Marketing prospects for U.S. agricultural export in the decade ahead are enough to make farmers giddy, as detailed recently by a USDA Foreign Agricultural Service director.
However, those opportunities will be tempered by the daunting challenges of meeting confusing and burdensome import regulations on pesticide residue levels for U.S. ag exports.
Peter Tabor, director of Plant Division, USDA/FAS’s Office of Scientific and Technical Affairs, told more than 100 people at a seminar in San Francisco that 2010 ag exports are headed for the second highest level in history.
The workshop on maximum residue levels (MRLs) for global marketing was organized by the California Specialty Crops Council.
Tabor said consumer-ready products will be fueling a large part of ag export growth over the next decade, feeding an escalating world middle class that will likely reach 1 billion people by 2020.
For this, ag exports are up 14 percent over 2009, rebounding from the economic downturn in 2008. It is the strong foreign demand for U.S. ag products along with a weakened dollar that is propelling this increase.
“Exports are projected to total $104 billion by the end of the year, up $8 billion from 2009,” said Tabor.
The U.S. trade surplus is projected to rebound from $23 billion in 2009 to $28 billion this year.
Bulk commodities continue to be a big part of overall U.S. ag exports; however, their percentage of the overall picture has been steadily declining since 1978. Consumer ready food products are up sharply.
Cotton continues to be No. 1 on the export list, with 98 percent of American production moving offshore. The percentages of other U.S. crops moving into export are: almonds 78 percent; raisins 50 percent; rice 47 percent; soybeans 43; wheat 39 percent; grapes 39 percent; peaches 20 percent; pears 19 percent; and corn only 15 percent.
Not surprising, China, Southeast Asia and India are driving “a lot of the recovery” in U.S. ag exports, said Tabor. The area takes 20 percent of U.S. ag exports.
China currently has 100 million middle class citizens. Within a decade that is expected to grow to 225 million. For India the growth is expected to reach 80 million from 25 million in the same time frame.
China and India are driving the demand for consumer food products and “this market will continue to grow,” Tabor emphasized. This is also happening in Brazil and other emerging nations.
These consumers want what America grows, particularly the so-called specialty crops that are grown in California.
Tabor painted a rosy picture; however, he added that there could be snares along the way.
Factors that could affect the continued growth of U.S. ag trade include the value of the U.S. dollar, energy prices, irrigation water availability and trade agreements.
Another challenge to meet this growing demand for food is likely to be cropland availability, he noted. It is rapidly diminishing in the U.S. and elsewhere.
This challenging scenario could be tempered by the growing use of biotechnology, which he said will “gain wide adoption” to create new products and boost production. Biotech “holds a lot of promise” for keeping prices down for consumer products by reducing pest and disease costs and the demand for hand labor, he noted.
While Tabor’s export outlook was good news, the council’s fifth workshop drew its biggest crowd ever because of the growing challenges MRLs represent in tapping that export market.
The U.S. Environmental Protection Agency registers agricultural chemicals and when it does, it sets pesticide residue allowances considered safe for people and animals.
Many countries accept EPA’s tolerance. However, many do not and set their own tolerances called MRLs or abide by a multi-nation standard. One of those is called Codex. The USDA FAS also tracks MRLs. Individual buyers like supermarkets or wholesalers can set their own MRLs. This customized customer MRL tactic is growing.
What this means is that ag chemical manufacturers must submit registration data to anyone who sets MRLs.
If MRLs are not established for the customer receiving the product, the customer can refuse shipments of U.S. agricultural imports. If established MRLs are exceeded, the product can also be rejected.
It takes an Excel spreadsheet the size of Rhode Island to keep track of it all. Richard Carver, senior DuPont registration manager, said to make sense of it, registrants should identify the key markets and the key commodities into those markets to submit MRL data. Carver told the audience of registrants, growers and others who deal directly with MRLs to allocate registration resources on those criteria.
“Import MRLs are not needed for countries that do not monitor or enforce MRLs. However, this can change. You always want to be in compliance. Nobody wants to learn by enforcement,” he said. “Regulatory policies and enforcement are constantly changing in the world.”
MRLs act as trade barriers that can significantly reduce accessibility of U.S. ag production, Carver said.
Fortunately, MRL enforcement in China and India is not as aggressive as some other countries, but that could change, he added.
Forty-five countries default to Codex MRLs. However, major buyers like Canada, the European Union’s 27 member nations, Japan, Taiwan, Australia, Russia, New Zealand, Argentina and Brazil are among buyers of U.S. ag products who set their own MRLs. Mexico, another major buyer, accepts U.S. EPA tolerances.
Matt Lantz, director of international market access and chemical and technical services for a Seattle company, Bryant Christie, Inc., has worked throughout the world on U.S. ag import issues. He told the seminar attendees MRLs will increase in importance to growers and shippers.
“The challenge to growers is that they can be within tolerance in the U.S. and be illegal abroad,” he said. “There are increasingly more rejections each year.”
Adding to this dilemma are new pests showing up in the U.S. that require aggressive chemical control, like the European grapevine moth that was found for the first time last fall in the U.S. in California grapes.
Also, there are new, reduced risk compounds being introduced in the U.S. after going through EPA registration that cannot be used because countries like Japan and Taiwan have not established MRLs. This forces U.S. growers to use higher risk compounds with MRLs, if they want to ship into those markets.
And there is the growing list of private sector MRLs where buyers say they want growers only to use a half or a third of the labeled rate — “for no reason” if a grower or packer wants to sell them product.
Educating buyers and consumers abroad is the key to use acceptance by food chains and others who are often setting unreasonable product use standards.
Phil Brindle, senior regulatory manager for BASF agricultural solutions, called the lack of MRL harmonization a “nightmare.”
“The poor farmer has to live with all this,” to sell his crop overseas.
Secondary MRLs also are not going away and are becoming more common as foreign buyers – as well as domestic companies like Wal-Mart, Coca Cola, and Fresh & Easy – set their own pesticide use standards, often telling growers they must cut rates or increase the pre-harvest internal from what is on the U.S. EPA label. These demands are often impossible for growers to meet.
“They are also undercutting and undermining the regulatory process in the U.S. and abroad,” he added.
To learn more about MRLs, go to pentonag.com. There is an accredited online continuing education course entitled the “The ABCs of MRLs” on that Web site. It is accredited by the California Department of Pesticide Regulation and the Arizona Department of Agriculture for continuing education for PCAs and applicators.
It is also accredited for CE hours in Florida, Georgia, Delaware, Maryland, Oklahoma, and Texas.
One credit for crop management has been approved for certified crop advisers.
The course is free, sponsored online by DuPont Crop Protection.