September 01, 1999
by Stormy Wylie
By Stormy WylieE.P.A.'s proposed restrictions on phosphine fumigation could cost the U.S. grain industry up to $1.135 billion annually, national grain association says.
The Environmental Protection Agency's proposed regulations for aluminum and magnesium phosphide, a grain fumigant, could have a devastating economic impact on U.S. agriculture, costing the country's grain industry up to U.S.$1.135 billion annually, according to a recent economic study released by the National Grain and Feed Association.
The N.G.F.A., a Washington-based non-profit trade association of about 1,000 grain, feed, processing and grain-related companies, said its study showed that E.P.A.'s restrictions on phosphine (the fumigant gas released by the phosphides), would impose costs and lost economic benefits on the grain-handling industry ranging from U.S.$341 million to U.S.$1.135 billion annually.
The restrictions would most directly affect U.S. wheat producers, the association added, resulting in economic losses ranging from 39% to 183% of their average net market return, and could jeopardize U.S.$3.45 billion in average annual export grain sales. About 25% of U.S. export grain currently is fumigated with phosphine, and the fumigation is often required contractually by the foreign buyer.
“The N.G.F.A. believes the findings in this economic analysis make it absolutely essential for E.P.A. to totally overhaul its proposal,” the association said in letters to E.P.A. Administrator Carol Browner, Secretary of Agriculture Dan Glickman and White House Office of Management and Budget Director Jacob J. Lew.
The association also called on E.P.A. to conduct and the O.M.B. to review its own economic impact analysis before proceeding with restrictions on the use of aluminum and magnesium phosphide.
The E.P.A. last December proposed several risk mitigation measures (RMMs) that would, among other things, prohibit the use of aluminum and magnesium phosphide at grain-handling facilities within a 500-foot radius of a residential area, require pre-notification of residents and businesses within a 750-foot radius of a facility where fumigation is to occur and reduce the permitted exposure limit to 0.03 parts per million a 10-fold reduction in the current 0.3 p.p.m. safety standard permitted on the label for these chemicals.
The proposed RMM's were met with sharp criticism by the U.S. grain and milling industry, which heavily relies on phosphine to control insects in stored grain. The only other remaining grain fumigant, methyl bromide, is to be phased out in a few years.
Mark Hartman, chemical review manager for E.P.A., said the agency received more than 600 letters during the initial public comment period. He said the agency has drafted a set of revised proposals to be published prior to conducting a series of “stakeholder” meetings later this fall, but added that the agency was still evaluating alternatives.
DEFINING A MIDDLE GROUND.
The U.S. Department of Agriculture's Office of Pest Management Policy organized a Phosphine Task Force made up of recognized experts in crop storage department officials and research and extension scientists with its land-grant university partners to propose to E.P.A. several alternative risk mitigation measures on phosphine.
A U.S.D.A. official, who asked not to be identified, said the task force's alternative proposals were an “attempt to define a middle ground” between E.P.A., whose proposed requirements are potentially “restrictive enough to essentially prohibit the use of aluminum and magnesium phosphide as pesticides,” and agriculture, which wants to keep the status quo.
“We may all agree that the status quo is fine, but we're not going to get the status quo,” the official said.
The U.S.D.A. said its alternative RMMs were intended to “meet the goals inferred from E.P.A.'s RMMs with the tactics that are most workable and readily adopted, based on current product labeling, industry practices and applicator certification.” The agency basically conceded to E.P.A.'s proposals on pre-notification of fumigations, increased placarding, improved training for applicators and requirement of certified applicators, establishment of an incident reporting program and prohibiting aeration of rail cars and other vehicles while in transit, except for ships at sea. But the U.S.D.A. proposed an “application performance standard” in lieu of the E.P.A.'s 500-foot buffer zone and reaffirmed that the 0.3 p.p.m. exposure level was adequate.
“The department cannot corroborate the scientific basis for reducing the exposure limit,” the U.S.D.A. said. “We ask (E.P.A.) to reconsider its toxicological evaluations and to have a more in-depth discussion of the registrant and industry toxicological research.” The department said most phosphide applications could be better addressed through a “performance standard” rather than the E.P.A.'s “design standard” approach. “This approach emphasizes an outcome or goal not how to meet it,” the agency said. “In keeping with this approach, the U.S.D.A. alternative RMMs allow more flexibility in methodology to attain the same goals.” The N.G.F.A., which reviewed the U.S.D.A.'s proposals, said it still had several concerns. Regarding the department's recommendations on pre-notification, the N.G.F.A. said the regulation would result in “unnecessary administrative and operational burdens on users” and could send an “incorrect signal that phosphine fumigation presents a significant health threat to the surrounding community.” The N.G.F.A. also disagreed with U.S.D.A's positions on requiring certified applicators only to handle fumigations, on establishing an incident reporting program and on setting a property line standard, which it said was “infeasible and impractical.”
The N.G.F.A. in a previous survey earlier this year said E.P.A.'s proposed regulations would preclude the use of aluminum and magnesium phosphide as a fumigant at 94% of its 5,000 member facilities.
The N.G.F.A.'s recent economic study analyzed two scenarios most likely to occur if E.P.A.'s restrictions on aluminum and magnesium phosphide are implemented as currently proposed.
The first scenario assumed no grain could be effectively and economically fumigated at 94% of grain-handling and processing facilities, or in barges and railcars that are at rest or in-transit. Under this scenario, the N.G.F.A. said, the total annual economic loss would be at least U.S.$1.135 billion annually, amounting to 183% of the average net market returns for wheat producers and 12% of the average net market returns for producers of all grains.
The association said the following assumptions were used to derive this figure:
A 5-cent-per-bushel discount on the quantity of grain currently being fumigated with aluminum and magnesium phosphide to account for additional insect infestation that would result if facilities were unable to use these chemicals. This discount level is equivalent to the U.S.D.A.'s 1999 price discount for infested grain pledged as collateral for marketing assistance loans under the farm program.
A slippage in the numerical grade for 20% of normally fumigated corn and sorghum from U.S. No. 2 to sample grade because of insect damage, with a 15-cent-per-bushel discount applied (equivalent to U.S.D.A.'s 1999 discount for sample grade) to this quantity.
The lost economic value equating to an estimated U.S. $1.15 per bushel that would result when increased quantities of wheat are infested and used for feed instead of being milled for flour for human consumption.
This estimate is conservative, though, and does not include the economic impact of E.P.A.'s proposed 0.03 p.p.m. exposure limit on phosphine, the N.G.F.A. said. “Nor does it take into account the price-depressing effects of increased farmer selling at harvest to avoid insect infestation risks associated with on-farm storage; the additional quantity of infested grain on the market, as well as the lower test weight and higher levels of spoilage and foreign material associated with infested grain; and an anticipated increase in inventory shrink resulting from greater insect consumption of stored grain.” The second scenario studied by the N.G.F.A. assumed that the 94% of facilities no longer able to fumigate with phosphine under E.P.A.'s restrictions would have their grain treated by the 6% of facilities that would not be precluded from doing so. “This assumes that these latter facilities would become phosphine fumigation service providers for facilities no longer able to perform such fumigation,” the N.G.F.A. said.
Under this scenario, the economic impact would amount to at least U.S.$341 million annually, it said. “This economic assumption was based on a phosphine fumigation facility being located within a 20- to 30-mile radius of facilities no longer able to perform such fumigation,” the association said.
The N.G.F.A. said this figure does not include additional capital expenditures needed to provide sufficient and properly located space to provide fumigation; labor, energy, transportation and other expenses incurred in shipping grain to and receiving grain from other locations for fumigation; reduced grain quality, such as breakage, resulting from increased handling of grain shipped to facilities for fumigation; price-depressing effects resulting from increased producer selling of grain at harvest to avoid infestation risks from on-farm storage; nor the economic impact of E.P.A.'s proposed 0.03 p.p.m. exposure limit on phosphine.
Mr. Hartman of the E.P.A. said the N.G.F.A.'s economic study was interesting and informative.
“We did ask for information on the economic impact of our original proposals, but we've already moved beyond that,” Mr. Hartman said. “Throughout the stakeholder process we made it clear that we are not here to cancel the use of phosphine.
“It's commonly known that we're in process of looking at viable alternatives (to its proposed RMMs). We have made great progress on viable alternatives to the buffer zone, for instance. We are optimistic that we will find some.”