RFID in the Dairy Farm Industry

Maikie Currie of Brand interviews Katina Michael on RFID in the dairy farm industry for this article. Date: 5 July 2009.

1. Has RFID improved efficiency in the dairy farm supply chain?

This is a difficult question to categorically answer because it all depends on ‘who you are’, ‘where you are doing your farming’, ‘how RFID was implemented’, and for ‘what RFID is being used for in every day supply chain operations’. If the reason why a stakeholder in the dairy farm supply chain adopts RFID has to do with a government mandate or industry-specific compliance or market specific legal directives, then efficiency gains to the farmer for instance, are initially quite low. Most Australian dairy farmers for instance have found the task of RFID tagging quite onerous, although they have obviously used other methods of manual identification in the past. The teething problems are similar to any new system implementation but the difference here is that it has to work and be functional.

Where RFID in dairy farming has really made its mark is in the practice of traceability, the end-to-end management of the dairy supply chain. Where this is especially important is in monitoring populations of animals to ensure early detection of disease outbreaks and other illness to prevent heavy casualties. Although there are some more innovative uses of RFID, for the greater part, farmers in Australia have gone for the basic implementation. But the industry as a whole is maturing. Some dairy farmers struggle with a basic implementation, while others are more visionary in their approach considering how they might be able to exploit the technology for all its benefits. A lot of it has to do with budget, whether the dairy farm runs any existing computer technology or online dairy processes, the foresight of the dairy farm owner, the expertise of nearby technical consultants, and whether or not there is a local industry association that can support dairy farmers and work with the whole end-to-end dairy supply chain. While dairy farming is an old industry with established processes, innovation is the key.

I guess, other supply chain stakeholders besides the farmer, (e.g. animal health care officials, veterinarians, livestock producers, saleyards, slaughterhouses, government agencies) can only benefit from this type of technology, and more than increasing efficiency, what RFID does is provide audit trail log data and evidence for the quality of the end-product that cannot easily be tampered with. Milk volumes from each farmer can also be remotely monitored giving wholesalers and retailers a better handle on what to expect.

A number of case studies in the South Coast of NSW were conducted in 2005 and dairy farming capabilities are documented in the following papers:

- Beyond Mere Compliance of RFID Regulations by the Farming Community: A Case Study of the Cochrane Dairy Farm (2007): http://works.bepress.com/kmichael/49/

- The RFID-Enabled Dairy Farm: Towards Total Farm Management (2008): http://works.bepress.com/kmichael/28/

- http://ro.uow.edu.au/thesesinfo/1/ (my student’s thesis): 

-  http://www.amazon.com/Innovative-Automatic-Identification-Location-Based-Services/dp/1599047950  (my latest book, chapter 9)

- Background paper by Adam Trevarthen (2006): http://portal.acm.org/citation.cfm?id=1247468

Some of the potential advantages explored in Adam’s thesis include the potential for RFID to increase efficiencies by providing greater information availability, ensuring reduced feed and labour costs, improving milk quality and volume, improving herd health, and the ease of herd management.

2. How has the dairy industry responded to this technology in terms of take-up?

Again, it all depends on your geographic location. In Australia for instance, the National Livestock Identification System (NLIS) initiative determined that all dairy farmers had to use a system based on RFID. The NLIS system is considered to provide a permanent whole-of-life system allowing individual animals to be identified using an electronic ID and tracked from the point of birth on a given property to the point of slaughter. The government has strict terms of compliance stating reasons to do with food safety, product integrity and market accessibility.

The NLIS system is a mirror of the 1990 directives in the European Union which eventually saw the introduction of the European Union Cattle Accreditation Scheme (EUCAS). The Council Directive 92/102/EC of 27 November 1992 made it mandatory for certain types of livestock to be marked in the EU. Today, national and supranational databases have made the sale of livestock a lot easier and ensure that buyers know the quality of what they are purchasing. As mentioned earlier a major benefit of the RFID system is the ability for farmers and government to track the movement of cattle.

Surprisingly in the United States market, animal tagging took off at about the same time it did in Australia, circa 2004/05. For more information see the National Animal Identification System (NAIS): http://animalid.aphis.usda.gov/nais/

For dairy farming and for any livestock in general, the real pressure to electronically tag animals came from the greater ease to transport animals between markets. It became apparent that with more movement of animals, electronically tagging became a ‘have-to’ measure as more and more foreign animal diseases became prevalent such as foot-and-mouth and mad cow disease.

Today when we talk of ‘take-up’ we are not talking about voluntary take-up as there were really only a small number of farmers globally that moved to adopt RFID before the whole industry said we need a ‘standard’ electronic solution. The Internet (wired and wireless) enabled a lot of these changes especially the advent of broadband, as did advancements in computing power, auxiliary storage and visual devices and the like. Early implementations of RFID are recorded in a book by Geers.

3. What problems are faced by the diary industry, which could be alleviated through the use of RFID?

RFID aims to make monitoring the birth, movement and slaughter of livestock possible for the avoidance, detection, and containment of disease outbreaks such as foot-and-mouth disease and mad cow disease that can cripple an industry in a given market and substantially affect milk production to consumers. Today, RFID is being used to maintain product integrity, traceability, and compliance with local laws.

With farmers being hit with tighter profit margins, mandated quota values by other members in the supply chain, the price per kilogram of quota produced coming down (including exact measures of protein to fat ratios), and increasing demands on net farm income, RFID is being used to help provide greater efficiencies in the cost of production (COP) process. How much feed to give individual cattle in the herd, monitoring cattle that are poor producers of milk or are frequently unwell, decreasing labour costs, and scaling the operation to an optimum can all be aided by RFID if exploited to its full potential. But this level of adoption does cost more than a standard implementation, and many farmers are already in substantial debt.

4. How long has RFID been used in this sector for? Is the technology improving?

Modern standardised implementations of RFID have been used since 2004 in countries like the United States and Australia but for much longer in countries in the European Union. Farmers were experimenting with RFID tags or transponder technologies as far back as the early 1990s but these were small scale trials and definitely not supply chain wide. Today what we have is a system mandated by government and embraced by members of the whole supply chain during the whole of life of the animal.

See for instance, Geers and Madoc (2006) with  and Geers et al. (1996) http://www.amazon.com/Electronic-Identification-Monitoring-Tracking-Animals/dp/0851991238

Technology is always improving.

The major issue initially was to do with proving the durability of the tags. Another issue was designing the RFID system so that it was 100% available at the times that it was needed to assist in the recording of data (e.g. as animals go through enter and exit gates) and not privy to interference issues. It should also be emphasized that electronic tagging has its own inherent limitations in that it relies on power like so many modern systems. That is why during power outages, back up battery power is needed. Some farmers also continue to retain hardcopy data and other off-line records which they believe aid them in their own practices, hence also the importance of the visual ID tag number. Dairy farmers love the business of dairy farming and many have established relationships with their cattle, knowing things about their livestock that are somewhat instinctive, and could not be detected via RFID. RFID will never ever replace this human ability.

Readers devices, if mobile rely on battery and so have limitations. Screen devices that display data to farmers and farm hands need to be able to work on the field and are susceptible to lighting issues although a number of manufacturers are now trying to address this urgently. Signals via LEDs need to be a lot clearer on some devices as it is hard to gauge things like signal strength sometimes.

Today, we also have seen a new breed of RFID implantable technologies that do not succumb to the pitfalls of in-body migration or external tag loss or damage. These new breed of implantable devices can also gather temperature data among other physiological characteristics. While they are not standard tags yet, new innovations will be standardized over time if economies of scale are reached in production.

New technologies currently being researched for the dairy farming industry include: better software to support farmers’ business processes, the use of secure wireless local area networks (WLAN) on the farm which are RFID compatible reducing the need for cables, business-to-business (B2B) portals and private exchanges along the dairy farm supply chain accessible by government agencies as well, the potential for global positioning system receivers to be integrated onto the tag, and even the use of robots to milk cows at the point of grazing, rather than in predefined zones.

Another challenge associated with adopting electronic tagging procedures is the potential for injury (even to the point of death) to the calve, lameness of the animal or accidental injury associated to the person conducting the tagging procedure. This is a problem that must be addressed in the longer term as it causes about 10% of all costs.

5. Is there a clear return on investment for diary product owners?  

A recent study published in the United States shows that for a typical dairy cow operation, the total cost of a bookend system would be US$2.47 per cow and full tracing US$3.43 per cow annually. These costs are predominantly composed of the cost of tagging individual calves with electronic ID plus scanning costs for a full tracing system. Right now we are still in markets where farmers are fully absorbing the adoption costs of new technologies and this has had a substantial impact on supply and demand curves.

Some of the stated benefits of RFID include:

-          premises registration

-          enhancing animal health surveillance and disease eradication

-          reducing economic impact of disease outbreak

-          regionalization and compartmentalization to re-establish market access

-          reducing producer costs associated with animal disease testing

-          enhancing animal welfare in response to natural disasters

-          facilitating and meeting country of origin labeling requirements

-          reducing information asymmetry by increasing transparency in the supply chain

-          reducing risk of unfounded responsibility during liability claims

-          improving efficiency of value added and certified programs

-          social benefits of animal tracing

-          enhancing global competitiveness

Stakeholders largely do not embrace national databanks but the government sees this as the only way to ensure coordination. The next phase of proving the business case will be to demonstrate how and where efficiencies have been gained and where costs have been reduced. The first major study to prove this is attached in a PDF and was published in January 2009. This is where my major responses have come from for question 5, but we have also conducted some of our own benefits analysis in Australia.

See: Benefits-Cost Analysis of National Animal Identification (Jan 14, 2009) 

See also: Total Farm Management paper by Trevarthen and Michael 2008: http://works.bepress.com/kmichael/28/