International Symposium on Certification and Traceability for Food Safety and Quality

Beijing, China October 18-20, 2007

Presentation Title:

Methods for Protecting Granular Information Ownership Along Complex Supply Chains
Presenter: Steve Holcombe, CEO Pardalis, Inc.

U.S. Beef Livestock Supply Chain Demographics U.S. Cattle Inventory ~100,000,000 U.S. Cattle Operations ~1,000,000 650,000 U.S. Operation have fewer than 50 Cattle U.S. Livestock Markets ~1,200 U.S. Feeding Operations ~90,000 U.S. Packing Operations ~650 U.S. Slaughter Cattle ~35M (Annual) Livestock Market Cattle Traffic ~15M (Annual) Top 5 Packers Kill ~75% of U.S. Slaughter Cattle (Tyson IBP, Cargill Excel, CongAgra, Smithfield Packerland, U.S. Premium Beef) Tyson IBP produces approximately one out of every four pounds of beef, chicken, and pork consumed in the U.S. Tyson IBP is the primary (if not the sole supplier) of beef to WalMart, the nation’s largest food retailer. U.S. meat from beef livestock at retail is an approximately a $50B market.

Significant Actions & Events: 2002 - 2007 October, 2003: United States Animal Identification Program (USAIP) proposed animal identification guidelines to the United States Animal Health Association. The objective of the USAIP guidelines is to enhance animal disease surveillance and monitoring systems, and improve traceback capabilities when a reportable animal disease event occurs. The proposal calls for a system that allows complete traceback within 48 hours of a confirmed reportable disease event. December, 2003: Mad Cow case in State of Washington. USDA Secretary Venneman announces that the USDA will expedite the implementation of a verifiable system of national animal identification system (NAIS) (i.e., the USAIP). May, 2004: The USDA announces it would spend $18.8 million to begin the three-stage process for setting up a national animal identification system to help contain animal disease outbreaks. Oct, 2006: After years of postponing deadlines, USDA stops issuing deadlines on the implementation of any of the three phases. USDA will henceforth focus on voluntary Phase I Premises Identification without deadline announcements. The ‘supply chain’ treats this announcement as a ‘throwing in of the towel’ by the USDA. Feb, 2007: NCBA shuts down its USAIO.

Why Has Mandatory Animal RFID Not (Yet) Worked? Fear of an IRS Conspiracy (more opportunity for taxation) Agency Capture (by ‘Agribusiness interests’) Costs not determinable (who pays for it?) Value not determinable (‘sold’ by USDA as an ‘insurance policy’) Information privacy (Who owns my data?) Fear of Liability (“What they don’t know can’t hurt me”) Fear of Vertical integration (like the chicken industry) Fear of Government/USDA regulation (“We’re doing fine without it”) Supply chain fragmentation (Highly segmented production practices)

Yet, 48 Hour Traceback Only Scratches The Surface Consumers do not know where their meat was first produced (“It’s from Tyson”) Tyson does not know where the slaughter cattle were first raised (“Yes, but know what feedlot it came from”) Calf Producers do not know where their calves are slaughtered (calves from small producers may be sold a dozen times before slaughter) Beef livestock are sold ‘as is’ (yet consumers are ‘pulling’ for more and more verifiable information) Foreign trade of U.S. beef meat has been severely curtailed since Mad Cow case (loss of competitiveness and billions of dollars) Insurance companies do not provide disease insurance to calf producers (not enough information from which to do risk assessments) Banks are not able to confidently track cattle collateral (higher risk means higher interest and less availability) Other agencies will follow suit (likely through additional unfunded mandates)

An Information Banking Model
Producer Customers

The Internet

Granular Informational Objects
Object Object ID Owner Permissions Per Element Unique ID Unique ID Unique ID

Element 1 Element 2 Element 3

Examples: • RFID No. • Birth date • Social Security No. • Blood type • Genetic marker

Granular Information Ownership Uniquely ID every data element
o Create central, data element dictionary

Attribute ownership to every data element
o Ownership, stewardship, trusteeship, custodial care, etc.

Make every data element immutable
o Immutable as to the owner

Supplemental: • Chinese patent #ZL02820809.9 granted June 20, 2007. See www.pardalis.com • North Dakota State University, Dickinson Research Extension Center, USDA CalfAID PVP Program. See www.ag.ndsu.nodak.edu/dickinso/ • Presentation paper: Banking on Information Ownership

Steve Holcombe, CEO Pardalis, Inc. www.pardalis.com (877) OWN DATA steve@pardalis.com