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The introduction of the National Animal Identification and Tracing (Nait) system is "no silver bullet" for a biosecurity incursion, Federated Farmers co-spokesman for animal identification Lachlan McKenzie believes.
While Federated Farmers fully backed biosecurity resources at the border "because biosecurity is the alpha and omega of not just farming, but the entire economy", it remained of concern that the Nait Bill was being treated as the only solution.
People were "deluded" if they thought a tag would magically block serious microscopic animal diseases from crossing the border.
The organisation feared Nait was being embraced as the definitive solution when, in fact, it was only one tool, Mr McKenzie said.
"While we've made a lot of improvements to Nait over the past few years, philosophically, we believe in a market-driven scheme and not compulsion.
A market-driven scheme would avoid the "worrying draconian compliance provisions" seen in the Nait Bill.
Dairy farmers have called for sheep farming to be brought into the controversial scheme, NZPA reported.
Sheep should be included within Nait at the earliest possible opportunity, Dairy New Zealand's general manager of policy, Simon Tucker, said in submissions to Parliament's primary production select committee.
Cattle and deer were susceptible to prion illnesses such as mad cow disease and chronic wasting disease, which were not in New Zealand but were seen by trading partners as a potential risk to human health.
But sheep were vulnerable to catastrophic diseases such as foot and mouth - which could also spread to cattle, deer and pigs, he said.