Farmers' Union of Wales president Emyr Jones has written to deputy agriculture minister Alun Davies emphasising the importance of allowing lambs to be identified by a single ear tag.
Speaking at Merioneth County Show in Bala today (August 24), Mr Jones said the three tagging options available for farmers - full EID, EID slaughter tags and non-EID slaughter tags - allowed farmers to tag appropriately, depending upon the market into which they were selling.
"Different operators within the supply chain have different needs and we have always advised farmers to speak to their customers in order to assess what their needs are," said Mr Jones.
In order to promote understanding of the options available, the FUW has supported the production of a leaflet by Hybu Cig Cymru which has been made available at shows and events throughout Wales.
In his letter to Mr Davies, Mr Jones said: "The current derogation takes account of a number of scenarios, including movements of animals to slaughter directly and via a market, where requiring such animals to be tagged with EID would result in significant extra costs and record keeping requirements for all those involved, while also increasing many fold the risk of unfair penalties being applied to single payments due to technological failings.
"While we are aware that there are some businesses which may currently, or in future, desire all animals to be electronically identified, it is our firm belief that those businesses must provide financial incentives, through the marketplace, which are sufficient to compensate farmers for the extra burden that EID represents, and that the current derogations must remain in place."
Mr Jones' letter also highlighted the importance of ensuring that any concessions allowed in Scotland regarding EID are also made available in Wales.
"While the Scots have announced concessions in relation to tolerances, the exact nature of these remains vague," said Mr Jones.
"However, given the failings of the technology, it is essential that any concessions allowed in other regions of the UK are implemented in Wales."