RFID — TI Layoffs, Animal Tags Charge Ahead

In manufacturing news Tuesday, Dallas-based Texas Instruments (NYSE: TXN, http://www.ti.com ). one of the leading manufacturers of Radio Frequency Identification technology (RFID), announced that it would be eliminating 3,400 positions, but said that it is not withdrawing from the business.  TI will continue with its asset tracking, livestock and automotive sectors, and says that their customers will not feel the impact.  TXN shares closed yesterday at $16.02, just under half their 52-week high of $33.00.

Given their already-low share prices, that news didn’t seem to impact companies who are manufacturing RFID technology for use in livestock tracking.  And more than ever, there is an explosion of marketers and distributors offering RFID technology. However, it appears that not all cattleman share the same enthusiasm for incorporating the RFID technology into their programs, and the progression of a national system has slowed as technical and political issues have surfaced.

In 2003 Kansas State University (KSU) began conducting a cooperative project with the USDA Animal and Plant Health Inspection Service (APHIS, http://www.aphis.usda.gov/) to evaluate these technology issues and provide producers with an unbiased database of performance results for RFID manufacturers and their products.

One such manufacturer, South St .Paul-based Digital Angel (Nasdaq: DIGA,  http://www.digitalangel.com/), now offers ranchers and other producers of livestock a new tool for tracking locations of animals in real time with greater precision.  The Minneapolis Star-Tribune covered the product introduction this week: http://www.startribune.com/business/38719137.html?elr=KArks7PYDiaK7DUdcOy_nc:DKUiD3aPc:_Yyc:aUU

DIGA shares closed yesterday at $0.56, down from a 52-week high of $7.68. Current market cap is just under $9 million with an estimated 2008 revenue of about $78 million. Current estimates at http://www.thecattlesite.com and  http://www.thepigsite.com are for larger livestock herds and lower feedstock prices in 2009, both in the USA and Canada.

Digital Angel announced that their battery-powered animal ID tag, known as the “r.Tag,” can be read from 100 feet away, and allows more efficient, accurate livestock tracking than is presently available using other tags.  The contrast to previous tags is striking, because in order to read older tags, a reader had to be within inches of the animal, which meant that all animals had to be herded down an extremely narrow chute whenever they were to be counted.And even then animals could only be identified one at a time.  With the new r.Tags, animals can be recognized in groups a third of a football field away.  

The new battery-active tags are weatherproof, and each interrogator is powered by a small solar panel that charges an onboard battery so the reader can operate for up to two sunless weeks.

 Although APHIS does not require the use of RFID for tracking livestock, it does recommend the technology as a part of the National Animal ID System, a voluntary tracking system.

Other manufacturers using RFID technology to track livestock include Dallas-based Allflex (http://www.allflexusa.com) and Farnum Ztag Products (http://www.farnamlts.com/), both privately held companies.

Dale Blasi, who heads the KSU project, said that “there are good products out there, new products yet to be tested, and products that need to be removed from the supply chain.”

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