Regulating Agricultural Imports To Keep Out
Foreign Pests and Disease
Governments use a range
of interventions to combat the entry of foreign
pests, and economic analysis can help assess
the costs and benefits of potential measures.
Michael
Livingston
Craig
Osteen
Donna
Roberts
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Increasing agricultural imports benefits
U.S. consumers, but shipments can
transport harmful foreign pests
and diseases. |
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The
United States and other nations use
a number of approaches to reduce risks
to agriculture and the environment
from pests and diseases entering through
trade.
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Economic
analysis can help identify measures
that mitigate risks of
economic or environmental damage with
minimal impact on trade benefits.
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This
article is drawn from . . . |
“Phytosanitary
Regulations Shape Fruit and Vegetable Trade
Patterns,” by Megan Romberg and
Donna Roberts, in Amber
Waves, Vol. 6, Issue
2, April 2008, USDA, Economic Research Service.
“Pest
Problems Abroad May Affect Compliance With
U.S. Safeguards,” by Michael
Livingston, in Amber Waves, Vol.
6, Issue 3, June 2008, USDA, Economic Research
Service.
“The
Mediterranean Fruit Fly and the United
States: Is the Probit 9 Level of Quarantine
Security Efficient?” by M.J. Livingston,
in the Canadian Journal
of Agricultural Economics
55(2007a):517-528.
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You
may also be interested in . . . |
“What
Share of U.S. Consumed Food Is Imported?” by
Andy Jerardo, in Amber
Waves, Vol. 6, Issue
1, February, 2008, USDA, Economic Research
Service.
ERS
Briefing Room on Invasive Species Management.
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Increased trade helps meet
U.S. consumers’ growing demand for a variety
of fresh and processed foods. Imports rose from
4.7 percent of the total value of U.S. food and
beverage consumption in 1995 to 6.8 percent in
2005. The import share of certain categories of
foods has grown much faster. For example, ERS calculates
that the import share of the value of domestic
consumption of fruit increased from 23.3 percent
in 1995 to 32.5 percent in 2005; the share for
vegetables rose from 13.9 to 24.9 percent. Growth
in imports of fresh produce and other imported
foods can lower costs, increase variety, and extend
seasonal availability, contributing to a healthier
diet for U.S. consumers.
Increased agricultural imports, however, can raise
the risk of inadvertently introducing foreign pests
and diseases, and the resulting damage to domestic
crops, livestock, and the environment can reduce
or offset some of the benefits of trade. Trade
is not the only vector for pests and diseases—natural
factors, such as wind currents, can spread insects,
fungal spores, pathogens, and weed seeds. Asian
soybean rust, for example, may have entered the
United States in conjunction with two hurricanes.
Passenger baggage, migration of wild animals, and
smuggling are also pathways for foreign pests and
diseases. In 2002, an outbreak of exotic Newcastle
disease in backyard poultry flocks in California
may have been introduced through infected game
birds smuggled from Mexico.
Nonetheless, it is widely recognized that trade,
along with the packing materials and means of conveyance
that make trade possible, can introduce foreign
pests and diseases that can potentially jeopardize
domestic plant and animal health. For example,
the emerald ash borer and Asian long-horned beetle,
which are damaging trees in the Northeast and Great
Lakes States, are thought to have first entered
the United States on wooden pallets in the 1990s.
More recently, Ralstonia solanacearum, a bacterial
pathogen that damages potatoes, eggplant, tomatoes,
and other horticultural products was detected on
greenhouse geraniums imported from Kenya and Guatemala
but has been contained thus far.
Although not every introduction of a pest or disease
results in its establishment, some grow and spread,
leading to losses in present or future production
or resource values and/or increased production
costs. The cost of foreign pests and diseases can
also include the temporary loss of export markets,
such as when Japan, Korea, and other countries
suspended imports of U.S. beef when bovine spongiform
encephalopathy (BSE) was detected in an imported
cow in December 2003. Comprehensive damages are
difficult to ascertain, but studies by the National
Plant Board, the Government Accountability Office,
the Office of Technology Assessment, and others
report that foreign pests and diseases cause billions
of dollars of economic losses to U.S. agriculture
each year, while also adversely affecting ecosystem
values and services.
These cost estimates include sizable public expenditures,
including emergency funding to address new pest
or disease threats and outbreaks. Today, 21 Federal
agencies are responsible for some aspect of managing
foreign pests and diseases in the United States.
USDA’s Animal and Plant Health Inspection
Service (APHIS) has, by far, the leading role,
accounting for about $9 out of every $10 that the
Federal Government spends annually on prevention
and control of foreign pests and diseases. Annual
expenditures for APHIS programs ranged from $1.1
to $1.5 billion between 2003 and 2007, including
emergency expenditures for programs such as increased
BSE surveillance in 2004-06.
Public Sector Has a Role in Reducing Risks From
Foreign Pests
In some instances, farmers and ranchers can adopt
available technologies or management practices
to safeguard their crops or livestock and will
do so if it improves their bottom line. Although
the use of pest and disease controls will generally
increase operating costs, they will also raise
expected profits if yield or herd losses are sufficiently
reduced. However, pest management decisions made
by producers exporting to the United States may
be made without accounting for the costs associated
with unintentionally introducing foreign pests
and diseases into this country. Economists describe
these kinds of situations, in which the action
of one economic agent affects the well-being or
production possibilities of another, as externalities.
For example, a farmer may apply a fungicide to
reduce orchard yield losses to negligible levels,
but if fruit harboring any fungal spores were exported
to a country that grows more susceptible fruit
cultivars, the fungus could cause widespread damages.
When private production decisions result in negative
externalities or spillovers, economic theory indicates
that public intervention can increase societal
well-being.
Furthermore, low prevalence of a pest or disease
can be considered a public good if the pest is
highly mobile, the disease is contagious, or either
is initially widespread. Economists define a public
good, such as regional control of a pest or disease,
as a good or service that is nonexcludable (no
one can be effectively excluded from using it)
and nonrival (use by one individual does not reduce
the amount available to another). Economic theory
holds that markets will fail to provide incentives
for individuals to provide these goods in the amounts
that society considers optimal. In these instances,
cooperative effort is needed to create the public
good of improved production capacity, requiring
public intervention in the form of monitoring,
regulation, and/or control to reduce hazards to
animal and plant health.
Economic Impacts Vary by Type of Intervention
Governments use a range of interventions to combat
the entry of foreign pests. Best known, perhaps,
are quarantine measures such as import bans. But
other, more targeted, tools are also available.
The level and distribution of benefits and costs
along the international supply chain depend partly
on the type of public intervention used. But even
for a single type of measure, economic impacts
vary widely depending on the specifics of an individual
case.
A well-known example of quarantine measures is
the U.S. ban on beef imports from countries where
foot-and-mouth disease is endemic in cattle. The
rules of the World Trade Organization allow the
use of import bans and other sanitary and phytosanitary
(SPS) measures to reduce the risk of international
transmission of pests and diseases if such measures
are based on scientific risk assessment, and their
use is common. For example, countries accounting
for 84 percent of global apple production are not
currently eligible to export to the United States.
In evaluating such bans, economists try to measure
the benefits of imports against the management,
production, market, and/or resource costs that
might be associated with an outbreak of a disease
or pest. Studies show that this varies on a case-by-case
basis. Import bans have reduced total welfare in
some cases, because the cost of disease establishment
was outweighed by the consumer benefits from imports.
For example, APHIS estimated that the annual net
benefits of replacing a longstanding ban on imports
of Mexican avocados with more targeted phytosanitary
measures totaled about $70 million, providing analytic
support for USDA’s decision to grant Mexico
full access to the U.S. market in 2007. On the
other hand, there can be cases where an import
ban is less costly than the economic consequences
of disease establishment, especially in those instances
when the country might lose potential export markets.
Even in instances where the benefits of an import
ban outweigh the costs to domestic consumers, there
still may be more efficient ways to mitigate foreign
pest and disease risks if the costs of hazards
and hazard reduction and the benefits of improvement
are shared across borders. Economists have identified
three potential approaches for the provision of
global public goods when problems and solutions
transcend national borders.
The best
shot approach pushes or pulls private
innovation by using public funds. An example of
this approach is the decades of research and evaluation
on the efficacy and safety of irradiation on fruits
and vegetables by the World Health Organization,
the United Nations Food and Agriculture Organization,
the U.S. Food and Drug Administration, and other
public institutions. This research laid the groundwork
for commercial use of irradiation as a phytosanitary
treatment to sterilize quarantine pests. This technology
enabled USDA to lift bans on exports of mangos
and other tropical fruits from Thailand, the Philippines,
and India that have been irradiated to reduce the
risk to negligible levels of infestation by 11
quarantine pests.
The summation
approach is the creation of global
mechanisms to enforce individual behavior along
the supply chain and/or among countries so that
the sum of individual actions produces the desired
outcome. The international standard promulgated
by the International Plant Protection Convention (IPPC) for wooden packaging
material provides an example of this type of global public good. The standard
sets out the terms for IPPC certification of heat treatment or methyl bromide
treatment of wooden pallets, crates, and boxes to reduce the risk of transmission
of timber pests such as the Asian long-horned beetle. Widespread acceptance of
IPPC-certified packing materials provides a viable alternative to the required
use of more expensive packaging materials in the international supply chain that
would make trade more costly, and, in some cases, prohibitively expensive.
The weakest
link approach uses foreign aid to overcome
the constraint imposed by those with the fewest
resources to combat a common problem. U.S. technical
assistance for a capacity-building project that entailed training in pest risk
assessment in West Africa provides an example of this approach. This project
supported scientific assessments that facilitated USDA’s approval of exports
of eggplant, okra, and peppers from Ghana into the United States in 2007.
USDA determines which approach, or combination
of approaches, to employ to protect domestic
and natural resources under the authority of
Federal mandates, including the Plant Protection,
Animal Health Protection, and Federal Seed Acts.
USDA has a wide range of regulatory tools at
its disposal under each approach, including import
protocols requiring agricultural producers and
exporters abroad to adhere to specific pest and
quality control guidelines and commodity inspection
and quarantine programs at U.S. ports.
Usually a combination of measures is used. For
example, to ensure that screwworms that afflict
ruminant livestock do not enter the United States,
USDA cooperates with the Government of Mexico
in administering a fly sterilization and release
program (weakest link approach). In addition, import protocols require the application
of screwworm disinfection and monitoring protocols in Mexico (with additional
safeguards required for the State of Chiapas) and at the U.S. port of first entry
for imported live animals originating in Mexican States in which screwworm outbreaks
have occurred (summation approach).
Economic Analysis Can Inform the Choice and Design
of Intervention Measures
Agricultural products are imported into the United
States only after successfully completing USDA’s
approval process. After a country petitions USDA
to allow importation of a specific commodity, APHIS
conducts a risk assessment to identify the economic
and environmental damage that pests associated
with the commodity might cause if they were to
enter the United States. No import is risk free,
but APHIS may recommend that the commodity be allowed to enter if certain steps
are followed to reduce pest and disease risk to levels acceptable to U.S. authorities.
Economic analysis of different options available
to public authorities can improve the economic
basis of pest and disease management decisions
in three important ways. First, the most important
determinants of the benefits and costs associated
with different policies can be examined, highlighting the essential informational
needs of public decisionmakers seeking to implement economically efficient measures.
Second, the impacts of different policies on the pest management behavior of
foreign and domestic agricultural producers can be analyzed to improve understanding
of economic impacts under different infestation and market scenarios. Finally,
economic analysis can quantify the benefits and costs of different policy options
and determine the degree to which the costs of different options are borne by
domestic and foreign firms and consumers.
ERS Researchers Investigate Medfly Measures
A recent study by an ERS economist, which examined
options for policies to reduce the risk of entry
of the Mediterranean fruit fly (medfly), illustrates
how economic analysis can inform public decisionmaking.
The medfly is a serious pest for many fruit and
vegetable crops and is known to exist in 65 foreign
countries (hereafter referred to as quarantine
countries). APHIS allows imports of fresh produce
from these countries only if they have been treated
to eliminate medfly larvae.
Currently, eight treatments are approved for the
medfly. One of the most widely used is cold treatment,
under which produce imported for fresh consumption
must be refrigerated according to specific schedules
(temperature-duration combinations) before allowed
entry into U.S. markets.
Interceptions of live medfly larvae in separate
shipments of clementines from Spain during November
and December of 2001 prompted USDA to ban this
fruit temporarily and re-examine its cold treatment
protocols. After imports were suspended, APHIS
launched an investigation to identify the causes
of the infestations to determine if there were
feasible phytosanitary measures that could be adopted
to permit trade to resume. Investigators determined
that the infestations were due to a number of factors,
including unseasonably warm weather conditions
and above-average medfly populations during the
2001-02 growing season, susceptibility of early-season
clementine varieties, and problems with the application of cold treatment.
To mitigate these newly identified risks, APHIS
proposed revised import regulations for Spanish
clementines, including mandatory medfly population
monitoring and threshold-based insecticide applications
(see box, “SPS Measures
for Spanish Clementines”). APHIS also proposed lengthening the mandatory cold treatment
periods of all medfly host commodities, including clementines, imported from
all quarantine countries. Economic and risk analyses concluded that allowing
clementine imports from Spain under the new measures would increase expected
net benefits relative to the ban that was put in place during the investigation.
Following adoption of these measures in October 2002, USDA allowed clementine
imports from Spain to resume.
Recently, ERS research extended this analysis to
determine which cold treatment schedules would
maximize net U.S. benefits from trade in 15 fruit
and vegetables with all 65 quarantine countries.
This analysis concluded that treatment periods
with the largest net benefits closely correspond to the currently mandated treatment
periods.
Another important finding was that the cold treatment
period that maximizes profit received by a foreign
producer varies with medfly population levels
abroad. The results have important implications
for policy design. When medfly populations are
at or below normal levels, the results suggest
that the economic incentives of fruit and vegetable
producers in quarantine countries are consistent
with U.S. cold treatment policy, because profits
received by fruit and vegetable producers in
quarantine countries are maximized at the treatment
periods that maximize net U.S. benefits associated
with trade in these commodities. However, when
medfly populations abroad are above normal levels,
the incentives of producers in quarantine countries
could lead to cold treatment of produce imported
into the United States at durations below what
the U.S. has determined to be the optimal cold
treatment period. This is because profits abroad
are maximized at a lower treatment period. These
results suggests that it is important to closely
monitor fulfillment of cold treatment requirements
and justify USDA’s current practice of doing
so, even though it increases private compliance costs and public enforcement
expenditures. Containers accepted at U.S. ports are required to have temperature-
and treatment-period duration gauges, which are examined at the port of first
entry.
Economists and Biologists Work Together To Inform
Public Policy and Investment
Biology and economics play key roles in the arrival
of foreign pests and diseases and in the processes
by which they become established. Economic activities
related to international trade, commodity and livestock
production, and domestic commerce are pathways
by which foreign pests and diseases penetrate the
U.S. border and disperse to new areas. At the same
time, to become established in new areas, pests
require suitable habitats, compatible climatic
conditions, and minimal populations of potential
predators. To inform decisions about policy responses
to today’s challenges of managing foreign
pests and diseases, research must address the joint
impacts of economic and biological factors on the
benefits and potential costs of agricultural trade.
Such research is also critical to decisions about
public and private roles for meeting new challenges
that might arise from changing trade flows, cropping
patterns, or pest populations. Finally, continuing
research can help policymakers capitalize on new
scientific discoveries and technological innovations
in order to increase welfare-enhancing trade.
SPS Measures for Spanish
Clementines
A complete description of
the regulations (Title 7, Part 319, Sec.
56-34) can be found at www.gpoaccess.gov/CFR/retrieve.html.
Briefly, Spanish clementine producers who
export to the United States must register
with the overnment of Spain and agree to
adhere to the following management and inspection
program:
Pheromone-baited medfly traps must be placed
in orchards 6 weeks prior to harvest, and
baited pesticide sprays using malathion,
spinosad, or other approved pesticide must
be applied according to a population threshold
rule.
To improve compliance, registered growers
are required to file detailed records of
their medfly population data and pesticide
sprays with the government of Spain and allow
APHIS inspectors access to their groves and
records.
Boxes of clementines must be clearly labeled
to identify the orchard in which they were
grown.
Before loading onto sea vessels for export
to the United States, 200 clementines must
be randomly selected from each individual
shipment (not to exceed 200,000 boxes)
by an APHIS inspector. If a single live
medfly (egg, larvae, pupae) is found, the
entire shipment is rejected, and if there
is a second occurrence for the same orchard,
shipments are suspended for the remainder
of the season from that orchard.
Shipments that pass inspection must then
undergo cold treatment prior to offloading
in the United States.
APHIS inspectors examine the cold treatment
data and inspect the fruit; if the cold treatment
has not been successfully completed or if
a single live medfly is found, the shipment
is held until an investigation is completed
and appropriate remedial actions implemented. |
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