His officials have been told to take a tougher approach with farmers and all other users who do not meet their obligations under the National Animal Identification and Tracing scheme (Nait).
Fines up to $10,000 can be issued for non-compliance under the Nait Act 2012.
Preliminary data showed most animal movements to saleyards and meat processors were recorded within the required 48 hours after they were completed. However, a high percentage of farm-to-farm movements were not recorded, Mr O'Connor said.
A review of Nait, which started in mid-2016 and would soon be completed, provided a good opportunity to highlight how important it was to have a fully functioning animal tracing system and for all farmers and the industry to comply with Nait requirements.
The recent Mycoplasma bovis response had shown where farmers had complied with the requirements, the tracing of animals had been quick and accurate.
Where farmers had not complied, the tracing had become more difficult, he said.
''With outbreaks like this, speed of response is vital to containing a disease, so it's more important than ever our farmers and industry use this system.''
Overall, compliance with the system was good for animals passing through saleyards and going to slaughter but a big improvement was needed in other areas, Mr O'Connor said.
Recommendations from the review and a discussion document would be available when the consultation began next year.
Federated Farmers president Katie Milne said the vast majority of farmers understood the importance of Nait for biosecurity, and for the ability to command premium prices in the world's markets by being able to demonstrate the high standards around food safety and traceability.
''The Mycoplasma bovis incursions have shown up gaps in recording animal movements that could have been serious had that been a fast-moving disease. We need to up our game.''
Ultimately, to help get on top of New Zealand's serious stock-rustling problem, Federated Farmers would also like to see an ability for police to more easily access the Nait database when dealing with suspicious movement of animals, Mrs Milne said.
Mr O'Connor plans to introduce a Bill to prevent the efficiency and contestable provisions of the Dairy Industry Restructuring Act 2001 from expiring in the South Island.
The Bill would provide certainty for the dairy industry about the regulatory regime after 2018, he said.
The previous government introduced the Dairy Industry Restructuring Amendment Bill in 2017 but the Bill did not proceed to a select committee before the election.
The Bill Mr O'Connor plans introducing deals with the issue of expiry.
When the Act was passed in 2001, Fonterra had a dominant position in dairy markets. The main purpose of the Act was to manage that dominance until sufficient competition emerged to make regulation unnecessary.
The Act contained expiry provisions which were triggered when Fonterra's market share fell below a specified threshold in either the North or South Island or both.
The expiry process also required a review of the state of competition in dairy markets to be undertaken by the Commerce Commission.
Key efficiency and contestable provisions in the Act would expire in the South Island on May 31, 2018, if the Act was not amended beforehand, Mr O'Connor said.
A review of the state of competition in the dairy industry in 2015 found there was too little competition in the South Island to let parts of the Act expire.
