Resolved: That the United States should substantially change its federal agricultural policy.

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Source: Resource: Engineering & Technology for a Sustainable World, Dec
1999 v6 i12 p11.

Title: Pesticide Economics.(Statistical Data Included)
Author: Ronald D. Knutson and Edward G. Smith

Full Text COPYRIGHT 1999 American Society of Agricultural Engineers

Policies to reduce pesticide use can increase costs - on a global scale

The 1996 Food Quality Protection Act renewed public attention to pesticide
use.

The Agricultural and Food Policy Center at Texas A&M University has focused on
this issue by providing leadership for three studies over the past decade.
Their conclusion: Less pesticide use reduces production, global
competitiveness and world food security. The research also led participants to
question whether reduced chemical use provides the environmental benefits
sought by policy makers.

Two Texas A&M researchers who worked on the three studies are:

* regents professor Ronald Knutson, director of the Agricultural and Food
Policy Center, and

* professor of extension economics and policy Edward Smith, a Roy B. Davis
professor of agricultural cooperation in the Agricultural and Food Policy
Center.

Study methods

The researchers used estimates of yield impacts and changes in cultural
practices associated with a chemical use reduction scenario. Nationally
recognized university scientists with a broad knowledge base in the analyzed
crop provided this data.

A farm management economist developed production costs per acre and unit from
yield impacts and cultural practice data. An agriculture sector model designed
at Texas A&M helped derive price and aggregate production level impacts. This
model is currently maintained by Robert Taylor at Auburn University.

Figure 1 shows yield effects using no pesticides in 1990, and no
organophosphates or carbamates in 1999, on corn, cotton and rice. Yield
reductions per acre ranged from 57 percent in rice to 32 percent in corn with
no pesticides in 1990. For bacillus thuringiensis (Bt) cotton and corn,
estimates would be lower.

Estimates for eliminating organo-phosphates and carbamates showed reduced
yields ranging from 14 percent for cotton to 4 percent for corn. The higher
yield reduction for cotton was attributed to the lack of malathion for
eradicating boll weevils.

[Graphic omitted]Figure 2 shows comparable data from a 1993 study and the 1999
study for apples, peaches and tomatoes. Using no pesticides, yield reductions
ranged from 100 percent for apples to 77 percent for tomatoes in 1993.
Currently, with no organophosphates or carbamates, the reduction ranges from
38 percent in apples to 2 percent in peaches.

Results from 15 commodities studied drew the following conclusions:

* The broader the group of pesticides eliminated, the greater the impact.

* Yield risk increases as chemical alternatives for dealing with pests
decrease.

* Fruits and vegetables are more adversely impacted than other crops.

* Yield reductions are variable among crops.

* The most pesticide-dependent crops include tomatoes, cotton, apples and
peanuts. Wheat is least dependent.

* The most pesticide-dependent areas have long growing seasons, no hard frost
and high humidity.

Cost and price effects

In percentages, variable costs per unit increase higher than yields. For
example, cotton yield estimates decreased 14 percent without organ-ophosphates
and carbamates. But variable costs per unit increased 22 percent. This
multiple effect is more noticeable as the range of pesticides eliminated
broadens. Higher variable costs result because alternative cultural practices
are more expensive. This relationship, with reduced yield risk, was the
original purpose of using pesticides.

The percentage reduction of a commodity produced in the United States is less
than the percentage reduction in yield per acre. The reason is that with
higher prices, more land is put into production and is farmed more
intensively. Intensive farming, and expanding to marginal land for crop
production, can be inconsistent with environmental goals set by public policy.

Decreases in crops such as rice and cotton became large enough in some areas
to threaten the production and marketing infrastructure. The boll weevil's
return to the Southeast, after eliminating malathion, could devastate
production in this region. Cotton production in the Southeast disappeared
prior to boll weevil eradication.

The percentage of crop price increase is greater than the percentage of
reduced production due to the inelastic nature of the demand for farm
products. For example, cotton production decreased 9 percent without
organophosphates and carbamates. But cotton prices increased 13 percent.

The result is higher net incomes for farmers who survive the transition.
However, the net income of livestock, dairy and poultry producers decreases
with higher feed prices.

Exports tumble with higher prices as the U.S.'s comparative advantage in
international markets decreases. Without pesticides, U.S. grain exports
decreased an estimated 15 percent and cotton exports dropped 46 percent.

With less exports and higher prices, imports are attracted to the United
States. Many countries have environmental regulations similar to the United
States but their enforcement is variable. The result is that U.S. products may
be replaced by imported products carrying more chemical residue. These
products are produced by farmers paying lower costs because they are
unconstrained by U.S. regulations for pesticides.

Overall economic impacts

Other economic impacts from research on eliminating organophosphates and
carbamates include:

* Negative economic effects of higher prices on U.S. consumers were nearly
double the positive net income effects on crop producers.

* The negative global economic effects on consumers were about triple the
benefits to major crop producers.

* The overall gross domestic product loss was triple the size of the net
economic benefit to crop producers.

Health and nutrition

[Graphic omitted]Researchers at Auburn and Harvard universities drew the
following conclusions to be factored into pesticide policy and regulatory
decisions:

* Reduced production and higher prices lead to less fruit, vegetable and fat
consumption. Less fruit and vegetable consumption relates to lower nutrition.
Government policies encourage increased intake of these often cancer-fighting
products. But reduced fat intake has positive dietary attributes.

* Harvard scientists believe the negative health effects due to eliminating
organophosphates and carbamates may be offset by substitute pesticides with
toxicity profiles, plants that produce natural toxins under high stress
conditions or changes in diet composition.

* Developed countries could make decisions about reducing pesticide use
without considering the effects on the poor, resource allocation and food
scarcity.

An analyses of the economic and health effects of reducing pesticide use
suggest that policy makers should consider a broader set of risks under the
Food Quality Protection Act. Current risk factors consider the target
pesticide's effect on health -- often based on untested assumptions. Capturing
offsetting or countervailing risks requires a broader approach. Using an
economic cost-benefit balancing method could benefit current policy decisions.

Ronald D. Kuntson is regents professor and director of the Agricultural and
Food Policy Center, Texas A&M University.

Edward G. Smith is professor of extension economics and policy and Roy B.
David professor of agricultural cooperation in the Agricultural and Food
Policy Centers, Texas A&M University.
No organophosphates
No pesticides and carbamates
Corn 32 4
Cotton 39 14
Rice 57 5
No organophosphates
No pesticides and carbamates
Apples 100 38
Peaches 81 2
Tomatoes 77 15

 
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