A meat processing company says New Zealand farmers could lose out to Australia if an electronic tracing system for livestock is not introduced.
A tracing scheme is due to be made compulsory for cattle and deer by 2011.
Federated Farmers argues the move will be costly and not worth the cost.
But from 1 January in Australia, all sheep will be tagged before they leave their farm of birth.
Silver Fern Farms chief executive Keith Cooper says Australia's export numbers are smaller than New Zealand's, but it now has a significant competitive advantage.
He says New Zealand exports could suffer as a result.
Mr Cooper says New Zealand needs to introduce full animal traceability to preserve its position in the global food supply chain.