WASHINGTON, DC – Earlier this month, the U.S. International Trade Commission (USITC) released the second volume of their two-part investigation, looking at the global economic impact of missing and low pesticide maximum residue levels (MRLs) on agricultural trade. The USITC first solicited comments from across the U.S. agriculture industry in 2019, following a request by the Office of the U.S. Trade Representative (USTR) and provided the first glimpse into the investigation’s findings to the public last summer (see
USA Rice Daily, August 20, 2020).
The report concluded that pesticide-related policies in some countries are creating significant challenges to agricultural trade. Farmers are increasingly adjusting production practices in response to evolving policies and regulations governing MRLs on agricultural products. These policy and regulatory changes, and the associated uncertainty, can negatively affect farmers’ costs as well as their ability to access export markets, which may affect their income.
The USITC noted that changes in MRLs in export markets (and MRL removals in particular) can have a range of effects that can impact a farm’s production, costs, and profitability. When MRL removals occur in markets that farmers rely on for a large portion of their sales, they may change their production practices by switching to other pesticides, which are frequently more costly, less effective, or both. This can undermine a farmer’s profitability. Even in cases where most of a farm’s sales are made domestically, the decision to forego exports rather than implement pesticide and farm practice changes necessitated by the reduction or elimination of importing country MRLs could be the difference between profitability and unprofitability in years when domestic prices are low.
Noncompliance with MRLs in foreign export markets presents a highly risky scenario that could substantially reduce a farmer’s profitability, even if noncompliance occurs for only a small portion of their overall sales. Although, there may be opportunities for well-positioned farmers to fetch a premium and increase income in cases where they are uniquely capable of meeting foreign MRLs.
“As with most row crops, when we plant rice, the majority of the time we’re not going to know whether it’s going to be used domestically or be exported, and if it’s exported, it could go to nearly any of the more than 130 countries the U.S. ships to,” said David Petter, Arkansas farmer and chair of the USA Rice Regulatory Affairs Committee.
“Rice farmers face enormous challenges managing pest pressures with a severely limited number of registered crop protection tools,” Petter added. “We comply with label restrictions that meet the demands of all sorts of end-users, and because U.S. rice is primarily grown for human consumption, there’s added pressure when compared to some of the commodities mostly used for feed or non-food industrial purposes.”
USA Rice has worked with federal agencies for years to address concerns related to arbitrarily low or missing MRLs among key trading partners and continues the push to ensure that our export destination markets regulate their own growers to the same extent they regulate our crop. USA Rice contributed valuable examples and data to the USITC’s requests for both Volume I and II of their investigation in 2019 and 2020.