Key Points:

After more than four years' work a proposed electronic tracking system for farm animals is on the verge of becoming a reality but opposition is still emanating from arguably the most important player - Federated Farmers.

The National Animal Identification and Tracing system is due to start in June and is aimed first at cattle and deer.

Nait is expected to go live as a voluntary system in June next year before becoming compulsory by July 2011.

The aim is to protect access to export markets and ensure a faster response to biosecurity crises such as foot and mouth, or BSE (mad cow disease).

The system will track all animal movements - focused at first on cattle and deer - between farms, saleyards and processors using radio frequency tags on ears, scanners and a database.

The current two-tag system uses a paper trail and does not record every movement.

The Government is supportive, exporter Silver Fern Farms wants it, Meat & Wool New Zealand backs it in principle and the Food Safety Authority says we will need it.

Federated Farmers appears to be the only voice raised in opposition.

Feds question whether the system will earn either a premium price for farmers or even any favours with export markets after a biosecurity scare.

American beef quickly gained the number two importer spot in Korea at the expense of Australia after returning from a five-year ban because of BSE, Feds says.

America has a voluntary ID system, Australia's is compulsory.

Our systems are world class, our partners are happy and the Australian experience shows no market access benefit, so why do it?

Future-proofing is the return volley.

Nait chairman Ian Corney says we're playing catch-up with the European Union, Australia and Canada and such systems are fast becoming a requirement for international trade.

"The cold reality is that the countries that we sell our produce to are the countries with the chequebooks and if the people with the chequebook are saying you guys are really falling behind the eight-ball on this and this is what we're asking for in the marketplace then I suspect that we really should be listening and moving on," Corney said.

"I think Federated Farmers' stance on this actually, to be perfectly honest, is a real bad lack of judgment ... and that's not even talking about the biosecurity aspect of it."

Biosecurity Minister David Carter tried to calm emotions and fears by saying that until a business study from the Ministry of Agriculture and Forestry was completed in June the Government was not making a final commitment.

However, Carter is very supportive of Nait and says the study should answer Feds' concerns.

"At this stage we're proceeding on the basis that the cost benefit analysis will show the validity and the necessity of the scheme but if that study concluded that it was too expensive or not warranted then we'd of course review our position," Carter says.

"I think that's unlikely to occur to be honest."

Getting so far down the track without farmers on board and with a chance the plug could be pulled is a head-scratcher.

Dumping the project in such a fashion now would look daft but that is no reason to keep going if the business study does not stack up.

Unfortunately for all involved, the study will likely be open to interpretation and so disagreement will rumble on.

It is hard to imagine the study shifting Feds from what appears a pretty determined position and so if it does give Nait a green light, by the interpretation of most people, and the Government sticks to its line of support then it will be a case of like it or lump it for farmers.

Nait is in part an insurance policy and nobody likes paying for insurance because it's a service you hope never to need.

Everything can be insured from tractors to toes and it is up to the user to assess the risks and decide where they feel comfortable on the scale of cost versus protection.

Few economies have such a dominant sector as that of agriculture in New Zealand.

It is our economic lifeblood and we rely on exports, so arguably we need to take a more cautious approach than other countries.

There are benefits in being a follower but when it comes to agriculture New Zealand needs to be at the leading edge.

A discussion paper last year said the Government would pay the capital expenditure of nearly $7.5 million plus 35 per cent of the ongoing costs, with operating expenditure estimated to be $7.3 million from 2012-13.

The Nait governance group says that during a transition phase farmers can use an electronic tag as the secondary tag required by the current bovine TB system, adding $2 to $3 to the tagging cost of each animal, although the ultimate goal is for a single tag that could add about 50c per animal.

It doesn't sound much but it is a cost for every animal and meat farmers are hardly bursting with profits.

Meat & Wool estimates sheep and beef farm profitability in the 2008-09 season will be $45,600.

Farmers need to minimise costs, especially costs they are not sure bring any benefit.

But could a compulsory tracking system have got American beef back into Korea sooner and what would that be worth compared with the cost of a tracking system?

What-ifs and maybes potentially worth millions of dollars.

It will be interesting to see if MAF can make any firm prediction about the length of a ban with and without electronic tracking.

Another argument revolves around control of the data and the fear of hidden agendas.

Farmers are worried that the data collected could be used for other purposes, such as emissions profiling.

But if an emissions trading scheme comes to pass surely it would make sense to use the data if it helped?

Meat & Wool New Zealand chairman Mike Petersen says he supports the system in principle but shares concerns with Feds around sheep, wants the cost benefit analysis tidied up and concerns about the security of the data resolved.

Nait is a sensitive debate and the disagreement is consistent with experiences in other countries, Petersen says.

"But our view remains that we should push ahead with this for cattle as we need to do that as quickly as possible," he says.

Some people in the industry say all species need to be included, Petersen says.

"I'm just saying look we won't get electronic ID for cattle if the industry is insisting on all species being included."

BSE is a human health issue and the same issues do not exist for sheep, and an electronic system would not help in a foot and mouth outbreak, which was an airborne disease or spread by contact, Petersen says.

"When you look in the market all of the demands from offshore are for a batch numbering type system [for sheep] or back to the farm of origin and we've got very good systems in place already for that."

If the Nait system was made ironclad for tracking cattle and deer unless farmers said otherwise and they were also given ownership over any future use of the data it would be easier to sell.

But then if Nait is ditched and we later suffer a serious biosecurity outbreak, any complaints from within the sector about a lack of speed or ability to trace animal movements would fall on deaf ears.