National Livestock Identification System board chairman John Wyld this morning condemned a weekend statement from the Australian Beef Association suggesting that banks could ‘automatically access NLIS accounts of beef producers and lotfeeders’ as baseless and deliberately misleading.    

In its document ‘Banks to use NLIS to spy on cattle producers,’ the ABA has claimed that Meat & Livestock Australia had “admitted it has commissioned consultants to develop a system that allows financial institutions to automatically access producers’, lot feeders’ and processors’ NLIS accounts to monitor livestock transactions.”

The ABA accused MLA – which is responsible only for service delivery of the NLIS program, not policy-setting – of being ‘secretive and deceitful’ in essentially trying to raise money by selling access to the NLIS database to banks.

“It would seem MLA/NLIS is seeking to develop a user-pays system that automatically notifies a financial institution when stock are moved onto or off an NLIS Account/PIC – for purchase, sale or slaughter,” ABA claimed. “Prospective users of the service are banks, stock and station agencies and other parties, such as investors, prepared to pay for the service,” it said.

“This is an outrageous abuse of trust by MLA,” ABA director Brad Bellinger claimed. “MLA’s deployment of this spying system for profit, when many cattle producers are facing unprecedented climatic and debt pressures, is little more than commercial treachery,” he said.

What ABA has failed to acknowledge in its statement is that any third party access by a Bank to an individual’s NLIS movement records would only apply in individual cases where there was clear, written approval from the borrower, such as in the case of a stock mortgage.

NLIS board chairman John Wyld said open and public discussions about the prospect of using NLIS to provide security for stock mortgage purposes had been taking place around the industry for ten years or more.

“Most people are well aware of the conversations that have been had around Cattle Council and broader industry circles over the prospect to use NLIS in this way for years,” he said.

Beef Central has indeed raised the prospect of such a facility for borrowers in earlier agribusiness reports.

Across Australia, a lot of stock are purchased with borrowed money. While those funds are usually provided by a bank, the exercise mostly goes through a local stock and station agent, because of the level of risk involved. Just one of those risks to the lender is keeping an eye on the location, and the number of stock involved. That’s why the transaction is normally done through a local stock agent, who is ‘closer’ to the lender’s herd than a bank can be.

The consequence of that ‘risk factor’ on stock mortgage is that the borrowed money is usually quite expensive, with an interest penalty involved.

The process now being explored, using NLIS, was seen as a win, win, win situation, allowing the banks to be a lot happier because the level of security provided through NLIS records was higher, Mr Wyld said.

But they key point is that such a process would only apply, and be approved by the stock-owner who wished to do the borrowing.

Open slather access 'rubbish': Wyld

“To suggest that this would be some sort of open slather access to industry records via NLIS is ridiculous rubbish,” Mr Wyld said. “This would only be done on a case by case basis, with the approval of the person wishing to borrow the money.”

He said it was important to remember that the NLIS database held only the device number for each animal, and the Property Identity Code, and the history of that device on which PIC’s it had been on. There were no names or addresses, or financial or other sensitive information on PIC holders stored on the NLIS database whatsoever.

“All that would happen, should this process be approved by industry, is that an agreement would be reached between an individual client seeking to borrow money, and their bank. They would put an agreed access status on those NLIS devices covering the cattle being mortgaged, and if NLIS records showed that one or more of those animals strayed outside of the agreed arrangements (i.e. sold, or passed through a saleyards or meatworks), that would generate an email to the mortgage-holder.”

“At no stage has there been any suggestion that producers generally would have their NLIS cattle details made available to banks, or anybody else – unless they chose to enter into such an agreement with their banker over borrowings,” Mr Wyld said.

In practical terms, there are already examples where third-party stakeholders are given access by individual owners to NLIS details. Many producers, for example, voluntarily allow stock and station agents and other parties to carry out their NLIS uploads, or to check the database to do reconciliations on their behalf, for example.

“It’s not uncommon to give somebody third party authority, but it can only be done at the discretion of the PIC holder, and certainly cannot be imposed on them in any way,” Mr Wyld said.

He suspected that the elevated current attention being focussed on the process may have stemmed from a pilot study that was currently underway, to explore how such a system might work.

“To my knowledge, there are no financial arrangements involved in the pilot study – it is purely a practical trial run to see how it would work in practice.”

ABA’s Brad Bellinger said MLA/NLIS “have not disclosed how much they will charge banks and others for this service.  MLA has not disclosed if it has already sold this service to any private or government organisations or made data available to the ATO or Centrelink.”

“Cattle producers are the primary stakeholders in NLIS.  We should have been consulted before any action was taken to ‘sell’ our cattle information for profit,” Mr Bellinger said.

MLIS chairman John Wyld said it had not even been contemplated yet how the NLIS database might be recompensed for providing the facility.

“But if we could offset some of the costs, that would obviously be of benefit to the levy payers as a whole,” he said.

“This is why we see this process as a win, win, win for the banks, their borrowers who might want to exercise a stock mortgage over their cattle, and the broader industry. But it’s still early stages, and any decision to adopt would require the full agreement of the peak councils, before it was signed-off on.”

The concept has already gone under the scrutiny of the NLIS advisory committees for both cattle and sheep, that sit under SafeMeat.

Mr Wyld said the NLIS Ltd board acted on the advice of industry players – it did not make decisions on such matters in isolation.

“I’m terribly surprised by the tone of the comments made by ABA, because senior management of MLA have been engaged at length with people within ABA by phone over this matter, yet they have chosen to ignore the facts about access.”

As a result he said the language used and connotation in ABA’s weekend statement was ‘quite disappointing’.

Breathless headlines have since appeared in metropolitan media based on the ABA statement in the past 24 hours, including this morning’s The Australian’s interpretation, headlined, “Farmer fury over eartag spying.”

“It’s disappointing that ABA’s comments would get such high profile, inaccurate headlines, when clearly, this is only being considered to be of benefit to industry, and individuals who choose to participate in such a process, in full consultation with their banker,” Mr Wyld said.

“We’ve always take the privacy of the NLIS database very seriously, and nothing will change in that area,” he said. 

Claims based on misinterpretation: Cattle Council

Cattle Council of Australia chief executive Jed Matz said it seemed that the ABA had misinterpreted the proposal's intent.

Using NLIS to 'spy' on cattle producers was against the law and could not happen, he said.

"NLIS Pty Ltd manages the database and all the information, that is a standalone company which has its own board and advisory committee, and there are very strict guidelines around what information can be used and any one member of the advisory committee can say no to that information being handed out," Mr Matz said.

"And everytime information is requested that has to go through the advisory committee, so it is a very strict process, and in addition that company also has to adhere to privacy laws.

"Any information that is provided would need the permission of that producer to provide that information because that is the law."