    We recognize, and in my opening statement, I said one size 
does not fit all. Therefore, we want to make sure that we do 
not disenfranchise those small producers----
    Senator Harkin. I appreciate that.
    Mr. Hawks [continuing]. Anywhere.
    Senator Harkin. I appreciate that.
    Mr. Hawks. Thank you.
    Senator Harkin. Mr. Chairman, you have been very kind.
    Senator Talent. Oh, no, I appreciate the Senator's 
attendance on a busy day.
    Let me follow-up on a few points, Bill, and I appreciate 
your testimony was very open. You actually answered some of the 
questions I had, and it does seem like the Department at this 
point has recognized and is working on the concerns that 
Senators have raised. Let me go a little bit into the 
confidentiality aspect of this.
    I understand, I am not asking you for the specifics that 
you want this process to get you. It is really not fair for me 
to say you have to tell me exactly what you anticipate this 
process to do when we have all been urging you to be open and 
to listen to what people say and adjust in response to the 
process, OK?
    I was hoping that we could get for Senators and for the 
record your thinking on these subjects, and I would encourage 
you to be forthcoming. I do think generally the subcommittee 
and the committee is supportive, and we are generally on the 
same page in terms of where you are trying to go.
    Is it anticipated that the base would be accessed in the 
case of some kind of emergency disease situation only? If not, 
are there other situations where you think it might be accessed 
by the Government, or are there areas where you are open--we 
are going to hear from, in the second panel from Dr. Schmitz-
Hsu from Switzerland, who is going to talk a little bit about 
how that system, now that they have had it in place for a 
number of years, how that information is available there and 
how they are using it actually with supporter producers for 
marketing efforts, et cetera.
    Would you just share with us a little bit about what you 
think in that area?
    Mr. Hawks. Yes, sir, Senator.
    It is our intent for this information that is in this 
national repository, if you will, to only be available for 
those animal health officials, whether it is State officials, 
whether it is Federal Government animal health officials, to 
carry on their disease control work. Some of it--it would not 
necessarily say that it would only be accessed just for an 
emergency situation; some routine surveillance, routine 
observations there that it would be available for those 
purposes.
    That is really what our intent is. We have no intent of 
this being accessed by any Government official, Government 
agencies that do not have a need to know for an animal disease 
standpoint.
    Having said that, we also want this system that is being 
developed to be broad enough to allow those producers the 
opportunity on their behalf, if they want to have other market-
driven information that could be attached to it, but somewhere 
else, not in our repository. We only want to know those things 
for movement, that identification. That is what we are looking 
at for our purposes.
    Senator Talent. Did I understand you to say that, again, I 
understand it is a long way down the road, but the only time 
this information would be available without the specific 
approval of the producer would be in the case of some kind of 
an animal disease situation?
    Mr. Hawks. Animal disease situation.
    Senator Talent. An agency that had authority, statutory 
authority to look into that, which I assume would be the 
Department.
    Mr. Hawks. Right, it would be the APHIS, Animal Plant 
Health Inspection Service. It could be State animal health 
officials, those that need to have it for that purpose.
    Senator Talent. Now, when you set up the pilot projects, is 
it your intention for APHIS to set guidelines that the plans 
have to follow? Or are you going to leave it up to the 
organizations submitting those plans?
    Mr. Hawks. We will have guidelines as we look at additional 
requests for participation in the program. There would be some 
guidelines, but they should be fairly wide. There should be 
opportunity from those that want to participate to have the 
opportunity to do that.
    Senator Talent. OK; I have a question staff has prepared: 
do you feel confident that terrorist organizations will not 
have access to the information? I am guessing that you are not 
going to approve a plan unless you are confident terrorist 
organizations are not going to have access to the information.
    Mr. Hawks. Well, I guess it depends on what they identify 
as terrorist organizations.
    No, sir, we have no intent of having terrorist 
organizations have----
    Senator Talent. It is a concern that we need to be----
    Mr. Hawks. Sure.
    Senator Talent. Because we certainly do not, we want to be 
careful with hackers and everything that people cannot get in. 
This is an important thing to do, but I really support what is 
the intention of the Department to move, yes, with speed in the 
sense that you do not rest; you do not just let it sit there 
for 6 months, but taking care that we do this the right way.
    When you talked about mandatory and voluntary, for example, 
it is my sense, observing what you are doing is that the idea 
here is to get some pilot programs out that meet the needs that 
we have identified of the public interest that producers feel 
at least reasonably comfortable with and then see, maybe, a 
little bit how they grow on their own, and then, if everything 
is working pretty well, at some point come in a little bit 
later with the more mandatory type system.
    Is that how you might envision this?
    Mr. Hawks. Yes, sir, that is exactly it. I would really 
like to stay away from the terminology mandatory, because it 
was certainly our objective to get--if we could get 100 percent 
participation or near 100 percent participation without having 
anything mandatory, I mean, it is our desire to have this 
system, have as much participation as we possibly can. Whatever 
way we get there, that is where we want to go.
    I personally think, being a farmer myself, I have a 
tendency to think that we would get more participation through 
a voluntary system that works efficiently, works effectively 
than we would from a top-driven system.
    Senator Talent. Yes, and if we all step back and just think 
in real life how this is going to work, the two options really 
just collapse, because we all want a system that will work. We 
can talk about mandatory or voluntary. I would say, though, 
that a system that is coercive, that we push down on top of our 
producers when they are fighting it with everything that they 
have, is just not a system that is going to work and therefore 
is not a system that is in anybody's interest.
    Would you agree with that?
    Mr. Hawks. I certainly agree with that.
    Senator Talent. It is one thing if you have a lot of 
pilots, and some of them are really working, and you sort of 
steer in the direction of the one you think is the best, and 
you have to push a little bit at a certain point, but if you 
are just absolutely jamming it, what that means is it is 
probably not working out there, and then, we are not going to 
get the kind of certainty that we want.
    Mr. Hawks. You are right, Senator. That is exactly what we 
intend to do, to evaluate these systems that we have already 
invested in. There will be some additional opportunities for 
those that have ideas and have systems that they would like to 
participate in the program. We do those evaluations, be very 
thorough, very deliberate, and then move toward those systems 
that certainly can deliver what we are looking for.
    Senator Talent. It is important to remind everybody, if the 
system is not working out there, and the industry does not have 
confidence in it, it could end up producing the opposite of 
what we want, because if it tell us certain things about 
premises, in the case of a disease situation, but we do not 
have, and our trading partners do not have real confidence, 
because the system is being resisted out there, well, then, we 
do not know how to act on that information or not.
    I would expect some elements of maybe--it is going to be 
largely, I do not want to say entirely--voluntary but it is 
something where you are going to have to work with industry to 
make this thing work. We are all in agreement with that.
    A couple more questions. We do have a couple of other 
panels, and you have been generous with your time. Are the 
development efforts with USAIP still underway? Is that group 
disbanding? Tell us the status of that.
    Mr. Hawks. No, sir, USAIP is a vital part of what we have 
done. We have taken the excellent work that they have done over 
the last almost 2 years now; built on that. We certainly want 
them to engage with us at this particular point in time. They 
are a grassroots group, and we think it is vitally important 
that they stay engaged, work with us to try to get forward. My 
motto is working together works, and we need to work together 
with USAIP as well as all industry interests to move forward.
    Senator Talent. You referenced existing ID programs that 
have received Federal funds. There are other programs that are 
working out there that have not received Federal funds. There 
is a good breed association tracking systems; Kentucky's animal 
ID system. Are you going to consider the merits of those 
programs?
    Mr. Hawks. Yes, sir, we sure will.
    Senator Talent. Yes, you are not just going to look at the 
ones that you have funded to this point. That is good.
    Mr. Hawks. No, sir.
    Senator Talent. See if I have anything.
    Let us just get briefly--I do not know that it is 
appropriate at this stage to get heavily into this, but how are 
you going to work with the States? How do you anticipate--are 
they going to control some of this base? What about premise 
distribution or premise numbers distribution? Do you want to 
comment on that for us?
    Mr. Hawks. Sure, the comment I would like to make there is 
the States are going to be vitally important in everything that 
we do; as a matter of fact, the vast majority of the authority 
that we use under--until we declare an extraordinary emergency 
for animal disease control--the situation with avian influenza 
in Delaware today, we are doing with State authority, and even 
in Texas right today, we are using State authority to handle 
the avian influenza there.
    It is absolutely vital that the States are well-connected 
and well-involved in this system.
    Senator Talent. That is all I have. Other Senators may have 
questions to submit for the record. We do appreciate your being 
here today, Mr. Hawks, and look forward to probably further 
hearings on this as you develop the program.
    Mr. Hawks. Thank you very much, Senator.
    Senator Talent. Thank you for coming.
    Senator Talent. As Mr. Hawks excuses himself, if the next 
panel could come forward, please.
    I want to welcome our second panel. Let me introduce both 
of you at the same time, and then, we will go to Dr. Marsh 
first because that is the order I have here on my paper. I do 
not know that it really matters. Dr. Brett Marsh, who is the 
first vice-president of the U.S. Animal Health Association and 
the Indiana State Veterinarian; and then, Dr. Fritz Schmitz, I 
understand, is how I should pronounce it, sir, who is the 
former CEO of an tracing base base corporation, and you can 
pronounce the name of that company. I am not going to attempt 
to do so, sir. I am very much looking forward to both your 
testimonies. and Dr. Schmitz, especially, well, I do not want 
to say I am not looking forward to yours, Dr. Marsh, but I will 
be very enlightening to the Subcommittee and the record to hear 
your experience in Switzerland and compare it to what you see 
happening here.
    Dr. Marsh, if you would go ahead with your testimony; thank 
you.

  STATEMENT OF BRETT MARSH, FIRST VICE PRESIDENT, U.S. ANIMAL 
           HEALTH ASSOCIATION, INDIANAPOLIS, INDIANA

    Mr. Marsh. Thank you, Chairman Talent, Ranking Member 
Baucus, the members of the Subcommittee.
    I really appreciate the opportunity to testify before the 
Subcommittee today on this extremely important issue with 
regard to developing a national animal identification system. 
In February 2003 was released a document titled the National 
Strategy for Physical Protection for Critical Infrastructures 
and Key Assets and it was indicated in that document and 
significantly that agriculture and food were listed as one of 
the critical infrastructures for the country.
    More recently, in January of this year, the President 
signed Homeland Security Presidential Directive No. 9, which 
establishes a policy for defending our ag and food systems in 
the country, and both of these illustrate the importance of 
this sector and that there is need to put safeguards in place 
in order to protect us for the long-term.
    Identification of livestock, of course, is one of those 
critical components in order for us to have an effective and 
efficient response to an animal health emergency, and quite 
frankly, the safety of the nation's food supply, our animal 
health and public health are at risk, and therefore, we need to 
take a hard look and be prepared as a nation to take some 
definitive actions and definitive steps.
    There are three basic tenets, if we take a look at those 
and use those in developing a successful plan and implementing 
that plan that will help us as we move forward, and the first 
of those tenets is that animal identification is not new. It 
has been mentioned here this morning that we have a variety of 
ID systems that have been used for decades across the country, 
whether they be brands, as Senator Baucus has mentioned, in his 
State, eartags, ear notches, back tags; we have had a variety 
of systems over the years that we have utilized, and of course, 
we have utilized those in my State as well, but unfortunately 
the shortcomings that we have with those systems and the lack 
of a national ID system result in an inadequate traceback 
capability for us at the State level and therefore inadequate 
for a country as a whole and unfortunately leave our livestock 
populations exposed to disease.
    Although, therefore, we have significant interest and 
experience with a variety of these systems, there is indeed a 
need for a dramatic change, a comprehensive animal 
identification system, and this is in part because of the 
changes in our industry. The industries the I serve in Indiana 
have changed dramatically over the last 5 years, let alone 10, 
and also in addition to the fact that in this post-9/11 
environment, we recognize that this sector is subject and a 
potential target for terrorist activity, either domestically or 
internationally.
    There is a need for a plan, a new plan with new goals, and 
tenet No. 2 is that there is such a plan. It may not be the 
plan, but it is a plan, and it has given us a templates where 
we can move forward. It is a template to identify the future 
needs of the United States for animal identification purposes. 
It is been developed by 70 organizations and associations 
working over the last 2 years, involving up to 400 individuals, 
so indeed a grassroots effort supported by USDA and the State 
animal health officials to identify the best ways to accomplish 
this task.
    They have done a good job in trying to identify and address 
those gaps in our current systems, and they have come down to 
three basic objectives, and they are important objectives as 
you look at the U.S. Animal Identification Plan. The first is 
that there be a uniform premise identification system. This is 
one of the primary objectives, one of the primary goals of this 
USAIP and will serve us well in the long run.
    The second objective is a uniform individual animal 
identification system or, depending upon the commodity, it may 
be a group or lot identification system. That is one of the 
things that needs to be worked out as we continue to refine 
this plan.
    Senator Talent. We have to work out what uniform means, 
too.
    Mr. Marsh. Indeed, indeed.
    The third objective under that plan is that there be a 48-
hour traceback capability. That is extremely important for us 
as well as we look at the experience of some of our global 
neighbors with the challenges they have had even 3 years ago 
with foot and mouth disease in the United Kingdom and having an 
effective traceback capability.
    The United States Animal Health Association, after careful 
review of this plan, passed a resolution at their meeting last 
fall that basically endorsed the plan as a work in progress and 
encouraged the USDA to establish species-specific working 
groups to get down to some of those specific needs of the 
commodity organizations to make sure they are addressed and 
their concerns are addressed as they move forward with the 
plan.
    It is interesting, in the fall of 2002, USDA hosted a table 
top exercise. It is called Crimson Sky. As I recall, Senator 
Roberts of this Subcommittee served as the chief executive 
during that table top exercise. Not unlike exercises that have 
taken place all across the country at the State level, and my 
State being one of them, it does not take very long to 
determine that if you do not know where the susceptible species 
are located before you have the outbreak, you have lost a lot 
of time and therefore may result in significant and 
catastrophic losses for the industry.
    We experienced that in our State, and therefore, we 
recognize that that is one of the basic objectives of the USAIP 
and an important piece of that.
    Individual identification, as I mentioned, we have been 
doing it for years, and a variety of programs have been used 
for ownership purposes or animal health purposes, but it is 
significant that in our most recent experience in Washington 
State, with a case that was identified in December of last 
year, that at the close of the BSE investigation, there were 
still cattle we could not find, and that is with our current 
system.
    We could all agree that it was better for the United States 
to experience BSE instead of foot and mouth disease with that 
kind of result. It is important for us to take a look at what 
is out there, and it is a compelling reason that I mentioned to 
move forward.
    The USAIP also identifies some of the best technology that 
they believe should be utilized, and that is the RFID, the 
radio frequency ID, for individual identification purposes, and 
it is also important because, based on what we have learned in 
my State and likely yours, Senator, that it may be the least 
disruptive to the markets process so that we can still trade 
and move our product amongst our States, which is important to 
all of us.
    The third tenet is that we have to have a workable time 
line and budget, and that has been discussed here today. 
Although the BSE case in Washington State has certainly 
energized the interest and the need for this plan, we have to 
have the infrastructure in place, or it will not work, and we 
have discussed that here this morning and not only the 
infrastructure but identifying the unique needs of the 
commodities.
    We talked a lot about the cattle industry, but certainly, 
swine is big in my State and other commodities, so we need to 
make sure that we have identified their specific needs.
    I applaud the USDA and Secretary Veneman for taking 
definitive actions to raise this to a level of interest at the 
national level, to make sure that this moves forward and 
particularly in asking her chief information officer and others 
in leadership positions at USDA to take a look at how to 
evaluate and for the implementation of the plan.
    One of my primary concerns and why I appreciate this effort 
from USDA is that there must be an information technology 
system to make sure this works. I am looking forward to the 
next speaker's presentation with regard to some of his remarks 
in this area, because we clearly have to have a situation that 
can gather and store and retrieve these key datum elements, 
because that is really the underpinning of the USAIP and the 
needs that we have as a country.
    We also have to have it so we can respond the evolving 
technologies. What we have today, obviously, may not satisfy 
all the needs that we have in the near term.
    Senator Talent. Doctor, we almost have to--Dr. Schmitz, we 
are all anticipating your testimony--it would seem to me that 
we almost need to know what that is going to be before we do 
the rest of the system, because everything else is going to 
have to put base into that part of the system, the base bank 
that we have.
    I agree with you, that is crucial. Then, as long as we work 
with producers and the States and--the rest of the system can 
adjust to that a little bit. Would you say that is fair?
    Mr. Marsh. That is an accurate statement, Senator. That is 
one of the things, frankly, we are looking to USDA to say what 
is that template, because the interest is there at the producer 
level and we are ready to move forward as long as we know what 
that is. Without that, we would be lost.
    One of the other issues that we run into is on this time 
line, and I am interested--and Undersecretary Hawks is here 
this afternoon--is that one of the challenges that we would be 
met with, and our cattle industry is not as large as yours is 
in Missouri, for example, but we have 19,000 cattle herds in 
our state, and if we were to accomplish this, say, over a 90-
day period of time, we would have to register in the 
neighborhood of 200 of those every day. That is one of the real 
challenges that we see in order to accomplish that. In your 
State, that would be in the neighborhood of 765 a day, and so, 
it could equate to a major task trying to do it well.
    In Indiana, we have established partnerships with our 
commodity organizations, because we recognize that as the State 
animal health official, we are not going to do it by ourselves. 
We recognize the value of their work with the USAIP, and our 
Indiana Beef Cattle Association, for example, has established 
an ID working group so they can begin to work through those 
specific nuances that have to be resolved.
    Resources, of course, have come up already this afternoon, 
and appropriately, clearly, it is going to have to be a public 
and private partnership, and back to your comments, Senator, we 
need to know what that template is to really begin to pound out 
what those figures will be in my State.
    Producers see the need, and there is the momentum to move 
forward. I have a number of questions from producers in my 
State, veterinarians and others, about how this needs to move 
forward and basically how they can help. The energy is there. 
We just need to have that template so we can begin to move 
forward. Likely, as is the case in other countries, it will 
likely take Federal funding to get it launched so that we can 
make sure that it is in place and sustainable for the long-
term. Because otherwise, it is going to be in place for some 
time, we hope, to serve our needs for the long-term.
    Basically, those three basic tenets: that the ID is not 
new, and if we leverage the experience that we have out across 
the country; we have a lot of producers that certainly have 
used these systems over the years, but to pull all those 
together into a meaningful system is really the value that we 
have here today; that there is a new plan, the USAIP. It is not 
the complete plan, but at least, it is certainly a great, great 
start, and indeed, having that grassroots influence in that 
process has been very valuable and then having a workable time 
line and budget.
    We recognize that there is a lot of interest in moving 
forward, but clearly, we have to have those infrastructure 
pieces put in place before we launch a national program.
    Chairman----
    Senator Talent. I agree with you Dr. Marsh about the USAIP 
plan, and it addresses some of the concerns Senator Harkin 
raised about transparency; that process has been pretty 
transparent in terms of working with the groups that are out 
there already, and if we just disregard it, which is not going 
to happen, then, we give up all of that input that we have had.
    Mr. Marsh. Indeed, it has been a valuable process. It is 
people who work together, particularly when--it is one thing 
for a commodity organization to agree to a process, but 
collectively, having all of those bodies together, working 
together has made that document even more valuable.
    Well, Chairman, I appreciate the opportunity; I appreciate 
your holding the hearing. There is a lot of value that is 
coming from this hearing, and I look forward to any of your 
questions.
    [The prepared statement of Mr. Marsh can be found in the 
appendix on page 67.]
    Senator Talent. Thank you, Dr. Marsh.
    As everybody can tell, particularly when I am the only one 
her, I like to keep it pretty informal, but I promise I will 
let the witnesses get through their statements----
    [Laughter.]
    Senator Talent [continuing]. With minimal interruptions, 
anyway.
    Dr. Schmitz, thank you for being here, and we all expect to 
learn a lot from your testimony. Please proceed.

          STATEMENT OF FRITZ SCHMITZ-HSU, FORMER CEO, 
               TIERVERKEHRSDATENBANK, SWITZERLAND

    Mr. Schmitz-Hsu. Mr. Chairman and members of the Committee, 
thank you for the opportunity to participate in this hearing.
    Respected Senators, ladies and gentlemen, I am very happy 
to report to you today on the experiences with animal tracking 
in Switzerland. I am here today because of four and a half 
years from its inception, I was CEO of the 
Tierverkehrsdatenbank AG, TVD AG, the animal tracking 
corporation in Switzerland. The TVD AG is the entity 
responsible for the design, implementation and operation of the 
Swiss animal identification and tracking system.
    In the nineties, Switzerland, suffering under outbreaks of 
BSE resulting from imported feedstuff was subject to a ban on 
the import of Swiss animal products by European and other 
countries. After due consideration of this and after danger of 
contagious diseases to the Swiss national herd, the Swiss 
veterinary authorities concluded there was an urgent need for 
an up-to-date animal tracking system. The solution had not only 
to address the problem of animal health but also help restore 
trust in Swiss animal products and promote food safety.
    The Swiss veterinary authorities concluded that the most 
effective solution would be to rely upon the private sector for 
the solution. The advantages that this would bring were faster 
setup and a more quickly operational system and increased 
support by the stakeholders, due to the fact that the new 
system and base collected could be more easily used for other 
purposes.
    To engage the involvement of the private sector in the 
design of the system, a competitive bid process under WTO rules 
was chosen. To participate in the competitive bid process, a 
consortium of interested Swiss agricultural organizations 
formed the TVD AG. I was chosen to serve as CEO. The 
organizations that came together did so because they recognized 
the impact and the potential a central animal tracking base 
base could have on their business. Together with our technology 
partner, the Swiss subsidiary of the American company Computer 
Science Corporation, we bid and won the contract.
    I understand there is great interest in how the private 
sector and the Swiss Government and the private sector arrived 
at the collaborative effort. At the beginning, the Swiss 
Government visited with all important agricultural 
organizations on how to define certain technical aspects of the 
system. Many of the organizations did not support the Swiss 
Government's vision of the system. More or less every 
organization had its own version of the animal identification 
plan, and some wanted to offer their services to run the base 
base.
    Fortunately, the Swiss Government had already a very strong 
opinion on how the final solution should look, a central base 
base run by an independent company collecting base directly 
from the system participants. When we set up the animal 
tracking solution, we knew that it take time and be difficult 
to gather information on the complete national herd. It was 
decided, therefore, to take an iterative process with early 
implementation, focus on quick wins and refinement based on 
experience.
    Features of the solution are: common processes implemented 
nationwide rather than different processes by cantons, which 
corresponds to your states; the ability to exchange base with 
existing sources, including the incorporation of existing 
identification systems; multiple base entry systems with strong 
base access functionality; a solution that integrates the 
business processes; a fully scalable solution, easily 
expandable for additional needs of the public and private 
sectors; and all basic services of the solution were fully 
operational within 6 months of winning the contract.
    Enhancements, especially for providing base quality and 
provision of additional services, were added on an iterative 
and step-by-step basis over time. The Swiss parliament decided 
that funding for the setting up of the entire system would be 
provided by the Swiss Government but that operational costs 
have to be covered by the users; that means the producers, 
traders and slaughterhouses.
    In Switzerland we therefore started with a fee associated 
with the eartags applied to the animals, $2 per calf in 1999, 
$4 since January 2004, and, since 2003, also a fee, $4 since 
January of this year, per slaughtered animal to provide funding 
of the operational costs. Since these fees are uniformly 
applied, the system is fair, and the costs can be passed on 
uniformly to the consumers without penalizing the producers.
    In addition, and of crucial importance to the success of 
the system, it was decided that the base base would be made 
available for commercial value-added services, provided that 
the owners of the base gave their consent; thus, today, not 
only producers can use the base base for their inventory 
purposes but also agriculture organizations for instance 
breeding associations, Government organizations, 
slaughterhouses, meat packers, supermarket chains and soon even 
consumers.
    In particular, some food safety and quality programs 
operated by the supermarket chains rely on the animal tracking 
base base. We expect others to follow. This provides an 
additional source of revenue, which helps fund the operation of 
the whole animal tracking system.
    Over time, the cost to the Government for running the 
animal identification and tracking system, excluding 
investments, was reduced from 60 percent in 1999 to less than 
20 percent in 2003 and completely self-funding since the start 
of this year.
    Another crucial aspect of the solution is the base quality. 
I cannot stress enough how important this aspect is. The value 
of the solution is directly dependent on the quality of the 
base. The best way to promote good quality is firstly through 
streamlined processes; second, with value-added services 
already mentioned; and especially by rewards for good quality 
base and penalties for missing or false base.
    Another aspect I would like to emphasize is the value of 
the business processes associated with the system. The 
processes are more crucial to the success of the solution than 
the software itself. We and our partners from CSE Switzerland 
have invested greatly in the processes and provide the 
expertise that we need. Experience is what counts for designing 
and running business processes.
    Regarding lessons learned from our 5 years experience with 
nationwide animal tracking, I would state the following: set up 
a central base base that serves not only for fighting animal 
diseases but as a tool for all organizations interested in 
animal identification. Gain experience before making major 
investments. The key success factors are the processes, 
training and acceptance. Allow the maximum value to be made 
from the base collected. Regulate access rights to protect the 
rights of the base owners, but impose no more base access 
restrictions than really necessary.
    Start with a new base base, but minimize extra costs by 
taking over existing base. Be careful not to make things too 
complicated and costly by catering to everything which already 
exists in order to satisfy certain groups. There must be common 
procedures and standard interfaces. Use a single central base 
base to reduce costs and minimize response time for impact 
analysis.
    Last, I would encourage you all to come to Switzerland and 
see yourself what we have in our solution. Talk to end users 
and familiarize yourself with the expertise we have built up. 
You are most welcome, and we would be very happy to collaborate 
with you.
    Thank you very much.
    [The prepared statement of Mr. Schmitz-Hsu can be found in 
the appendix on page 71.]
    Senator Talent. Well, I can talk to the Chairman and see if 
we can arrange a trip for the members of the Subcommittee to 
Switzerland. That might be rather popular. I do not know.
    Thank you, Dr. Schmitz, for that. That was very, very 
helpful.
    Let me ask a few questions of you. You mentioned how 
crucial business processes are. Could you be a little bit more 
specific with that? I want to make certain I understand what 
you are talking about there.
    Mr. Schmitz-Hsu. About business processes, from ordering 
the eartags, delivering the eartags, from registering the birth 
notifications over the whole cattle movement to their 
slaughterhouses, that you have fully impact this in a very 
streamlined fashion.
    Senator Talent. That is within the agency the base base and 
the system? Or are you talking about the producers or both?
    Mr. Schmitz-Hsu. That is for the agency which runs the base 
base.
    Senator Talent. OK.
    Mr. Schmitz-Hsu. You need to make sure that the system is 
consistent and simple to use for end users.
    Senator Talent. Interesting. Is the base base operational 
for hogs, sheep, goats, other animals?
    Mr. Schmitz-Hsu. Currently we have registration only of 
cattle. The system is set up so it can also handle pigs, sheep 
and goats. With pigs, sheep and goats, we currently only 
deliver uniform eartags to them, and we register who gets these 
eartags. We have the beginning of where the animal is born if 
later on, we see an urgent need to trace back where this animal 
comes from, but we do not register where and when this animal 
has been for pigs, sheep and goats.
    Senator Talent. Are you moving in that direction? Do you 
think you will be there?
    Mr. Schmitz-Hsu. We will do so as soon as there is need for 
doing that. Currently, there is not enough need for doing that. 
Also we are working currently with conventional eartags, and 
for instance, for hogs, you cannot rely on conventional eartags 
when you want to register all their movements. You have to 
switch to a radio frequency ID. The system is already set up, 
and we have already a trial with a radio frequency ID with 
cattle.
    Senator Talent. Let us discuss that a little bit. In the 
list of the bullet point features in your solution, you mention 
the common numbering scheme and base collection systems, 
ability to exchange base with existing sources, including 
existing ID systems, multiple base entry systems, a solution 
integrating business processes. Does that mean that your system 
was technology-neutral as regards the technology used by a 
particular rancher? Radio frequency, eartags, bar code? Did it 
matter to your system what kind of technology they used, or 
were you able to keep it neutral?
    Mr. Schmitz-Hsu. It is technology-independent. If you look 
at the identification, it matters actually only when reading 
the ID from the animal; that is just the distance to the 
reader. This reader can be electronic. It can be your eye. From 
there on, the process is exactly the same if you are talking of 
electronic ID or conventional ID. Our system is set up; there 
are some differences between RFIDs and conventional eartags, 
but that is a rather minor thing to incorporate, and we have 
done this already.
    Senator Talent. That is up to the rancher, the producer 
about what kind of technology they want to use.
    Mr. Schmitz-Hsu. Actually it is important that you set 
certain standards, because then, it will also be market-driven 
in buying these kinds of products. If you are buying 30 million 
identical identification ID, say, eartags or whatever it is, 
that is certainly cheaper than if you are buying 20 different 
versions of IDs.
    Senator Talent. I get you. You set the standards, and then, 
there is flexibility in terms of which particular technology 
they want to use in meeting the standards.
    Mr. Schmitz-Hsu. Right.
    Senator Talent. Right; OK; did the system, as you were 
developing it, and actually, I should get back and establish 
for the record the time. You indicated in your testimony that 
your exports were being banned in 1996. You started the 
national ID program in 1998, which was several years later. How 
long did it take you to develop and implement this system once 
you got the mandate to do so?
    Mr. Schmitz-Hsu. In 1996, it showed up; it was evidence 
that BSE can be transmitted to humans. That was when this was 
certainly an urgent need on fighting this BSE. It took 2 years 
until legislation has passed a law to implement a central base 
base. That was in 1998. In 1999, we brought in our offer, and 
we got the contract in May 1999. In December 1, 1999, that 
means less than 6 months after we got the contract, we actually 
had already the national base base running, being able to 
register all newborn calves. Within less than 6 months.
    Senator Talent. How long did it take after that to get cows 
registered? You had the system ready, but how long before you 
had all the animals on the system?
    Mr. Schmitz-Hsu. We started with the newborn calves, and a 
year later, we registered all animals on the base base. We took 
our base from breeding associations to avoid that we had to go 
again to collect information on cows which were already 
registered in breeding associations' base bases. We had to 
register the remaining cows which were not in a herd. From the 
end of 2000 on, in principle, we had the whole national herd on 
the base base.
    If you mean in terms of sufficient base quality, it took a 
little bit longer to get this all running.
    Senator Talent. It sounds like from the time you got the 
contract to the time the base base was ready, that was about 6 
months.
    Mr. Schmitz-Hsu. Right.
    Senator Talent. Then another year or more, so you are 
talking a year and a half, maybe 2 years, to get all of this 
registered, and this was several years after the issue really 
arose. That is in Switzerland with 1.5 million cows; and the 
United States with roughly 100 million.
    There have been some bills proposed in the other house to 
have a 90-day implementation deadline for implementing a 
system. Would you say that was a little bit too ambitious given 
the size of the task here?
    Mr. Schmitz-Hsu. It sounds to me very ambitious. You have 
to consider--it is for the U.S., it is really very urgent, and 
it was also for Switzerland. It took a long time, but I heard 
the figure that you lose $10 billion per year, so, with this 
ban that you have on your beef, and if you convert that to our 
hearing today, then, I must say we have, during the just the 
hearing here, we have, what, $2 million already lost again to 
the agriculture industry in the U.S., so there is an urgent 
need to proceed forward.
    It is important, and that was also once the whole process 
was set up that we quickly had a base system implemented, and 
we could show, then, to the neighboring countries that we have 
done now something, that we are building up a base base, 
actually, a whole animal tracking solution which fulfills the 
international requirements.
    Senator Talent. You mentioned gaining experience before 
making major investments. I really appreciate, for the record, 
these lessons learned and would commend it to anybody who is 
considering how this process is going to be done. Would you say 
that your system evolved over time toward one particular kind 
of tracking device because it was better than others? In other 
words, I guess what I am sensing is that you consulted, you 
pulled together this base base. You began implementing it. 
While you were implementing the process, you were trying to 
learn from the process as you implemented it and did it step-
by-step and concentrated on what was practical rather than sort 
of coming up with a plan whole cloth and then just implementing 
that without regard to the facts of implementation. That is a 
leading question, we lawyers say, but it seems to me that is 
how you did it.
    Mr. Schmitz-Hsu. The basic functionality is still the same. 
We have not changed on that. The principle is still the same. 
We have added certain services; we have added certain 
functions; we have especially increased the possibility to 
communicate electronically with the central base base; that is 
a central issue, also, to gain acceptance. I would just like to 
stress, again, the problem will not be the central base base, 
the computer system, and so on. The problem is to get base 
quality, to get the acceptance of the producers to participate.
    The fancy system does not help if you do not get the base 
in as you need. There, you need to focus, and there, we made a 
lot of experience and learned many lessons, and I would have 
been happy if I would have been able to share at that time with 
somebody else who had made this experience already.
    Senator Talent. You mentioned several times how important 
it was for it to be user-friendly, for the processes to be 
simple and understandable. I guess the idea is to--tell me if I 
am wrong--is to create out there in the country among our 
ranchers and our cattlemen a sense that they are comfortable 
with this system; they know how to use it; it will work well 
for them, so you are not dealing with a lot of passive 
resistance all the time. Am I understanding you correctly?
    Mr. Schmitz-Hsu. Yes, that is an important issue, and we 
got a sufficient base quality, a real good base quality, only 
after some rewards for good notification were given to the 
producers and some penalties if they did not comply with the 
system. We have a mandatory system, not a voluntary system.
    Senator Talent. You have a mandatory system that most 
people feel comfortable with and are happy to participate in. 
That is a good way of saying it.
    Mr. Schmitz-Hsu. Right, it took awhile, but it was raising 
more and more--conviction that something has to be done, 
producers had from the very beginning. Actually participate and 
do the work, and so, that is an additional effort for them. We 
do not deny that. Finally, when they saw the system was good 
for something, and they can access their base, they can get the 
inventory, they can see that the base they enter for the 
national base base is actually also going to their breeding 
association, so they do not have to make the notifications two 
times, that is a crucial part.
    Our system, our central base base is not on top of the 
existing base bases we had already but is on the bottom. It is 
the base. That is why there was quite a lot of opposition at 
the beginning, and people wanted to make it different; 
different breeding associations wanted, hey, make a national 
system that incorporates our system. Actually, fortunately, the 
Federal Government decided, no, we implement a new base base 
which will be the basis for the other services.
    Very quickly, also, driven by the pressure of the 
producers, because they do not want to make notification 
several times, then, actually, the other agricultural 
organizations, they were somehow driven and forced to take the 
base from the central base base. Then, there were additional 
services provided to these agricultural organizations, so that 
actually fulfills their need.
    Senator Talent. Just a couple more questions. I just 
thought the opportunity to have you here to get as much 
information as we can from you too valuable, really, to pass up 
or to minimize. You mentioned--I am going to read this--from 
lessons learned: allow the maximum value to be made from the 
base collected; regulate access rights to protect the rights of 
the base owner but impose no more base access restrictions than 
really necessary; make sure the benefit goes to the owners of 
the base, that means to the end users; involve third parties 
such as supermarket chains early in the process in order to add 
to the value for the end users; reward the good end users.
    Now, there have been two issues that have been raised, one 
by Senator Harkin, and he is reflecting concerns of producers 
and others producers have raised that this lesson learned would 
implicate. One is I know our producers are very concerned about 
confidentiality. If we went out and just said oh, you know 
what? This stuff is going to be available, and it is really 
going to be good for niche marketing your products and all this 
stuff, they would initially, anyway, say wait a minute, we are 
not making our operations an open book.
    The other that Senator Harkin raised, we do not want 
private, big supermarket chains sort of driving what the 
requirements of this base bank are. Now, did your ranchers have 
the same issues? If they did, what did you do to accommodate 
those issues?
    Mr. Schmitz-Hsu. See, the producers, they had exactly the 
same concerns as your producers here have. Confidentiality, oh, 
this goes--does the base go to the IRS and so on, all of these 
issues came up.
    What we have, the regulation for base access, is we make a 
clear distinction between animal base and premises base; say, 
the animal base, that goes with the animal, and the new owner 
of the animal, he gets all the information, where this animal 
has been before, including the address of the previous owners. 
For this animal here, whereas, how many animals a premises has, 
that is something confidential, and that is only given out to 
those when the owner of--the actual producers give the consent 
that this has to be done.
    We had to implement on our system really elaborate base 
access functionality to cover these rules. That fulfills, now, 
the need of the producers also, so if they make some--
participate in some kind of supermarket chain program, they can 
authorize, by themselves, the supermarket chain, OK, I give you 
the right that you can access my base. Then, I do not need to 
tell you about my animals. You can go directly from the central 
base base.
    Senator Talent. Thank you, Dr. Schmitz. I appreciate that 
testimony.
    Let me ask you, Dr. Marsh, do you want to comment on what 
you have heard regarding the Swiss program, what you think we 
could take from it? If you just have any comment on things that 
they are doing in Switzerland that maybe would not work here or 
would work especially well? I would sure like to hear it if you 
have any comments. You look like you were listening as intently 
as I was.
    Mr. Marsh. Yes, it was fascinating testimony, and I 
appreciate getting an opportunity to hear him. Even though we 
are geographically thousands of miles apart, I do not think we 
are on this issue and the challenges that we meet, be met with 
it, issues of confidentiality, who owns the base, where it 
goes, making sure that the technology that is used, make sure 
that the marketplace can still function and certainly State to 
State in our situation and potentially internationally.
    I am intrigued by what is there. I am aware that others 
have reviewed this process, and it is important that we take 
those lessons learned. It is not something that is going to 
happen overnight. It is going to take awhile to put it in 
place. There have been questions about voluntary versus 
mandatory. I guess for me and our State, I am not sure what you 
would mandate just yet. We are not quite to that point yet, to 
say this is what we want, and that is why this is valuable that 
we have these species-specific working groups working under the 
USAIP to pound out some of those specific details so that they 
are not lost in the process.
    Again, the number of issues and the lessons learned there 
are valuable for us, and we can take heed.
    Senator Talent. Do you have a gut sense of what a realistic 
timeframe would be?
    Mr. Marsh. I am intrigued by Under Secretary Hawk's remarks 
that with regard to the premise allocator that that could be 
available by the end of this Federal fiscal year. Indeed, there 
are a number of base base systems in the States that have been 
used for animal health purposes, whether it is for brucellosis, 
tuberculosis, pseudo-rabies, et cetera; that there are base 
bases out there that have some of this base that could be 
transferred into the process.
    I am aware of some States, Senator Nelson's State, for 
example, where you can go online and register a site. There 
will be those who will do that. That is a good tool, but I 
harken back to the United Kingdom again. Foot and mouth did not 
start in their major commercial operations; it started in a 
garbage feeder. At some point, you have to go out and get the 
balance of them, where those premises are located, and that 
will take some time, and that has been indicated in Dr. 
Schmitz's testimony as well.
    It is important that we take a look at the processes that 
are in place. Our neighbor to the north in Michigan, for 
example, has been using RFID for several years, combatting 
their tuberculosis problem. There are lessons learned there in 
country; there are lessons learned from some of the others; 
FAIR and other processes are in-State, are in the country, 
rather, and if we are careful in evaluating those, then, we 
will not make the same mistakes twice.
    Senator Talent. Well, I have kept you two a long time, and 
I am grateful for that. We covered a lot of good issues. We do 
have another panel. Thank you, Dr. Schmitz; thank you, Dr. 
Marsh, for being here.
    Oh, I am sorry, Ben, did you----
    Senator Nelson. No, no, that is OK.
    Senator Talent. The third panel can come on up, then.
    Senator Talent. Our third panel is being seated, and I 
will, if Senator Nelson would like, would love to have him 
introduce the witness from Nebraska, and then, I will introduce 
the other witnesses.
    Senator Nelson. Well, thank you very much, Mr. Chairman.
    I appreciate so much the courtesy of being able to do this. 
It is really a pleasure for me to be able to introduce Joy 
Philippi from Bruning, Nebraska. She is a family farmer with 
2,000 head of nursery hog operation, with that operation 
working with a local producer. She serves on the National Pork 
Producers Council board. She has been involved with the 
Nebraska pork producers for 10 years, the past-president in 
2000. She serves on the species subgroup for swine on the USAIP 
working group. She is chairman of the NPPC Committee on Animal 
Health and Food Security, involved with the Nebraska State 
Group on Animal ID, and as I said, in her spare time, she also 
farms.
    We appreciate very much her presence here today and her 
support in the past for our efforts to deal with agricultural 
issues of all kinds but particularly to help us understand, 
from the point of view of a pork producer, what is involved 
with animal identification, and I hope that you will be able to 
enlighten us--I hope to be able to stay here for a period--on 
what animal ID licensing could involve with respect to the 
small to medium size producers. Joy, thank you for being here, 
and thank you, Mr. Chairman.
    Senator Talent. I will introduce the other three witnesses, 
and then, we will start with Mr. John and just go from that way 
to that way, because that is how have it down on my paper.
    We thank all of you for coming here, and, as Senator Harkin 
said, it is very important that we hear from people who really 
are doing this and will have to do it, so I want you to tell us 
everything you think we need to know. With that in mind, so 
that there is enough time to ask questions, if you could, you 
do not have to read your whole written statement; if you want 
to give a summary of it, that would be fine as well.
    Mr. Mike John, who is Vice President of the National 
Cattlemen's Beef Association and is from Columbia, Missouri; 
Mike, thank you for coming; Mr. Bob Lehfeldt, of the American 
Sheep Industry Association from Lavina, Montana?
    Mr. Lehfeldt. Lavina.
    Senator Talent. Lavina, I am sorry, and Senator Baucus 
referred to Bob before, and Ron Ostberg, who is a Montana 
Farmers Union member from Scobey, Montana, is with us today.
    Mike, thanks for coming. You and I have discussed this 
privately, but I wanted everybody to have the benefit of your 
wisdom, so please give us your statement.

 STATEMENT OF MIKE JOHN, VICE PRESIDENT, NATIONAL CATTLEMEN'S 
              BEEF ASSOCIATION, COLUMBIA, MISSOURI

    Mr. John. Thank you for the opportunity to present 
testimony to you today on behalf of the State affiliates of the 
National Cattlemen's Beef Association. I appreciate being able 
to discuss animal identification, an issue of great interest 
and concern for cattle producers across the country.
    The recent discovery of BSE in a Canadian cow in Washington 
has given this discussion a tremendous sense of urgency. Animal 
identification is a tool that can be used in conjunction with 
our animal health infrastructure to identify and isolate 
animals and premises that have been associated with animal 
disease. It is not a substitute for this infrastructure. NCBA 
will oppose efforts to pay for an animal identification system 
by cutting existing animal health infrastructure.
    Animal identification is a confusing and complicated topic 
which has endured several years of debate to come to a 
consensus, and there is still much work to do. To forge broad 
consensus, NCBA worked with more than 70 organizations and over 
400 individuals to draft what is known as the United States 
Animal Identification Plan or USAIP. As a matter of NCBA 
policy, we support the USAIP as the foundation of the national 
identification system and support its ongoing work.
    The USAIP focuses on establishing technology standards so 
the system is uniform, workable and consistent. USAIP 
establishes radio frequency identification or RFID as the 
currently preferred identification method. RFID has been 
readily adopted by livestock producers. Adoption of the RFID 
standard within USAIP acknowledges the existing use of this 
technology.
    Full and complete implementation of USAIP is estimated at 
$545 million over a 6-year period. The USAIP estimate includes 
the information system, base collection infrastructure and 
identification devices. Clearly, this amount is a tremendous 
outlay of resources for any party. A potential funding approach 
could be the Federal Government paying for establishment and 
approval of the standards, the Federal and State Governments 
partnering on infrastructure installation, and the Federal and 
State Governments cost-sharing with producers on the 
identification devices.
    An effective animal identification program would provide 
the traceability needed to contain, isolate and eradicate the 
spread of an animal disease that has the ability to disrupt the 
livelihood of producers. The creation of a system for these 
purposes should not result in the invasion of a producer's 
privacy. Therefore, NCBA believes that any information provided 
by producers for the animal identification system should be 
exempt from release under FOIA; additionally, the Privacy Act 
protects private and personal base from release without the 
written consent of that party that provided the information.
    The question of mandatory versus voluntary should revolve 
around how best to achieve the level of participation needed to 
make the system effective. In addition, privacy concerns, costs 
to producers and the appropriate implementation plan will have 
as much bearing on the success of the program as will whether 
it is mandatory or voluntary.
    The USAIP calls for initially starting with a premise 
identification system then moving forward with individual 
animal identification. It is critical that a premise allocation 
system be defined soon that meets USAIP guidelines and 
recognizes the interstate nature of livestock movements. It is 
extremely important that implementation of the program be in 
step with how marketed and moved. We must take into 
consideration constraints that exist at livestock markets, 
processing facilities and feed yards.
    Additionally, many cattle are already identified through 
existing marketing and management programs. If the systems in 
which these cattle are already identified are consistent with 
the standards of the USAIP, then these systems should be 
available to provide base to USDA for the purposes of producer 
participation in the identification system.
    It is important that there be international harmonization 
in animal identification standards and systems. Our five-
nations working group is in agreement that there should be 
harmonization in our animal identification systems. NCBA 
supports the adoption of the RFID standard within USAIP. 
However, should Congress act on an identification bill, no 
statutory provision should be included which establishes the 
RFI technology standard. Keeping the technology standard within 
the regulatory responsibility of USDA maintains the flexibility 
needed to adopt new technology.
    USDA has the authority under the Animal Health Protection 
Act passed in the 2002 Farm Bill to implement an identification 
system. NCBA will monitor the implementation of an 
identification program by USDA and, as previously stated, NCBA 
is supportive of an industry-implemented program that is 
accessed by USDA for animal disease issues only.
    We are confident that the current path we are on will 
result in the development of an effective animal identification 
and traceability program for not only the cattle industry but 
also for all animals in agriculture.
    Thank you for allowing me the opportunity to testify.
    [The prepared statement of Mr. John can be found in the 
appendix on page 77.]
    Senator Talent. Thank you, Mike.
    Ms. Philippi.
    Ms. Philippi. Philippi.
    Senator Talent. We are ready for your statement. Please go 
ahead.

  STATEMENT OF JOY PHILIPPI, NATIONAL PORK PRODUCERS COUNCIL, 
                       BRUNING, NEBRASKA

    Ms. Philippi. Good afternoon, Mr. Chairman, and thank you, 
Senator Nelson, for your kind introduction. We would like to 
thank the Chairman and the Committee for holding this hearing 
today, and we would like to ask that our complete written 
statement is submitted for the record.
    In recent months, it has become clear that the issue of a 
national animal identification system has become increasingly 
more important to animal health officials, livestock producers 
and consumers. Developing and implementing a national 
identification system is far more complicated than simply 
identifying every animal at birth. The pork industry considers 
a national animal ID system part of protecting the nation's 
critical food and agriculture infrastructure in case of an 
animal disease outbreak or intentional or unintentional 
introduction of a pathogen or toxin.
    We believe that most Americans now better understand the 
importance of animal health in protecting food security and 
safety in this country. We also believe that they are willing 
to support the development of an affordable, accurate and 
sustainable mandatory national animal ID system. I would like 
to focus my comments today on three areas: first, the pork 
industry's current mandatory swine identification system; ways 
to enhance the current swine system; and finally comment on 
where the pork industry sees outstanding issues in further 
developing the national animal ID system.
    Today, we have five categories of mandatory ID for swine in 
interstate commerce: one, individual ID for all replacement 
breeding swine; two, individual ID for all breeding swine at 
commingling or slaughter; three, ID of feeder swine; four, 
market swine identified back to their owner at federally 
inspected plants; and, five, feeder swine movements across the 
state lines within a production system based on written health 
plans and production records.
    The current interstate swine ID system has been in place 
since 1988, and we recognize there are several areas where 
enhancement is needed. First, the back tag system currently is 
being used to identify culled breeding swine has a low tag 
retention rate of about 15 to 20 percent. This retention rate 
is the result of an identification system that does not meet 
the species-specific needs in regard to handling the animals on 
the way to market.
    When a national premises ID system is implemented, it would 
be possible to apply premises ID tags to our breeding animals, 
thereby identifying the source farm. Second, the identification 
of market hogs back to their last premises instead of the 
owners' mailbox will result in a more rapid and accurate 
traceback to the suspect premise. Improved accuracy could 
facilitate further traceback to origin premises because today, 
generally, hogs move in lots. Recordkeeping in our industry is 
by and large based on lot and group movements.
    Today, as we speak, the U.S. pork industry is holding its 
annual business meeting in Atlanta, Georgia. We expect at least 
one public policy resolution to be presented in support of a 
mandatory national animal ID system and expressing support for 
the U.S. Animal Identification Plan or USAIP. The USAIP process 
has been underway since April 2002. Over 109 stakeholders 
representing 70 industry organizations have had input into the 
USAIP.
    Let us be clear on what the USAIP is and is not. It simply 
defines the standards and framework for implementing and 
maintaining a national animal ID system for all of U.S. 
livestock. It includes standards for, one, national premises 
numbering system; two, individual group and lot animal 
numbering systems; and, three, performance standards for ID 
devices.
    NPPC believes that the USAIP represents a blueprint for 
moving forward. We acknowledge that it does not have all of the 
answers and that there are outstanding questions. I would like 
to highlight five of those outstanding issues that require 
further development, careful consideration and possible 
Congressional action.
    One, should the system be a mandatory or a voluntary 
system? Two, how do we protect and maintain the confidentiality 
of producer base? Three, how do we recognize the importance of 
species-specific differences? Four, how do we maintain 
technology flexibility; and, finally, five, funding: Who is 
going to pay for what?
    The first issue is about mandatory versus voluntary system. 
Ours has been mandatory since 1988. From a disease management 
perspective, we believe the system must be a mandatory program. 
Otherwise, the ability to effectively manage diseases will be 
compromised. The second issue is about how to protect the 
confidentiality and security of the producer base. This issue 
of confidentiality has not been effectively addressed by either 
the USAIP or by USDA. We need to sort out whether USDA has 
clear authority to protect the confidentiality and security of 
the producers' base. If USDA does not, then Congress must 
assure that the Department has the appropriate authority.
    Producers are concerned about who will have access to their 
vital economic and trade information, and until these issues 
are addressed, pork producers are willing to record the base 
locally but unwilling to report it nationally.
    A third issue relates to species-specific implementation 
plans. There are vast differences between the species, 
including the diseases of concern, production practices, record 
keeping, animal movements, animal value. The cattle industry 
has embraced electronic ID, eartags or RFID as the 
identification device of choice for their species. RFID makes 
sense based on the value of a single bovine coupled with the 
frequent commingling of animals of different owners. RFID at $2 
a tag does make sense on an animal that is valued at $1,200 
versus a $90 animal.
    If cost of identification is based on breeding females, a 
cow has one calf per year, and therefore, the cost per cow is 
$2 per year. On the other hand, a sow will have 22 to 24 pigs a 
year, and pork producers will face identification costs between 
$44 and $48 per sow per year. That is why group and lot ID is a 
cost-effective identification system to swine.
    The fourth issue is related to technology flexibility. A 
system allowing species differences must allow for technology 
flexibility. New devices, methodologies and technologies come 
out every day, and I am sure that the committee has seen many 
technologies over the past several months. USDA must establish 
a national base platform for animal health management purposes 
and have the marketplace meet those standards. This not only 
encourages innovation and competition; it also drives down the 
cost to pork producers.
    The fifth and final issue I wish to highlight is the issue 
of funding. Who pays for what? We believe that the national 
premises identification system is the basis for a national 
animal ID system, and it is a Federal responsibility. We also 
believe that USDA needs to develop the information system to 
allow animal movement base to be captured, stored, and accessed 
when needed whenever those base have anything to do with animal 
health management purposes.
    In conclusion, Mr. Chairman, and members of the Committee, 
I have outlined why the National Pork Producers Council 
supports a mandatory national identification system. I would 
like to thank you again for holding this hearing, and I would 
be pleased to answer any questions at the appropriate time.
    [The prepared statement of Ms. Philippi can be found in the 
appendix on page 83]
    Senator Talent. Thank you, Joy. That is very useful 
testimony.
    Bob, why do you not go on ahead? I will tell the witnesses, 
we have been notified we have votes starting at 4 o'clock, and 
we can stay a little bit after 4 o'clock, because the first 
vote will probably be--we will have an extra few minutes to get 
over there to vote, but we are coming up against a deadline.
    Bob, go ahead and go, please.

STATEMENT OF BOB LEHFELDT, AMERICAN SHEEP INDUSTRY ASSOCIATION, 
                        LAVINA, MONTANA

    Mr. Lehfeldt. Mr. Chairman and members of the Committee, on 
behalf of the nation's sheep industry, I greatly appreciate 
your leadership in conducting this hearing regarding 
development of an animal identification program.
    I am a sheep producer from Lavina, Montana, and today 
represent my state association and the American Sheep Industry 
Association. I can personally attest that livestock 
identification was a hot issue at our national board of 
director meeting in late January. ASI has been involved with 
the USAIP since initiation and intends to provide a sheep-
specific ID plan to USDA APHIS this spring.
    Our industry has a national animal health program in place. 
That includes a identification system, namely, the Scrapie 
Eradication Program. We have over 50,000 sheep operations 
nationwide, already enrolled with a premise identification and 
millions of identification tags distributed. This program, 
implemented by regulation in August of 2001, provides a basis 
for our view and we believe a model for fitting the sheep 
industry into a national animal ID system.
    We approve national policy at our board meeting, and I 
believe these points are important for discussion. One, the 
cost of identification supplies and devices should be provided 
by the public sector. A national ID system for livestock should 
not duplicate our National Scrapie Eradication Program ID 
requirements. Transition into a livestock system must be 
planned and announced well in advance, with supplies available 
through a well-organized distribution channel.
    We have a wide variance of production systems for sheep in 
the U.S., and the ID program should accommodate all, including 
group movement of animals through feeder and slaughter 
channels. A national ID system should contribute to the 
management, marketing and business needs of the US sheep 
industry. A national ID system for sheep should be thoroughly 
field tested before implementation to demonstrate that the 
technology is compatible with normal industry operations.
    Implementation of this system should not economically 
burden any sector of the U.S. sheep industry. The system ought 
to be thoroughly reviewed and field-tested prior to 
implementation. This includes the base base function, which 
needs to be provided and maintained by the Federal Government. 
We must recognize the needs of the entire industry involved 
from auction markets to processors as well as ranchers such as 
myself.
    It is important to remember on the cost side that cost of 
an ID on a $125 lamb is much larger than that on a market steer 
worth many more times. An additional item that is weighing 
heavily in our sheep ID discussion is the need to identify 
sheep and lambs by lot or group, similar to our feeder and 
slaughter lambs today under our Scrapie Eradication Program 
requirements. Such a system makes more sense when hundreds of 
lambs per truckload are moving through the feed lot and packing 
plant.
    Key issues that I believe must be addressed on the sheep ID 
group includes procedures for lost tags, compatibility of all 
ID tags and associated equipment on a national basis, and 
privacy of base collected by a national animal identification 
program.
    Thank you, and I would be pleased to answer questions.
    [The prepared statement of Mr. Lehfeldt can be found in the 
appendix on page 93.]
    Senator Talent. Thank you, Bob.
    Mr. Ostberg.

  STATEMENT OF RONALD OSTBERG, MONTANA FARMERS UNION MEMBER, 
                        SCOBEY, MONTANA

    Mr. Ostberg. Thank you, Mr. Chairman; also, I would like to 
thank or give a special thanks to Senator Max Baucus for his 
kind comments in introducing us earlier here today.
    For the record, Mr. Chairman, and Senator Nelson, I am Ron 
Ostberg. I am a cattle producer in the west central part of 
Montana. I can also say that I come from a farming and ranching 
family; that we have had somebody from our family live on that 
land for almost 100 years. My granddad on my dad's side 
actually filed for homestead on the home place there on 
September 8, 1909. We are getting close to that. That is quite 
an accomplishment as well.
    I am also here today representing the National----
    Senator Talent. Maybe you could have us out for the 100th 
anniversary.
    Mr. Ostberg. I would love to.
    Senator Talent. When we get back from Switzerland, we 
will----
    [Laughter.]
    Mr. Ostberg. Maybe I could just go with you to Switzerland, 
and we could work that out.
    Senator Talent. We would celebrate there, yes.
    Mr. Ostberg. I am also here representing and testifying on 
behalf of the National Farmers Union and the Montana Farmers 
Union as well, where I am a lifetime member. The National 
Farmers Union is meeting today in my home state as we speak. 
They are conducting their 102d annual convention there, and one 
of the issues that they are working on is this specific issue 
here. As soon as they do get that policy identified and 
finalized, they will be sharing that with the committee, Mr. 
Chairman, and the Members of Congress.
    I would like to highlight five of the major concerns that 
NFU and I have relative to the many animal identification 
proposals being considered and explain why these concerns must 
be addressed before any national animal ID program is further 
pursued or implemented.
    No. 1 is the ability of an identification program to 
enhance both food safety and animal health, and there has been 
some discussion, and it is great to be able to listen to all of 
the comments that were previously offered here today; there was 
some discussion specifically between Senator Harkin and Under 
Secretary Hawks in regard to how far the program was really 
going to go.
    We talked about animal diseases, and then, Senator Harkin 
brought up the concern that was raised to him from Wal-Mart. 
Now, I would guess, and maybe I should not do that, but I have 
been known to do this before and get into trouble, but I would 
guess that Wal-Mart's concern would probably be food safety. 
That is something that the Committee needs to take into account 
when you look at the total programming here and not just 
address animal health issues, some parts of industry are 
looking for food safety, and I know consumers are looking for 
food safety.
    I will try to go through these a little quick here. 
Otherwise, I will not be redundant. Everybody else has probably 
touched on some of the same concerns. The second issue that I 
would like to address is the cost burden of implementing and 
maintaining ID systems on livestock producers. That one has 
been talked about quite a bit; again, I would like to relate my 
comments to some of the other discussion that was held here 
earlier today.
    Dr. Schmitz talked about the program that he had there in 
Switzerland, and that the and Senator Baucus talked about the 
branding program that we have in Montana. If I remember 
correctly, there is not too many states that do have a branding 
program, and I have been told that there are maybe 14 states in 
the United States that actually have a branding program. They 
tell us that Montana probably has the best branding 
identification system in the nation.
    The program that I use out there right now on my farm and 
ranch is that I do brand all of my animals. That gives an 
ownership identification to those animals. I also eartag all of 
my animals. My eartags identify the lineal descent of the 
animals. I can look at a calf out there; I know immediately who 
the mother of that calf is. I can go back to the record books, 
and I can tell you who the grandmother and the great-
grandmother was of that cow.
    We do have that information there, and I would be more than 
happy to share that with any program if that would be something 
that they would care to work into or visit with them in regards 
to setting up something like that.
    Going through this here pretty quick, in regards to the 
costs, I do want to touch a little bit on that. It has already 
been said, but I would like to say it again that the livestock 
producers are the ones who are going to be on the front lines 
on this program's initiation. We are concerned today that a 
disproportionate amount of the cost associated with an animal 
ID system will fall on the producers, particularly the small 
producers, in a way that makes them less positioned to remain 
competitive in the marketplace.
    This was talked about earlier, but I would like to mention 
this again: according to the USDA, a livestock identification 
system is estimated to cost from $70 million to $120 million 
per year, and that is considerably more than the $33 million 
proposed in the 2005 fiscal ag budget. We believe that it is 
appropriate for the public to bear a substantial portion of 
both the development costs as well as those associated with the 
day-to-day management of the program.
    The third issue that I would like to raise, the third 
concern, is the confidentiality of proprietary information that 
is collected. There has been a lot been said about that one 
already, so I will try not to be redundant on that. I do not 
think that I have any points here that--you do have my written 
comments, too, Mr. Chairman, so they are in that.
    The fourth issue that we raise is the producer liability 
protection issue. Assuming an animal identification system does 
in fact enhance our capacity to detect and control those 
commodities and products which may have adverse food safety, 
human or animal health implications, the issue of legal 
liability must be considered. It should be expected that the 
use of a traceback system will prompt parties to attempt to 
establish that any products which do not meet safety and health 
standards resulted from actions taken by others within the food 
system.
    Because the potential costs of identified food safety and 
health issues can be significant and will tend to increase as 
products move through the food chain, we are concerned about 
the process that will be utilized in establishing any liability 
and the potential financial obligations a process could create 
for market participants. Our final concern, and that one has 
not been voiced here yet today, and that is the relationship of 
an animal ID program to country of origin labeling, and I am 
sure that you have never heard of that one before. Just 
kidding.
    Actually, we feel that mandatory country of origin 
labeling, as directed in the 2002 Farm Bill, should be 
immediately implemented. We believe that Secretary Veneman has 
the Congressional authority and discretion to implement this 
program in a common sense that bears minimum burden and cost on 
producers, processors and retailers.
    Despite the 2-year delay of implementation of country of 
origin labeling included in the fiscal year 2005 omnibus 
appropriations bill, the law still requires USDA to move 
forward in promulgating a final rule by September 30 of this 
year. After the labeling program has been implemented and at 
the point an animal identification program is up and running, 
we believe it is necessary to coordinate the two programs so 
that U.S. livestock producers will not find themselves paying 
the bill for the benefit of processors and retailers without 
achieving any market benefits.
    We would like to see the information gathered through a 
national animal identification program maintained and utilized 
to augment mandatory country of origin labeling at the retail 
level. It is our hope that the discussion of implementing an 
animal identification program does not delay implementing the 
already mandated country of origin labeling law.
    American agricultural producers want a labeling program. 
American consumers want a labeling program. When the two 
programs are coupled, consumers will be better able to select 
food products with the knowledge that new steps have been taken 
to strengthen our capacity to identify and contain food 
pathogens or other food safety factors prior to the products 
reaching the retail market.
    In closing, Mr. Chairman, the National Farmers Union and I 
ask that full consideration be given to all of our concerns 
before any legislative or administrative action is taken to 
implement an animal identification program. I would like to 
thank you again for the opportunity that I have had here to 
testify before you today. We both, the National Farmers Union 
and myself, look forward to working with members of this 
Subcommittee and other Members of Congress as development of an 
identification system moves forward.
    That includes a trip to Switzerland, and I would be happy 
to answer any questions that you might have. Thank you.
    [The prepared statement of Mr. Ostberg can be found in the 
appendix on page 96.]
    Senator Talent. Thank you, Mr. Ostberg. I thank you for 
summarizing your testimony and thank all of the witnesses for 
coming such a long way to give us the benefit of their 
practical experience, and I will recognize Senator Nelson.
    Senator Nelson. Well, thank you, Mr. Chairman. I too thank 
our witnesses. This is obviously a very important issue, and it 
has to be resolved. Clearly, the lost opportunity and the lost 
costs or lost income from the BSE incident is an indication 
that we have to proceed to do something to improve not only 
animal health, but, as you say, food safety as well. 
Credibility in the world is important to that, but it is always 
about who pays. We understand that.
    While the lost costs and lost income from the BSE incident 
probably far outweighs what the cost of this program is, nobody 
wants to minimize what the cost is, nor do we want to ignore 
who has to pay for it. We need to find a solution to that so 
that it is fair, not disproportionate and ultimately delivers a 
better product to the public so that we can all enjoy the 
commerce, and the ag industry can benefit from it as well.
    Thank you very much. I appreciate it. Thank you, Joy, 
particularly.
    Thank you, Mr. Chairman.
    Senator Talent. I thank the Senator for his remarks.
    They have started the series of votes, so Senator Nelson 
may need to go. I am going to continue the hearing just for a 
couple more minutes. I cannot pass up the opportunity to ask 
you all to comment on a couple of things anyway.
    Let me find Dr. Schmitz's testimony here. Yes. I have 
consistently heard concerns, which I can certainly understand 
and, in fact, share, about confidentiality. Mr. Ostberg shared 
it and made the point, that it was redundant, because others 
had said the same thing. I do not know if you all were 
listening to Dr. Schmitz's testimony about what was going on in 
Switzerland, but there is an interesting point that he has 
raised that we are going to have to confront at some point.
    He says allow the maximum value to be made from the base 
collected; regulate access rights to protect the rights of the 
base owners but impose no more base access restrictions than 
really necessary. Make sure the benefits go to the owners of 
the base; that means to the end users. The way it works in 
Switzerland, I take it, is that he mentioned breeding 
associations have access with the permission of the producers. 
If you have a relationship worked out with some kind of an end 
buyer or supermarket or something, they may be allowed to have 
access to facilitate that relationship.
    They seem to have opened it up there a little bit more than 
we anticipate opening this up or than we are comfortable doing 
at this stage. Let me ask two questions relating to the base 
base and just get your comments on it. First of all, are you 
and the industries you represent more comfortable with the 
Government having access to base that is largely owned and 
operated by a private entity or association, as I understand it 
is in Switzerland, or vice versa. In other words, would you be 
more comfortable with the Government having access to base 
managed by a private association or ownership, or would you be 
more comfortable if there were private owners that had access 
to Government-run base and--and this relates to that second 
question there--how comfortable, having heard what Dr. Schmitz 
said, how open are you to that situation where if once we 
developed this system, if a producer gives permission, allowing 
the access to the base by a breeding association or a retail 
buyer or something?
    I was not marvelously clear with that, but you all are 
intelligent, and maybe you got it enough to comment on it. 
Would anybody like to share?
    Mr. Ostberg, please, go ahead.
    Mr. Ostberg. Mr. Chairman, Senator Talent, I would love to 
address that one.
    One of the main concerns that I have, and I guess this one 
might not be too hard to guess and probably would speak for a 
lot of others would as well, would be when it comes to the 
pocketbook is how the confidentiality issue concerns us. Dr. 
Schmitz made the comment in regards to information becoming 
available to IRS. IRS knows more than enough about me already, 
and I do not think I could tell them anything else, including 
the numbers of cattle I have. They already know that. I do not 
have any concerns in that regard.
    Where I do have the concern, again, is back to the 
pocketbook, and that is when it comes to marketing these 
animals. We have seen this information or this kind of 
information used against us in the market prices that we 
receive; no matter what the commodity is, we have seen this a 
number of different times. Your question, Mr. Chairman, was 
specifically in regard to whether we let the Federal Government 
address this issue or private enterprise.
    Senator Talent. Just generally, if you heard Dr. Schmitz's 
description of how they have allowed access for certain 
purposes with permission, which is one of the ways that they 
make this pay for itself; in other words, this helps facilitate 
transactions, so I know you have all just heard it for the 
first time. I read it, but I have really just heard it for the 
first time. You may not want to comment, but if you have it, I 
would love to hear it.
    Mr. Ostberg. My comments on that, Mr. Chairman, would be 
that either way we go, even with the Government, the 
information is public. Private enterprise's is public. There 
was some discussion earlier here today that addressed the 
concern or the request, actually, that was conveyed to the 
committee here that they come up with some specific language 
that addresses the proprietary information and the withholding 
of that information anyplace, and again, I suppose that we 
could include some language in there that would provide for, 
yes, if we have the consent of the individual producers.
    Now, depending again on how far you go with this ID system 
here, and to cover the food safety issue, you need to go much 
further than just from the producer to the processor. There are 
too many people and too many other interests out there that 
have an interest further down the food chain. You need to 
address that concern to other parts of industry as well.
    Thanks for the question, Mr. Chairman.
    Senator Talent. Mike.
    Mr. John. I would like to address that just briefly, 
Senator.
    It depends on the perspective that you take on what the 
goal of the ID system is, and if it is animal health and 
disease related, then probably a combination of private and 
Government-type participation would be a more reasonable 
direction than just saying it is going to be one way or the 
other. I would say as far as keeping costs out of the system 
that if there can be a competitive component in the free market 
system to deal with managing the production and the 
communication between the segments that we will probably see it 
offered at a lower cost and maybe a more efficient direction 
than having it all contained in a centralized Government base 
base.
    As it relates to analysis for tracking animals and 
isolating an animal disease, obviously, the Government is going 
to have to have access to that base in some manner, and good 
science will decide whether that means it comes from a single 
base base with just the key components of that ID or whether it 
is going to come from a series of private base bases.
    As far as the components of communicating between the 
segments on the things that add value to animal agriculture, 
those need to be kept privately.
    Senator Talent. OK; yes.
    Ms. Philippi. If I could add just a little comment there, 
too, I have been in a couple of meetings on this 
confidentiality discussion, and one thing that was brought 
forward was we do not mind if the Government can have access to 
come back and find where our premise is; we do not want that 
public. Because especially in our industry, we have those that 
would love to know where every hog farm is in the United 
States.
    Senator Talent. Right.
    Ms. Philippi. We have discussed that at length. The other 
thing is for the animal health issues, we believe the 
Government needs to have access to that.
    Senator Talent. Yes, I would just keep that in mind, 
because we have all talked about the costs of the 
systematically emergency, and to the extent that with, of 
course, the permission of producers, the system can be involved 
in adding value, that generates streams of income that might 
help to pay for the system, which, of course, we would all 
like, because, to that extent, neither the taxpayers nor the 
producers have to pay for it.
    That is the first time I have heard of it. I wanted to get 
your comments.
    I would have other questions, but I am told there is about 
a minute and a half left in the first vote, and on the off 
chance that for the first time in its history, the Senate 
closes a vote on time, I better get over there to vote.
    I am very grateful, the whole Subcommittee is, to you all 
for coming such a long way and for the great contribution that 
you have made to the hearing, and I will adjourn the hearing 
now.
    Thank you.
    [Whereupon, at 4:16 p.m., the Subcommittee was adjourned.]


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                   DOCUMENTS SUBMITTED FOR THE RECORD

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                         QUESTIONS AND ANSWERS

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