Scanning can help prevent major stock losses

Scanning can help prevent major stock losses

January 30th, 2014

Farmer stock losses through winter grazing, and increased disputes over stock ownership, can be prevented by the use of electronic scanning systems, says Michael Lee, Audit Principal in Crowe Horwath’s Invercargill office.

“The herd is the most valuable asset on a dairy farm,” said Mr Lee. “Missing and lost stock are part and parcel of farming, but these days technology is available to ensure timely identification of farm animals.”

Mr Lee noted that thousands of head of valuable stock disappear every year during winter grazing. Graziers are often dealing with multiple farm herds over the winter, and mistakes do happen. Stock numbers are sometimes incorrectly tallied and herd ownership can be mixed up. Stock disputes are getting more common amongst owners and managers/sharemilkers and graziers, he said.

“Electronic scanning of all farm stock ensures that an accurate stock count can be made on a timely basis,” said Mr Lee.

Since July 2012, all stock animals have had to be tagged with National Animal Identification and Tracing (NAIT)-approved radio frequency identification device tags. Scanning can identify the animals based on their birth records through the NAIT scheme and their Electronic Identification Devices (EID’s).

“We recommend implementing a scanning system in conjunction with an independent farm advisor in order to develop an action plan, and assist with set-up and interpretation,” he said.

“We believe a stock auditing system protects all parties – the farm manager, contract milker, sharemilker and farm owners - particularly absentee owners. The owners have peace of mind knowing that the cows that they purchased are the cows still on their farm. This benefit is also extended to the staff working on the farm as they to know that they are protected due to our independent counting of the stock.”

Recent stock disputes dealt with by Crowe Horwath include:
• Potential fraud by a farm manager looking to manipulate stock records of deaths and missing with the goal of taking ownership of milkers/calves.
• Stock returned from grazing, but not to the right farms.

Costs not only include the loss of valuable animals - with a current average price of $2300 per cow - but the lost production during a high milk payout season. Crowe Horwath has also encountered cases of non-farm stock being illegally grazed by employees on the farm-owner’s land.

Utilising the scanning of NAIT tags allows each animal to be identified and helps ensure they remain on the farm. By comparing the scanning results, farmers can determine:

Any missing animals (by identification, rather than just numbers missing).
Any new animals (such as any lower value cows being exchanged for higher value animals).
Animals that are not farm animals (non-farm stock being grazed at the owner’s expense or animals that have been brought in for the count to make sure cow numbers are correct, only to disappear afterwards).

“Electronic scanning is much better than just a physical count,” said Mr Lee. “It means you can identify the ownership of individual cows. Scanning your cows can help to prevent and detect fraudulent movements of stock and ensure that your animals remain your property.”

Scanning recommendations

The MINDA system uses a combination of the EID tag system and scanning to report on stock numbers, trace by individual cow and compare the cows actually recorded in MINDA with previous scans. Crowe Horwath suggests conducting four scans a year – in May, August, October/November & March/April.

• First scan – May (initial scan). The May scan is timed to coincide with the start of the new season, prior to off-farm winter grazing and before on-farm staff changes occur. This scan will take the longest, in order to identify cows that might be missing EID tags, cows not recorded on MINDA, inaccurate MINDA records etc.

• Second scan – August (post-grazing/pre-calving). This scan would coincide with the cows return from off-farm grazing and also a pre-calving scan. If cows have come back from the grazier that do not belong to the farmer (potentially with a lower value than the cows sent to grazing) this scanning will identify the specific cow details. This scan will also provide the correct opening numbers for the on farm management coming in.

• Third scan – October/November (post-calving). This scan will confirm movements over the calving period and will give the owner quick information as to the number of deaths that have actually occurred during calving. This scan will also identify young stock on hand and will serve as a basis to determine if MINDA records are accurate and up-to-date.

• Fourth scan – March/April. The purpose of this scan is to identify cows that have been culled or are no longer in the herd.

About Crowe Horwath
Crowe Horwath New Zealand is the largest provider of practical accounting, audit, tax and business advice to individuals and small and medium businesses from a comprehensive network of over 20 offices. Crowe Horwath is part of a global accounting network that delivers high quality audit, tax and advisory services in over 100 countries. We are the relationship that you can count on - large enough to offer a range of expertise and skills - and small enough to provide the personal touch.

ENDS

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