A NATIONAL sheep and goat electronic ear tag tender would need to be attractive enough to manufacturers to justify removing resellers from the current supply chain, according to a leading Australian supplier.

As all states move toward a national mandatory electronic identification system for sheep and goats, governments, peak bodies and state farming organisations are debating how to minimise the cost of EID ear tags to producers.

The cost of EID tags has been used by opponents of the proposed national EID roll-out to delay or oppose it, and to seek subsidies from state and federal governments.

Sheep Producers Australia chief executive officer Bonnie Skinner said the body has sought support from the Federal Government to develop and implement a suitable industry-led initiative to support national tag procurement for producers.

“An industry-led model would ensure any benefits gained would be returned to industry.

“Sheep Producers Australia is currently seeking independent advice on a national tag procurement model and will then undertaking consultation with our members,” she said.

“Sheep Producers Australia understands that the cost to transition to EID, and the associated system changes required to support that transition, is the most significant step in evolving to a more robust system.

“The main cost of implementing an EID system for sheep producers is associated with the purchase of tags,” Ms Skinner said.

“The costs at farm level (tags only) have been estimated at between 47.3 and 52.8 percent of the industry total.

“The cost of tags is critical to the overall value proposition and supporting producers with transitional assistance is crucial to ensure a timely transition with high participation and compliance rates.”

But NSW has already ruled out tag subsidies…

New South Wales Agriculture Minister Dugald Saunders last month said the government is not supportive of subsidies, but is supportive of a national tag tender “to try and reduce those costs for a competitive market place approach.”

However, Leader Products director Bruce Dumbrell asked how would a national tender be accepted by the resellers and stock agents that currently do the work reading tags in property-to-property sales or in saleyards nationally?

“If there was any outbreak these are the front-line people that would be involved in the tracing of movements across Australia.”

He said most manufacturers have as in our case been supplying tags through rural resellers for decades.

“The rural reseller adds a margin to our cost and then on sells to the producer.

“There is nothing stopping tag manufacturers selling direct.”

United Kingdom-based supplier Shearwell is already supplying tags direct to producers in Australia.

Mr Dumbrell said the Victorian tender for EID sheep and goat tags only worked as there was a significant subsidy that ensured that if tag manufacturers did not submit to the tag tender, they would not be competitive in the market.

Under pressure from the Victorian Farmers Federation, the Victorian Government in 2016 announced it would provide an initial $7.7 million subsidy to make EID tags ‘cost-neutral’ for producers at a price of 35 cents.

The initial Victorian tag price subsidy was part of a $17 million package to support the introduction of electronic identification technology across the supply chain. Approved sheep and goat EID tags continue to be subsidised in Victoria using funds from the Sheep and Goat Compensation Fund generated by carcase duties.

“Any attempt to do a national tender must take this into account.

“Our issue is we have a long-standing supply arrangement with our resellers Elders, Ruralco, Nutrien, 4Tags etc on a large range of veterinary products apart from our identification products,” he said.

“Any national tender has to somehow make it attractive enough to remove the reseller from the ordering process.”

Direct selling option would remove the reseller

Mr Dumbrell said if manufacturers like Leader were to sell tags direct to producers there would be the obvious reduction of prices as the reseller margin would be removed.

“The tags could be ordered online and paid for directly prior to despatch using credit card this would improve cashflow.

“Manufacturers would have the ability to reduce or increase pricing to get a larger market share or to reduce or increase pricing to adjust to increased inputs currency fluctuations etc,” he said.

“Simply by altering prices on the ordering web site pricing can be adjusted like petrol sales.

“Lower prices more sales not a new concept.”

Mr Dumbrell said ordering tags on an online site would ensure the producer can see exactly what they are ordering and design the tag that suits their exact requirements without need to use the agent /reseller to order the tags for them.

“The elephant in the room regarding a national tender would require discussions with the resellers.

“Would the resellers agree to a national tender that does not include them?” Mr Dumbrell said.

“What is on offer to the tag manufacturers to submit for any national tender if there is no subsidy and obviously upset our resellers by doing so.

“We have worked together for over 70 years selling through our resellers.”

Don’t forget the engagement factor….

Australian Livestock and Property Agents Association chief executive officer Peter Baldwin said he hoped that in any discussions on a national tag tender the current reseller and agent businesses would be given “massive consideration.”

“We are not just talking from a cash register perspective, we are actually talking about the quality of the trusted advice that the rural retail outlets provide and are trusted in the same way that an agent is.

“A lot of these organisations almost feel a fiduciary obligation to these clients that come in and have a very close bond with their customers,” he said.

“There are people out there who don’t own a computer, that are not au fait with mobile phone technology and it is an accepted practice that they speak with their trusted merchandise, agronomist or agent representative for advice.”