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		 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
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][email protected] . 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][email protected]

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)

GAO's Mission

The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site ( [51]www.gao.gov ). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site. To
have GAO e-mail you a list of newly posted products every afternoon, go to
[52]www.gao.gov and select "Subscribe to Updates."

Order by Mail or Phone

The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:

U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
D.C. 20548

To order by Phone: Voice: (202) 512-6000
TDD: (202) 512-2537
Fax: (202) 512-6061

To Report Fraud, Waste, and Abuse in Federal Programs

Contact:

Web site: [53]www.gao.gov/fraudnet/fraudnet.htm
E-mail: [54][email protected]
Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional Relations

Gloria Jarmon, Managing Director, [55][email protected] (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125 Washington,
D.C. 20548

Public Affairs

Paul Anderson, Managing Director, [56][email protected] (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548

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

To view the full product, including the scope
and methodology, click on the link above.

For more information, contact Lisa Shames at (202) 512-3841 or
[email protected].

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:[email protected]
  49. http://animalid.aphis.usda.gov/nais/premises_id/update.shtml
  50. mailto:[email protected]
  51. http://www.gao.gov/
  52. http://www.gao.gov/
  53. http://www.gao.gov/fraudnet/fraudnet.htm
  54. mailto:[email protected]
  55. mailto:[email protected]
  56. mailto:[email protected]
*** End of document. ***