    National Animal Identification System: USDA Needs to Resolve
    Several Key Implementation Issues to Achieve Rapid and Effective
    Disease Traceback (06-JUL-07, GAO-07-592).

    Livestock production contributed nearly $123 billion to the U.S.
    economy in 2006. In response to concerns about animal disease
    outbreaks, the U.S. Department of Agriculture (USDA) announced in
    December 2003 that it would implement a nationwide program--later
    named the National Animal Identification System (NAIS)--to help
    producers and animal health officials respond quickly and
    effectively to animal disease events in the United States. In
    this context, GAO determined (1) how effectively USDA is
    implementing NAIS and, specifically, the key issues identified by
    livestock industry groups, market operators, state officials, and
    others; (2) how USDA has distributed cooperative agreement funds
    to help states and industry prepare for NAIS and evaluated the
    agreements' results; and (3) what USDA and others estimate are
    the costs for USDA, states, and industry to implement NAIS. In
    conducting its work, GAO reviewed USDA documents; interviewed
    agency, industry, and state officials; and consulted 32 animal
    identification (ID) experts.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-592
        ACCNO:   A72130
      TITLE:     National Animal Identification System: USDA Needs to
    Resolve Several Key Implementation Issues to Achieve Rapid and
    Effective Disease Traceback
         DATE:   07/06/2007
      SUBJECT:   Animal diseases
    	     Animals
    	     Cost analysis
    	     Databases
    	     Federal/state relations
    	     Livestock
    	     Program evaluation
    	     Program management
    	     Radio frequency identification
    	     technology

    	     Species
    	     Standards
    	     Mad cow disease
    	     Cost estimates
    	     Program implementation
    	     National Animal Identification System

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    GAO-07-592

         * [1]NATIONAL ANIMAL IDENTIFICATION SYSTEM
         * [2]USDA Needs to Resolve Several Key Implementation Issues to A

              * [3]Contents

                   * [4]Results in Brief
                   * [5]Background
                   * [6]Key NAIS Implementation Issues Are Unresolved and Could
                     Unde

                        * [7]USDA Is Implementing NAIS as a Voluntary Program
                          without Par
                        * [8]Several Other Key Issues Hinder USDA's Ability to
                          Implement

                             * [9]USDA Has Not Prioritized the Implementation of
                               NAIS by Speci
                             * [10]USDA Has Not Developed a Plan for Integrating
                               NAIS with Othe
                             * [11]USDA Has Not Established a Robust Process for
                               Selecting, Sta
                             * [12]USDA Does Not Clearly Define the Time Frame
                               for Rapid Traceb
                             * [13]USDA Does Not Require Potentially Critical
                               Information for E

                   * [14]USDA Has Awarded NAIS Cooperative Agreements to Identify
                     Eff

                        * [15]USDA Awarded 169 Cooperative Agreements between
                          Fiscal Years
                        * [16]USDA Has Not Consistently Monitored or Formally
                          Evaluated NA
                        * [17]USDA Plans to Improve Oversight and Give States
                          with Greater

                   * [18]Total NAIS Program Costs Have Not Been Determined, but
                     USDA

                        * [19]NAIS Costs and Benefits Are Not Known
                        * [20]Concerns Exist over How USDA Has Spent Funds to
                          Develop and
                        * [21]Expert Views Concerning Changes to the Livestock
                          Industry Ar

                   * [22]Conclusions
                   * [23]Recommendations for Executive Action
                   * [24]Agency Comments and Our Evaluation

              * [25]Appendix I: Objectives, Scope, and Methodology
              * [26]Appendix II: Select Domestic and Foreign Animal Diseases of
              * [27]Appendix III: Members of GAO's Expert Panel on NAIS

                   * [28]Expert Panel Members

              * [29]Appendix IV: GAO Expert Panel Questions and Responses on NAI

                   * [30]Expert Panel: USDA's Implementation of the National
                     Animal I

              * [31]Appendix V: Select International Animal Identification and T
              * [32]Appendix VI: Information on NAIS Cooperative Agreements
              * [33]Appendix VII: Comments from the U.S. Department of Agricultu

                   * [34]GAO Comments

              * [35]Appendix VIII: GAO Contact and Staff Acknowledgments

                   * [36]GAO Contact
                   * [37]Staff Acknowledgments

                        * [38]Order by Mail or Phone

    Report to the Chairman, Committee on Agriculture, Nutrition, and Forestry,
    U.S. Senate

    United States Government Accountability Office

    GAO

    July 2007

    NATIONAL ANIMAL IDENTIFICATION SYSTEM

    USDA Needs to Resolve Several Key Implementation Issues to Achieve Rapid
    and Effective Disease Traceback

    GAO-07-592

    Contents

    Letter 1

    Results in Brief 4
    Background 8
    Key NAIS Implementation Issues Are Unresolved and Could Undermine the
    Program's Goal of Rapid and Effective Traceback 11
    USDA Has Awarded NAIS Cooperative Agreements to Identify Effective
    Implementation Approaches but Has Not Formally Evaluated Agreements'
    Results 27
    Total NAIS Program Costs Have Not Been Determined, but USDA Recently
    Announced Plans to Develop a Cost-benefit Analysis 33
    Conclusions 37
    Recommendations for Executive Action 38
    Agency Comments and Our Evaluation 39
    Appendix I Objectives, Scope, and Methodology 42
    Appendix II Select Domestic and Foreign Animal Diseases of Concern
    Identified by USDA 45
    Appendix III Members of GAO's Expert Panel on NAIS 46
    Expert Panel Members 46
    Appendix IV GAO Expert Panel Questions and Responses on NAIS 49
    Expert Panel: USDA's Implementation of the National Animal Identification
    System 49
    Appendix V Select International Animal Identification and Tracking
    Programs 63
    Appendix VI Information on NAIS Cooperative Agreements 65
    Appendix VII Comments from the U.S. Department of Agriculture 77
    GAO Comments 83
    Appendix VIII GAO Contact and Staff Acknowledgments 84

    Tables

    Table 1: USDA NAIS Budget Data, Fiscal Years 2004 (CCC Funds) through 2006
    35
    Table 2: USDA Funding for NAIS Cooperative Agreements to States,
    Territories, and Tribes, Fiscal Years 2004 through 2006 65
    Table 3: Species Covered by USDA NAIS Cooperative Agreement Field Trials,
    Fiscal Years 2004 and 2005 70
    Table 4: NAIS Premises Registration Statistics, by State, as of June 4,
    2007 72
    Table 5: USDA's Criteria for Distributing NAIS Cooperative Agreement
    Funding in Fiscal Year 2007 74

    Figures

    Figure 1: A Calf Identified with Both a Visual and an Electronic Tag 10
    Figure 2: Number of NAIS Premises Registered, 2005 to Present 14

    Abbreviations

    APHIS Animal and Plant Health Inspection Service
    BSE bovine spongiform encephalopathy
    CCC Commodity Credit Corporation
    EU European Union
    FMD foot-and-mouth disease
    ID identification
    NAIS National Animal Identification System
    OMB Office of Management and Budget
    RFID radio frequency identification
    TB tuberculosis
    USDA U.S. Department of Agriculture

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office
    Washington, DC 20548

    July 6, 2007

    The Honorable Tom Harkin
    Chairman
    Committee on Agriculture, Nutrition, and Forestry
    United States Senate

    Dear Mr. Chairman:

    U.S. agriculture provides an abundant supply of food and other products
    for Americans and others around the world, annually generating more than
    $1 trillion in economic activity, including more than $68 billion in
    exports in 2006. Because of the economic importance of the agriculture
    sector and the risks to public health as well as the economy, we have
    designated the federal oversight of food safety as a high-risk area.^1
    Within the broader sector, livestock production contributed nearly $123
    billion to the U.S. economy in 2006, including $13.4 billion in livestock,
    poultry, and dairy exports.^2 One way to protect the health of livestock
    animals--which are critically important to the integrity and safety of the
    nation's food supply, the well-being of Americans, and the U.S.
    economy--is through a national animal identification (ID) system to trace
    back and contain diseases that spread rapidly. Our recent work has
    described animal diseases and their economic and, in some cases, human
    health consequences. For example, a highly pathogenic strain of avian
    influenza has spread to nearly 60 countries over the past few years,
    resulting in the death and destruction of millions of wild and domestic
    birds and infecting almost 300 humans, more than one-half of whom have
    died--creating serious concerns that the virus could reach North America
    at any time.^3 In addition, the first known U.S. case discovered in
    December 2003 of one cow infected with bovine spongiform encephalopathy
    (BSE) caused the U.S. beef industry to lose more than 80 percent of its
    export trade, or an estimated $2 billion, between January and September
    2004.^4 Commonly known as mad cow disease, BSE has been linked by
    scientists to a fatal neurological disease in humans known as variant
    Creutzfeldt-Jacob disease. Another disease of particular concern is
    foot-and-mouth disease (FMD), a highly contagious livestock disease that
    does not typically affect humans and last occurred in the United States in
    1929. According to several estimates, the direct costs of controlling and
    eradicating a U.S. outbreak of FMD could range up to $27 billion in
    current dollars.^5

    1GAO, High-Risk Series: An Update, [39]GAO-07-310 (Washington, D.C.:
    January 2007).

    ^2In this report, we use the word "livestock" to refer to all animals
    involved in livestock production, including poultry.

    ^3GAO, Avian Influenza: USDA Has Taken Important Steps to Prepare for
    Outbreaks, but Better Planning Could Improve Response, [40]GAO-07-652
    (Washington, D.C.: June 11, 2007).

    In response to concerns about such outbreaks occurring in the United
    States and in recognition that speed and accuracy are critical factors in
    controlling a disease, the U.S. Department of Agriculture (USDA) announced
    in December 2003 that it would lead the design and implementation of a
    nationwide program--later named the National Animal Identification System
    (NAIS)--to enable USDA, states, and industry to quickly and efficiently
    locate all infected and potentially exposed animals and premises that have
    had contact with a foreign or domestic disease of concern. USDA recognized
    that a fully functional animal tracking system will keep the United States
    competitive in international markets, can help reassure foreign consumers
    about the health of U.S. livestock, and may satisfy other countries'
    import requirements. Internationally, some of the United States' major
    trading partners--such as the European Union (EU), Japan, and
    Canada--already have mandatory national animal ID programs in place for
    certain species. The Animal Health Protection Act authorizes the Secretary
    of Agriculture to carry out operations and measures to detect, control, or
    eradicate livestock pests and diseases,^6 and USDA has delegated this
    responsibility to its Animal and Plant Health Inspection Service's (APHIS)
    Veterinary Services. USDA cites this broad authority for implementing NAIS
    as either a voluntary or mandatory program.

    NAIS is currently being implemented for nine livestock species groups:
    bison; camelids (llamas and alpacas); cattle (beef and dairy); cervids
    (deer and elk); equine (horses, mules, donkeys, and burros); goats;
    poultry; sheep; and swine. Since 2004, USDA has received input on the
    design and implementation of the program from various stakeholders,
    including industry groups, individual producers, livestock markets,
    slaughter facilities (processors), and state animal health officials. USDA
    says that because NAIS is a state-federal-industry partnership, the agency
    has used stakeholder input to adjust the program as NAIS has evolved, and
    it encourages continued stakeholder input.

    ^4GAO, Mad Cow Disease: FDA's Management of the Feed Ban Has Improved, but
    Oversight Weaknesses Continue to Limit Program Effectiveness,
    [41]GAO-05-101 (Washington, D.C.: Feb. 25, 2005).

    ^5GAO, Foot and Mouth Disease: To Protect U.S. Livestock, USDA Must Remain
    Vigilant and Resolve Outstanding Issues, [42]GAO-02-808 (Washington, D.C.:
    July 26, 2002).

    ^67 U.S.C. S 8308.

    NAIS consists of three components: (1) registering all "premises" that
    manage or handle livestock, such as farms, feedlots, veterinary clinics,
    and livestock markets; (2) identifying livestock animals; and (3) tracking
    animal movements throughout the production process, from their premises of
    origin to their slaughter or death. Initially, USDA stated that NAIS would
    start as a voluntary program and later become mandatory, but, in late
    2006, the agency decided that NAIS would remain voluntary. The agency also
    provided a timeline for implementation and set participation benchmarks
    that called for gradually increasing the percentages of premises
    registered, animals identified, and animals tracked. By August 2005, all
    states had the capability of registering premises, and, as of late May
    2007, USDA reported that more than 390,000 premises, or 27.5 percent of
    the national estimate, were registered in NAIS.

    Of the total $85.0 million funding made available for NAIS from fiscal
    years 2004 through 2006, USDA has awarded $35.0 million in cooperative
    agreements to states, territories, and tribes to help identify effective
    approaches to register premises and to identify and track animals. In
    fiscal year 2007, Congress appropriated another $33.0 million to develop
    and implement NAIS, and the President's Budget in fiscal year 2008
    requested an additional $33.1 million for the program. Premises
    registration is currently funded by USDA, states, territories, and tribes
    and, therefore, is free to the producer. The costs of animal ID and
    tracking are to be borne by the livestock industry and will vary,
    depending on the choices made by individual producers.

    In this context, we determined (1) how effectively USDA is implementing
    NAIS and, specifically, the key implementation issues identified by
    livestock industry groups, market operators, state animal health
    officials, and others; (2) how USDA has distributed cooperative agreement
    funding to help states and industry prepare for NAIS and evaluated the
    agreements' results; and (3) what USDA and others estimate are the costs
    for USDA, states, and the livestock industry to implement and maintain
    NAIS.

    To address all three objectives, we reviewed USDA documents, interviewed
    agency officials responsible for implementing NAIS, and conducted site
    visits to selected livestock markets and cooperative agreement field
    trials. We also conducted structured interviews in person or via telephone
    with animal health officials in seven states. These states were selected
    on the basis of their geographic dispersion; the range in the number of
    premises located in each state; and, in some cases, their high levels of
    livestock production. We also conducted structured interviews in person or
    via telephone with, and reviewed documents from, representatives from
    numerous stakeholder organizations, including several NAIS industry
    working groups. In addition, for the first and third objectives, we
    convened a Web-based panel of 32 experts to learn their beliefs and
    opinions on various aspects of USDA's implementation of NAIS. We selected
    experts who were actively involved in the development or implementation of
    NAIS and were knowledgeable of its details; who had conducted research on
    animal ID, or had published in peer-reviewed journals on animal ID; or who
    were recognized by their peers as an expert on NAIS. For the second
    objective, we also reviewed USDA documentation related to cooperative
    agreements signed between USDA and states, territories, tribes, and
    industry groups from fiscal years 2004 through 2007. For the third
    objective, we asked USDA and others for any NAIS cost estimates they had
    developed, and we reviewed federal guidance for developing cost-benefit
    analyses. A more detailed description of our scope and methodology is
    presented in appendix I. We conducted our work from June 2006 to May 2007
    in accordance with generally accepted government auditing standards.

    Results in Brief

    USDA has steadily increased the number of livestock premises registered in
    the nation and taken some steps to address stakeholder concerns in
    implementing NAIS. However, the agency has not effectively addressed
    several key issues identified by livestock industry groups, market
    operators, state animal health officials, and others that, if left
    unresolved, could undermine the program's goal of rapid and effective
    traceback and thus hinder its success. Foremost among these issues is
    USDA's decision in late 2006 to continue implementing NAIS as a voluntary
    program and to drop participation benchmarks that were intended to gauge
    progress. Many industry groups, state animal health officials, and experts
    say this approach may affect the agency's ability to attract the necessary
    levels of participation to quickly and efficiently locate all animals that
    are potentially exposed to a disease. However, some industry groups oppose
    the program being mandatory because they believe that NAIS could succeed
    as a voluntary program or that USDA first needs to resolve several
    implementation issues. USDA officials told us that the agency is analyzing
    what participation levels are necessary to meet the program's goal, and
    that it may introduce new, risk-based benchmarks, accordingly. In
    addition, several other key problems hinder the agency's ability to
    implement NAIS effectively, as follows:

               o USDA has not prioritized the implementation of NAIS by species
               or other criteria. Instead, the agency is implementing NAIS for
               numerous species simultaneously, regardless of the species'
               economic value, their risk of diseases of concern, the potential
               human health impact of these diseases, or other criteria.
               Consequently, federal, state, and industry resources for NAIS have
               been allocated widely, rather than being focused first on the
               species of greatest concern and allowing other species to be
               included later, on the basis of lessons learned. Twenty-one of the
               32 expert panel members said USDA should definitely or probably
               implement NAIS incrementally by species and suggested criteria to
               prioritize the order of implementation. USDA officials told us
               that prioritizing implementation may be appropriate, such as
               focusing on specific diseases of concern or commercial operations,
               and that the states should determine their own priorities for
               implementation.
               o Although USDA aims to minimize the financial and practical
               impact on producers and others in implementing NAIS, the agency
               has not developed a plan to integrate NAIS with preexisting animal
               ID requirements, such as scrapie ear tags and brands, for other
               USDA and state animal health programs. As a result, producers have
               generally been discouraged from investing in new ID devices for
               NAIS, according to industry groups we interviewed.
               o USDA has not established a robust process for selecting,
               standardizing, and testing ID and tracking technologies. While
               international programs have generally used specific animal ID
               devices for their national animal ID programs, USDA has taken a
               "technology-neutral" position to allow market forces to determine
               what devices are most effective and practical. In addition,
               industry groups, experts, and others told us that electronic ID
               technologies do not always perform well in production
               environments, such as livestock markets, and that the agency has
               not independently tested any ID or tracking devices. Consequently,
               producers, livestock markets, and others are reluctant to invest
               in new ID or tracking devices for NAIS, according to industry
               groups and the experts.
               o USDA does not clearly define the time frame for rapid animal
               disease traceback. The definition of "rapid traceback" may vary by
               disease because some diseases spread more quickly than others, but
               by not clearly defining a rapid response for a given disease,
               there could be a slower response and greater economic losses. A
               senior USDA official told us the agency first needs to identify
               current baselines for traceback before the agency can determine
               time-sensitive traceback goals for NAIS.
               o USDA does not require potentially critical information--such as
               the species, date of birth, or approximate age of animals--to be
               recorded in NAIS animal ID and tracking databases. This
               information can be critical for efficient traceback because it
               helps limit the scope of an investigation, thus saving time and
               potentially minimizing the economic impact. USDA officials told us
               that although animal-specific data can be valuable, the agency is
               collecting the minimum amount of information needed due to some
               producers' concerns about protection of their proprietary
               information in NAIS databases.

               USDA awarded 169 NAIS cooperative agreements totaling $35 million
               to 49 states, 29 tribes, and 2 territories from fiscal years 2004
               through 2006 to help identify effective approaches to register
               premises and identify and track animals. To date, USDA has not
               consistently monitored cooperative agreements, and, as a result,
               the agency cannot be assured that the agreements' intended
               outcomes have been achieved. In addition, USDA has not formally
               evaluated or consistently shared the results of cooperative
               agreements with state departments of agriculture, industry groups,
               and other NAIS stakeholders, which would enable lessons learned
               and best practices to inform the program's progress. USDA
               officials told us the quality of reports submitted to the agency
               varies, and USDA has had insufficient resources to conduct
               additional oversight. In fiscal year 2007, USDA plans to increase
               oversight of all cooperative agreements awarded that year by
               assessing progress midyear. Furthermore, USDA plans to give those
               states with greater numbers of premises registered some
               flexibility in using cooperative agreement funds to subsidize the
               purchase of animal tracking equipment for livestock markets. For
               the first time, in fiscal year 2007, USDA also plans to award $6
               million in cooperative agreements to nonprofit industry and other
               groups to increase premises registration efforts.

               Although USDA began to implement NAIS in 2004, no comprehensive
               cost estimate or cost-benefit analysis for the implementation and
               maintenance of NAIS currently exists. As a result, it is not known
               how much is required in federal, state, and industry resources to
               achieve rapid and effective traceback or whether the potential
               benefits of the program outweigh the costs. Twenty-nine of the 32
               expert panel members said that USDA should definitely or probably
               publish a cost-benefit analysis for NAIS. The NAIS working groups,
               other livestock industry representatives, and state animal health
               officials we interviewed also said that the cost of implementing
               NAIS remained one of their biggest concerns. USDA officials plan
               to hire a contractor to conduct a cost-benefit analysis, in part,
               to more precisely forecast the program's economic effects.
               Moreover, the Senate Committee on Appropriations and the House of
               Representatives have raised concerns over how USDA has spent funds
               to develop and implement NAIS. Finally, the experts had mixed
               views on the impact that NAIS would have on the livestock
               industry, such as whether NAIS may lead to changes in market
               structure or affect prices.

               To ensure that USDA continues to take steps to address unresolved
               issues, we are making several recommendations aimed at improving
               USDA's efforts to implement NAIS more effectively and efficiently.
               For example, we are recommending that USDA reestablish
               participation benchmarks to gauge progress in registering premises
               and identifying and tracking animals; monitor participation; and,
               if participation does not meet the benchmarks, take further
               action, such as making participation mandatory or creating
               incentives to achieve those levels of participation. In addition,
               we are recommending that USDA establish a robust process to
               select, standardize, and independently test and evaluate the
               performance of animal ID and tracking devices to ensure they meet
               minimum standards. We are also recommending that USDA increase the
               monitoring of NAIS cooperative agreements, evaluate and publish
               the results of cooperative agreements on a timely basis, and
               publish the planned analysis of the costs and benefits of NAIS
               following criteria established in Office of Management and Budget
               (OMB) guidance.

               In commenting on a draft of this report, USDA stated that it
               appreciated our comprehensive evaluation of NAIS and generally
               agreed with our recommendations. However, regarding our
               recommendation that USDA establish a robust process to select,
               standardize, and independently test and evaluate the performance
               of animal ID and tracking devices to ensure they meet minimum
               standards, USDA believed that these standards must be defined
               through a consensus of affected stakeholders and that working with
               stakeholders to resolve this issue is imperative before selecting
               specific technologies for NAIS. We recognize the need for USDA to
               work with stakeholders before determining which ID and tracking
               devices are most appropriate for NAIS. However, we emphasize that
               the sooner USDA selects specific technologies, the sooner the
               animal ID and tracking components of the program will be
               implemented effectively and efficiently. See the "Agency Comments
               and Our Evaluation" section and appendix VII for a reprint of
               USDA's comment letter and our responses to these comments.

    			  Background

               The concept of animal ID is not new, in the United States or
               abroad. For decades, American producers have kept records on, and
               used ID methods for, livestock animals for both commercial and
               regulatory purposes. Specifically, several USDA and state animal
               disease eradication programs--such as programs for tuberculosis
               (TB) in cattle, pseudorabies in swine, and scrapie in sheep and
               goats--include animal ID requirements. Certain species and classes
               of animals require officially recognized ID devices for interstate
               commerce, and all live animals imported into, or exported from,
               the United States require official ID. Thus, many livestock
               animals are already identified in the United States by ear tags,
               branding, tattoos, or other devices. However, the use of ID
               devices varies by breed, species, and state, and, until NAIS, no
               attempt had been made to create a uniform animal ID system of
               national scope and across multiple species using a universal
               numbering system and central data repository.

               Due to serious concerns about the United States' ability to
               safeguard its livestock from the harmful effects of disease, in
               2002, the National Institute of Animal Agriculture--an
               organization of producers, veterinarians, scientists, government
               representatives, and allied industries--initiated a
               state-USDA-industry task force of approximately 70 representatives
               to create a national animal ID system. In 2003, USDA expanded upon
               this work and established a development team consisting of more
               than 70 industry associations, organizations, and government
               agencies. That team ultimately produced the United States Animal
               Identification Plan in December 2003, which provided the
               foundation for NAIS. Although early versions of the plan focused
               on food animals only, other livestock species were later
               incorporated. The plan was being finalized when the nation's first
               case of BSE was confirmed on December 25, 2003. Five days later,
               the Secretary of Agriculture announced measures to guard against
               BSE and indicated that USDA would expedite the implementation of a
               national animal ID system.

               Since 2004, USDA has solicited public comments on draft NAIS
               policy documents, held public listening sessions, and met with
               industry groups and others in its efforts to design and implement
               NAIS. In addition, USDA has received input from 10 working groups
               comprising producers, academics, and others representing the
               various livestock species and industry sectors currently included
               in NAIS. These working groups make recommendations to the NAIS
               Subcommittee, a group of state and industry stakeholders
               established by USDA in September 2004 to provide regular, formal
               input to the USDA Secretary's Advisory Committee on Foreign Animal
               and Poultry Diseases (full committee) about how NAIS should
               progress. The NAIS Subcommittee is also responsible for receiving
               input from the National Institute of Animal Agriculture; the
               United States Animal Health Association, an organization
               representing state veterinarians and allied industry groups; and
               other organizations and individuals. The full committee is a
               federal advisory group of state, academic, and industry experts
               selected by the Secretary, which meets once a year or as deemed
               necessary by the Secretary. While the NAIS Subcommittee meets
               periodically, the full committee has met only twice--in September
               2004 and September 2006--since the creation of NAIS. USDA is not
               obligated to take action on the NAIS Subcommittee's, full
               committee's, or others' recommendations.

               For the premises registration component of NAIS, states and tribes
               are responsible for submitting premises information--given to them
               by producers and others--to a central, Web-based USDA premises
               database. In turn, USDA allocates a unique, 7-digit, alphanumeric,
               premises ID number (e.g., A123B45). The premises then receives
               confirmation online or by mail from the relevant state or tribe
               with its unique premises ID number.

               For the animal ID component, USDA published an interim rule,
               effective in November 2004, recognizing the Animal Identification
               Number as a new, official numbering system for individual animals
               in interstate commerce.^7 Producers and other NAIS participants
               can order ID devices from USDA-approved managers that are
               imprinted with a unique, 15-digit Animal Identification Number for
               use on animals that move through the production process as
               individuals, as is typical in the cattle, sheep, and goat
               industries. Figure 1 shows a calf that is identified with tags in
               both ears, with the calf's left ear bearing an electronic tag and
               its right ear bearing a visual tag. Both tags have the Animal
               Identification Number for official ID purposes, and the visual tag
               also has a number used for the producer's herd management
               purposes. For animals of the same species that typically move
               through the production chain as a group, such as commercial
               poultry and swine, producers can instead identify the animals with
               a group/lot ID number. Group/Lot ID numbers are self-generated by
               the premises (not assigned by USDA) and are maintained at the
               premises in management records.

    ^7Livestock Identification; Use of Alternative Numbering System, 69 Fed.
    Reg. 64,644 (Nov. 8, 2004).

               Figure 1: A Calf Identified with Both a Visual and an Electronic
               Tag

               Lastly, for the animal tracking component, USDA has developed the
               Animal Trace Processing System to allow state and federal animal
               health officials to request information, in the event of an animal
               health investigation, from multiple private and state animal
               tracking databases containing animal location and movement
               records. Producers and others are responsible for reporting
               certain animal movements, such as when a change of ownership
               occurs or when animals commingle with other herds or flocks.
               Events that would enable state and federal animal health officials
               to request information from this network of databases include an
               indication or a confirmed positive test of a foreign animal
               disease, an animal disease emergency as determined by the
               Secretary of Agriculture or state departments of agriculture, or a
               need to conduct a trace to determine the origin of infection for a
               domestic disease of concern. (See app. II for a list of domestic
               and foreign animal diseases of concern identified by USDA.)

    			  Key NAIS Implementation Issues Are Unresolved and Could Undermine
    			  the Program's Goal of Rapid and Effective Traceback

               USDA has steadily increased the number of livestock premises
               registered in the nation and has taken some steps to address
               stakeholder concerns in implementing NAIS. However, the agency has
               not effectively addressed a number of key issues identified by
               livestock industry groups, market operators, state animal health
               officials, and others that, if not ultimately resolved, could
               undermine the program's goal of rapid and effective traceback,
               thus hindering its success. USDA's decision to implement NAIS as a
               voluntary program without benchmarks to measure progress may
               affect the agency's ability to attract the necessary levels of
               participation to quickly and efficiently locate all animals
               potentially exposed to a disease. In addition, USDA has not
               prioritized the implementation of NAIS by species or other
               criteria. Furthermore, USDA has not developed a plan for
               integrating NAIS with other USDA and state animal ID requirements,
               nor has it established a robust process for selecting,
               standardizing, and testing ID and tracking technologies. The
               agency also does not clearly define the time frame for rapid
               traceback. Finally, USDA does not require potentially critical
               information for efficient traceback to be recorded in NAIS
               databases.

    			  USDA Is Implementing NAIS as a Voluntary Program without
    			  Participation Benchmarks

               During the first 2 years of the program's implementation, USDA
               stated several times that participation in NAIS would initially be
               voluntary but would eventually become mandatory to achieve full
               participation and, thus, the goal of rapid and effective
               traceback. One of USDA's first major NAIS policy documents, the
               Draft Strategic Plan 2005-2009, released in April 2005, stated
               that during initial implementation, participation would be
               voluntary so that stakeholders could have the opportunity to
               obtain experience with the program and provide feedback as
               successful and practical solutions evolved. The plan also provided
               a timeline for implementation, with premises registration and
               animal ID to be required by January 2008 and the reporting of
               defined animal movements to be required by January 2009, under
               what would become an entirely mandatory program. The plan stated
               that this phased-in approach was "to support the transition from
               voluntary to mandatory as full implementation is achieved." In
               addition, the plan also stated that, "While market forces may
               eventually create more inclusiveness, the clear stakeholder
               support for transitioning to a mandatory program and the urgency
               of achieving the goal, suggest that setting a date for that
               transition would benefit the program."

               Later, the April 2006 Strategies for the Implementation of NAIS
               set benchmarks that were intended to gauge progress in attaining
               full participation. These benchmarks called for gradually
               increasing the percentages of premises registered, animals
               identified, and animals tracked from January 2007 through January
               2009. Specifically, for premises registration, USDA aimed for 25
               percent participation by January 2007, 70 percent by January 2008,
               and 100 percent by January 2009. In addition, the implementation
               plan called for 40 percent of animals being identified by January
               2008, 100 percent of "new" animals less than 1 year of age being
               identified by January 2009, and 60 percent of new animals having
               complete tracking data by January 2009. USDA stated that it would
               evaluate whether participation levels were increasing at rates
               that would achieve full participation by 2009, and that, if this
               were not the case, USDA would develop federal regulations to
               require industry to identify their premises and animals.

               In May 2006, in an announcement for NAIS cooperative agreements,
               USDA stated that it anticipated promulgating regulations by early
               2008 to require participation in all three components of the
               program. Furthermore, in a document supporting its fiscal year
               2007 budget submission to OMB, USDA stated that the intrinsic
               value of its investment in NAIS was based on the assumption that
               there would be sufficient animal ID and movement data available to
               support the program's traceback goal. USDA also said that if
               participation fell below expectations, traceback would
               periodically fail because of the lack of animal tracking
               information from nonparticipants.

               However, in August 2006, reporting that 20 percent of the nation's
               premises had been registered, USDA decided that NAIS would
               permanently remain a voluntary program. USDA officials told us
               that due to opposition from some industry groups, it is imperative
               that industry advance the program, rather than government
               regulations, to encourage participation. Some industry groups
               believe that NAIS could succeed as a voluntary program or that
               USDA first needs to resolve several key implementation issues
               before making participation mandatory. For example, officials from
               the National Cattlemen's Beef Association told us they believe
               that NAIS could be successful as a voluntary program, such as the
               beef industry's 20-year-old Beef Quality Assurance program, which
               covers about 95 percent of cattle in feedlots and aims to reduce
               drug residues and pathogen contamination. The association
               officials also told us that if NAIS became mandatory, producers
               who have voluntarily participated would lose the market advantage
               they currently enjoy through higher prices paid at market or
               slaughter for animals they identify for marketing or management
               purposes. Another industry group, the American Farm Bureau
               Federation, which in 2006 supported NAIS being a mandatory
               program, expressed its support in January 2007 for NAIS to be
               voluntary, while cautioning that USDA should not make the program
               mandatory until the agency has published a full cost analysis for
               the program. The Livestock Marketing Association--a national trade
               association representing over 700 livestock auction markets,
               dealers, and other livestock marketing businesses--also wrote in
               comments to USDA in 2005 that NAIS should remain voluntary until
               USDA addresses several implementation issues, including the
               effectiveness and availability of animal ID technology.

               In November 2006, USDA also dropped its participation benchmarks
               from the most recent policy document for the program, the draft
               NAIS User Guide.^8 Despite a steady increase in the number of
               premises registered since USDA began reporting premises
               registration information in January 2005 and reaching the 25
               percent target (nearly 360,000 premises) in early February 2007
               (see fig. 2), USDA officials told us they dropped the
               participation benchmarks because meeting future benchmarks for all
               components of NAIS was no longer realistic. Instead, the officials
               said the agency is analyzing what participation levels for all
               components of NAIS would achieve the "critical mass" necessary to
               have an efficient and effective program. The officials added that
               the agency does not expect that equal levels of involvement across
               all species will be necessary, and that new, risk-based
               participation benchmarks for premises registration, animal ID, and
               animal tracking may be developed accordingly, which could vary by
               species. However, USDA has not determined what action it may take
               if participation levels do not meet those new benchmarks.

    ^8USDA, National Animal Identification System (NAIS): A User Guide and
    Additional Information Resources, Draft Version (November 2006).

    Figure 2: Number of NAIS Premises Registered, 2005 to Present

    Note: On the basis of 2002 U.S. Census of Agriculture data, USDA's
    National Agriculture Statistics Service estimates there are approximately
    1.4 million distinct livestock premises nationwide (with more than $1,000
    in annual income), which may contain one or more species.

    Although it may be too soon to determine whether USDA's current approach
    will be successful, many industry groups, state animal health officials,
    and the experts we surveyed say the program will likely need to become
    mandatory to achieve the levels of participation that are necessary to
    rapidly and effectively locate all potentially exposed animals in a
    disease traceback. In the Draft Strategic Plan, for instance, USDA
    reported that most individuals who spoke about this subject at the
    agency's 2004 listening sessions preferred, by a ratio of 3:1, a mandatory
    program to a purely voluntary program. USDA also reported at that time
    that a survey of National Institute of Animal Agriculture members showed
    even stronger support, by a ratio of 8:1, for a program that is or will
    become mandatory. In addition, state and industry officials we interviewed
    said that as a voluntary program without benchmarks, NAIS has lost
    momentum, deterred participation, and faces an uncertain future. For
    example, officials from one major agricultural state told us that USDA's
    changed direction on whether the program would become mandatory has
    challenged the state's premises registration efforts, because many
    producers are motivated by compliance with federal requirements, not
    necessarily by NAIS's traceback goal alone. These officials also said that
    the lack of participation benchmarks had compromised the state's
    credibility with producers and its ability to make progress in
    implementation. As of early June 2007, this state had less than 16 percent
    of its premises registered, and the officials believed there is little
    incentive for producers to participate in NAIS. Moreover, three states
    where premises registration is mandatory by state law--Indiana,
    Michigan,^9 and Wisconsin--accounted for about 26 percent of USDA's total
    premises registered nationally as of that time.

    Furthermore, a majority of the 32 expert panel members said that 81
    percent to 100 percent of producers, livestock markets, and slaughter
    facilities would need to register their premises to achieve the program's
    goal of rapid and effective traceback (see apps. III and IV for more
    details about these experts and their responses to our questions). By
    contrast, under a voluntary program, only 1 expert believed that producers
    would achieve at least 81 percent participation in premises registration,
    while 11 experts believed that level would be achieved by livestock
    markets, and 20 experts believed that level would be achieved by slaughter
    facilities. For the animal ID and tracking components, experts had similar
    views. For example, a majority believed that 76 percent to 100 percent of
    producers, markets, and slaughter facilities would need to participate in
    animal tracking to make the program effective, while a minority believed
    that level would be achieved in any of those sections under a voluntary
    program. Overall, 27 of the 32 experts said participation in NAIS should
    definitely or probably be mandatory.

    Several other countries, including the United States' major agricultural
    trading partners and competitors, have instituted mandatory animal ID
    programs for cattle and, in some cases, a few other species. For example,
    the EU has mandatory programs in which all cattle born or moved across EU
    state lines as of 2000 must be identified with two individual ear tags and
    an animal passport, and member states must maintain computerized databases
    that record births, movements, and deaths. Since several cases of BSE were
    discovered in 2001, Japan has made a series of changes to its food safety
    legislation, resulting in a mandatory system where all beef and dairy
    cattle must be identified using an ear tag. Information is maintained on
    an animal's ID number, breed, gender, and production history from the farm
    of origin through distribution to consumers. Similarly, in 2001, Canada
    started a compulsory animal ID program that applies to all bovine and
    bison and now requires that animals receive a radio frequency
    identification (RFID) tag when leaving their herd of origin,^10 which is
    collected at slaughter or export. Canada later expanded its program to
    sheep in 2004, requiring the use of visual ear tags. Brazil, the world's
    largest beef exporter, gradually phased in its mandatory ID program for
    cattle and bison starting in January 2002; the entire herd is expected to
    be identified by the end of 2007. Australia, the world's second-largest
    beef exporter, has developed a mandatory system that uses RFID to identify
    and trace cattle from farm of origin to slaughter. Australia has been
    moving toward a fully integrated program linking electronic ID devices,
    product bar coding, and a central electronic database. Appendix V provides
    more detailed information on select international animal ID and tracking
    programs.^11

    ^9In March 2007, Michigan regulations took effect that require electronic
    ear tags for all cattle prior to leaving their premises of origin.

    To increase participation in NAIS, several industry groups, state animal
    health officials, and the experts we surveyed have also suggested that
    USDA provide incentives, such as financial assistance, to industry to
    implement the animal ID and tracking components. For instance, the NAIS
    Cattle Working Group recommended in 2004 that USDA assume primary
    financial responsibility for funding the initial development of the basic
    infrastructure required for animal ID and tracking--including equipping
    concentration points, such as livestock markets and slaughter facilities,
    with RFID readers and software to capture the data electronically.
    Livestock market operators and others also say such financial support
    would be an attractive incentive because RFID technology, if effective,
    would allow animal movements to be recorded as quickly as the current
    "speed of commerce" and, therefore, would not slow down business
    operations. The NAIS Subcommittee also recommended, in 2005, a
    cost-sharing arrangement between USDA and industry to fund the program's
    implementation. The Secretary's Advisory Committee on Foreign Animal and
    Poultry Diseases adopted these recommendations as well as the other NAIS
    working group and Subcommittee recommendations presented at its September
    2006 meeting. One state that has already created a cost-sharing incentive
    is Wisconsin, where the state contributes 50 percent, or up to $1, of the
    cost of an RFID ear tag on a first-come, first-served basis under its
    voluntary animal ID program. Wisconsin officials say the cost-sharing
    arrangement is designed to make the program more attractive to the state's
    producers, and, as of early March 2007, the state had approved reimbursing
    producers for a total of 30,000 tags for cattle, which was up from 20,000
    tags the previous month.

    ^10RFID is an automated data-capture technology that can be used to
    electronically identify, track, and store information contained on an
    object (in the case of NAIS, an animal).

    ^11We did not independently verify the information on foreign countries'
    animal ID systems.

    However, USDA officials told us that the power of producers to protect
    themselves and their animals is a tremendous incentive for participation
    in NAIS, and, as the program continues to be implemented and developed,
    additional incentives will be realized by USDA, producers, and state and
    industry partners. Nonetheless, whether NAIS is mandatory or voluntary,
    the lack of participation benchmarks prevents USDA from measuring progress
    in attaining the necessary participation levels for an effective program.

    Several Other Key Issues Hinder USDA's Ability to Implement NAIS Effectively

    Industry groups, market operators, state animal health officials, and
    others have identified several other key problems that, if left
    unresolved, could undermine the program's goal, further hindering USDA's
    ability to implement the NAIS program effectively.

      USDA Has Not Prioritized the Implementation of NAIS by Species or Other
      Criteria

    USDA has not prioritized the implementation of NAIS by species or other
    criteria. Instead, the agency is currently implementing NAIS
    simultaneously for numerous species, regardless of their economic value,
    their risk of diseases of concern, the potential human health impact of
    these diseases, or other criteria. Consequently, federal, state, and
    industry resources for NAIS have been allocated widely, rather than being
    focused first on the species of greatest concern and allowing other
    species to be included later, on the basis of lessons learned. In
    contrast, international animal ID programs have generally started
    implementation with one species (cattle) and, in some cases, later
    expanded to include a few other species, such as sheep, bison, and goats,
    on the basis of disease risk, economic importance, or potential human
    health impact. In addition, 21 of the 32 expert panel members said USDA
    should definitely or probably implement NAIS incrementally by species,
    while 8 experts said USDA should definitely or probably continue with its
    current approach to implement the program for numerous species
    simultaneously.^12 Many of the 32 experts suggested criteria that USDA
    could use to determine the priorities given to each species in
    implementing NAIS, including whether it is a food animal; its likelihood
    of capturing diseases of concern; the risk that the animal will spread a
    disease harmful to human health; the relative ease of implementation for a
    particular industry; and the industry's impact on the U.S. economy,
    including export value.

    Prioritizing implementation for certain species before trying to apply the
    program to numerous species would likely result in more efficient and
    cost-effective implementation, on the basis of lessons learned and best
    practices being identified. In addition, the industries currently covered
    by NAIS appear to be at various stages of readiness to implement NAIS. For
    example, the Bison, Camelid, Cattle, Equine, Swine, Sheep, and Goat
    Working Groups have submitted reports to USDA with implementation
    recommendations for their industries, but the Cervid and Poultry Working
    Groups have not. Furthermore, according to industry representatives, some
    industries, such as commercial swine and poultry operations, already have
    widespread ID and tracking systems in place that would allow traceback to
    occur within 48 hours, while other industries may not.

    USDA officials pointed out that an animal ID program to support the animal
    health needs of all livestock species would be unique in the world and
    would place the United States in a position to set a new standard for
    animal ID. Some industry groups have expressed their support for NAIS
    being implemented for all species, since many transmissible diseases are
    not species-specific. For example, the National Livestock Producers
    Association, which represents about 200,000 producers across the country,
    wrote USDA in 2005 that the true value of NAIS rests in its potential
    ability to track all livestock animals, regardless of species, due to the
    extent of their commingling and potential to spread disease. The
    association added that NAIS would not be very effective or equitable if
    all species were not included as soon as possible. Furthermore, 21 of the
    32 experts we surveyed said USDA should definitely or probably continue
    with its current approach to include all species, rather than limit NAIS
    to one or a few species. USDA officials also told us that establishing
    NAIS across all species is critical, because many operations handle more
    than one species, and that focusing entirely on cattle, as some other
    countries have done, is a critical flaw since some animal diseases cross
    species lines. Nonetheless, USDA officials told us they recognize that
    prioritizing program implementation may be appropriate, such as by
    focusing on specific diseases of concern or large commercial operations,
    and that the states should determine their own priorities for
    implementation. These officials also said future NAIS plans will more
    clearly identify higher-risk areas or sectors within the species. In
    commenting on a draft of this report, USDA told us it plans to develop, in
    collaboration with the species working groups, a NAIS Short-Term and
    Long-Term Implementation Strategies document that will contain actions for
    the remainder of 2007 through 2011. Specifically, the agency stated that
    the short-term strategy, targeted for publication in August 2007, will
    target species or industry sectors that have the greatest need for
    advancing premises registration, animal ID, and tracking. The long-term
    strategy will be distributed in early 2008 and will call for an evaluation
    of participation through 2009 to determine what actions, such as
    incentives, may be needed to accelerate participation in the voluntary
    program.

    ^12Two of the 32 experts were uncertain, and 1 expert did not answer this
    question.

      USDA Has Not Developed a Plan for Integrating NAIS with Other USDA and State
      Animal ID Requirements

    Although USDA aims to minimize the financial and practical impact on
    producers and others in implementing NAIS, the agency has not developed a
    plan to integrate NAIS with preexisting programs and systems. Many
    producers are already required to participate in preexisting USDA and
    state animal disease eradication programs that use specific ID devices
    with different numbering systems or that require branding. For example,
    the National Scrapie Eradication Program for sheep and goats requires
    visual ear tags, and other USDA-state programs require ear tags for
    brucellosis and TB in cattle and ear notches in swine. In addition,
    several western states recognize branding as an official ID for disease
    control purposes. As a result, producers have generally been discouraged
    from investing in new ID devices for NAIS, according to industry groups we
    interviewed, thereby inhibiting implementation of the program's animal ID
    and tracking components.

    Importantly, while USDA published an interim rule effective in November
    2004 recognizing the Animal Identification Number as a new, official
    numbering system for individual animals in interstate commerce, this new
    system does not replace other, USDA-recognized, official numbering
    systems. The rule established that the Animal Identification Number may be
    used for official ID in other disease eradication programs. Nonetheless,
    USDA officials told us that they are evaluating how NAIS and other
    official ID systems can be standardized and moved to a single numbering
    system, to the extent practical, and that eventually, the agency expects
    Animal Identification Numbers to become the standard national numbering
    system used for certain species, individual ID methods, or both. USDA told
    us that as of early March 2007, 1.3 million Animal Identification Number
    RFID ear tags had been distributed, including some that are being used for
    state disease eradication programs. For example, USDA reported that about
    500,000 tags had been distributed to Michigan producers, where the state's
    bovine TB eradication program requires all cattle to have RFID ear tags
    prior to movement from their premises.

    For NAIS not to impose undue costs on producers by requiring additional ID
    devices, stakeholders say the program must be integrated with preexisting
    programs and systems. However, USDA faces challenges in integrating NAIS
    with other animal ID requirements. For example, Sheep Working Group
    members told us that because the scrapie program already assigns a flock
    ID number to each premises--plus a unique, individual ID number to each
    animal--sheep producers do not see the need to participate in NAIS, which
    involves different premises and individual animal ID numbering systems.
    Another challenge is that brands identify all animals raised by a specific
    producer as a group, not as individuals, and the same brands are often
    used in different states or even in different counties within the same
    state. USDA's NAIS User Guide states that registered brands are not
    considered to be an official, individual animal ID as called for by NAIS
    because cattle typically move through the production process as
    individuals. In addition, NAIS animal tracking requirements may differ
    operationally from state brand laws and practices. For example, New Mexico
    requires state authorities to inspect all livestock moving across brand
    district lines, which contrasts with NAIS, where the responsibility of
    reporting animal movement lies with the premises receiving animals. New
    Mexico officials told us that if they were to implement NAIS as
    envisioned, the time required for state inspections would at least double
    if inspectors were required to read and report ID tags. The Cattle Working
    Group recommended, in 2004, that USDA develop protocols for integrating
    existing brand laws with NAIS individual animal ID requirements and for
    the reporting of animals' movements from brand law states to nonbrand law
    states.

    USDA officials told us that the need to have a single numbering system
    across all species is less important than getting animals individually
    identified and tracked using any official ID system recognized by USDA.
    Furthermore, these officials said that while standardizing to a single
    numbering system for animal ID may eventually be appropriate, USDA
    recognizes there are differences among species and that cost, technology
    capability, and practicality must be considered before phasing out
    existing ID devices that have proven to be workable for producers. For
    example, the 15-digit Animal Identification Number may not be the most
    practical numbering system when used on visual ear tags for smaller
    animals since the size of the tag does not lend itself to a 15-digit
    number. Nonetheless, USDA officials are starting to address some
    integration issues. For example, USDA officials told us in April 2007 that
    the agency has decided to allow the official ID devices and numbering
    systems used by other disease eradication programs for the purposes of
    NAIS as well, although the agency has not yet communicated this
    development to industry. In addition, in late 2006, a NAIS Brand State
    Working Group was formed, in part to identify what brand concepts could
    integrate with NAIS. In commenting on a draft of this report, USDA
    informed us that it will update the NAIS User Guide in October 2007 to
    more clearly reflect the use of other official ID numbers within NAIS.

      USDA Has Not Established a Robust Process for Selecting, Standardizing, and
      Testing ID and Tracking Technologies

    International programs have generally used specific animal ID devices for
    their national animal ID programs, and some NAIS working groups have
    recommended specific ID devices for their species, such as RFID ear tags
    for cattle and RFID microchip implants for horses. However, USDA has taken
    a "technology-neutral" position to allow market forces to determine what
    devices are most effective and practical and to accommodate future
    technologies. In a NAIS policy document on ID devices released in February
    2006,^13 USDA stated that individual, visual ID devices are a starting
    point to ensure greater participation among producers and asserted that a
    neutral approach allows RFID; biometrics, such as DNA and retinal imaging
    devices; and other potential technologies to be used as supplemental
    identification. Nonetheless, that document also stated that uniformity and
    compatibility of technology are critical to ensure that the collection of
    animal ID data is practical and cost-effective throughout production.
    Furthermore, USDA recognized the need to have ID technologies that are
    compatible with Canada and Mexico. USDA also stated that as NAIS is phased
    in, ongoing efforts to harmonize animal ID with other countries will
    facilitate safe trade.

    While not all species can use the same devices due to industry preferences
    or physical limitations, such as small ears, USDA's technology-neutral
    approach means, for example in the cattle industry, that a producer can
    choose to use visual ear tags; low- or high-frequency RFID ear tags; or
    other advanced technologies, such as retinal imaging. There are costs and
    benefits associated with any device. For example, visual ID devices are
    less expensive but require manual recording, which may cause errors and
    slow down the "speed of commerce" at livestock markets and slaughter
    facilities. RFID systems, on the other hand, allow data to be captured
    automatically into databases, but these systems are also not consistently
    accurate and are more expensive--in terms of both the ID device and the
    associated infrastructure (reader, installation, and computer use). With
    such a wide range of options in animal ID and tracking devices, industry
    groups and expert panel members told us that producers and market
    operators fear that their choices may be inconsistent with others in the
    marketplace, or that USDA will adopt specific devices in the future, and
    they may find themselves having made the wrong investment decision. For
    instance, a producer may find that the closest livestock market uses
    electronic readers and cannot easily accommodate visual ear tags;
    alternatively, the market may not have installed RFID reader equipment,
    and the producer would not get the anticipated return on his or her
    investment. From another perspective, a multispecies livestock market,
    based on its customers, may face a dilemma of investing in equipment to
    read and record visual tags, RFID tags, RFID implants, and other
    devices--or risk being unable to capture all information quickly and
    efficiently and losing some customers. Consequently, producers, livestock
    markets, and slaughter facilities have generally been discouraged from
    investing in ID or tracking devices, thus inhibiting implementation of the
    animal ID and tracking phases.

    ^13USDA, National Animal Identification System (NAIS): Administration of
    Official Identification Devices with the Animal Identification Number
    (Feb. 23, 2006).

    Asked whether USDA's technology-neutral position encourages or discourages
    producers' investment in animal ID technology, 23 of the 32 expert panel
    members said this position definitely or probably discourages investment,
    and 6 said it definitely or probably encourages investment.^14 In their
    written responses elaborating on this question, several experts said
    USDA's technology-neutral approach limits the interoperability
    (compatibility) of different systems in place, thus reducing the viability
    of a consistent, national traceback program. In addition, they wrote that
    it has caused confusion, uncertainty, and a "wait-and-see" attitude in the
    marketplace, and that it will take time to sort out efficient from
    inefficient technologies. Conversely, other experts replied that USDA's
    technology-neutral approach allows marketplace competition to advance new
    or improved technologies and drive fair prices. Similarly, for animal
    tracking, more experts replied that USDA's approach definitely or probably
    discourages investment by producers, livestock markets, and slaughter
    facilities more than it encourages investment. For example, 22 experts
    said USDA's approach discourages investment by livestock markets, compared
    with 2 who said it encourages such investment; 17 experts said it
    discourages investment by slaughter facilities, whereas 4 said it
    encourages that industry sector to invest.

    ^14Two experts responded that investment in animal ID technology is
    neither encouraged nor discouraged, and 1 expert replied as having no
    expertise on this topic.

    While USDA has not selected specific animal ID devices, the agency has
    published minimum standards for the various ID devices recommended to date
    by the species working groups and the NAIS Subcommittee. Specifically,
    USDA has established printing and performance standards for visual and
    RFID ear tags that address characteristics such as durability (expected
    tag life); tag loss; visual readability of the 15-digit Animal
    Identification Number; and, in the case of RFID, electronic read rates and
    ranges. USDA has published similar performance standards for RFID
    implants, with additional characteristics addressing the migration or
    breakage of the device and its being harmless to an animal. However, USDA
    has not published standards for RFID readers and does not expect to do so
    unless the agency purchases readers for use by animal health officials, in
    which case it says it will define performance standards for those specific
    environments. In addition, USDA has not established a robust process to
    independently test and evaluate the performance of animal ID and tracking
    devices.

    Industry groups, expert panel members, and others told us that RFID
    devices do not always perform well in production environments, such as
    livestock markets, particularly with RFID readers being made by different
    companies. For example, one NAIS pilot project found that in loading
    cattle onto commercial trucks, RFID readers read only 70 percent of the
    RFID ear tags, with variations among tag manufacturers ranging from 47
    percent to 96 percent.^15 As a result, stakeholders are lacking reliable,
    independent information on the effectiveness of animal ID and tracking
    devices, and without such information, they are reluctant to invest in
    these devices.

    It is common U.S. practice to select one technology for systems that need
    to be widely implemented in different environments to ensure consistency
    and interoperability across multiple users. We have previously reported
    that a robust process for selecting technologies, setting and revising
    performance standards, and testing and evaluating technologies against
    those standards leads to the most effective and efficient use of
    technology.^16 For example, we have reported on the necessity of the
    federal government's selection and standardization of RFID cards and
    readers for federal employees so that the ID cards can be read at any
    federal agency across the nation.^17

    ^15However, in commenting on a draft of this report, USDA told us that
    continued testing and modification of systems in several pilot projects
    demonstrated high readability rates of 90 percent to 99 percent for
    systems that initially showed high variability and low readability rates
    of 50 percent to 60 percent.

    Several expert panel members suggested that USDA provide funding for
    independent, third-party evaluations of technologies and make results of
    such work readily available; appoint a standards committee to evaluate and
    make recommendations on the basis of sound science; or require independent
    evidence that devices meet standards before approving them. The NAIS
    Subcommittee also recommended, in 2006, that USDA establish an objective
    process to (1) test the performance of ID devices to ensure they meet NAIS
    standards in various production environments and over extended periods and
    (2) evaluate new technologies as they emerge. Typically, federal agencies
    rely on independent laboratories that are certified by a government
    agency, such as the National Institute of Standards and Technology, for
    such testing and evaluation.

    USDA officials told us they are working with industry to determine better
    ways to define performance criteria and establish a more thorough process
    to test and evaluate ID devices, but they did not specify a time frame for
    these developments. Toward this end, the agency held preliminary
    discussions in mid-April 2007 with the American Society for Testing and
    Materials' Committee on Livestock, Meat and Poultry Evaluation Systems to
    form a task force to fine-tune ID performance standards for NAIS and help
    USDA put testing protocols in place. In the February 2006 NAIS policy
    document on ID devices, USDA stated that when NAIS becomes fully
    operational, the agency will develop an approval process for official ID
    devices and more complete testing and evaluation procedures. Manufacturers
    of Animal Identification Number devices, regardless of any prior
    permission from USDA, will have to submit new or appended applications to
    be considered for "USDA Approved" status. Evaluations may include
    laboratory or field studies to verify compliance with criteria and
    specification standards, either before or following issuance of "USDA
    Approval Pending" or "USDA Approved" status for ID devices.

    ^16GAO, Information Security: Radio Frequency Identification Technology in
    the Federal Government, [43]GAO-05-551 (Washington, D.C.: May 27, 2005).

    ^17GAO, Electronic Government: Progress in Promoting Adoption of Smart
    Card Technology, [44]GAO-03-114 (Washington, D.C.: Jan. 3, 2003).

      USDA Does Not Clearly Define the Time Frame for Rapid Traceback

    When USDA announced NAIS in 2004, the program's traceability goal was to
    locate all potentially exposed animals within 48 hours of a disease's
    discovery, and both USDA and states conveyed that message in their
    outreach to producers and others. However, USDA's most recent NAIS policy
    document, the draft NAIS User Guide issued in November 2006, is silent on
    this time frame and instead says NAIS will allow producers and animal
    health officials to respond as "quickly, efficiently, and effectively as
    possible." By definition, traceback goals need to be time-sensitive and
    cost-effective to efficiently target and evaluate the program's success in
    eliminating a disease outbreak. If rapid traceback goals are not clearly
    defined, there could be a slower response to an animal disease outbreak
    and, therefore, greater economic losses.

    Of the 32 expert panel members, 25 defined rapid traceback in an animal
    disease event as occurring within 48 hours, with 10 of the experts
    defining it as 24 hours or less and 15 defining it as 25 to 48 hours.
    State animal health and industry officials told us it is important that
    USDA communicate a specific time frame to encourage participation,
    reinforce the necessity of rapid traceback, and have a measure by which to
    evaluate results. However, a senior USDA official told us that the
    definition of "rapid traceback" may vary by disease, because some diseases
    spread more quickly than others and some diseases are limited in how they
    can be transmitted. For example, traceback for FMD might ideally occur
    within 12 hours because the disease spreads so rapidly. By contrast,
    because BSE is transmitted only through animal feed containing certain
    contaminated animal products, and scrapie is transmitted during the
    breeding season, a longer traceback would be appropriate. In addition, the
    senior official told us that until USDA collects baseline information on
    tracebacks for specific diseases, the agency cannot determine
    time-sensitive, cost-effective traceback goals for NAIS.

      USDA Does Not Require Potentially Critical Information for Efficient Traceback
      to Be Recorded in NAIS Databases

    When producers and other participants register their premises, they are
    required by USDA to record only their name and contact information, with
    species information being optional. In addition, when USDA-approved
    managers distribute ID devices to a producer, they must record the
    devices' unique animal ID numbers, the premises ID number where the
    devices were sent, and the date of distribution. However, USDA does not
    require additional information, such as the species, date of birth, or
    approximate age of the animals, to be recorded in NAIS animal ID or
    tracking databases.

    Information that may be critical for narrowing the scope of a
    traceback--thus saving time and resources and potentially minimizing the
    economic impact--includes the species, date of birth, or approximate age
    of an animal. Many diseases, such as bovine TB, affect only specific
    species or generally affect animals of a certain age, such as in the case
    of Johne's disease, which is usually contracted at a young age.
    Consequently, if a new case of these diseases arose in the United States,
    tracing other species or animals of a different age may unnecessarily use
    federal, state, and industry resources in locating animals and premises
    that may not be affected--thus impeding the goal of rapid and effective
    traceback. Similarly, most equine diseases of concern affect only equine
    species, and exotic Newcastle disease affects only poultry, so tracing
    other species would be an inefficient use of time and resources. Other
    state and federal animal disease eradication programs require the
    recording or reporting of this type of information. For example, the
    Bovine Tuberculosis Eradication Program requires, for all TB-tested bison
    and cattle, the reporting of the animal's unique, official ID device;
    approximate age; gender; and breed. In addition, the National Scrapie
    Eradication Program requires goat flock owners to maintain a management
    and monitoring plan that must record an animal's gender, year of birth,
    and breed following the discovery of scrapie within the flock.

    The Cattle Working Group recommends that producers identify calves at
    birth or at the earliest date possible to support animal disease issues
    when the age of an animal is needed, noting that when the precise date of
    birth is not known, the approximate birth date within 2 to 3 months should
    be recorded. USDA officials acknowledged that although animal-specific
    data can be valuable, the agency is collecting the minimum amount of
    information needed for traceback to (1) respond to some producers'
    concerns about protection of their proprietary information in NAIS
    databases and (2) encourage participation. In addition, participants have
    the option to record such information in ID and tracking databases, and
    USDA encourages them to do so. Nonetheless, without this information being
    consistently recorded in NAIS databases, USDA and state officials may not
    be able to efficiently trace only those animals potentially affected by a
    disease.

    USDA Has Awarded NAIS Cooperative Agreements to Identify Effective
    Implementation Approaches but Has Not Formally Evaluated Agreements' Results

    USDA has awarded $35.0 million in NAIS cooperative agreements to states,
    tribes, and territories to help register premises and identify and track
    animals. However, USDA has not consistently monitored or formally
    evaluated the results of these cooperative agreements. In addition, USDA
    has not consistently shared cooperative agreement results with NAIS
    stakeholders. USDA plans to increase its oversight and give states with
    greater participation in NAIS some flexibility in using their cooperative
    agreement funds.

    USDA Awarded 169 Cooperative Agreements between Fiscal Years 2004 and 2006

    To help identify effective approaches to register premises and identify
    and track animals between fiscal years 2004 and 2006, USDA awarded 169
    cooperative agreements, totaling $35.0 million, to 49 states, 29 tribes,
    and 2 territories. NAIS cooperative agreement awards ranged in size from
    $7,381 to $1.2 million, and the average award was about $207,000. In
    fiscal years 2004 and 2005, USDA did not require recipients to contribute
    to, or share, costs (cost-share); however, in fiscal years 2006 and 2007,
    USDA required certain recipients to demonstrate 20 percent in matching
    funds, through cash or in-kind (noncash) contributions. For more
    information about NAIS cooperative agreements' funding by fiscal year, see
    appendix VI, table 2. Cooperative agreements are typically funded for a
    12-month funding period, with recipients required to submit both quarterly
    accomplishment and financial status reports.

    USDA required all NAIS cooperative agreement recipients to submit
    information to USDA in an initial work plan containing proposed project
    objectives, species and industry sector focus, as well as milestones for
    measuring progress. Although some premises registration cooperative
    agreements proposed activities that would span across most species and
    industry sectors covered by NAIS, other projects proposed focusing
    premises registration activities on one, or a few, species and sectors of
    the livestock industry. Of field trial cooperative agreement funding to
    test animal ID and tracking solutions, all but two field trials intended
    to focus on beef or dairy cattle; several proposed work on sheep; a few
    included swine, cervids, goats, bison, and equine; and only one project
    intended to focus some work on camelids. While no NAIS field trials
    proposed work on the poultry industry, USDA has previously funded work,
    through funds other than NAIS cooperative agreements, that examined the
    tagging and record-keeping requirements that would facilitate tracking of
    birds in the live bird marketing system. For information on species
    covered under NAIS field trials, see appendix VI, table 3.

    Field trial funding recipients also varied in the number of industry
    sectors they intended to involve in cooperative agreement activities.
    Overall, more than one-half of recipients intended to work with producers,
    livestock markets, slaughter facilities, and feedlots. USDA did not
    require field trials covering multiple species or industry sectors to
    include in initial work plans information regarding how funding was to be
    spent on each species or sector. USDA officials told us that they have not
    requested such details because of the interconnectivity of the activities
    associated with cooperative agreements.

    Most of the cooperative agreement awards were focused on premises
    registration. Specifically, of the $35.0 million awarded in fiscal years
    2004 through 2006, USDA awarded 146 cooperative agreements totaling $23.4
    million for premises registration efforts to 49 states, 29 tribes, and 2
    territories. These premises registration awards provided funding for
    activities such as hiring personnel to register premises, developing
    educational materials, and providing outreach to producers and nonproducer
    participants on the goals of NAIS. For example, 1 cooperative agreement
    awarded to the Navajo Nation was for the development of communications in
    the Navajo language for outreach on premises registration and animal ID.
    In addition, some of these cooperative agreements funded limited animal ID
    and tracking activities, along with premises registration.

    In fiscal years 2004 and 2005, USDA also awarded field trial cooperative
    agreements. Specifically, in fiscal year 2004, USDA awarded 16 cooperative
    agreements totaling $9.7 million to 15 states and 1 tribe. USDA estimates
    that $1.8 million of the $9.7 million awarded was used to support premises
    registration activities. The remainder was used for field trials to
    develop, test, and offer solutions for applying animal ID devices and
    collecting animal tracking information. For example, 1 cooperative
    agreement with the Wyoming Livestock Board tested whether existing brand
    inspection personnel and infrastructure could be used to track livestock
    changing ownership and livestock entering into interstate commerce through
    Wyoming livestock markets. In fiscal year 2005, USDA awarded 7 cooperative
    agreements totaling $1.9 million to 6 states and 1 tribe for field trials
    to support research, including the assessment of existing and novel ID
    technologies.

    USDA anticipates awarding an additional $20.5 million in cooperative
    agreements in fiscal year 2007. Of this, USDA anticipates awarding $14.5
    million for continued support of premises registration, education, and
    outreach activities under approximately 80 cooperative agreements to 50
    states, 28 tribes, and 2 territories. As of March 2007, USDA had awarded
    31 of the anticipated 80 cooperative agreements, totaling $6.7 million.
    The remaining $6.0 million in fiscal year 2007 funding for cooperative
    agreements will be provided for the first time to nonprofit organizations
    for premises registration activities. In January 2007, USDA entered into a
    cooperative agreement with the National Pork Board to begin work with pork
    producers to encourage premises registration. Subsequently, in February
    2007, USDA announced that other nonprofit industry organizations,
    historically black colleges, tribal land-grant colleges, and tribal
    organizations were also eligible for these awards, which are intended to
    support the continued registration of premises.

    USDA Has Not Consistently Monitored or Formally Evaluated NAIS Cooperative
    Agreements or Consistently Shared Their Results

    To date, USDA has not consistently monitored or formally evaluated NAIS
    cooperative agreements and has not consistently shared their results with
    state, industry, and other stakeholders. USDA officials told us that NAIS
    program staff provided some oversight for field trial cooperative
    agreements as well as for tribal premises registration cooperative
    agreements. However, NAIS program staff do not directly monitor most NAIS
    cooperative agreements; instead, USDA delegates administrative oversight
    activities for each cooperative agreement to designated representatives,
    mostly Area Veterinarians in Charge whose overall responsibility is to
    supervise and perform the official animal health activities of APHIS in
    the state concerned. These individuals are responsible for direct
    administration of the individual state premises registration and field
    trial cooperative agreements, including the monitoring and assessment of
    agreements. According to USDA, it is appropriate for these designated
    representatives to monitor cooperative agreements because they are
    familiar with the circumstances associated with implementing projects in a
    particular state. We have previously reported with other government audit
    organizations that monitoring the performance of federal awards helps to
    ensure that goals are reached and required deliverables are completed.^18
    According to USDA officials, the designated representatives responsible
    for monitoring cooperative agreements have a multitude of competing
    responsibilities and thus may not have sufficient time or resources to
    oversee cooperative agreements.

    ^18Domestic Working Group, Grant Accountability Project, Guide to
    Opportunities for Improving Grant Accountability (Washington, D.C.:
    October 2005). The Domestic Working Group is an organization made up of 19
    federal, state, and local audit organizations.

    In addition, NAIS program staff did not conduct any formal evaluation of
    NAIS cooperative agreements. Evaluating results against cooperative
    agreement goals can help to identify ways to improve program performance.
    USDA officials said that the quality of quarterly and final accomplishment
    reports provided to designated representatives by cooperative agreement
    recipients varied. They said that many times, these reports identified
    what was being done, rather than what was being accomplished. For example,
    one state premises registration project set milestones for educating 60
    percent of livestock producers and registering 40 percent of premises;
    however, the reported results included the purchase of computers, number
    of presentations given to producer organizations, and number of premises
    registration forms that were printed for distribution. Furthermore, our
    analysis of available reports indicated that results were not reported or
    were of limited value because initial project goals and milestones
    presented in recipients' work plans were vague or unclear.^19 In addition,
    several states indicated to us that they had difficulty completing the
    work outlined in their cooperative agreements within given time frames.
    For instance, one state told us that it was difficult for it to hire an ID
    coordinator in its first year of cooperative agreement funding, which
    meant the state was unable to use all of the funds it was allocated. Thus,
    while USDA has awarded the majority of cooperative agreement funds to
    support premises registration, the agency has not been able to determine
    effective or ineffective approaches for increasing premises registration,
    animal ID, or tracking.

    USDA has formally shared few results of cooperative agreements with NAIS
    stakeholders, hindering them from identifying approaches that have worked
    to achieve NAIS program objectives, such as increasing outreach, as well
    as ineffective approaches, such as the interoperability of RFID devices
    and readers. To date, USDA has provided information regarding NAIS field
    trial cooperative agreements on three occasions. In April 2005, USDA
    released a document containing summary information on the goals of the
    initial 16 field trials, including the types of technology tested and
    industry focus. In June 2006, USDA released a preliminary progress report
    for these first 16 field trials but stated in the report that due to the
    timing of work plan submissions and the subsequent need for approved time
    extensions to complete proposed projects, 10 of these 16 projects awarded
    in fiscal year 2004 had not yet submitted final reports. In addition, USDA
    stated in this report that to fully understand the projects' results,
    interested parties should contact cooperative agreement project
    administrators to learn more about the projects' specific activities.
    However, the report did not include contact information. In May 2007, USDA
    released a third and final report on the results of the fiscal year 2004
    field trials and descriptions of the fiscal year 2005 field trials for
    distribution to state, industry, and other stakeholders.^20

    ^19Some cooperative agreement projects from fiscal years 2004 through 2007
    were still ongoing at the time of our review; therefore, reports for these
    agreements were not available.

    USDA started sharing the results of premises registration and outreach
    cooperative agreements by publishing weekly premises registration
    statistics, by state, beginning in December 2006 (for state premises
    registration statistics, see app. VI, table 4). However, USDA has not
    formally shared any information about the strategies used by the
    individual state projects, nor has the agency communicated to stakeholders
    successful or unsuccessful approaches to registering premises.

    While USDA states that some results of cooperative agreements have been
    shared publicly at numerous stakeholder meetings, animal health officials
    and industry representatives told us that not enough information exists
    about the results of NAIS cooperative agreements, and that more sharing of
    results, best practices, and lessons learned is needed. For example, a
    researcher applying for fiscal year 2005 field trial funding told us it
    was difficult to determine whether previous NAIS cooperative agreements
    had included work similar to what the applicant was proposing. In
    addition, industry groups, state animal health officials, and experts told
    us that livestock markets would benefit from more information concerning
    the retrofitting of animal tracking equipment.

    ^20USDA, National Animal Identification System (NAIS): Pilot
    Projects/Field Trials Summary: 2004 Initial Pilot Projects Final Report
    and 2005-07 Project Descriptions (May 2007).

    USDA Plans to Improve Oversight and Give States with Greater Participation in
    NAIS Some Flexibility in Using Cooperative Agreement Funds

    As we have previously reported, increasing oversight, linking funding to
    performance milestones, and altering flexibility are accountability
    mechanisms that can be used by agencies to encourage improved performance
    during an award period.^21 In fiscal year 2007, USDA plans to increase
    oversight activities for some state cooperative agreements, on the basis
    of state premises registration levels at the time of the November 2006
    announcement. For example, the 27 states that had 25 percent or less of
    their premises registered at the time of the cooperative agreement
    announcement and were eligible for more than $82,000 in awards would
    receive only 90 percent of reserved funding until a midyear review period.
    According to USDA, designated representatives will determine the success
    of cooperative agreements during this midyear review, largely on the basis
    of the goals stated in the cooperative agreements' approved work plans.
    The 23 states with greater than 25 percent of premises registered, or
    eligible for awards of less than $82,000, are eligible to receive 100
    percent of cooperative agreement funding without a midyear review (see
    app. VI, table 5). In addition, all nonprofit industry organizations that
    receive cooperative agreement funding in fiscal year 2007 will be eligible
    for 50 percent of approved funds, with an additional 25 percent of funds
    released following each successful third- and fourth-quarter review of
    interim reports required by USDA.

    Moreover, USDA has linked funding to participation levels by providing for
    increased spending flexibility for some state recipients of fiscal year
    2007 premises registration cooperative agreements. USDA believes that
    cooperative agreement funding may be more appropriately used by states
    with greater numbers of premises registered to support the animal ID and
    tracking components of NAIS. For example, the 14 states that have achieved
    greater than 25 percent of premises registered may spend up to 40 percent
    of funds on animal tracking infrastructure, such as to support NAIS's
    integration with preexisting disease eradication programs or to share in
    the cost of data collection equipment for livestock markets and dealers.
    The 18 states that have registered between 11 percent and 25 percent of
    premises may spend up to 30 percent of their funding on animal tracking
    infrastructure, while the 8 states that have registered between 6 percent
    and 10 percent of premises may spend up to 20 percent of funding on animal
    tracking infrastructure. Finally, those states that have registered less
    than 6 percent of premises are required to spend 100 percent of funds on
    outreach and premises registration.

    ^21GAO, Grants Management: Enhancing Performance Accountability Provisions
    Could Lead to Better Results, [45]GAO-06-1046 (Washington, D.C.: Sept. 29,
    2006).

    Total NAIS Program Costs Have Not Been Determined, but USDA Recently Announced
    Plans to Develop a Cost-benefit Analysis

    USDA has not determined the program costs for NAIS but recently announced
    plans to hire a contractor to conduct a cost-benefit analysis for NAIS, in
    part to more precisely forecast the economic effects of the program. The
    Senate Appropriations Committee and the House of Representatives have
    raised concerns in recent years about how USDA has spent funds to develop
    and implement NAIS. Finally, the views of our expert panel members are
    mixed concerning NAIS's potential impact on the livestock industry.

    NAIS Costs and Benefits Are Not Known

    Although implementation of NAIS began in 2004, USDA has not developed a
    comprehensive cost estimate or cost-benefit analysis for the program. In
    addition, to our knowledge, no industry group, academic institution, or
    state animal health agency has published a cost estimate for implementing
    and maintaining NAIS. Without a comprehensive cost-benefit analysis for
    NAIS, it is not known how much is required in federal, state, and industry
    resources to achieve rapid and effective traceback, or whether the
    potential benefits of the program outweigh the costs. In 2004, and again
    in 2006, the NAIS Subcommittee recommended that USDA prepare an in-depth,
    cost-benefit analysis for NAIS as part of the strategic planning process.
    In addition, 29 of the 32 expert panel members said that USDA should
    definitely or probably publish a cost-benefit analysis that contains
    detailed NAIS cost and benefit information for the different sectors of
    the livestock industry, states, and USDA. The NAIS working groups, other
    livestock industry representatives, and state animal health officials we
    interviewed said that the cost of implementing NAIS remained one of their
    biggest concerns. For example, in comments to USDA in 2005, the Livestock
    Marketing Association wrote that it is "highly critical of the fact that
    too little has been known" about the potential costs of establishing a
    national animal ID system and about who will bear those costs.
    Furthermore, the association wrote that a cost-benefit analysis is "long
    overdue" and that without better information, NAIS appears to be
    prohibitively expensive for the livestock industry to implement. As a
    result, without a reliable cost-benefit analysis that is consistent with
    federal guidance, stakeholders are unlikely to participate in NAIS due to
    their uncertainty that NAIS program benefits outweigh program costs.

    USDA announced plans in March 2007 to conduct a cost-benefit analysis for
    NAIS. USDA officials told us that the cost-benefit analysis will be used
    for program planning and resource allocation, producer and industry
    education, and public relations and outreach and to more precisely
    forecast the economic effects of NAIS. USDA officials anticipate that the
    cost-benefit analysis will be available in 2008.

    As we have previously reported, measuring the economic performance of
    federal programs, such as the extent to which program benefits exceed
    costs (net benefits) or are achieved at least cost (cost-effectiveness),
    could be a useful way to assess, in conjunction with other measures, the
    extent to which federal programs are meeting the nation's priorities.^22
    In addition, OMB has established general guidance on conducting
    cost-benefit analyses of federal programs to promote efficient resource
    allocation through well-informed decision making.^23 OMB suggests that
    agencies follow this guidance in conducting analyses used to support
    government decisions to initiate, renew, or expand programs or projects
    that would result in a series of measurable benefits or costs extending 3
    or more years into the future. The USDA announcement suggests that the
    planned NAIS cost-benefit analysis follow this and other available federal
    guidance.

    Concerns Exist over How USDA Has Spent Funds to Develop and Implement NAIS

    In fiscal year 2004, the Secretary of Agriculture transferred $18.8
    million from the Commodity Credit Corporation (CCC) to develop and
    implement NAIS, as shown in table 1. Although approximately $85.0 million
    had been made available for NAIS implementation by the end of fiscal year
    2006, USDA had obligated only about $61.1 million as of late March
    2007;^24 thus, the agency has carried over about $23.9 million in
    unobligated NAIS funds into fiscal year 2007.^25 Because NAIS funding has
    been designated by Congress to be available until expended, USDA can carry
    funds that it did not expend in prior years forward into the current year.
    In addition to these carryover funds, Congress appropriated an additional
    $33.0 million for the NAIS program for fiscal year 2007. The President's
    Budget requested $33.1 million for NAIS in fiscal year 2008.

    ^22GAO, Economic Performance: Highlights of a Workshop on Economic
    Performance Measures, [46]GAO-05-796SP (Washington, D.C.: July 2005).

    ^23OMB, Circular A-94 Revised, Guidelines and Discount Rates for
    Benefit-Cost Analysis of Federal Programs (Washington, D.C.: updated Jan.
    26, 2006).

    ^24The term "obligation" is a definite commitment that creates a legal
    liability of the government for the payment of goods and services ordered
    or received.

    ^25Unobligated funds are the difference between total funding available
    and actual obligations.

    Table 1: USDA NAIS Budget Data, Fiscal Years 2004 (CCC Funds) through 2006

    Dollars in thousands
                                                       Fiscal year
                                                    2004    2005    2006    Total
    Funding availability                      $18,793 $33,197 $33,007  $84,997
    Planned obligations
    Information technology development,
    maintenance, and operations                $2,009  $6,858  $7,733  $16,600
    Cooperative agreements                     14,357  17,050  13,882   45,288
    Communications and outreach                 2,137   3,474   1,940    7,551
    Headquarters and field staff and
    materials                                     290   3,125   5,285    8,700
    Uncommitted/Unassigned funding                  0   2,690   4,167    6,857
    Total                                     $18,793 $33,197 $33,007  $84,997
    Actual obligations
    Information technology development,
    maintenance, and operations                $1,829  $5,276  $2,466   $9,571
    Cooperative agreements                     13,944  15,031   6,026   35,000
    Communications and outreach                 2,137   2,719   1,640    6,495
    Headquarters and field staff and
    materials                                     379   3,213   6,428   10,019
    Total                                     $18,288 $26,238 $16,559  $61,086
    Unobligated funds                            $505  $6,959 $16,448  $23,911
    Actual expenditures
    Information technology development,
    maintenance, and operations                $1,813  $3,946    $908   $6,668
    Cooperative agreements                     11,831   9,799   2,219   23,849
    Communications and outreach                 2,103   1,598     216    3,918
    Headquarters and field staff and
    materials                                     379   3,174   6,427    9,979
    Total                                     $16,127 $18,518  $9,770  $44,414

    Source: USDA data as of March 27, 2007.

    Note: All figures have been rounded to the nearest thousand.

    The Senate Appropriations Committee and the House of Representatives have
    raised concerns in recent years about how USDA has spent funds to develop
    and implement NAIS. For example, in the 109th Congress, the House passed a
    fiscal year 2007 appropriations bill for agriculture (H.R. 5384) that
    included a provision prohibiting funds from being obligated on NAIS until
    the House Appropriations Committee received a detailed plan for NAIS
    "including, but not limited to, proposed legislative changes, cost
    estimates, and means of program evaluation," and that the plan be
    published in the Federal Register for public comment. Although the bill,
    with the provision limiting obligations, passed in the House, it did not
    become law. USDA officials told us they have plans to obligate all
    carryover funds in fiscal year 2007. These plans include awarding
    additional cooperative agreements to states and industry organizations to
    register premises; additional investments in information technology
    development, maintenance, and operations; and communications and outreach.

    Expert Views Concerning Changes to the Livestock Industry Are Mixed

    Questions have been raised about whether NAIS could lead to greater
    contracting, vertical integration, or horizontal consolidation in the
    livestock industry market structure,^26 and whether NAIS could affect
    prices at both the retail and producer levels. Expert panel members
    provided the following views relating to changes in market structure as
    well as to changes in costs and prices for various market participants due
    to the implementation of NAIS.

               o The 32 experts were evenly split on whether contracting or
               horizontal consolidation would increase as a result of NAIS--16
               said those effects would definitely or probably be more likely to
               occur, and 16 said those effects would not occur or are probably
               less likely to occur.
               o Twenty experts said vertical integration would not occur or is
               probably less likely to occur, while 12 said vertical integration
               is definitely or probably more likely to occur.
               o Regarding price effects at the retail level of meat and/or
               animal products, 12 experts thought prices would be higher; 15
               thought there would be no effect; and 5 believed they would be
               lower.

    ^26Contracting is where a firm commits to purchase a commodity from a
    producer at a price established in advance of the purchase. Vertical
    integration is where a single firm controls the flow of the commodity
    across two or more stages of production. Horizontal consolidation refers
    to the process by which production is organized into fewer, but larger,
    plants or farms.

               o When asked what would be the effect on prices paid to producers
               for livestock if NAIS led to increased costs in livestock markets
               and/or slaughter facilities, 21 experts believed that prices would
               probably or definitely decrease; 8 thought there would be no
               effect; and 2 thought that there would probably be an increase.
               o Similarly, when asked what would be the effect on prices paid to
               producers for livestock if NAIS led to decreased costs in
               livestock markets and/or slaughter facilities, 16 experts replied
               that prices paid to producers would probably or definitely
               increase; 13 replied that there would be no effect; and 1
               respondent thought there would be a decrease.

    			  Conclusions

               NAIS provides USDA, states, and the livestock industry with a
               historic opportunity for the United States to develop a
               comprehensive, coherent program to identify the nation's livestock
               animals and premises and achieve the goal of rapid and effective
               disease traceback. In addition, a successful program in sync with
               our international trading partners and competitors could boost
               consumer confidence in U.S. animal products and help maintain and
               expand market access. However, for NAIS to be fully effective and
               efficient in responding to an animal disease emergency, adequate
               levels of participation need to be achieved in all three NAIS
               components--premises registration, animal ID, and tracking. If
               insufficient numbers of animals are identified and tracked, the
               system will have gaps, despite millions of dollars being invested
               in the program's development. Conversely, high levels of
               participation would better position the United States to handle
               future animal health emergencies and minimize economic, trade, and
               possibly human health consequences. USDA's changes in direction
               over the past 3 years have caused considerable confusion and
               frustration among many NAIS stakeholders, and the program's
               implementation may be in danger of losing momentum. Most
               critically, whether NAIS is voluntary or mandatory, the lack of
               participation benchmarks makes it more difficult to gauge progress
               in attaining the necessary levels of participation for an
               effective animal ID program and, if there is insufficient
               participation, to develop strategies to achieve it. Without
               meaningful progress, USDA's expenditures on NAIS will continue to
               be questioned.

               In addition, if USDA does not resolve several key implementation
               issues, the program will continue to face opposition by some
               industry stakeholders, and participation in all three NAIS
               components could be limited. Collectively, these unresolved issues
               will likely lead to ineffective and inefficient implementation and
               prevent NAIS from achieving the goal of rapid and effective
               traceback. First, prioritizing how NAIS is implemented, such as by
               species, would allow USDA and stakeholders to better allocate
               their resources and improve the program over time. Second, the
               integration of NAIS with other USDA and state animal disease
               eradication programs and branding systems would remove another
               hurdle preventing participation in NAIS's animal ID and tracking
               components. Third, creating a robust process for selecting,
               setting standards for, and independently testing and evaluating
               animal ID and tracking devices in meeting NAIS standards is
               important to ensure effectiveness and interoperability across the
               national program and, therefore, would encourage investment.
               Fourth, identifying time-sensitive and cost-effective goals for
               traceback, which may vary by disease, would allow stakeholders to
               have common goals in responding to an event, potentially speeding
               up response and, therefore, minimizing economic losses. Fifth,
               requiring the recording of information in NAIS databases that may
               be critical for efficient traceback, such as species, approximate
               age, or date of birth, would enable animal health authorities to
               more quickly locate only those premises and animals that are
               relevant in an investigation, thus minimizing time and resources
               and hastening response.

               Finally, we believe that if USDA were to provide industry, state,
               and other stakeholders with key information on the results of
               cooperative agreements, it would help identify the most effective
               and efficient means to implement the program and likely increase
               participation and enable producers, livestock markets, states, and
               other stakeholders to make informed decisions about where to
               allocate scarce resources. Moreover, for planning purposes in
               allocating federal, state, and industry resources, it is important
               for stakeholders, Congress, and the public to know how much it
               will cost to implement and maintain NAIS, compared with its
               benefits. Without a reliable cost-benefit analysis, stakeholders
               are unlikely to participate in NAIS due to their uncertainty about
               whether program benefits outweigh the costs.

    			  Recommendations for Executive Action

               To achieve the program's goal of rapid and effective animal
               disease traceback, we recommend that the Secretary of Agriculture
               direct the Administrator of APHIS to reestablish participation
               benchmarks to gauge progress in registering premises and
               identifying and tracking animals; monitor participation; and, if
               participation does not meet the benchmarks, take further action,
               such as making participation mandatory or creating incentives to
               achieve those levels of participation.

               In addition, we recommend that the Secretary direct the
               Administrator of APHIS to take the following seven actions to
               implement NAIS more effectively and efficiently and achieve the
               program's goal of rapid and effective traceback:

               o set priorities, in consultation with the NAIS species working
               groups, state animal health officials, and others, for
               implementing NAIS incrementally by species or other criteria;
               o determine how NAIS will integrate with existing USDA and state
               animal disease eradication programs and branding systems;
               o establish a robust process to select, standardize, and
               independently test and evaluate the performance of animal ID and
               tracking devices to ensure they meet minimum standards;
               o identify--in consultation with the NAIS species working groups,
               state animal health officials, and others--current baselines for
               animal disease traceback, and develop time-sensitive,
               cost-effective goals for traceback under NAIS, which may include
               separate time frames for specific diseases;
               o evaluate what information is critical for efficient traceback,
               such as species, approximate age or date of birth, and require
               that participants record that information in the NAIS animal ID
               and tracking databases;
               o increase the monitoring of NAIS cooperative agreements, and
               evaluate and publish the results of cooperative agreements on a
               timely basis; and
               o conduct the planned analysis of the costs and benefits of NAIS
               following criteria established in OMB guidance for conducting
               cost-benefit analyses for federal programs and publish the results
               for comment.

    			  Agency Comments and Our Evaluation

               We provided a draft of this report to USDA for review and comment.
               In written comments on our draft report, USDA stated that it
               appreciated our comprehensive evaluation of NAIS and generally
               agreed with our recommendations. However, regarding our
               recommendation that USDA establish a robust process to select,
               standardize, and independently test and evaluate the performance
               of animal ID and tracking devices to ensure they meet minimum
               standards, USDA agreed with the need to establish a more robust
               process for having ID devices tested to meet minimum performance
               standards, but believed that these standards must be defined
               through a consensus of affected stakeholders. USDA stated that as
               performance standards are established, the selection of such
               devices will then be warranted. USDA also stated that as part of
               the evaluation process, it will specify the testing standards and
               then review the manufacturer's documentation of laboratory testing
               and field trials. In addition, USDA stated that testing of such
               devices should be at the expense of the device manufacturer.

               We recognize the need for USDA to work with stakeholders before
               determining which ID and tracking devices are most appropriate for
               NAIS. However, the sooner USDA selects specific technologies, the
               sooner producers, livestock markets, slaughter facilities, and
               others will likely participate in the animal ID and tracking
               components of NAIS. As a starting point, some NAIS working groups
               have recommended specific ID devices for their species. It is
               common U.S. practice to select one technology for systems that
               need to be widely implemented in different environments, and we
               have previously reported that a robust process for selecting,
               standardizing, and testing and evaluating technologies leads to
               the most effective and efficient systems. During the course of our
               work, we found that USDA's technology-neutral position has caused
               producers, market operators, and slaughter facilities to be
               generally discouraged from investing in new animal ID or tracking
               devices for NAIS due to fear that their choices might be
               inconsistent with others in the marketplace, or that USDA might
               adopt specific devices in the future. The selection of specific ID
               and tracking devices, therefore, would ensure consistency and
               interoperability across the program's many potential users,
               leading to more efficient implementation. Furthermore, as stated
               in this report, USDA has recognized the need for animal ID
               technologies that are compatible with Canada and Mexico, and it
               also has stated that harmonizing the United States' program with
               other countries will facilitate safe trade. Selecting technologies
               for NAIS that are in sync with our trading partners and
               competitors could have positive trade implications for the United
               States. Lastly, the selection of specific devices would inform the
               cost-benefit analysis that USDA is currently conducting, which, in
               turn, could affect participation levels. These reasons underscore
               the need for USDA to select specific ID and tracking devices, on
               the basis of independent, reliable information regarding their
               performance in meeting minimum standards and of consultations with
               stakeholders.

               In its written comments, USDA also provided points of
               clarification and provided details about current and future
               actions that the agency plans to take to address our
               recommendations, which we incorporated throughout the report, as
               appropriate. USDA's written comments and our specific responses
               appear in appendix VII. In addition, USDA provided technical
               comments that we incorporated throughout the report, as
               appropriate.

               As we agreed with your office, unless you publicly announce the
               contents of this report earlier, we plan no further distribution
               of it until 30 days from the date of this report. At that time, we
               will send copies of this report to the interested congressional
               committees, the Secretary of Agriculture, and other interested
               parties. We will also make copies available to others upon
               request. In addition, this report will be available at no charge
               on the GAO Web site at [47]http://www.gao.gov .

               If your or your staff have any questions about this report, please
               contact me at (202) 512-3841 or [48]ShamesL@gao.gov . Contact
               points for our Offices of Congressional Relations and Public
               Affairs may be found on the last page of this report. GAO staff
               who made key contributions to this report are listed in appendix
               VIII.

               Sincerely yours,

               Lisa Shames
    			  Director, Natural Resources and Environment

    			  Appendix I: Objectives, Scope, and Methodology

               The objectives of our review were to determine (1) how effectively
               the U.S. Department of Agriculture (USDA) is implementing the
               National Animal Identification System (NAIS) and, specifically,
               the key implementation issues identified by livestock industry
               groups, market operators, state animal health officials, and
               others; (2) how USDA has distributed cooperative agreement funding
               to help states and industry prepare for NAIS and evaluated the
               agreements' results; and (3) what USDA and others estimate are the
               costs for USDA, states, and the livestock industry to implement
               and maintain NAIS.

               To address these objectives, we interviewed USDA officials
               responsible for implementing NAIS and conducted site visits to
               selected livestock markets and cooperative agreement field trials.
               We conducted structured interviews in person or via telephone with
               animal health officials in seven states: California, Iowa,
               Michigan, New Mexico, Texas, Vermont, and Wisconsin. These states
               were selected on the basis of their geographic dispersion; the
               range in the number of premises located in each state; and, in
               some cases, their high levels of livestock production. We also
               conducted interviews in person or via telephone and reviewed
               documents from the NAIS Subcommittee and the 10 NAIS working
               groups that report to the NAIS Subcommittee: Beef and Dairy Cattle
               Working Group, Bison Working Group, Camelid Working Group, Cervid
               Working Group, Equine Working Group, Goat Working Group,
               Market/Processor Working Group, Poultry Working Group, Sheep
               Working Group, and Swine Working Group. We also conducted
               structured interviews in person or via telephone and reviewed
               documents from four industry organizations: American Farm Bureau
               Federation, Livestock Marketing Association, National Cattlemen's
               Beef Association, and National Livestock Producers Association. In
               addition, we reviewed documents from the United States Animal
               Health Association Livestock ID Committee; the Ranchers-Cattlemen
               Action Legal Fund -- United Stockgrowers of America; three NAIS
               opposition groups--NoNAIS.org, Liberty Ark Coalition, and the Farm
               and Ranch Freedom Alliance; and other organizations that testified
               before Congress on NAIS in recent years or spoke at USDA's
               listening sessions in 2004. We attended the NAIS Subcommittee
               meeting and a USDA meeting with state departments of agriculture
               on NAIS held in August 2006 in Kansas City, Missouri, and the
               Secretary's Advisory Committee on Foreign Animal and Poultry
               Diseases meeting in September 2006 in Riverdale, Maryland. We
               identified and reviewed applicable laws, USDA policies, guidance,
               and technical standards regarding NAIS. We also reviewed relevant
               GAO reports and a Congressional Research Service report to
               Congress on animal identification (ID) and traceability.

               To determine how USDA has distributed cooperative agreement
               funding to help states and industry prepare for NAIS, we reviewed
               USDA documentation related to cooperative agreements signed
               between USDA and states, territories, tribes, and industry groups
               from fiscal years 2004 through 2007. To determine which livestock
               species were the focus of cooperative agreement field trials, we
               reviewed and systematically recorded this information from
               cooperative agreement recipients' work plans; however, we did not
               independently assess whether the proposed work with these species
               and industry sectors took place. To determine how USDA has
               evaluated the results of cooperative agreements, we interviewed
               NAIS program staff, reviewed guidance provided to recipients, and
               reviewed quarterly and final reports submitted to USDA by
               cooperative agreement recipients. Because some cooperative
               agreements were ongoing and because other recipients did not
               report to USDA in a timely manner, we could not examine a complete
               set of quarterly and final reports for all recipients. We
               conducted a reliability assessment of the data that USDA provided
               to us on the NAIS cooperative agreements and found these data to
               be reliable for our reporting purposes.

               For the third objective, to determine estimates of the costs to
               implement and maintain NAIS, we asked representatives from USDA,
               industry groups, academic institutions, and state animal health
               agencies for any NAIS cost estimates they had developed. We
               identified and reviewed federal guidance for developing cost
               estimates and cost-benefit analyses and sound economic and cost
               accounting principles. We also reviewed NAIS budget data from USDA
               for fiscal years 2004 through 2007, and conducted a reliability
               assessment of these data and found them to be reliable for our
               reporting purposes.

               To help answer the first and third objectives, we convened a
               Web-based panel of 32 experts on several aspects of NAIS. The
               process we followed is based on GAO guidance for identifying
               experts for panels or other work requiring expertise in a specific
               area. We identified potential panel members by conducting a
               literature search to obtain the names of individuals who had
               published on animal ID in academic journals and in other relevant
               venues. We also asked for recommendations from individuals we
               interviewed for other aspects of the job. We then selected
               individuals who were actively involved in the development or
               implementation of NAIS and were knowledgeable of its details; who
               had conducted research, or were published in peer-reviewed
               journals on animal ID; or who were recognized by their peers as an
               expert on NAIS. Panel members were asked to fill out a Web-based
               questionnaire, which asked for their beliefs and opinions on
               future participation in NAIS, effective traceback, implementation
               of NAIS, the costs and benefits of NAIS, the impact of NAIS on the
               livestock industry and consumers, ID technology, and databases for
               tracking animals. Panel members had approximately 3 weeks to fill
               out their questionnaires in December 2006 and January 2007. All
               panel members completed their questionnaires, giving us a 100
               percent response rate. The questions and aggregated responses are
               presented in appendix IV. While we display only the quantitative,
               closed-ended responses, we also relied on the responses to the
               qualitative, open-ended questions to inform our findings in this
               report. The views expressed by the panel members do not
               necessarily represent the views of GAO.

               We conducted our work from June 2006 to May 2007 in accordance
               with generally accepted government auditing standards.

    Appendix II: Select Domestic and Foreign Animal Diseases of Concern
    Identified by USDA

    Animal disease               Livestock animals affected Can affect humans?
    Domestic
    Avian influenza (low         Poultry                    No
    pathogenic)
    Bovine spongiform            Cattle                     Yes
    encephalopathy
    Bovine brucellosis and Swine Cattle, bison, goats,      Yes
    brucellosis                  swine, and cervids
    Chronic wasting disease      Cervids                    Unknown
    Equine infectious anemia     Horses, donkeys, mules,    No
                                    ponies, and zebra
    Johne's disease              Cattle, sheep, goats, and  Unknown
                                    cervids
    Pseudorabies                 Swine, cattle, sheep, and  No
                                    goats
    Scrapie                      Sheep and goats            Unknown
    Texas (splenetic) fever      Cattle                     No
    Tuberculosis                 Cattle, bison, and captive Yes
                                    cervids
    Foreign
    Avian influenza (highly      Poultry                    Yes
    pathogenic)
    Dourine                      Horses and donkeys         No
    Exotic Newcastle disease     Poultry                    Yes
    African swine fever          Swine                      No
    Classical swine fever        Swine                      No
    Contagious bovine            Cattle and bison           No
    pleuropneumonia
    Foot-and-mouth disease       Cattle, sheep, goats, and  Yes, but rarely
                                    swine                      infects humans
    Glanders                     Horses, donkeys, mules,    Yes
                                    and goats

               Source: USDA.

               Note: Pursuant to the Public Health Security and Bioterrorism
               Preparedness and Response Act of 2002 (the "Bioterrorism Act of
               2002"), USDA identifies animal diseases that have the potential to
               pose a severe threat to livestock and human health, including
               bacillus anthracis, brucella abortusm, brucella melitensis,
               brucella suis, burkholderia mallei, burkholderia pseudomallei,
               clostridium botulinum, coccidioides immitis, francisella
               tularensis, botulinum neurotoxins, clostridium perfringens epsilon
               toxin, shigatoxin, staphylococcal enterotoxins, T-2 toxin, African
               horsesickness, peste des petits ruminants, swine vesicular disease
               virus, lumpyskin disease virus, sheep pox, and goat pox.

               USDA identifies other domestic animal diseases of concern in
               federal regulations, including acute swine erysipelas (affects
               swine), anthrax (all domestic species), bluetongue (all domestic
               species), chlamydiosis (poultry), Eastern equine
               encephalomyelistis (horses), mycoplasma gallisepticum (poultry),
               mycoplasma meleagridis (poultry), mycoplasma synoviae (poultry),
               salmonella enteritidis (poultry), salmonella gallinarum (poultry),
               salmonella pullorum (poultry), scabies (cattle), infectious salmon
               anemia, and spring viremia of carp. Additional foreign animal
               diseases of concern identified by USDA include equine viral
               arteritis (horses, donkeys, mules, ponies, and zebra); hendra
               (horses); nipah (swine and horses); Rift Valley fever (cattle,
               sheep, and goats); rinderpest (cattle, sheep, and goats);
               Venezuelan equine encephalomyelitis (all equine species); and
               vesicular stomatitis (swine, cattle, sheep, and goats).

    			  Appendix III: Members of GAO's Expert Panel on NAIS

               This appendix provides the names and affiliations of 32 academic,
               government, and other experts who, as members of our expert panel
               on NAIS, completed a Web-based questionnaire from December 2006 to
               January 2007 regarding USDA's implementation of NAIS. We also
               spoke with a select number of these experts regarding animal ID
               and tracking technology, among other issues.

    			  Expert Panel Members

               o Dr. David P. Anderson, Associate Professor and Extension
               Economist - Livestock and Food Products Marketing, Department of
               Agricultural Economics, Texas A&M University
               o Dr. DeeVon Bailey, Interim Department Head and Professor,
               Department of Economics, Utah State University
               o Dr. Joseph Balagtas, Assistant Professor, Department of
               Agricultural Economics, Purdue University
               o Dr. Dale A. Blasi, Professor & Extension Beef Specialist,
               Department of Animal Sciences & Industry, Kansas State University
               o Dr. D. Scott Brown, Research Assistant Professor and Program
               Director of Livestock and Dairy, Food and Agricultural Policy
               Research Institute, University of Missouri
               o Dr. Daniel D. Buskirk, Associate Professor and Beef Extension
               Specialist, Department of Animal Science, Michigan State
               University
               o Dr. Julie A. Caswell, Professor and Department Chair, Department
               of Resource Economics, College of Natural Resources and the
               Environment, University of Massachusetts
               o Dr. David A. Daley, Professor, College of Agriculture,
               California State University, Chico
               o Dr. Kevin Dhuyvetter, Agricultural Economist, Department of
               Agricultural Economics, Kansas State University
               o Dr. Basil Eastwood, National Program Leader, Plant and Animal
               Systems, Cooperative State Research, Education, and Extension
               Service, USDA
               o Dr. Scott Greiner, Associate Professor and Extension Animal
               Scientist, Beef and Sheep, Department of Animal & Poultry
               Sciences, College of Agriculture and Life Sciences, Virginia
               Polytechnic Institute and State University
               o Dr. Ron A. Gustafson, Senior Economist, Beef Analysis, Economic
               Research Service, USDA
               o Dr. James C. Heird, Director of Equine Sciences Department,
               Equine Teaching and Research Center, Colorado State University
               o Dr. Julie Jarvinen, Associate Professor, Department of
               Veterinary Pathology, Iowa State University
               o Dr. Cleon V. Kimberling (retired), Clinical Sciences Department,
               Colorado State University
               o Dr. John D. Lawrence, Professor and Extension Livestock
               Economist, Agricultural Economics, Department of Economics, Iowa
               State University
               o Dr. Darrell R. Mark, Assistant Professor and Livestock
               Extentionist, Department of Agricultural Economics, University of
               Nebraska, Lincoln
               o Dr. Bret D. Marsh, State Veterinarian, Indiana State Board of
               Animal Health, and immediate past president of the United States
               Animal Health Association
               o Dr. James D. McKean, Extension Veterinarian and University
               Professor, Department of Veterinary Diagnostic & Production Animal
               Medicine, College of Veterinary Medicine, Iowa State University
               o Mr. Douglas O'Brien, Co-Director, National Agricultural Law
               Center, University of Arkansas School of Law, and Staff Attorney,
               Drake University Agricultural Law Center
               o Dr. James W. Oltjen, Professor and Extension Specialist, Animal
               Management Systems, Department of Animal Science, University of
               California, Davis
               o Dr. Derrell Peel, Professor, and Livestock Extensionist,
               Department of Agricultural Economics, Oklahoma State University
               o Dr. Valerie Ragan, President, AgWorks Solutions LLC, and former
               Assistant Deputy Administrator for USDA's Animal and Plant Health
               Inspection Service, Veterinary Services
               o Dr. Kris Ringwall, Animal Scientist and Director of the
               Dickinson Research Extension Center, North Dakota State
               University, and Executive Secretary, North Dakota Beef Cattle
               Improvement Association
               o Dr. Joan Dean Rowe, Associate Professor, Department of
               Population Health & Reproduction, University of California, Davis
               o Dr. Ted Schroeder, Professor and Director of Graduate Program,
               Department of Agricultural Economics, Kansas State University
               o Dr. Clifford F. Shipley, Clinical Associate Professor, College
               of Veterinary Medicine, University of Illinois
               o Dr. Ronnie E. Silcox, Associate Professor and Extension Beef
               Specialist, Animal & Dairy Science Department, University of
               Georgia
               o Dr. Michael A. Tomaszewski, Professor and Extension Dairy
               Specialist, Department of Animal Science, Texas A&M University
               o Dr. Glynn Tonsor, Assistant Professor, Department of
               Agricultural Economics, Michigan State University
               o Dr. Wendy J. Umberger, Assistant Professor and Extension
               Economist, Department of Agricultural and Resource Economics,
               Colorado State University
               o Dr. Kelly Zering, Associate Professor, Department of
               Agricultural and Resource Economics, North Carolina State
               University, Raleigh

    			  Appendix IV: GAO Expert Panel Questions and Responses on NAIS

    			  Expert Panel: USDA's Implementation of the National Animal
    			  Identification System

               We conducted the following survey as part of our review of USDA's
               implementation of NAIS. We received a 100 percent response rate
               from a panel of 32 experts who filled out a Web-based
               questionnaire in late December 2006 and early January 2007. For
               presentation purposes in this appendix, we have combined the
               category "No expertise on topic" with "No answer" and the category
               "50% or less" with "51 to 60%." However, when the experts filled
               out the questionnaire, those categories were not combined. The
               views expressed by the panel members do not necessarily represent
               the views of GAO.

    Part I: Participation in the NAIS Voluntary Program

    In USDA's November 2006 draft National Animal Identification System
    (NAIS): A User Guide and Additional Information Resources (NAIS User
    Guide), USDA states that NAIS is a voluntary program that helps producers
    and animal health officials respond rapidly and effectively to animal
    disease events for livestock and poultry in the United States. The next
    three questions ask for your opinion on likely participation levels for
    the three components of NAIS (premises registration, animal
    identification, and animal tracking) under a voluntary program.

    In this questionnaire, the term "producer" refers to all individuals
    engaged in the ownership, management, or marketing of any of the species
    of livestock included in NAIS. For example, in the beef cattle industry,
    this refers to cow-calf producers as well as stocker, backgrounder, and
    feedlot operators. While owners or managers of certain species, for
    example horses, may not typically be referred to as producers, these
    individuals are included in this definition of producer. This definition
    is consistent with USDA's draft NAIS User Guide (pg. 5). The term
    "livestock market" refers to livestock auction markets, sale barns, and
    sale yards.

    Q1. What do you believe will be the percentage of premises registered for
    each sector of livestock production under the NAIS voluntary program?

                        60%                                        No
                         or                              expertise/No    Numberof
                       less 61-70% 71-80% 81-90% 91-100%       answer respondents
    a. Producers      24      4      2      1       0            1          32
    b. Livestock
    Markets            9      4      5      6       5            3          32
    c. Slaughter
    Facilities         6      1      3     12       8            2          32

    Q2. What do you believe will be the percentage of animals identified (as
    individuals or, where applicable, as a group) for each species of animal
    under the NAIS voluntary program?

                         60%                                        No
                          or                              expertise/No    Numberof
                        less 61-70% 71-80% 81-90% 91-100%       answer respondents
    a. Bison           18      1      1      0       1           11          32
    b. Camelids
    (e.g., alpacas,
    llamas)            14      1      2      1       0           14          32
    c. Cattle (beef)   24      2      2      1       0            3          32
    d. Cattle
    (dairy)            10      4      7      5       3            3          32
    e. Cervids
    (e.g., deer,
    elk)               14      3      0      1       1           13          32
    f. Equine (e.g.,
    horses, donkeys,
    mules)             22      1      0      0       1            8          32
    g. Goats           18      3      1      0       0           10          32
    h. Poultry
    (commercial)        8      1      2      8       7            6          32
    i. Poultry
    (non-commercial)   25      0      0      0       0            7          32
    j. Sheep           15      4      5      1       1            6          32
    k. Swine
    (individual)       28      0      0      1       0            3          32
    l. Swine (group)    8      3      3     11       4            3          32

    Q3. What do you believe will be the percentage of animals tracked for each
    sector of livestock production under the NAIS voluntary program?

                                                        No expertise/    Numberof
                            0-25% 26-50% 51-75% 76-100%     No answer respondents
    a. Producers            17     12      2       0             1          32
    b. Livestock markets    10      9      8       2             3          32
    c. Slaughter
    facilities               7      6      5      10             4          32

    Part II: Achieving Rapid and Effective Trace Back

    The next four questions ask for your opinion on the participation levels
    in NAIS that are necessary for producers and animal health officials to
    respond quickly and effectively to animal disease events by tracing
    livestock animals throughout the production process.

    Q4. USDA's draft NAIS User Guide does not define the time period for rapid
    trace back. In your opinion, what time period defines a "rapid" trace back
    in an animal disease event?

    24 hours     25-48    49-72    73-96         No expertise/        Numberof
    or less      hours    hours    hours Other       No answer     respondents
    10              15        3        2     1               1              32

    Q5. What percentage of premises registered do you believe is necessary to
    achieve the NAIS program's goal of rapid and effective animal disease
    trace back?

                        60%                                        No
                         or                              expertise/No    Numberof
                       less 61-70% 71-80% 81-90% 91-100%       answer respondents
    a. Producers       2      2      1     11      16            0          32
    b. Livestock
    markets            0      0      1      3      27            1          32
    c. Slaughter
    facilities         0      0      1      2      28            1          32

    Q6. What percentage of animals identified is necessary to achieve the goal
    of rapid animal disease trace back?

                         60%                                        No
                          or                              expertise/No    Numberof
                        less 61-70% 71-80% 81-90% 91-100%       answer respondents
    a. Bison            3      0      3      5      11           10          32
    b. Camelids
    (e.g., alpacas,
    llamas)             3      0      3      4       9           13          32
    c. Cattle (beef)    1      0      8      5      17            1          32
    d. Cattle
    (dairy)             1      0      6      8      16            1          32
    e. Cervids
    (e.g., deer,
    elk)                0      2      4      4      10           12          32
    f. Equine (e.g.,
    horses, donkeys,
    mules)              2      3      5      3      10            9          32
    g. Goats            3      1      4      7      10            7          32
    h. Poultry
    (commercial)        0      1      4      5      17            5          32
    i. Poultry
    (non-commercial)    1      0      4      3      18            6          32
    j. Sheep            1      2      5      6      15            3          32
    k. Swine
    (individual)        5      1      3      4      15            4          32
    l. Swine (group)    0      1      4      7      18            2          32

    Q7. What percentage of animals tracked is necessary to achieve the goal of
    rapid animal disease trace back?

                                                        No expertise/    Numberof
                            0-25% 26-50% 51-75% 76-100%     No answer respondents
    a. Producers             2      1      7      22             0          32
    b. Livestock markets     2      0      2      27             1          32
    c. Slaughter
    facilities               2      0      2      27             1          32

    Part III: Implementation of NAIS

    NAIS is being implemented for all livestock species, including bison,
    camelids, cattle (beef and dairy), cervids, equine, goats, poultry, sheep,
    and swine. Countries that have already implemented national animal ID
    programs (e.g., Canada, EU, Australia) generally started with cattle and,
    in some cases, later extended their program to cover a few other species.
    No other country has attempted to reach the number of species that USDA
    aims to cover with NAIS, nor has any other country implemented a program
    for multiple species simultaneously.

    Q8. What types of incentives do you believe could be used to achieve a
    high level of participation in the premises registration, animal
    identification, and/or animal tracking components of NAIS?

    Number of experts who provided a response No expertise/No response
                                              32                        0

    Q9. In your opinion, should participation in NAIS be mandatory?

                                                                   No
    Definitely Probably           Probably Definitely   expertise/    Numberof
    yes             yes Uncertain       no         no    No answer respondents
               17       10         2        2          1            0          32

    Q10. How would you characterize USDA's effectiveness in communicating
    roles and responsibilities for NAIS?

                                       Neither
                                     effective                                   No
                    Very Generally         nor   Generally        Very expertise/No    Numberof
               effective effective ineffective ineffective ineffective       answer respondents
    a.
    Producers          0         2           3          18           7            2          32
    b.
    Livestock
    markets            0         5           3          14           5            5          32
    c.
    Slaughter
    facilities         1         9           4           6           5            7          32
    d. State
    animal
    health
    officials          4        14           2           3           3            6          32

    Q11. If you believe that USDA's communications are not as effective as
    they could be, please describe any actions that USDA could take to make
    communications better.

    Number of experts who provided a response No expertise/No response
                                              27                        5

    Q12. In your opinion, should USDA limit NAIS to one or a few species or
    continue with its current approach to include all species?

                                      Probably
                                      continue
                                          with  Definitely
                                       current    continue
                  Probably            approach        with
    Definitely limit to                  of     current
         limit to   one or           including approach of         No
    one or few      few                 all   including expertise/    Numberof
          species  species Uncertain   species all species  No answer respondents
                6        4         1        16           5          0          32

    Q13. In your opinion, should USDA implement NAIS incrementally by species,
    or continue with its current approach to implement NAIS for all species
    simultaneously?

                                                Probably     Definitely
                                           continue with  continue with
                                                 current        current
                                             approach of    approach of
    Definitely      Probably             implementing   implementing
        implement     implement                  for all        for all         No
    incrementally incrementally                  species        species expertise/    Numberof
    by species    by species Uncertain simultaneously simultaneously  No answer respondents
               13             8         2              6              2          1          32

    Q14. In your opinion, what criteria should be used to determine the
    priority given to each species in implementing NAIS?

    Number of experts who provided a response No expertise/No response
                                              30                        2

    Q15. In your opinion, what priority should be given to each species in
    implementing NAIS?

                                                                            No
                       Lowest      Low   Medium     High  Highest expertise/No    Numberof
                     priority priority priority priority priority       answer respondents
    a. Bison                5        8        7        5        3            4          32
    b. Camelids
    (e.g., alpacas,
    llamas)                14        9        2        2        0            5          32
    c. Cattle (beef)        0        0        1        7       23            1          32
    d. Cattle
    (dairy)                 0        0        1        6       24            1          32
    e. Cervids
    (e.g., deer,
    elk)                    4       11        6        4        4            3          32
    f. Equine (e.g.,
    horses, donkeys,
    mules)                  7        7       11        3        0            4          32
    g. Goats                4        8       11        1        5            3          32
    h. Poultry
    (commercial)            1        1        5        9       13            3          32
    i. Poultry
    (non-commercial)        3        5       10        6        6            2          32
    j. Sheep                2        5        8       10        6            1          32
    k. Swine
    (individual)            3       12        5        5        6            1          32
    l. Swine (group)        1        1        2       11       16            1          32

    Part IV: Costs and Benefits of NAIS

    USDA has not released detailed information on the cost of implementing and
    maintaining NAIS for producers, livestock markets, slaughter facilities,
    states, and others that are subject to NAIS. In the November 2006 draft
    NAIS User Guide (pg. 12) USDA states that it plans to conduct a
    cost-benefit analysis that will help forecast more precisely the potential
    economic effects of NAIS.

    Q16. Should USDA publish a cost-benefit analysis for NAIS that contains
    detailed cost and benefit information for the different sectors of the
    livestock industry, states, and USDA?

                                                                   No
    Definitely Probably           Probably Definitely   expertise/    Numberof
    yes             yes Uncertain       no         no    No answer respondents
    21                8         2        1          0            0          32

    Q17. Do you believe there are other actions that USDA should take to
    address the cost(s) of implementing and maintaining NAIS?

                                                                   No
    Definitely Probably           Probably Definitely   expertise/    Numberof
    yes             yes Uncertain       no         no    No answer respondents
    14               15         2        0          0            1          32

    Q18. If you answered "Definitely yes" or "Probably yes" to question 17,
    what other actions should USDA take to address the cost of implementing
    and maintaining NAIS?

    Number of experts who provided a response No expertise/No response
                                              29                        3

    Q19. Do you believe there are other actions that USDA could take to make
    known the benefit(s) of implementing and maintaining NAIS?

                                                                   No
    Definitely Probably           Probably Definitely   expertise/    Numberof
    yes             yes Uncertain       no         no    No answer respondents
    19               10         2        1          0            0          32

    Q20. If you answered "Definitely yes" or "Probably yes" to Question 19,
    what other actions could USDA take to make known the benefit(s) of
    implementing and maintaining NAIS?

    Number of experts who provided a response No expertise/No response
                                              29                        3

    Q21. In your opinion, what overall, net effect (considering all costs and
    benefits) will NAIS likely have on producers, livestock markets, and/or
    slaughter facilities?

                                                                        No
               Definitely Probably     No Probably Definitely expertise/No    Numberof
                 negative negative effect positive   positive       answer respondents
    a.
    Producers           1        6      0       13         11            1          32
    b.
    Livestock
    markets             1        6      3        9         11            2          32
    c.
    Slaughter
    facilities          0        2      6        8         14            2          32

    Part V: Impact on the Livestock Industry and Consumers

    This section asks about vertical coordination, which refers to the way
    products are exchanged between different stages of production in a market,
    such as between farmers, processors, and retailers. The three basic types
    of vertical coordination are: (1) open-production, where a firm purchases
    a commodity from a producer at the market price determined at the time of
    purchase; (2) contract-production (contracting), where a firm commits to
    purchase a commodity from a producer at a price established in advance of
    the purchase; and (3) vertical integration, where a single firm controls
    the flow of the commodity across two or more stages of production. There
    are also questions about horizontal consolidation, the process by which
    production is organized into fewer, but larger, plants or farms.

    Q22. In your opinion, will NAIS make contracting, vertical integration,
    and/or horizontal consolidation in the livestock industry (all species)
    more or less likely to occur?

                  Definitely Probably        Probably Definitely           No
                        more     more     No     less       less expertise/No    Numberof
                      likely   likely effect   likely     likely       answer respondents
    a.
    Contracting            3       13     15        1          0            0          32
    b. Vertical
    integration            4        8     18        2          0            0          32
    c. Horizontal
    consolidation          0       16     15        1          0            0          32

    Q23. In the textbox below, please provide a brief explanation for why you
    think NAIS will make contracting, vertical integration, and/or horizontal
    consolidation more or less likely to occur.

    Number of experts who provided a response No expertise/No response
                                              31                        1

    Q24. In what ways, if any, should USDA address any of the effects NAIS
    could have on the industry due to contracting, vertical integration,
    and/or horizontal consolidation?

    Number of experts who provided a response No expertise/No response
                                              29                        3

    Q25. In your opinion, will NAIS result in higher or lower prices for meat
    and/or other animal products?

    Definitely Probably     No Probably Definitely   No expertise/    Numberof
    higher       higher effect    lower      lower       No answer respondents
    3                 9     15        2          0               3          32

    Q26. In your opinion, if NAIS causes costs of livestock markets and/or
    slaughter facilities to increase, what effect will that have on the prices
    paid to producers for livestock?

    Definitely Probably     No Probably Definitely   No expertise/    Numberof
    increase   increase effect decrease   decrease       No answer respondents
    0                 2      8       17          4               1          32

    Q27. In your opinion, if NAIS causes costs of livestock markets and/or
    slaughter facilities to decrease, what effect will that have on the prices
    paid to producers for livestock?

    Definitely Probably     No Probably Definitely   No expertise/    Numberof
    increase   increase effect decrease   decrease       No answer respondents
    2                14     13        1          0               2          32

    Part VI: Animal Identification and Tracking Technologies

    Canada and Australia have adopted standards that limit the acceptable
    identification and tracking technologies to certain electronic devices for
    their national animal (cattle) ID programs. However, USDA has taken a
    "technology-neutral" position so that many different types of ID devices,
    both visual and electronic, are acceptable under NAIS. Some of USDA's NAIS
    Species Working Groups have recommended specific ID devices for their
    industries, such as cattle RFID ear tags and equine neck microchips, but
    USDA has not adopted these recommendations as NAIS standards.

    Q28. Does USDA's "technology-neutral" position encourage or discourage
    investment by producers in animal identification technology (e.g.,
    individual animal ID devices)?

                              Neither
                           encourages                                 No
    Definitely   Probably         nor    Probably  Definitely expertise/    Numberof
    encourages encourages discourages discourages discourages  No answer respondents
    3                   3           2          14           9          1          32

    Q29. Please use the space below to elaborate on your answers to Question
    28.

    Number of experts who provided a response No expertise/No response
                                              32                        0

    Q30. Does USDA's "technology-neutral" position encourage or discourage
    investment in animal tracking technology (e.g., ID readers, databases, and
    retrofitting facilities) by producers, livestock markets, and slaughter
    facilities?

                                         Neither
                                      encourages                                   No
               Definitely   Probably         nor    Probably  Definitely expertise/No    Numberof
               encourages encourages discourages discourages discourages       answer respondents
    a.
    Producers           1          1           5          12          12            1          32
    b.
    Livestock
    markets             1          1           4          14           8            4          32
    c.
    Slaughter
    facilities          1          3           6          11           6            5          32

    Q31. Please use the space below to elaborate on your answers to Question
    30.

    Number of experts who provided a response No expertise/No response
                                              30                        2

    Q32. Do you know of any specific problems regarding the interoperability
    (compatibility) of animal ID and tracking devices made by different
    manufacturers? If yes, please describe below.

    Number of experts who provided a response No expertise/No response
                                              18                       14

    Q33. What actions could USDA take to address problems affecting the
    interoperability of animal ID and tracking devices?

    Number of experts who provided a response No expertise/No response
                                              21                       11

    Q34. Do you know of any specific problems affecting the accuracy of animal
    tracking devices? If yes, please describe below.

    Number of experts who provided a response No expertise/No response
                                              18                       14

    Q35. What actions could USDA take to address problems affecting the
    accuracy of animal tracking devices?

    Number of experts who provided a response No expertise/No response
                                              19                       13

    Q36. Do you know of any specific problems affecting the longevity of
    animal ID or tracking devices? If yes, please describe below.

    Number of experts who provided a response No expertise/No response
                                              16                       16

    Q37. What actions could USDA take to address problems affecting the
    longevity of animal ID or tracking devices?

    Number of experts who provided a response No expertise/No response
                                              21                       11

    Q38. Do you know of any specific problems affecting the ability of animal
    tracking devices to keep up with the "speed of commerce" when animals
    change ownership? If yes, please describe below.

    Number of experts who provided a response No expertise/No response
                                              23                        9

    Q39. What actions could USDA take to address any problems affecting the
    ability of animal tracking devices to keep up with the speed of commerce?

    Number of experts who provided a response No expertise/No response
                                              22                       10

    Part VII: Databases for Tracking Animals

    USDA's original plan for animal tracking, the third component of NAIS, was
    for USDA to manage a centralized database that would contain all animal
    movements input by industry in the birth-to-slaughter production process.
    To address concerns about the protection of proprietary information,
    Secretary Johanns announced in August 2005 that USDA would allow data from
    approved state and private animal tracking databases (ATDs) to be
    transferred to a USDA information system. However, some industry groups
    and states have expressed concerns about the cost, quality, and timeliness
    of this new, decentralized approach.

    Q40. What actions could USDA take to address any concerns about the
    cost(s) of the decentralized approach?

    Number of experts who provided a response No expertise/No response
                                              29                        3

    Q41. What actions could USDA take to address concerns about the quality
    and timeliness of the decentralized approach?

    Number of experts who provided a response No expertise/No response
                                              28                        4

    Part VIII: Final Comments

    Q42. Are you in favor of a national animal ID program?

    Definitely Probably           Probably Definitely     No          Numberof
    yes             yes Uncertain       no         no answer       respondents
    25                4         2        0          0      1                32

    Q43. Are you in favor of NAIS as it is currently planned?

    Definitely       Probably             Probably   Definitely      Number of
    yes                   yes Uncertain         no           no    respondents
    0                       7         5         15            5             32

    Q44. If applicable, please explain any discrepancy in your answers to
    Questions 42 and 43.

    Number of experts who provided a response No expertise/No response
                                              29                        3

    Q45. What changes, if any, would you make to NAIS as it is currently
    planned? (Please limit to the 3 most important issues.)

    Number of experts who provided a response No expertise/No response
                                              32                        0

    Q46. If you have additional comments about NAIS that you would like to
    make, please do so here.

    Number of experts who provided a response No expertise/No response
                                              19                       13

    Appendix V: Select International Animal Identification and Tracking
    Programs

                   Select International AnimaI Identification and Tracking Programs
                                      Voluntary                                Production
              Program                 or        Year           Current type of cycle
    Country   name/Law title Species  mandatory implemented    ID device used  covered
    Argentina Export Cattle  Cattle   Mandatory 2003           Visual ear tag  Farm of
              Identification          for                                      origin to
              System                  export                                   slaughter
    Australia National       Cattle,  Mandatory Cattle:        Cattle:         Farm of
              Livestock      sheep,             premises       electronic      origin to
              Identification and                registration   (radio          slaughter
              System         goats              since 1960s;   frequency
                                                individual     identification)
                                                identification ear tag or ear
                                                in 2005.       tag/rumen bolus
                                                               combination
                                                Sheep and
                                                goats: initial Sheep and
                                                implementation goats: visual
                                                in 2006; full  ear tags
                                                implementation
                                                in 2009.
    Brazil    Brazilian      Cattle   Mandatory First phase    Visual ear tag  Farm of
              System of      and                (2002):        combined with   origin to
              Identification bison              mandatory      one of the      slaughter
              and                               participation  following:
              Certification                     only by those  button ear tag,
              of Origin for                     exporting beef electronic
              Bovine and                        to the         device, tattoo,
              Buffalo                           European       or iron brand
                                                Union.

                                                Second phase
                                                (2006):
                                                mandatory
                                                participation
                                                for all
                                                foreign
                                                exports.

                                                Third phase
                                                (2006):
                                                mandatory
                                                requirement
                                                for all
                                                foot-and-mouth
                                                disease
                                                affected
                                                areas,
                                                regardless of
                                                whether the
                                                product is
                                                being sold
                                                overseas.

                                                Fourth phase
                                                (2007): all
                                                beef producers
                                                must
                                                participate,
                                                regardless of
                                                whether the
                                                product is
                                                being
                                                exported.
    Canada    Canadian       Cattle   Mandatory 2001           Radio frequency Farm of
              Cattle         and                               identification  origin to
              Identification bison                                             carcass
              Program                                                          inspection
                                                                               or export
              Canadian Sheep Sheep    Mandatory 2004           Visual ear tags Farm of
              Identification                                                   origin to
              Program                                                          carcass
                                                                               inspection
    European  N/A            Cattle,  Mandatory Cattle,        Cattle,         Farm of
    Union                    buffalo,           buffalo,       buffalo, and    origin to
                             bison,             bison, and     bison: double   retail
                             sheep,             equine: 2000   ear tag and
                             goats,                            passport
                             equine,            Sheep and
                             and                goats: 1992    Equine:
                             swine                             passport
                                                Swine: 1992
                                                               Sheep and
                                                               goats: double
                                                               identification
                                                               (two ear tags
                                                               or one ear tag
                                                               and a tattoo,
                                                               mark on the
                                                               pastern (for
                                                               goats only), or
                                                               electronic
                                                               identifiers)

                                                               Swine: ear tags
                                                               or tattoos
    Japan     Beef           Beef     Mandatory 2003           Ear tags with   Farm of
              Traceability   cattle                            minimum         origin to
              Law                                              requirements    retail

    Source: GAO summary of reports and articles on international animal ID
    programs. Note: We did not independently verify the information on foreign
    countries' animal ID systems.

    Appendix VI: Information on NAIS Cooperative Agreements

    Table 2: USDA Funding for NAIS Cooperative Agreements to States,
    Territories, and Tribes, Fiscal Years 2004 through 2006

                      Fiscal year 2004 (CCC)                                                      Fiscal year
                               funds                              Fiscal year 2005                   2006
                                         Field
                                       trials/
                         Premises     Premises       Premises       Field     Premises
                     registration registration   registration    trials^a registration      Total
    State
    Alabama                           $115,000                   $245,000                            $360,000
    Alaska                                                         35,488                              35,488
    Arizona                                                       169,000                $141,000     310,000
    Arkansas                           115,000                    281,000                 203,000     599,000
    California           $752,000                                 625,000     $350,000    387,000   2,114,000
    Colorado            1,214,579                                 365,000      295,227    264,000   2,138,806
    Connecticut                                                    78,735                              78,735
    Delaware                            31,500                     34,800                              66,300
    Florida               531,840                                 273,000                 191,000     995,840
    Georgia                            120,000                     42,173                 238,160     400,333
    Hawaii                                                        100,000                             100,000
    Idaho               1,164,000                                 299,000                 203,000   1,666,000
    Illinois                           130,000                    245,000                 141,000     516,000
    Indiana                            130,000                    201,000                 100,073     431,073
    Iowa                               130,000                    472,000                 130,400     732,400
    Kansas                805,000                                 685,000      441,430              1,931,430
    Kentucky              269,093                                 352,000                             621,093
    Louisiana                          100,000                                                        100,000
    Maine                               78,343                     94,000                  21,500     193,843
    Maryland                            73,500                     81,200                             154,700
    Massachusetts                                                  95,348                              95,348
    Michigan                           120,000                    207,000                             327,000
    Minnesota             434,578                                 342,000                 203,000     979,578
    Mississippi                        153,327                    170,129                  43,294     366,750
    Missouri                           511,707                    561,000                 237,000   1,309,707
    Montana               431,928                                 349,000                             780,928
    Nebraska                           130,000                    672,000                 448,000   1,250,000
    Nevada                              99,999                    129,000                  80,000     308,999
    New Hampshire                                                  47,171                              47,171
    New Jersey                         100,000                     92,000                  72,108     264,108
    New Mexico                                                    244,000      203,000    447,000
    New York                            93,000                    250,000                 202,941     545,941
    North Carolina                     120,000                    197,000                                         317,000
    North Dakota          515,000                                 272,000                                         787,000
    Ohio                               130,000                    258,000                             129,746     517,746
    Oklahoma              675,000                                 629,000                             309,599   1,613,599
    Oregon                                                        248,000                                         248,000
    Pennsylvania          615,000                                 257,000      205,856                142,238   1,220,094
    Rhode Island
    South Carolina                     199,865                    139,000                             141,000     479,865
    South Dakota          505,240                                 334,277                             326,000   1,165,517
    Tennessee                          130,000                    347,000      142,973                129,408     749,381
    Texas               1,000,000                               1,038,975                             235,000   2,273,975
    Utah                  182,100                                 194,000                                         376,100
    Vermont                            100,000                    114,000                                         214,000
    Virginia                           112,636                    266,000      220,000                            598,636
    Washington                         100,956                    206,000                             141,000     447,956
    West Virginia                      100,000                    138,000                              64,079     302,079
    Wisconsin                          100,000                    444,000                                         544,000
    Wyoming               361,929                                 235,000                             141,000     737,929
    Subtotal           $9,457,287   $3,324,833                $13,154,296   $1,655,486             $5,268,546 $32,860,448
    Territories
    Puerto Rico                                                   $70,000                                         $70,000
    Virgin Islands                                                 22,213                              $7,381      29,594
    Subtotal                   $0           $0                    $92,213           $0                 $7,381     $99,594
    Tribes
    Cheyenne River
    Sioux Tribe of
    the Cheyenne
    River
    Reservation,
    South Dakota                                                              $250,000                $15,000    $265,000
    Chippewa-Cree
    Indians of the
    Rocky Boy's
    Reservation,
    Montana                                                                                             9,175       9,175
    Fort Belknap
    Indian Community
    of the Fort
    Belknap
    Reservation of
    Montana^b            $200,000                                $417,000                             242,500     859,500
    Hopi Tribe of
    Arizona                                                        18,000                                          18,000
    Hualapai Indian
    Tribe of the
    Hualapai Indian
    Reservation,
    Arizona                                                        18,000                              10,000      28,000
    Jicarilla Apache
    Nation, New
    Mexico                                                         18,000                              10,000      28,000
    Minnesota
    Chippewa Tribe,
    Minnesota (White
    Earth Band)                                                    18,000                              15,000      33,000
    Navajo Nation,
    Arizona, New
    Mexico & Utah                                                  18,000                              10,000      28,000
    Oglala Sioux
    Tribe of the
    Pine Ridge
    Reservation,
    South Dakota                                                   18,000                              15,000      33,000
    Osage Tribe,
    Oklahoma                           $50,000                     18,000                                          68,000
    Poarch Band of
    Creek Indians of
    Alabama                                                                                            15,000      15,000
    Pueblo of Acoma,
    New Mexico                                                     18,000                                          18,000
    Pueblo of
    Isleta, New
    Mexico                                                          9,000                                           9,000
    Pueblo of Jemez,
    New Mexico                                                      9,000                                           9,000
    Pueblo of
    Laguna, New
    Mexico                                                          9,000                                           9,000
    Pueblo of
    Pojoaque, New
    Mexico                                                          9,000                                           9,000
    Pyramid Lake
    Paiute Tribe of
    the Pyramid Lake
    Reservation,
    Nevada                                                         18,000                              18,000
    San Carlos
    Apache Tribe of
    the San Carlos
    Reservation,
    Arizona                                                        18,000                  10,000      28,000
    Shoshone Tribe
    of the Wind
    River
    Reservation,
    Wyoming^c                                                                             347,500     347,500
    Shoshone-Bannock
    Tribes of the
    Fort Hall
    Reservation of
    Idaho                                                          18,000                  10,000      28,000
    Shoshone-Paiute
    Tribes of the
    Duck Valley
    Reservation,
    Nevada                                                                                 18,000
    Spirit Lake                                      National
    Tribe, North                                       Animal
    Dakota                                     Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System
                                                     National
                                                       Animal
                                               Identification
                                                       System      18,000                              18,000
    St Regis Band of
    Mohawk Indians
    of New York                                                    18,000                              18,000
    Three Affiliated
    Tribes of the
    Fort Berthold
    Reservation,
    North Dakota                                                   18,000                              18,000
    Tohono O'odham
    Nation of
    Arizona                                                        18,000                              18,000
    Tule River
    Indian Tribe of
    the Tule River
    Reservation,
    California                                                                             20,000      20,000
    Turtle Mountain
    Band of Chippewa
    Indians of North
    Dakota                                                         18,000                              18,000
    Walker River
    Paiute Tribe of
    the Walker River
    Reservation,
    Nevada                                                         18,000                  10,000      28,000
    White Mountain
    Apache Tribe of
    the Fort Apache
    Reservation,
    Arizona                                                        13,493                  10,000      23,493
    Subtotal             $200,000      $50,000                   $790,493     $250,000   $749,175  $2,039,668
    Total              $9,657,287   $3,374,833                $14,037,002   $1,905,486 $6,025,101 $34,999,710

    Source: GAO analysis of USDA data.

    Note: This information was compiled from data provided by USDA summarizing
    signed cooperative agreements between USDA and state, territory, and
    tribal governments; we did not independently assess whether states
    received funding in these amounts. The award amounts listed have been
    adjusted to reflect additional obligations, or deobligations, reported by
    USDA.

    ^aSome of these pilot projects were funded from CCC fiscal year 2004
    funding. Awards that have been committed, but not yet signed, are not
    included in this column.

    ^bThe Fort Belknap Indian Community of the Fort Belknap Reservation of
    Montana fiscal year 2006 cooperative agreement for $35,000 included
    funding for the following tribes: Fort Belknap Indian Community of the
    Fort Belknap Reservation of Montana; Confederated Tribes of the Warm
    Springs Reservation of Oregon; and Ute Indian Tribe of the Uintah & Ouray
    Reservation, Utah.

    ^cThe Shoshone Tribe of the Wind River Reservation, Wyoming fiscal year
    2006 cooperative agreement for $115,000 included funding for the following
    tribes: Shoshone Tribe of the Wind River Reservation, Wyoming; Crow Tribe
    of Montana; Shoshone-Paiute Tribes of the Duck Valley Reservation, Nevada;
    Yomba Shoshone Tribe of the Yomba Reservation, Nevada; Te-Moak Tribe of
    Western Shoshone Indians of Nevada (South Fork Band); Washoe Tribe of
    Nevada & California; Skull Valley Band of Goshute Indians of Utah; Pyramid
    Lake Paiute Tribe of the Pyramid Lake Reservation, Nevada; Arapahoe Tribe
    of the Wind River Reservation, Wyoming; and Blackfeet Tribe of the
    Blackfeet Indian Reservation of Montana.

    Table 3: Species Covered by USDA NAIS Cooperative Agreement Field Trials,
    Fiscal Years 2004 and 2005

                                                     Species^a
    Recipient of       Award       Dairy   Beef
    award             amount Bison cattle cattle Swine Sheep Equine Poultry Cervids Goats Camelids
    Fiscal year 2004 (CCC)
    funding^b
    California
    Department
    of Food and
    Agriculture     $752,000         o
    Colorado
    Department
    of
    Agriculture    1,214,579   o     o      o            o     o               o      o      o
    Florida
    Department
    of
    Agriculture      531,840         o      o
    Fort Belknap
    Indian
    Community        200,000   o            o
    Idaho State
    Department
    of
    Agriculture    1,164,000         o      o      o     o                     o
    Kansas
    Animal Heath
    Department       805,000                o
    Kentucky
    Department
    of
    Agriculture      269,093         o      o
    Minnesota
    Board of
    Animal
    Health           434,578         o      o      o
    Montana
    Department
    of Livestock     431,928   o            o            o                     o
    North Dakota
    State Board
    of Animal
    Health           515,000   o     o      o            o
    Oklahoma
    Department
    of
    Agriculture      675,000         o      o            o     o               o      o
    Pennsylvania
    Department
    of
    Agriculture      615,000         o      o
    South Dakota
    Animal
    Industry
    Board            505,240         o      o      o     o
                                                     Species^a
    Recipient of       Award       Dairy   Beef
    award             amount Bison cattle cattle Swine Sheep Equine Poultry Cervids Goats Camelids
    Texas Animal
    Health
    Commission     1,000,000         o      o            o     o               o      o
    Utah
    Department
    of
    Agriculture
    and Food         182,100                                                   o
    Wyoming
    Livestock
    Board            361,929         o      o      o     o     o
    Fiscal year 2005 funding^b
    California
    Department
    of Food and
    Agriculture      350,000         o      o            o
    Colorado
    Department
    of
    Agriculture      295,227                o      o     o                            o
    Kansas
    Animal
    Health
    Department       441,430                o
    Virginia
    Department
    of
    Agriculture
    and Consumer
    Services         220,000                o            o
    Cheyenne
    River Sioux
    Tribe of the
    Cheyenne
    River
    Reservation,
    South Dakota     250,000                o
    Tennessee
    Department
    of
    Agriculture      142,973                o
    Pennsylvania
    State
    University       205,856                                   o
    Total        $11,562,773   4     13     20     5    11     5       0       6      4      1

    Source: GAO analysis of USDA data.

    ^aThis information was compiled from applications to USDA by cooperative
    agreement recipients. We did not independently assess whether the
    cooperative agreements involved work with these species. Additional
    cooperative agreements are undergoing final revisions but have not yet
    been signed.

    ^bFiscal year 2004 funding was provided for both field trials and premises
    registration activities. Fiscal year 2005 funding was provided exclusively
    for field trial activities.

    Table 4: NAIS Premises Registration Statistics, by State, as of June 4,
    2007

                      Estimated number of     Premises     Percentage of premises
    State                   premises^a registered^b                 registered
    Alabama                     35,538        3,881                      10.9%
    Alaska                         354           59                       16.7
    Arizona                      5,170          610                       11.8
    Arkansas                    37,614        7,463                       19.8
    California                  32,500        5,017                       15.4
    Colorado                    22,951        6,280                       27.4
    Connecticut                  2,539           17                        0.7
    Delaware                     1,553          651                       41.9
    Florida                     28,731        3,972                       13.8
    Georgia                     35,431        3,793                       10.7
    Hawaii                       1,391          288                       20.7
    Idaho                       18,754       18,046                       96.2
    Illinois                    30,046        8,151                       27.1
    Indiana                     34,790       28,581                       82.2
    Iowa                        47,273       18,136                       38.4
    Kansas                      39,346        5,048                       12.8
    Kentucky                    61,251       12,095                       19.7
    Louisiana                   19,677        1,121                        5.7
    Maine                        4,213          416                        9.9
    Maryland                     7,837        1,332                       17.0
    Massachusetts                3,555        1,685                       47.4
    Michigan                    29,011       18,351                       63.3
    Minnesota                   44,193       11,741                       26.6
    Mississippi                 29,312        1,405                        4.8
    Missouri                    79,018       13,546                       17.1
    Montana                     19,708          790                        4.0
    Nebraska                    30,841       13,616                       44.1
    Nevada                       2,522        1,209                       47.9
    New Hampshire                2,277           39                        1.7
    New Jersey                   5,315          992                       18.7
    New Mexico                  11,250          962                        8.6
    New York                    25,559       16,132                       63.1
    North Carolina              36,142        9,455                       26.2
    North Dakota                14,085        8,209                       58.3
    Ohio                        48,073        5,697                       11.9
    Oklahoma                    71,420        7,150                       10.0
    Oregon                      28,634        2,503                        8.7
    Pennsylvania                42,302       27,658                       65.4
    Rhode Island                   504            5                        1.0
    South Carolina              16,120        2,418                       15.0
    South Dakota                22,356        4,950                       22.1
    Tennessee                   68,010       13,375                       19.7
    Texas                      187,118       28,616                       15.3
    Utah                        12,460        8,606                       69.1
    Vermont                      4,438          306                        6.9
    Virginia                    37,673        4,388                       11.6
    Washington                  22,155        1,415                        6.4
    West Virginia               17,670        8,671                       49.1
    Wisconsin                   51,373       57,742                      112.4
    Wyoming                      8,227        1,216                       14.8

    Source: USDA NAIS Web site,
    [49]http://animalid.aphis.usda.gov/nais/premises_id/update.shtml , updated
    weekly.

    Note: According to USDA, this information represents a snapshot of the
    progress being made with regard to premises registration in each state.
    The figures are USDA estimates, and we did not independently verify this
    information.

    ^aThe National Agriculture Statistics Survey estimates 1.4 million
    livestock farms in the United States (premises more than $1,000 in annual
    income). Premises with more than one species are counted one time.

    ^bPremises registered in the National Animal Identification System.

    Table 5: USDA's Criteria for Distributing NAIS Cooperative Agreement
    Funding in Fiscal Year 2007

                                                                                 Less than
                                    Greater than    Between 11% Between 6% and       6% of
                                          25% of     and 25% of         10% of    premises
                                        premises       premises       premises registered:
                                     registered:    registered:    registered:     100% of
                                  Minimum of 60% Minimum of 70% Minimum of 80%  funds must
                                   of funds must  of funds must  of funds must be spent on
                          Midyear    be spent on    be spent on    be spent on   education
                      performance   outreach and   outreach and   outreach and         and
             Reserved      review       premises       premises       premises    outreach
    State      amount  required^a registration^b registration^b registration^b      only^b
    AL       $276,000      o                                          o
    AK         80,000                                                 o
    AZ        178,000      o                           o
    AR        277,000      o                           o
    CA        575,000      o                           o
    CO        376,000      o                           o
    CT         80,000                                                               o
    DE         80,000                   o
    FL        277,000      o                           o
    GA        180,000      o                                          o
    HI         81,000                                  o
    ID        278,000                   o
    IL        180,000      o                           o
    IN        179,000                   o
    IA        474,000      o                           o
    KS        673,000      o                           o
    KY        375,000      o                           o
    LA        178,000      o                                                        o
    ME         80,000                                                 o
    MD         81,000                                  o
    MA         80,000                   o
    MI        179,000                   o
    MN        279,000                   o
    MS        179,000      o                                                        o
    MO        572,000      o                           o
    MT        279,000      o                                                        o
    NE        672,000                   o
    NV         82,000                   o
    NH         80,000                                                               o
                                                                                 Less than
                                    Greater than    Between 11% Between 6% and       6% of
                                          25% of     and 25% of         10% of    premises
                                        premises       premises       premises registered:
                                     registered:    registered:    registered:     100% of
                                  Minimum of 60% Minimum of 70% Minimum of 80%  funds must
                                   of funds must  of funds must  of funds must be spent on
                          Midyear    be spent on    be spent on    be spent on   education
                      performance   outreach and   outreach and   outreach and         and
             Reserved      review       premises       premises       premises    outreach
    State      amount  required^a registration^b registration^b registration^b      only^b
    NJ         80,000                                  o
    NM        276,000      o                                          o
    NY        276,000                   o
    NC        179,000      o                           o
    ND        277,000                   o
    OH        276,000      o                                                        o
    OK        575,000      o                                                        o
    OR        276,000      o                                          o
    PA        277,000                   o
    RI         80,000                                                               o
    SC        177,000      o                           o
    SD        474,000      o                           o
    TN        279,000      o                           o
    TX      1,200,000      o                           o
    UT        179,000                   o
    VT         81,000                                                               o
    VA        277,000      o                                          o
    WA        179,000      o                                                        o
    WV        177,000                   o
    WI        378,000                   o
    WY        276,000      o                                          o
    Total $13,609,000     27            14             18             8            10

    Source: GAO analysis of USDA data.

    ^aStates with less than $82,000 reserved and states that have achieved
    greater than 25 percent of premises registered are not subject to a
    midyear performance review and are eligible to apply for an amount up to
    the total reserved amount. States that have awards larger than $82,000 and
    have achieved 25 percent or less of premises registered are subject to a
    midyear performance review. States subject to this review will be provided
    only 90 percent of the reserved amount at the beginning of the funding
    period. Depending on successful achievement of measurable outcomes
    proposed in the initial work plan as of a midyear review, the remaining 10
    percent, or appropriate portion of the remaining 10 percent, of the
    reserved amount may be allocated to the state for the remaining 6 months
    of the funding period.

    ^bPremises registration information is current as of application
    announcement in November 2006. The remaining funds can be spent on
    automatic data collection equipment for livestock markets and dealers to
    support NAIS integration with established state/federal cooperative animal
    health programs and for incentives, such as promotional items, to
    encourage producers to implement portions of NAIS.

    Appendix VII: Comments from the U.S. Department of Agriculture

    Note: GAO comments supplementing those in the report text appear at the
    end of this appendix.

    See comment 1.

    See comment 2.

    The following are GAO's comments on the U.S. Department of Agriculture's
    letter dated June 7, 2007.

    GAO Comments

               1. We added a statement about USDA's developing, in collaboration
               with the species working groups, a NAIS Short-Term and Long-Term
               Implementation Strategies document that will contain actions for
               the remainder of 2007 through 2011.
               2. We added a statement about USDA's plans to update the NAIS User
               Guide in October 2007 to more clearly reflect the use of other
               official ID numbers within NAIS.

    Appendix VIII: GAO Contact and Staff Acknowledgments

    GAO Contact

    Lisa Shames, (202) 512-3841 or [50]ShamesL@gao.gov

    Staff Acknowledgments

    In addition to the individual named above, Josey Ballenger and Heather
    Hill made significant contributions to this report. Kevin Bray, Nancy
    Crothers, John de Ferrari, Mary Denigan-Macauley, Barbara El-Osta, J. Erin
    Lansburg, Allen Lomax, Lynn Musser, Shannin O'Neill, and Susan Ragland
    also provided key assistance.

    (360716)

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    www.gao.gov/cgi-bin/getrpt?GAO-07-592.

    To view the full product, including the scope
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    Highlights of GAO-07-592, a report to the Chairman, Committee on
    Agriculture, Nutrition, and Forestry, U.S. Senate

    July 2007

    NATIONAL ANIMAL IDENTIFICATION SYSTEM

    USDA Needs to Resolve Several Key Implementation Issues to Achieve Rapid
    and Effective Disease Traceback

    Livestock production contributed nearly $123 billion to the U.S. economy
    in 2006. In response to concerns about animal disease outbreaks, the U.S.
    Department of Agriculture (USDA) announced in December 2003 that it would
    implement a nationwide program--later named the National Animal
    Identification System (NAIS)--to help producers and animal health
    officials respond quickly and effectively to animal disease events in the
    United States.

    In this context, GAO determined (1) how effectively USDA is implementing
    NAIS and, specifically, the key issues identified by livestock industry
    groups, market operators, state officials, and others; (2) how USDA has
    distributed cooperative agreement funds to help states and industry
    prepare for NAIS and evaluated the agreements' results; and (3) what USDA
    and others estimate are the costs for USDA, states, and industry to
    implement NAIS. In conducting its work, GAO reviewed USDA documents;
    interviewed agency, industry, and state officials; and consulted 32 animal
    identification (ID) experts.

    [57]What GAO Recommends

    GAO made several recommendations to help USDA achieve the program's goal
    of rapid and effective animal disease traceback. In commenting on a draft
    of this report, USDA generally agreed with the recommendations.

    In implementing the NAIS program, USDA has taken some steps to address
    issues identified by livestock industry groups, market operators, state
    animal health officials, and others. Nonetheless, the agency has not
    effectively addressed several issues that, if left unresolved, could
    undermine the program's ability to achieve the goal of rapid and effective
    animal disease traceback. Specifically, USDA's decision to implement NAIS
    as a voluntary program may affect the agency's ability to attract the
    necessary levels of participation. However, some industry groups believe
    that NAIS could succeed as a voluntary program, or that USDA needs to
    first resolve several issues before making participation mandatory. Agency
    officials are analyzing what participation levels are necessary to meet
    the program's goal and may introduce benchmarks to measure progress. In
    addition, several key problems hinder USDA's ability to implement NAIS
    effectively:

               o USDA has not prioritized the implementation of NAIS by species
               or other criteria. Instead, the agency is implementing NAIS for
               numerous species simultaneously, causing federal, state, and
               industry resources to be allocated widely, rather than being
               focused on the species of greatest concern.
               o USDA has not developed a plan to integrate NAIS with preexisting
               USDA and state animal ID requirements. As a result, producers are
               generally discouraged from investing in new ID devices for NAIS.
               o USDA has not established a robust process for selecting,
               standardizing, and testing animal ID and tracking technologies.
               o USDA does not clearly define the time frame for rapid traceback,
               possibly slowing response and causing greater economic losses.
               o USDA does not require potentially critical information to be
               recorded, such as species or age, in the NAIS databases.

    USDA has awarded $35 million in NAIS cooperative agreements from fiscal
    years 2004 through 2006 to 49 states, 29 tribes, and 2 territories to help
    identify effective approaches to register premises and identify and track
    animals. However, USDA has not consistently monitored or formally
    evaluated the results of cooperative agreements or consistently shared the
    results with states, industry groups, and other stakeholders. As a result,
    USDA cannot be assured that the agreements' intended outcomes have been
    achieved and, furthermore, that lessons learned and best practices are
    used to inform the program's progress.

    No comprehensive cost estimate or cost-benefit analysis for the
    implementation and maintenance of NAIS currently exists. As a result, it
    is not known how much is required in federal, state, and industry
    resources to achieve rapid and effective traceback, or whether the
    potential benefits of the program outweigh the costs. Industry groups and
    state officials say the cost of implementing NAIS is one of their biggest
    concerns. USDA plans to hire a contractor to conduct a cost-benefit
    analysis, in part to more precisely forecast the economic effects of NAIS.

    References

    Visible links
      39. http://www.gao.gov/cgi-bin/getrpt?GAO-07-310
      40. http://www.gao.gov/cgi-bin/getrpt?GAO-07-652
      41. http://www.gao.gov/cgi-bin/getrpt?GAO-05-101
      42. http://www.gao.gov/cgi-bin/getrpt?GAO-02-808
      43. http://www.gao.gov/cgi-bin/getrpt?GAO-05-551
      44. http://www.gao.gov/cgi-bin/getrpt?GAO-03-114
      45. http://www.gao.gov/cgi-bin/getrpt?GAO-06-1046
      46. http://www.gao.gov/cgi-bin/getrpt?GAO-05-796SP
      47. http://www.gao.gov/
      48. mailto:ShamesL@gao.gov
      49. http://animalid.aphis.usda.gov/nais/premises_id/update.shtml
      50. mailto:ShamesL@gao.gov
      51. http://www.gao.gov/
      52. http://www.gao.gov/
      53. http://www.gao.gov/fraudnet/fraudnet.htm
      54. mailto:fraudnet@gao.gov
      55. mailto:JarmonG@gao.gov
      56. mailto:AndersonP1@gao.gov
    *** End of document. ***