Mad Cow Not the RFID Tipping Point

By Allen Bernard

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With mad cow disease making headlines of late, a push is on worldwide to track all beef cattle from cradle to grave, literally. But with only one billion or so cattle worldwide at any give time, there is not enough volume to drive the prices associated with RFID to commodity levels.

"This will definitely help spur adoption," said Christopher Boone, a program manager at IDC. "I don't know if it's the tipping point. But it moves us closer in the direction of getting there."

Confirmation last month of the single case of mad cow or bovine spongiform encephalopathy (BSE), a brain-wasting disease transferable to humans through the consumption of infected meat, has sped up the U.S. Department of Agriculture's efforts to institute a nationwide tracking system. But there probably aren't enough cattle around to drive down the cost of tags, readers and the associated systems to a point where RFID would become as common or replace bar codes, said Barry Bennett, CEO of Advanced ID an RFID animal tracking company in Calgary, Canada.

Even with major retailers like Wal-Mart and huge commodities consumers like the Department of Defense calling for RFID tracking of shipments by January 2005, and huge companies like Boeing using RFID, selling enough RFID tags to get prices in the pennies-per-tag range is still a ways off.

Boone estimates, based on his research and reading, that demand for tags would have to be upward of 30 billion per year before the technology becomes commoditized. Adding one billion cattle to the mix certainly moves things in the right direction, but it's not enough to tip the scales at this point in time, he said.

What will push RFID over the top is when retailers worldwide adopt the technology, he said. This is happening. Movement from massive retailers in Europe and here in the U.S. are pushing the technology toward commoditization, but standards still lag behind these pilot projects and pose yet another hurdle to massive adoption, he said.

"There's a large investment that has to be made on the infrastructure side to get this off the ground," said Boone.

According to Allied Business Intelligence, the animal tracking market will grow from $88 million in 2003 to over $210 million in 2008, with much of the growth attributable to increased demand designed to better control outbreak situations such as mad cow disease, said Erik Michielsen, a senior analyst at ABI Research.

"European mad cow outbreaks have pushed heavier RFID adoption overseas in recent years and, in the United States, animal tracking RFID initiatives continue to grow," said Michielsen. "The mad cow concern in the U.S. will only further escalate low-frequency RFID animal tracking adoption and benefit leading industry players such as Texas Instruments."