NFAPP's Newsletter April/May 1998

Featured Articles :

"Food Quality Protection Act: Regulation in the Public Interest? ", by Timothy J. Richards, Ph. D.
(Topic : Food quality protection).

"Fresh Broccoli and Cauliflower Market Watch and Outlook ", by Richard Adu-Asamoah, Ph.D.
(Topic : Fresh Broccoli and Cauliflower Market Watch).

"Legislative Update" , By Amy Ridings.

Food Quality Protection Act: Regulation in the Public Interest?

by Timothy J. Richards, Ph. D.

The Food Quality Protection Act (FQPA 1996) will likely result in a sharp reduction in chemical tolerances for many fruits and vegetables. While tolerance is usually a virtue, this specific usage creates no similar warm feelings among growers. Technically, a tolerance is the maximum amount of trace chemicals that a product may contain while maintaining a "...reasonable certainty of no harm..." to consumers. Ultimately, reducing these tolerances may result in the mass de-registration of many key chemicals for use in producing fruits and vegetables. Losing their ability to use the best and most efficient pest-control tool will mean higher costs to growers and, hence, prices to consumers. It may also mean greater yield uncertainty, lower quality, and, predictably, less consumption of fruits and vegetables. Congress' goals in unanimously passing this legislation are laudable — to ensure a safe food supply for all Americans. In fact, in their zeal to support the FQPA, legislators gave the new regulations mandated by the Act such priority that they are no longer subject to the usual cost-benefit analysis common among other regulations¹. Clearly, their intentions were to ensure that compliance with the Act would not be a matter of growers trading safety for profit, but would rather set an absolute level of protection.

However, if their "greater goal" is in preserving the public health, even among the children that figured so prominently in the passage of this Act, taking the market out of the equation may serve to undermine their own objectives. Much of the debate among grower groups and their advocates has been in terms of establishing the cost of losing access to key chemicals, the first of which promises to be the organophosphates (OPs). While the EPA and the chemical companies who, in fact, apply for registration, are under no obligation to consider the financial costs of the crops that they may impact, growers have been urged to let both parties know the monetary consequences of their decisions. These financial costs, however, just scratch the surface.

Every year, U.S. taxpayers and non-profit organizations spend millions of dollars on cancer research. Just last week, news that drugs have been found that are able to restrict cancerous growth in mice was heralded as one of the most significant medical finds in recent years. However, it has long been known that diet and the incidence of certain cancers are closely related. In fact, 35% of all cancer deaths in a given year are attributable to diet. It is also well known that greater consumption of fresh fruits and vegetables is a cheap and effective way of reducing the likelihood of developing many types of cancer. Health officials estimate that fully one-third of the 500,000 cancer deaths each year could have been prevented by eating a diet rich in fruits and vegetables. In economic terms, medical researchers estimate that $333 billion each year in medical cost and lost productivity are due to diet related diseases. Eating five fruits and vegetables a day can reduce the costs of these diseases by approximately $130 billion a year. Consequently, any regulation that impedes the 5-a-day-for-Better-Health campaign from achieving its goals surely represents a long-term cost to our battle against cancer. So the true comparison in cost must weigh the benefits to removing some product with marginal OP contamination from the market with the cost of causing some people to give up consuming that product altogether. Similar examples of these types of hidden, incipient, costs abound.

Following the discovery of hepatitis-contaminated raspberries from Guatemala, and other outbreaks among imported produce, legislators and food-safety advocates began again the call for country-of-origin labeling. Ostensibly, this regulation would allow consumers to understand the risks they are taking in consuming produce from fields that the FDA cannot regulate. However, FQPA regulation does not cover imported produce items, but rather only products that are grown in the U.S. with chemicals that we have the ability to control. Raising the cost of U.S. grown produce, and making it appear less attractive on the shelf, can only increase the demand for imported produce. Perversely, this increases the likelihood of future food-borne-disease outbreaks taking more lives than are saved through rigorous application of the new FQPA regulations.

Finally, there is the cost of uncertainty. With the FQPA's broad definition of exposure to a chemical now including all sources of each chemical, including through drinking water, public recreation areas, and the like, minor use products will be lumped into groups that include the major users of each chemical. While data on tolerances and application rates among major-use crops are well known, comparable data for minor-use crops are not. Consequently, EPA officials will likely "assume the worst" and ascribe 100% application and full-tolerance levels for these minor use crops. Chemical companies, therefore, recognizing that their biggest bang for the delisting buck will come from minor-use crops will, of course, choose to sacrifice these first. To the extent that their assumptions are overly pessimistic, society will be losing valuable production and nutritional diversity in the name of preserving the chemical companies' bottom line. Again, contrary to the program's goals.

Because the added benefit from more regulation declines the more strict that regulation becomes, there must be some point at which that added benefit falls below the cost of the alternatives forgone. Rigid application of the FQPA may indeed succeed in finding that point.

¹Leonard P. Gianessi, National Center for Food and Agricultural Policy. From presentation made at Santa Nella, CA. Oct. 9, 1997.

Fresh Broccoli and Cauliflower Market Watch and Outlook

By Richard Adu-Asamoah, Ph.D.

El Nino's effect may linger a little longer:

The effect of El Nino on West Coast production may lead to higher prices in grocery stores through June. Vegetable growing areas of California's Salinas Valley, Santa Maria and Bakersville have had a lot of rain caused by the weather phenomenon. Some of the heaviest rains fell in late January and early February when broccoli and cauliflower growers were to start planting for the winter crop. Farmers are experiencing delays of two to four weeks. Industry observers believe that the fresh vegetable industry as a whole is entering a series of volume gaps during April through mid-June.

Supply still follows transition from desert to northern regions:

Despite earlier concerns about supply due to the extended effects of El Nino in California and Arizona, supply levels through mid-April have mostly reflected the normal transition from the desert growing regions of Arizona and California to regions in northern California. Shipments started to decline in early March from higher February levels. It is expected that efforts to recoup losses caused by bad weather conditions and planting delays may lead to larger broccoli and cauliflower acreage in later months. This, however, may not result in larger harvested acreage and production as field conditions may remain less than ideal. Supplies may, in fact, be lighter than normal for both broccoli and cauliflower through May.

Erratic production in Huron and Salinas may lead to unstable prices:

Barring any extended and dramatic weather effects between April and June, shipments and price trends will resemble those of April-June, 1996 for fresh broccoli and cauliflower. This suggest a deviation from trends observed during the same period in 1997.

On average 1998 f.o.b.s are expected to improve over 1997 prices for broccoli (Figures 1). The average price of a 20-pound carton of loose broccoli crowns is expected to be $8.40 depending on quality and supply. Average weekly shipment will be about 839,000 cartons (Figure 1). Movement from Salinas-Watsonville is expected to increase through the end of April. Movement from the Santa Maria-Guadalupe-Oceano-Lompoc areas of California is expected to remain the same as the last three weeks. California's Imperial , Palo Verde and Coachella Valleys, and Arizona's Central and Western regions should expect continued seasonal decline. Trading is expected to be active resulting in higher f.o.b. prices.

Cauliflower shipments will continue to be lighter and with more variable quality than 1997 for April through June. Prices will, therefore, vary widely but will be higher than 1997 prices. Average weekly price for April through June will be about $11.10 per carton of film-wrapped 12's depending on quality and supply. Average weekly supply for April-June 1998 is expected to be about 370,000 cartons (Figure 2). Movement from Santa Maria-Guadalupe-Oceano-Lompoc areas of California is expected to increase through the end of April. During the same period Salinas-Watsonville, California, should expect no improvement in movement. Central and Western Arizona and the Imperial and Coachella Valleys of California should see their movement decline. Trading, however, will be active in all relevant winter markets resulting in higher prices.

Exports Continue to be Important for the Broccoli and Cauliflower Industry:

Broccoli and cauliflower exports have continued to grow since the 1980's. Between 1990 and 1997 broccoli exports increased by 67 percent (an average annual growth rate of 8.3 percent). During the same eight-year period cauliflower exports increased by 87 percent (an average annual growth rate of 10.9 percent). An interesting market trend seems to be developing. For broccoli, both total domestic use and total exports have been increasing though at different rates. Total domestic broccoli use increased by 29 percent (about 3.7 percent per year) during 1990-97. For cauliflower, however, increased exports seem to be at the expense of domestic use. Between 1990 and 1997 total domestic fresh cauliflower use fell by 29 percent (an average decline of 3.6 percent a year). 1997 per capita use is estimated at 4.1 (an average annual increase of 2.6 percent since 1990) and 1.5 (an average annual decline of about 4.0 percent since 1990) pounds respectively for fresh broccoli and

cauliflower (Figure 3). While the above export and domestic use numbers may suggest shifts in the structure of the market for these crops, the numbers also make a case for an effort to improve domestic cauliflower consumption.

Legislative Update

by Amy Ridings

The Senate is currently considering final passage of the agriculture research bill in Congress, amid a great deal of controversy over the language on restoration of food stamp benefits to legal immigrants. While the bill contains approximately $1.7 billion in funding, only about $650 million of that is actually designated for agricultural research. Secretary Dan Glickman has stated his intent to request a veto from the President if this bill does not include the food stamp funding for legal immigrants.

On a different note, environmental concerns in agriculture are still a hot topic in Congress. Senator Larry Craig of Idaho recently introduced a Senate companion bill to H.R. 2609, which calls for a regulatory correction concerning methyl bromide. The purpose of the legislation is to allow U.S. farmers the same flexibility and exemptions allowed farmers in other countries under the Montreal Protocol. Given the fact there are currently no acceptable alternatives to methyl bromide on the market, banning methyl bromide in the U.S. by 2001 - four years before other developed nations and fourteen years before some of our main agricultural competitors - would put U.S. farmers at a serious competitive disadvantage.

H.R. 2609 would prohibit the Administrator of the EPA from controlling "consumption, production, importation, or export of methyl bromide for pesticide use." The exceptions to this would be when the Montreal Protocol requires compliance by all parties or when the USDA certifies a viable alternative to methyl bromide. Glancing at the list of co-sponsors, it is plain to see that most of the names represent states that would be most affected by the loss of methyl bromide, namely Florida, California, Georgia, and North and South Carolina. In Florida alone, the estimated decline of vegetable acreage due to the loss of methyl bromide is predicted to be 43 percent.

And last, but not least, the Administration directed the EPA to work with the USDA in implementing the FQPA regulations. Vice-President Gore stated that these regulatory efforts should be guided by sound science and should include broader participation. Concerns from agriculture and chemical industries most likely prompted the move due to their complaints that the EPA was too strict in carrying out food safety laws and that they had been left out of the implementation phase. This move by the Administration should allay some of the concerns of the agriculture industry by giving them more voice in the matter of FQPA, but still allows the EPA some discretion in applying the law.

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