Riding a crest of popularity, Chipotle Mexican Grill’s profits reached $445 million on revenue of $4.1 billion in 2014. Then the crash came. In the fall of 2015, more than 500 people fell ill after eating Salmonella- and E. coli-contaminated Chipotle burritos. The Centers for Disease Control and Prevention (CDC) found a critical lapse in the restaurant chain’s trace back system: once ingredients arrived in stores, all tracking stopped. The CDC wasn’t able to determine exactly which foods were responsible. Chipotle’s 2016 revenue fell 13.3% to $3.9 billion, and profits dipped 95%. In response, Chipotle has implemented a system that uses package bar codes to identify which supplier sent which item to which restaurant tracking every ingredient “from seed to stomach.”
Many believe the Chipotle crisis underscores the need for a national animal identification system. They say it’s not a matter of if a crisis hits the livestock industries but when.
“Every week thousands of cattle are sold at auction, and within 24 hours they can be scattered a thousand miles from the auctions,” explains Derrell Peel, Oklahoma State University ag economist. “A disease outbreak at one of those locations means it would take weeks to trace those cattle in an effort to contain the disease. That’s the shadow the livestock industry is living under [without animal ID].”
Disease containment is just one of many reasons animal ID might soon be necessary. The U.S. food system is changing, too. Amazon entered the beef business when it bought Whole Foods Markets, and traceability is a core component of their model.
“The lack of an animal ID system is hindering our market access and commerce,” Peel says. “Virtually every other beef exporting country has an ID system in place.”
Uruguay, for example, has implemented one of the world’s most sophisticated supply chain tracking systems. Every calf born in the country is electronically tagged, and every stakeholder in the beef value chain is obligated by law to abide by the system. It’s a primary reason Uruguay exports nearly 75% of its production and has become the largest exporter of beef to China, displacing Australia.
Even in the U.S., the beef industry lags behind on the traceability scale. “More than 95% of all pork production premises have a registered PIN, or premises identification number,” says Dave Pyburn, vice president of science and technology at the National Pork Board. Support is high because the U.S. pork industry is much more dependent on export sales, he says.
As consumers demand more assurances about how and where their food is raised, the beef industry will be scurrying to play catch-up.
Purdue University economist Jayson Lusk says the demand for traceability hasn’t diminished. “Producers who are willing or able to participate are likely to be at a competitive advantage,” he adds.
Still, an industrywide animal ID system will face resistance as some legitimate concerns about privacy and market access exist.
“No producer has an absolute right to be able to sell cattle,” Lusk says. Rather producers compete in the marketplace and try to find customers who are willing to pay a price they’re willing to accept.
“Sometimes,” he adds, “that means adopting practices we’d prefer not to adopt so we have willing buyers.”