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Group Title: Bulletin; University of Florida Food and Resource Economics Dept. ; 333
Title: Impact of a methyl bromide ban on the U.S. vegetable industry
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 Material Information
Title: Impact of a methyl bromide ban on the U.S. vegetable industry
Series Title: Bulletin; University of Florida Food and Resource Economics Dept. ; 333
Physical Description: Book
Language: English
Creator: VanSickle, John J.
Brewster, Charlene
Spreen, Thomas
Publisher: University of Florida, Agricultural Experiment Station, Institute of Food and Agricultural Sciences
Publication Date: 2000?
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Bibliographic ID: UF00049890
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page
    Authors
        Unnumbered ( 3 )
    Main
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
    Reference
        Page 13
        Page 14
    Tables
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
    Mathematical model of the North American fresh vegetable market
        Page 25
        Page 26
Full Text
101/



i333
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John J VanSickle
Charlene Brewster


Thomas H Spreen


Food & Resource Economics Department


., L UNIVERSITY OF
SFLORIDA
Institute of Food and Agncultural Sciences
Agricultural Experiment Station


o Bulletin 333





an
on the U.S. Vegetable Industry


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MARSTON SCIENCE LIBRARY


MAR 1 7 Z0M


Impact of a Methyl Bromide Ban on the U.S. Vegetable Industry











John J. VanSickle, Charlene Brewster and Thomas H. Spreen
Food & Resource Economics Department, IFAS
University of Florida










Authors

John J. VanSickle is a professor in the Food and Resource Economics Department and
Director of the International Agricultural Trade and Development Center. Thomas H.
Spreen is a professor and Charlene Brewster is a graduate research assistant, Food and
Resource Economics Department, IFAS, University of Florida, Gainesville, Florida.









Impact of a Methyl Bromide Ban on the U.S. Vegetable Industry

John J. VanSickle, Charlene Brewster and Thomas H. Spreen

INTRODUCTION

Methyl bromide is a broad spectrum pesticide that has been identified as critical
for the production and marketing of many fruit and vegetable crops. Parties to the
Montreal Protocol on Substances that Deplete the Ozone Layer (the international
agreement which monitors ozone depleting substances and provides international
regulations on their production and use, commonly referred to as the Montreal Protocol)
declared at their November 1992 meeting that methyl bromide had an ozone depletion
potential (ODP) of 0.7, well above the 0.2 ODP required to be classified as a Class I
ozone depleting substance. The U.S. Clean Air Act of 1992 requires that all Class I ozone
depleting substances be banned from use within seven years of being classified. The
schedule adopted by U.S. regulators was a complete ban on all use of methyl bromide by
January 1, 2001. The Clean Air Act was amended in 1998 to extend the phase out period
for methyl bromide to 2005. This new schedule is synchronous with the schedule for
developed countries that are parties to the Montreal Protocol, which calls for a 25%
reduction in use of methyl bromide in 1999 from 1991 base levels and another 25%
reduction in use in 2001. An additional 20% reduction in use is scheduled for 2003 with a
complete phase out scheduled for January 1, 2005.
Soil fumigation accounts for nearly 80% of the worldwide use of methyl bromide
(UNEP, 1997). Tomatoes and strawberries account for more than half of that amount
with 35% and 20% of all soil fumigation applied on tomato and strawberry production,
respectively. The U.S. was identified as using 40% of the worldwide use of methyl
bromide in 1991, but that amount dropped to 32% in 1995 as production of tomatoes and
strawberries declined (UNEP, 1998).
Spreen et al. (1995) estimated that the loss of methyl bromide would have a $1
billion impact on the winter U.S. vegetable industry, with Florida accounting for nearly
all of this impact. Lynch (1996) estimated that the impact on strawberries could be as
large as a $313.6 million loss in U.S. producer surplus.
The United Nations Environment Programme (UNEP) indicated that research and
development could have significant effects in reducing the impact of a methyl bromide
ban (UNEP, 1997). Using the model developed by Spreen et al. (1995), UNEP estimated
that the impact on tomato production in Florida could be reduced from a 61.4%
production loss to 21.8% if yield impacts could be reduced from a range of 20% to 40%
(depending on area produced) to a range of 0 to 40%. Strawberry impacts in Florida
could be reduced from a production loss of 68.7% to 28.3% if yield impacts could be
reduced from 25% to 5%.
Significant research has been completed for evaluating the yield and cost impacts
of alternatives to methyl bromide (UNEP, 1997). Most of this research focuses on
chemical alternatives to methyl bromide. Many integrated pest management (IPM)
strategies are in preliminary stages of evaluation. The research has resulted in more
reliable data on existing alternatives and development of new alternatives that could
lower the impact on producers and consumers. The objective of this research is to
evaluate the impacts of methyl bromide alternatives on U.S. producers of fresh vegetables










and to evaluate potential targets for alternatives in order to minimize the impacts on
producers. This was accomplished by developing a North American vegetable model that
accounts for a large majority of the methyl bromide used for soil fumigation purposes for
fresh vegetables and strawberries. This model is then used to estimate the impact of a
methyl bromide ban on producers of fresh vegetables and strawberries who supply those
products to North American markets. The impacts on U.S. consumers of those products is
also estimated.

NORTH AMERICAN VEGETABLE MODEL

A model of the North American vegetable market was developed to estimate the
impacts of a ban of methyl bromide on producers and consumers of fresh vegetables in
North America. The model expands previous work by Spreen et al. (1995), converting
that model from a winter model to a full year model (a mathematical presentation of the
model is contained in Appendix A). The North American vegetable model can be
characterized as a spatial equilibrium problem. The model is limited to those crops that
use methyl bromide as a pre-plant fumigant and those crops that are competitive with
crops that use methyl bromide. Crops that may be affected by a methyl bromide ban
include tomatoes, peppers, eggplant, cucumbers, squash, watermelons and strawberries.
Producing areas included in the model are Florida, Mexico, California, Texas, South
Carolina, Virginia and Maryland combined, and Alabama and Tennessee combined.
Florida was separated into four producing areas: Dade County, Palm Beach County,
Southwest Florida (near Immokalee, Florida) and West Central Florida (Palmetto-Ruskin
area). Mexico was included with two producing areas: the Mexican states of Sinaloa and
Baja California. California was separated into two producing areas for strawberries:
Southern California (including Orange, Ventura, San Diego and Los Angeles counties)
and Northern California (the remaining California production).
The U.S. vegetable model allocates production of these crops across regions
based on their cost delivered to regional markets, productivity and the regional demand
structure in the U.S. Inverse demand equations were employed in the model based upon
work by Scott (1991) and used by Spreen et al. (1995). An inverse Rotterdam system of
five equations of fresh vegetable demand in the U.S. was estimated for four selected
markets: Los Angeles, Chicago, Atlanta and New York City. The system of equations
was estimated for the crops included in the model with monthly wholesale prices and
unloads data collected by the U.S. Department of Agriculture, Agricultural Marketing
Service, Fruit and Vegetable Division, Market News Branch. Demand flexibilities are
presented in Table 1. The intercepts of the demand equations were adjusted to reflect
aggregate demand (as outlined by Spreen et al., 1995). The adjustments were
accomplished by dividing the U.S. and Canada into four demand regions and allocating
aggregate consumption across those regions.
Preharvest and post harvest production costs were estimated for each production
system and area included in the model. Florida uses several double cropping systems in
which a primary crop is first produced, and then inputs from the primary crop are used to
produce a second crop on the same unit of land. Cropping systems used in each
producing area are listed in Table 2 with the per acre preharvest costs, per unit
postharvest costs and yields per acre that have been estimated in producing these crops










with methyl bromide. Transportation costs were included for delivering these products to
each of the regional markets based on mileages determined by the Automap software and
an estimate of $1.3072 per mile as the transportation cost of a fully loaded refrigerated
truck carrying 40,000 pounds of product (VanSickle, et al., 1994).
The alternatives that were selected and modeled as the next best alternatives were
those identified at meetings of scientists, industry representatives and environmental
advocates. In most cases, these meetings were organized by the U.S.D.A. to present the
existing state of knowledge about known alternatives and to allow participants to discuss
their views about existing and emerging technologies. The participants were asked to
indicate the alternatives they felt users would adopt and to provide their best estimates of
the impacts of next best alternatives on cost and yield. The yield impacts expected when
using the next best alternative in each cropping system are also listed in Table 2.

METHYL BROMIDE ALTERNATIVES

The discussions held by the USDA identified those alternatives which users are
most likely to switch to and the impacts they are expected to have on costs and yield for
the crops involved. Several studies have been completed for some crops in evaluating
those alternatives that may be implemented by current users of methyl bromide. Other
crops have had few, if any, studies completed to provide the knowledge necessary to
understand the potential impacts on their yield and costs. Estimates of impacts on
production of these crops were determined from discussions with scientists attending the
USDA sponsored meetings (USDA, 1998a; USDA, 1998b). The conclusions reached at
those meetings for impacts on costs and yield provide a framework for the economic
evaluations of alternatives. A summary of these estimates is described below and in Table
2.
Strawberries. Producers in West Central Florida are assumed to switch to an in-
row or broadcast application of a Telone C17/Devrinol herbicide combination as a
replacement to methyl bromide. The impact of this alternative is an expected decline of
$71 per acre in preharvest costs and a 15% decline in yield. Telone requires that
additional protective equipment be worn by applicators which increases preharvest cost,
but Telone C17/Devrinol will be less costly to apply than methyl bromide. Scientists
attending the USDA meetings indicated that the effectiveness of this alternative is lower
than reported in some research trials because of the potential for longer residual in the
soil, the associated problems of crop phytotoxicity, and possible increases in pest
pressures, all of which are not accounted for in those studies. The low impact scenario for
Florida strawberries assumes a 10% reduction in yields. The high impact scenario
assumes a 20% reduction in yields.
California is assumed to switch to an application of Chloropicrin with additional
hand weeding. The expected impact of this alternative is a $653 per acre increase in
preharvest costs and a 20% decline in yields. The low impact scenario for California
strawberries assumes a 10% reduction in yields. The high impact scenario assumes a
30% reduction in yields.
Tomatoes. Florida tomato growers are assumed to switch to an in-row application
of a Telone C17 and Tillam herbicide combination. The use of Telone will require
additional personal protective equipment that must be worn by applicators and field










workers. Using this combination will result in changes to preharvest costs, ranging from
an $84 per acre decline for fall tomatoes grown in West Central Florida to an increase of
$36 per acre for both spring and fall tomatoes grown in Southwest Florida. Those cost
impacts vary even more for double cropping systems where tomatoes are the primary
crop. In those cropping systems, cost impacts range from a decrease of $61 per acre for a
double cropping system of tomatoes and cucumbers grown in Southwest Florida to an
increase of $255 per acre for a double cropping system of tomatoes and squash grown in
West Central Florida. Tomato yields in each of these cropping systems are expected to
decline 10% in all areas but Dade County where yields are expected to decline by 20%
because of regulatory constraints that restrict Telone use. The low impact yield decline is
assumed to be 5% in each area but Dade County where the yield impact is assumed to be
10%. The high impact yield decline is assumed to be 20% in each area but Dade County
where the yield decline is assumed to be 25%.
No other producing areas included in the model rely on methyl bromide for
efficient production of tomatoes. There is some use of methyl bromide but alternatives
are currently used by most producers. The resulting expected impacts on costs and yield
are assumed to be zero for each scenario in those areas.
Peppers. Florida pepper growers are assumed to switch to a Telone C17/Devrinol
herbicide combination as an alternative to methyl bromide. Again, Telone requires the
use of additional personal protective equipment by applicators and field workers.
Preharvest cost changes from using this alternative are expected to range from a decline
of $41 per acre for spring peppers grown in West Central Florida to an increase of $397
per acre for peppers grown in Palm Beach County, Florida. Cost impacts are even higher
in double cropping systems producing peppers as the primary crop, increasing costs by
$437 per acre for a pepper cucumber double cropping system grown in Palm Beach
County. The yield impact is expected to be a 15% decline in all areas of Florida but Dade
County where the expected impact is assumed to be 25% because of restrictions on
Telone use. The low impact scenario for peppers grown in Florida assumes a 10%
decline in yields in all areas but Dade County where yields are assumed to decline 15%.
The high impact scenario assumes a 25% decline in yields in all areas but Dade County
where impacts are assumed to be 30%.
No other producing area included in the model relies on methyl bromide for
growing fresh bell peppers as a predominate practice. The banning of methyl bromide is
not expected to impact their preharvest production costs or expected yields.
Eggplant. Florida growers of eggplant are expected to switch to a Telone C17/
Devrinol combination as an alternative to methyl bromide. The impact of this change is
expected to be a $327 per acre increase in preharvest costs for eggplant grown in Palm
Beach County, Florida and a 15% decline in yields. The low impact scenario for eggplant
grown in Florida is assumed to be a 7% decline in yields and the high impact scenario is
assumed to be a 30% decline in yields. No other producing area included in the model
uses methyl bromide as the predominate practice for production of eggplant and therefore
will have no impact on preharvest costs or yield.
Cucumbers. Watermelons and Squash. Cucumber, watermelon and squash
growers do not generally use methyl bromide when grown as single crops. These crops
are, however, frequently planted as a second crop to tomatoes and bell peppers in Florida.
Preharvest costs and yields for cucumbers, watermelons and squash will be impacted by










the alternative production practices used to grow the first crop in the double cropping
system. It is assumed that the alternative used for the first crop will be the alternative
used in a double cropping system. Preharvest cost changes are expected to range from a
decrease of $61 per acre for tomatoes and cucumbers grown in a double cropping system
in Southwest Florida to an increase of $37 for peppers and cucumbers grown in a double
cropping system in Palm Beach County, Florida. Yields will be impacted by the loss of
methyl bromide as certain pests will become re-established and more difficult to manage
following a first crop. It is expected that yields on these second crops will decline 15%
when methyl bromide is no longer available. The low impact scenario assumes a 7%
decline in yields and the high impact scenario assumes a 30% decline in yields for these
crops.


EMPIRICAL RESULTS

The model was solved using GAMS programming software. The analysis of
impacts from switching to an alternative for methyl bromide was conducted in two parts.
First the model was solved with parameters that assumed continued use of methyl
bromide. This solution provided the baseline for comparison to other solutions where the
parameters of the model were adjusted to reflect a ban on methyl bromide use. The
adjustments that are made in the parameters reflect changes in production costs and
changes in yield in switching to the alternatives. Three initial scenarios beyond the
baseline were solved with the model. The first scenario assumed the next best alternative
given projections on expected cost and yield impacts that were developed from
workshops held in Florida and California to discuss alternatives to methyl bromide. A
low impact scenario was then solved where yield impacts were reduced to reflect lower
impacts than those identified at the methyl bromide workshops. The third scenario was
solved where yield impacts were assumed to be larger than those developed in the
workshops. The cost impacts were assumed to be the same in each scenario. Yield
impacts for each scenario are listed in Table 2.

Baseline Solution

The solution to the quadratic programming model included equilibrium prices and
quantity consumed by month and crop in each of the four market areas, shipments by
month and crop from each producing area to each market, and the acres planted to each
cropping system in each producing area. The baseline solution performed reasonably well
in replicating the observed pattern of shipments and acres planted for the 1993/94
production season.
The acres planted by cropping system in each of the producing areas for the
baseline model are shown in Table 3. Total acreage that is planted to tomatoes in Florida
in the baseline model is 49,765 acres, which is slightly more than the 46,500 acres
reported by the Florida Agricultural Statistics Service for the 1993/94 season. The total
baseline acreage of tomatoes is 142,736, which is within 3 % of the total acreage actually
planted in all of the producing areas included in the model for 1994. The baseline acreage










of each of the other crops was also estimated within 3 % of the actual acreage reported
for the 1994 season.

Model Solution Under a Methyl Bromide Ban

The acreages planted by cropping system in each of the major producing areas
under a methyl bromide ban with expected impacts on cost and yield are shown in Table
3. Table 3 also provides the expected acres to be planted by cropping system in each of
the producing areas, with high and low impacts on yield. Results in Table 3 demonstrate
that significant effects may be expected if methyl bromide is banned and no better
alternatives are developed than are known today. Total acres planted across all areas are
not expected to change significantly for any crop, but the allocation of production across
producing areas is significant for all crops.
Tomatoes. Tomato production in Dade and Palm Beach Counties in Florida is
expected to cease under all scenarios for the methyl bromide ban. Southwest Florida and
Mexico are expected to increase producing acreage significantly, offsetting most of the
loss in Dade and Palm Beach Counties. Total production of tomatoes across all areas is
expected to decrease 2.4 % in response to the lower productivity expected in switching to
methyl bromide alternatives (Table 4). The average wholesale price is expected to
increase 0.87 % (Table 5), but the total revenues that growers receive for tomatoes is
expected to decrease $15.7 million (Table 6) in the expected impacts scenario. Wholesale
prices increase 2.17 % in the high impacts scenario and total revenues decline $61.3
million. Florida suffers the greatest loss in tomato shipping point revenues with a loss of
$68.8 million in the expected impacts scenario and a $171.8 million loss in the high
impacts scenario. Mexico increases their shipping point revenues by $51.5 million in the
expected impacts scenario and $108.0 million in the high impacts scenario. Two
significant conclusions to draw from these results are that Florida will lose significant
market share and shipping point revenues and Mexico will gain market share and
shipping point revenues. Within Florida, Dade and Palm Beach Counties will stop
producing commercial quantities of tomatoes and Southwest Florida will increase
production to offset some of that loss.
Peppers. The impacts are even more significant for peppers. Acreage of bell
peppers in Florida is expected to decline 65 % (Table 3) given existing alternatives that
were identified in the methyl bromide workshops hosted by the USDA. Acreage in Texas
and Mexico are expected to increase significantly, offsetting the loss experienced in
Florida. Total acres planted to bell peppers across all areas are expected to increase 4 %.
The largest negative impact again is felt by Palm Beach County, Florida, where planted
acreage of peppers is expected to decline from 14,310 acres to 3,066 acres in the
expected impacts scenario. The West Central Florida producing area is also expected to
decrease acres of peppers from 9,448 acres to 5,203 acres in the expected impacts
scenario. The loss of pepper acreage in Florida is more than offset with increased acreage
in both Texas and Mexico. Neither of these areas use methyl bromide as a predominant
production practice and Texas is expected to increase acreage from 5,156 acres to 12,428
acres in the expected impacts scenario. Mexico is expected to increase acreage from
13,339 acres to 23, 348 acres. Total production of peppers is expected to decline by 12.3
% (Table 4) and wholesale bell pepper prices are expected to increase 4.5 % (Table 5).










Total shipping point revenues for peppers are expected to decline $37.8 million in the
expected impacts scenario with Florida suffering a $134.8 million loss in shipping point
revenues (Table 6). Shipping point revenues in Texas and Mexico are expected to
increase $33.3 million and $63.7 million, respectively. Even the low impacts scenario
results in significant losses to Florida producers with shipping point revenues declining
$119.9 million and Texas and Mexico shipping point revenues increasing $32.4 million
and $55.0 million, respectively.
Cucumbers. Cucumber acreage in Palm Beach County is also significantly
affected by the methyl bromide ban. Acres of cucumbers planted in Palm Beach County
declines from 7,276 acres to 3,066 acres under the expected impacts scenario (Table 3).
Southwest Florida increases acres of cucumbers from 384 acres to 3,413 acres under the
expected impacts scenario. Total production of cucumbers declines by 6.1 % (Table 4)
and wholesale prices increase 1.4 % (Table 5). Total revenues are expected to decline
$4.4 million with Florida suffering a $6.2 million loss in shipping point revenues and
Mexico gaining $1.8 million in shipping point revenues (Table 6).
Squash. Planted acres of squash actually increase in all areas under the methyl
.bromide ban. Double cropping of squash increases in Southwest Florida and single crop
squash production increases in Dade County and in Mexico. The increase in production
in Southwest Florida is small and is due to the increased competitiveness of double
cropped squash with tomatoes. Because tomatoes are impacted in Dade County and Palm
Beach County, tomato production in Southwest Florida increases to take advantage of the
opportunities created by the void left by Dade and Palm Beach Counties. Production of
tomatoes with squash offers greater opportunities, increasing the acres devoted to this
cropping system by 585 acres (Table 3). This increase is not enough to offset the decrease
in productivity lost in this producing area, resulting in less total production of squash in
Southwest Florida. Lower production in Southwest Florida offers opportunities to those
in Dade County and in Mexico who produce without methyl bromide and are not
impacted by a methyl bromide ban. The results show increases in acreage in all three
producing areas. However, production actually declines in Southwest Florida and
increases in Dade County and in Mexico, with a loss of 2.4 % across all areas (Table 4).
Total shipping point revenues decline by $134,700 in the expected impacts scenario and
by $1.1 million in the high impacts scenario (Table 6). The low impacts scenario results
in an insignificant increase in shipping point revenue.
Eggplant. A methyl bromide ban will have its most significant impact in relative
terms on eggplant production. Planted acres of eggplant in Florida are expected to decline
64 % with existing technologies, but acreage in Mexico is expected to increase 73 %,
offsetting most of the loss in Florida so that total acreage declines only 6 % (Table 3).
Total production of eggplant in all areas is expected to decline 20.3 % (Table 4) and
wholesale prices are expected to increase 4.6 % (Table 5). Total shipping point revenues
are expected to decline $9.9 million with Florida suffering a $27.7 million loss and
Mexico gaining $17.8 million (Table 6).
Watermelons. Watermelons grown as a second crop following tomatoes using
methyl bromide are expected to decline slightly in Florida. Watermelon production is
expected to stop in West Central Florida and all acreage for the early spring market is
expected to be grown in Southwest Florida. This shift results in the loss in profitability of
tomatoes grown as a first crop because of lost productivity. Total production of









watermelons grown in this market window is expected to decline 13.9 % in the expected
impacts scenario (Table 4). Total revenues received from watermelons are expected to
decline $3.4 million under the expected impacts scenario and decline $8.7 million in the
high impacts scenario (Table 6).
Strawberries. Total impacts are largest for strawberries. The impacts on California
are significant because of the high cost and high productivity of current production
systems in California. Strawberry production in Northern California is expected to cease
under the expected impacts scenario and decline slightly in the Southern California
growing areas (Table 3). Acreage in Florida is expected to increase from 6, 177 acres to
8,302 acres under the expected impacts scenario and to 10,027 acres in the high impacts
scenario. Total strawberry production is expected to decline 35.3 % (Table 4) and
wholesale price is expected to increase 9.4 % (Table 5). Total shipping point revenues are
expected to decline $192.8 million under the expected impacts scenario and decline
$243.1 million under the high impacts scenario (Table 6). Clearly, strawberry production
in Northern California is at risk given the current state of knowledge about alternatives to
methyl bromide.
Aggregate Impacts. Florida and California stand to suffer similar total losses
when a ban on methyl bromide is imposed if better alternatives are not developed than
are known today. Florida shippers stand to lose $218.4 million (Table 7) in shipping point
revenues across all crops while California shippers stand to lose $218.1 million under the
expected impacts scenario. Those impacts increase to $349.3 million for Florida and
$291.0 million for California if yield impacts increase to the level assumed in the high
impacts scenario. If expected impacts decrease to the levels specified in the low impacts
scenario, shipping point revenues decline $179.5 million in Florida and $143.7 million in
California. Mexico will gain from the loss of methyl bromide because of their lower
reliance on it as a pesticide and because Mexican producers will have an additional 10
years to use methyl bromide under the Montreal Protocol. Mexican shippers will gain
$134.9 million under a methyl bromide ban with the expected impacts scenario. Their
revenues will increase $213.3 million under the high impacts scenario and by $111.6
million under the low impacts scenario. Texas will also gain $33.3 million in shipping
point revenues since peppers grown by their producers do not rely on methyl bromide.
South Carolina also gains $9.4 million from increased shipping point revenues for
tomatoes. In total, shipping point revenues are expected to decline $264.2 million under
the expected impacts scenario. Those impacts increase to a $386.1 million decline under
the high impacts scenario. The low impacts scenario results in a $175.7 million decline in
shipping point revenues.
Losses in consumers' surplus were also measured in the model as the area under
the demand curve that is lost when a ban on methyl bromide is imposed. Consumer
surplus is lost because of a decline in the quantity of products consumed and an increase
in the prices paid for those products consumed. Consumer surplus is expected to decline
$111.7 million dollars under the expected impacts scenario (Table 8). That loss is
expected to increase to $176.4 million under the high impact scenario. If impacts on
productivity are lowered to those assumed in the low impacts scenario, then consumer
surplus losses decline to $66.6 million.












SEARCHING FOR THE SEAMLESS TRANSITION


The loss of methyl bromide will clearly have significant impacts on producers of
crops who rely on it as part of their production practices and ultimately on consumers of
those crops. A relevant question for policy makers and researchers would be "What
targets must be achieved in reducing impacts for methyl bromide alternatives in order to
experience minimal changes in market shares for existing producers?" That question can
be explored using the model developed for this analysis. It was assumed that a seamless
transition is experienced when market shares after adopting alternatives are within 10 %
of the baseline market shares. The question was explored by using the cost impacts
assumed in the expected impacts scenario and then by "ratcheting" down the impacts on
yield for each of the crops in the model, until the largest impact felt by any producing
area for any single crop is a 10 % loss in the baseline market share. This question was
also explored by assuming no change in preharvest costs and then ratcheting down the
.yield impact until market shares were within 10 % of the baseline market shares. Targets
were also explored for controlling costs on existing alternatives. Costs were adjusted by
increasing the cost of non-methyl bromide alternatives with no expected impact on yield
to determine the increase in costs that could be borne by current users of methyl bromide,
without losing market share to other producers.
The results indicate that the challenges facing the scientific community in
developing better alternatives are significant. To experience a seamless transition for
tomato production with cost penalties the same as for the expected impacts scenario,
yield impacts would have to be reduced from 20 % for tomatoes grown in Dade County,
Florida to only 9 %. This represents a 55 % reduction in yield loss for currently identified
next best alternatives. Yield losses in other producing areas of Florida would have to
decline 60 %, from the 10 % expected yield impact to only 4 %.
The challenge to keep Florida producers competitive in pepper production is even
greater. Current estimates indicate that using a Telone C17/ Devrinol herbicide
combination for bell pepper production in Florida will reduce yields 15 %. Those impacts
need to be reduced to 1 % before Florida can experience a seamless transition for pepper
production.
The challenge to developing alternatives for double cropping systems is also
significant. Current estimates for cucumbers, squash and watermelons grown as second
crops to tomatoes and bell peppers indicate a 15 % reduction in yields for these second
crops. Those yield impacts must be reduced to 3 % before a seamless transition is
experienced by producers using double cropping systems in Florida.
Developing better alternatives is also paramount to strawberry producers. Current
estimates indicate that a switch to Telone C17/Devrinol herbicide combination in Florida
will result in a 15 % decline in expected yields. Yields in California are expected to
decline 20 % when Chloropicrin is used as an alternative to methyl bromide. The model
indicates that a seamless transition is impossible for strawberry production since expected
increases in preharvest costs in California ($653 per acre) with no yield impact will result
in California losing more than 10 % of its existing market share.










The model also was evaluated to determine the yield impacts that were
sustainable if alternatives are developed with no change in preharvest costs. The results
indicate that vegetable producers could sustain only 20 % of the currently estimated
impacts on yield before causing significant changes in market share that deny a seamless
transition. A seamless transition in strawberry production will require that these yield
reductions be lowered to only 5 % for California and Florida in order for California
producers to experience a seamless transition.
The model was also used to determine how much growers could increase
preharvest costs with no impact on yields in order to experience a seamless transition
away from methyl bromide use. The results indicate that growers of vegetables could
experience a preharvest cost increase of only 3.5 % before impacts on market share were
larger than that allowable for a seamless transition. Preharvest costs could increase by
only 5 % for strawberries (without any impact on yields) for producers in California to
experience a seamless transition.
These results indicate that the challenge is significant in attempting to mitigate the
impact a ban on methyl bromide will have on U.S. growers of fresh vegetables and
strawberries. New technologies that reduce yield impacts and control costs will be
significant in mitigating these impacts.

LIMITATIONS OF THE ANALYSIS

The model used in this analysis included those crops that use methyl bromide in
their current production systems and those crops that compete with those users. As such,
the model does not account for those users who are potential entrants to the market as
conditions of competitiveness change. This precaution is particularly true for
strawberries. Mexico has been a shipper of fresh strawberries to U.S. markets and has not
been able to keep pace with the advances in technology that have been experienced in
California and Florida. If methyl bromide is banned with no better alternatives than are
known today, there would be opportunities for Mexico to enter this market and become a
major shipper of strawberries. This would increase the impact on California producers
and also likely negatively affect strawberry production in Florida. Further study needs to
be done on the Mexican strawberry industry to determine their competitiveness in fresh
strawberries and their potential for taking significant market share in U.S. markets.
A second precaution that must be noted in this analysis concerns the assumptions
used to solve the model. The impact of a methyl bromide ban will be determined by the
impacts that alternatives will have on costs, yields and market windows. The USDA
workshops were an attempt to determine those alternatives that growers, researchers and
environmental activists believe have potential for this industry. Further research needs to
be conducted on alternatives to accurately determine impacts on cost and productivity
(yield) and on the changes in market windows for crops that undergo significant changes
in production practices. Changes in market windows in marketing these crops will
significantly impact competitiveness and the allocation of production across regions.
Again, more information needs to be generated to fully understand these impacts.


NEED FOR FURTHER RESEARCH











The results of this research demonstrate the importance of methyl bromide to U.S.
producers supplying fresh vegetables to North American markets. The impacts were
determined for the industry based on production levels for the 1993/94 production
season. That season was chosen for two reasons. First, the 1993/94 season was the last
season before the 1995 freeze was imposed on methyl bromide use by the Montreal
Protocol. Second, the 1993/94 production season was the last normal season experienced
by U.S. growers of fresh vegetables before the effects of NAFTA and the large peso
devaluation that followed (Van Sickle, et al., 1996). Dumping practices followed by
Mexican producers of fresh tomatoes distorted the market in 1995 and 1996 (VanSickle,
1997) and constrained efforts to model economic forces during this period.
The industry has undergone several changes since the freeze was imposed on
methyl bromide use in 1995. Significant production changes have occurred as Mexican
producers adopted new technologies. The imposition of the suspension agreement has
also altered the economic forces in the market (VanSickle, 1997).
The Montreal Protocol imposes a 25 % reduction in methyl bromide use for
.developed countries in 1999. That reduction has been implemented with production
constraints placed on methyl bromide producers who are allocating their stock to methyl
bromide users (e.g., vegetable producers). Changes in economic forces have led to a
significant downsizing on the part of the fresh vegetable industry that uses methyl
bromide for soil fumigation purposes. This is demonstrated by the decline in acreage of
fresh tomatoes planted in Florida from 50,600 acres in all of Florida in 1993/94 to 37,500
acres planted in 1996/97 (Florida Agricultural Statistics Service, 1998).
The effects of these changes in economic forces led to the decline in methyl
bromide use that made the 1999 reduction appear seamless. The next step in the Montreal
Protocol schedule is the second 25 % reduction in methyl bromide use in 2001 (equaling
a total 50 % reduction from 1991 baseline levels), another 20 % in 2003 (a 70 %
reduction from 1991 baseline levels) and a complete ban in 2005.
These scheduled phaseouts in 2001, 2003, and 2005 are likely to have much
greater impacts on producers than the phaseout imposed in 1999. These phaseouts need to
be studied for the impacts on producers and mechanisms that could be used to help
vegetable producers deal with these phaseouts. Deepak et al. (in press) evaluated
mechanisms for phasing out methyl bromide given the 2001 phaseout schedule. UNEP
(1998) outlined a broader set of mechanisms that could be used to phase out ozone
depleting substances. Those mechanisms include command and control measures, market
mechanisms, voluntary approaches, and public awareness campaigns. Those mechanisms
need to be evaluated for their potential to be used with methyl bromide and the scheduled
phaseouts in 2001, 2003, and 2005. The phase out of methyl bromide may be much less
seamless in 2001, 2003, and 2005 unless the impacts of alternatives to methyl bromide
are reduced significantly. Further work needs to be completed to better understand these
impacts.
A multi-disciplinary approach to studying alternatives for methyl bromide should
be pursued to assess their potential for providing a seamless transition. The USDA
meetings organized to gain input from a variety of sources was an attempt to understand
the problems facing this important industry. Those meetings provided a forum for
debating the potential for alternative production practices, but the opinions presented did










not always rely on scientific data that could be used to accurately measure impacts. The
meetings did provide useful data for evaluation of alternatives, but further work should be
completed by multi-disciplinary research teams that will coordinate the data collection
for future evaluations.










REFERENCES


California Cooperative Extension Service. "Vegetable Production Budgets." University of
California at Davis, 1995.

Deepak, M.S., C. Brewster and T. Spreen. "An Economic Analysis of the Impact of
Pesticide Bans on the United States Fresh Tomato Industry" in The Importance of
Pesticides and other Pest Management Practices in U.S. Tomato Production, R.
Michael Davis, G. Hamilton, W. Lanini and T. Spreen, Appendix C, NAPIAP Report
#1-CA-98 (1999).

Deepak, M.S., Thomas H. Spreen, and John J. VanSickle. "Environmental Externalities
and International Trade: The Case of Methyl Bromide." Flexible Incentives: A
Unifying Framework for Policy Analysis. (1999): 139-156.

Florida Agricultural Statistics Service. "Florida Agricultural Statistics Vegetable
Summary 1996-97." Orlando, Florida. 1998.

Lynch, Lori. "Agricultural Trade and Environmental Concerns: Three Essays Exploring
Pest Control, Regulations, and Environmental Issues." Ph.D. dissertation. Univ. Cal.,
Berkeley. 1996.

McCarl, B.A. and T.H. Spreen. 1980. "Price Endogenous Mathematical Programming
Models as a Tool for Sector Analysis." Amer. J. Agr.. Econ. 62: 87-102.

Peter, Mark A. and T.H. Spreen. 1989. Price Endogenous Mathematical Programming
Models and Integrability: An Alternative Approach." Amer. J. Agr. Econ. 71: 1342.

Scott, S.W. International Competition and Demand in the United States Fresh Winter
Vegetable Industry." Unpublished M.S. Thesis, University of Florida, 1991.

Smith, S.A. and T.G. Taylor. "Production Costs for Selected Florida Vegetables, 1993-
1994." Circ. No.1146, Florida Coop. Ext. Service, Institute of Food and Agricultural
Sciences, University of Florida, 1995.

Spreen, T. H., J. J. VanSickle, A. E. Moseley, M.S. Deepak, and L. Mathers. "Use of
Methyl Bromide and the Economic Impact of its Proposed Ban on the Florida Fresh
Fruit and Vegetable Industry." Univ. Flor. Tech. Bull. 898. 1995.

Texas Cooperative Extension Service. "Cost of Producing Peppers." Texas A&M
University, College Station, 1993.

United Nations Environment Programme (UNEP). 1997 Report on the Economic
Viability of Methyl Bromide Alternatives. 1997.










United Nations Environment Programme (UNEP). 1998 Assessment Report of the UNEP
TEAP Economics Options Committee. 1998.

U.S. Department of Agriculture (USDA). "Briefing Book: USDA/ERS Methyl Bromide
Alternatives Workshop. March 17&18, 1998. Orlando, FL." 1998a.

U.S. Department of Agriculture (USDA). "Briefing Book: USDA/ERS Methyl Bromide
Alternatives Workshop. June 10&11, 1998. Sacramento, CA." 1998b.

VanSickle, John J. "A Compromise in the Winter Fresh Tomato Dispute." Flor. J.
International Law 11 (1997): 399-408.

VanSickle, John J., Daniel Cantliffe, Emil Belibasis, Gary Thompson and Norm Oebker.
"Competition in the U.S. Winter Fresh Vegetable Industry." USDA ERS Ag. Econ.
Rep. 691. July 1994.

VanSickle, John J., Thomas H. Spreen and Kenrick Jordan. "An Economic Analysis of
the Impact of Devaluation of the Peso and Adverse Weather in Florida on the North
American Winter Fresh Vegetable Market." Paper presented at the Tri-National
Research Symposium 'NAFTA and Agriculture: Is the Experiment Working?' Nov. 2,
1996.

Welch, Norman C. "Strawberry Sample Costs 1996." University of California
Agricultural Extension. 1996.










Table I. Estimated monthly demand flexibilties by market and crop.
Market Tomatoes Peppers Cukes Squash Eggplant Melon Strawberries
New York -0.240 -0.441 -0.290 -0.252 -0.160 -0.250 -0.250
Chicago -0.280 -0.259 -0.382 -0.259 -0.170 -0.250 -0.225
Atlanta -0.277 -0.335 -0.252 -0.295 -0.160 -0.250 -0.255
Los Angeles -0.338 -1.012 -0.253 -0.254 -0.150 -0.250 -0.250


Source: Scott(1991).









Table 2. Estimated preharvest production costs and yields by cropping system and production area and the cost yield impacts with
scenarios of expected yield impact, low yield impact and high yield impact.

Baseline
Preharvest Postharvest Cost Yield Impacts
Location/Cropping System Costs Costs Yieldsg Impact Expected Low High


Florida"
Dade County
Tomatoes
Squash
Palm Beach County
Tomatoes
Tomatoes/Cukes
Peppers
Peppers/Cukes
Eggplant
Southwest Florida
Fall tomatoes
Spring tomatoes
Tomatoes/Cukes
Tomatoes/Squash
Tomatoes/Melons
Peppers
Peppers/Cukes
Peppers/Melons
Cukes
Squash
West Central
Fall tomatoes
Spring tomatoes


($/acre)

6,107
2,042

6,300
7,400
4,995
6,380
5,248

6,272
6,706
7,561
7,380
8,036
5,113
7,272
7,304
3,274
2,048

5,959
5,800


($/unit) (units/acre)
(-----1st/2"d Crops-------)
4.35 1300
5.15 275


4.32
4.32/5.06
3.79
3.79/5.06
4.26

4.31
4.31
4.11/4.94
4.11/3.94
4.71/3.05
4.95
4.95/4.94
4.95/3.05
4.94
4.13

4.25
4.25


($/acre)


1300
1300/400
1000
1000/400
1500

1300
1300
1300/400
1300/275
1300/320
1000
1000/400
1000/320
400
275

1100
1250


(-------% Decline l"/2nd Crops------)


10
10/15
15
15/15
15

10
10
10/15
10/15
10/15
15
15/15
15/15
0
0

10
10


10
0

5
5/7
10
10/7
7

5
5
5/7
5/7
5/7
0
0/7
0/7
0
0

5
5


25
0

20
20/30
20
20/30
30

20
20
20/30
20/30
20/30
20
20/30
20/30
0
0

20
20










Table 2. (cont.) Estimated preharvest production costs and yields by cropping system and production area and the cost yield impacts
with scenarios of expected yield impact, low yield impact and high yield impact.

Baseline
Preharvest Postharvest Cost Yield Impacts
Location/Cropping System Costs Costs Yields Impact Expected Low High


Florida
West Central (cont.)
Tomatoes/Cukes
Tomatoes/Squash
Tomatoes/Melons
Fall Peppers
Spring Peppers
Peppers/Squash
Peppers/Melons
Cukes
Squash
Strawberries


($/acre)

6,882
6,902
7,080
4,813
5,106
6,210
6,140
3,274
2,048
7,869


California
Tomatoesb 3,495
Northern California
Strawberries 12,113
Southern California c
Strawberries 12,113


Texas
Peppers d
Virginia/Maryland b
Tomatoes
South Carolina b
Tomatoes


2,206

3,880

4,600


($/unit) (units/acre)
(-------l /2"" Crops ... -)
4.25/5.04 1100/400
4.25/3.94 1100/275
4.25/2.85 1100/300
4.20 950
4.20 950
4.20/3.94 950/275
4.20/2.85 950/300
5.04 400
3.95 275
3.71 2100

4.30 1080

4.27 1943

4.27 3374


3.95

4.26

5.52


($/acre)


(-------% Decline 1It/2"d Crops ...-)


10/15
10/15
10/15
15
15
15/15
15/15
0
0
15


0

653

653


5/7
5/7
5/7
10
10
10/7
10/7
0
0
10

0

10

10


20/30
20/30
20/30
20
20
20/30
20/30
0
0
20

0

30

30


600

690

1060









Table 2. (cont.) Estimated preharvest production costs and yields by cropping system and production area and the cost yield impacts
with scenarios of expected yield impact, low yield impact and high yield impact.

Baseline
Preharvest Postharvest Cost Yield Impacts
Location/Cropping System Costs Costs Yields Impact Expected Low High

($/acre) ($/unit) (units/acre) ($/acre) (-----------% Decline ------------)
Alabama/Tennessee b
Tomatoes 3,490 3.86 630 0 0 0 0
Mexico
Sinaloa
Tomatoes 3,720 4.45 1100 0 0 0 0
Peppers 3,010 4.42 760 0 0 0 0
Cukes 2,140 5.18 550 0 0 0 0
Squash 1,010 7.65 220 0 0 0 0
Eggplant 3,595 4.70 1230 0 0 0 0
Baja California
Tomatoes 3,860 5.56 1800 0 0 0 0


a Production costs for baseline cropping systems were adapted from Smith and Taylor (1995).
b Production costs adapted from Deepak et al. (1998).
c Adapted from Welch (1996).
d Texas Cooperative Extension Service (1993).
c Adapted from VanSickle et al (1994).
SCalifornia Cooperative Extension Service (1995).
g Tomato yields are in 25-lb cartons, pepper yields are in 28-lb bushels, cucumber yields are in 55-lb bushels, squash yields are in 42-
lb flats, eggplant yields are in 33-lb bushels, strawberry yields are in 12-lb flats and watermelon yields are in 100-lb units.










Table 3. Planted acreage in the baseline model and with a ban on methyl bromide assuming
expected impacts on yield, high impacts on yield and low impacts on yield.


Crop/ Expected High Low
Area Baseline Impact Impact Impact


Tomatoes
Florida
Dade
Palm Beach
Southwest
West Central
California
Alabama/Tennessee
South Carolina
Virginia/Maryland
Mexico
Sinaloa
Baja
Total
Peppers
Florida
Palm Beach
West Central
Texas
Mexico
Sinaloa
Total
Cucumbers
Florida
Palm Beach

West Central

Southwest

Mexico
Sinaloa
Total
Squash
Florida
Dade
Southwest
Mexico
Sinaloa
Total


(----- ----------------- Acres ------------ ------)


5,145
7,977
19,435
17,208
34,989
1,792
6,144
4,696

40,856
4.494


0
0
31,965
13,573
34,665
1,026
7,045
4,585

46,947
4,426


0
0
26,740
11,592
34,409
1,602
6,912
4,725

54,255
3,940


0
0
31,946
14,738
34,711
923
7,069
4,560

45,630
4,514


142,736 144,232 144,175 144,091


14,310 3,066 2,067 3,817
9,448 5,203 4,232 5,934
5,156 12,428 12,539 12,241

13.339 23.348 25,019 21,974
42,253 44,045 43,857 43,966


7,276 3,066 2,066 3,860

7,839 7,708 7,476 7,802

384 3,413 1,709 3,593


10,248 10.600 11,224 10.347
25,747 24,787 22,475 25,602


2,867 3,256 3,670 2,956
9,448 10,033 10,165 9,944

11.062 11.083 11.218 11,070


24,372


25,053


23,970


23,377










Table 3 (cont.). Planted acreage in the baseline model and in the methyl bromide ban model
assuming expected impacts, high impacts and low impacts on yield.
Crop/ Expected High Low
Area Baseline Impact Impact Impact
Eggplant (--------------------- Acres ----------------------)
Florida
Palm Beach Co. 3,590 1,305 0 1,914
Mexico
Sinaloa 2,605 4,503 5.336 4,174
Total 6,195 5,808 5,336 6,088
Watermelon
Florida
Southwest 9,603 18,520 14,866 18,408
West Central 9.250 0 3,008 0
Total 18,853 18,520 17,874 18,408
Strawberries
Florida 6,177 8,302 10,027 7,121
California
Northern 8,949 0 0 1,850
Southern 11,055 10,717 8,290 11,539
Total 26,181 19,019 18,317 20,510










Table 4. Baseline production and %age changes in production of crops in moving to a methyl
bromide ban with expected impacts on yield, high impacts on yield and low impacts on yield.

Expected High Low
Crop Baseline Impact Impact Impact
(1,000 units) (----------------- % ----------)
Tomatoes 164,961 (2.40) (6.30) (0.59)
Peppers 36,518 (12.34) (14.00) (10.75)
Cukes 11,838 (6.10) (13.64) (2.14)
Squash 5,820 (2.44) (6.63) (0.48)
Eggplant 9,040 (20.31) (27.39) (13.66)
Watermelon 5,849 (13.87) (32.26) (6.34)
Strawberries 67,662 (35.34) (46.16) (23.54)

* Parentheses contain negative numbers.

Table 5. Baseline average wholesale prices and %age changes in wholesale prices across all
markets under a methyl bromide ban with expected impacts on yield, high impacts on yield and
low impacts on yield.


Wholesale
Crop Price


Tomatoes
Peppers
Cukes
Squash
Eggplant
Watermelon
Strawberries


($/unit)
9.10
9.60
10.98
13.84
9.67
14.49
11.78


Expected High Low
Impact Impact Impa
(--------- % increase ------------)
0.87 2.17 0.32
4.52 5.60 4.00
1.44 3.30 0.49
0.77 2.04 0.16
4.63 6.70 2.75
6.37 15.75 2.71
9.40 12.03 6.20


ct










Table 6. Baseline revenues and changes in revenues from a ban on methyl bromide with
expected impacts on yield, high impacts on yield and low impacts on yield, by crop and area.


Crop/ Baseline
Area Revenues


Tomatoes
Florida
California
Alabama/Tennessee
South Carolina
Virginia/Maryland
Mexico
Sinaloa
Baja
Total
Peppers
Florida
Texas
Mexico
Sinaloa
Total
Cucumbers
Florida
Mexico
Sinaloa
Total
Squash
Florida
Mexico
Sinaloa
Total


($1,000)
561,427.8
276,796.8
10,615.8
64,269.2
32,057.0

352,155.9
60.152.5


1


Expected High Low
Impact Impact Impact
(------change in revenues, $1,000 ------)
(68,807.5) (171,797.7) (44,475.2)
(2,564.0) (4,587.5) (2,199.4)
(4,538.3) (1,129.1) (5,152.6)
9,427.6 8,032.9 9,678.9
(756.5) 197.0 (928.3)


52,495.8
(978.2)


115,492.2
(7.478.4)


41,144.8
193.0


,357,475.0 (15,721.1) (61,270.6) (1,738.9)

204,518.8 (134,782.5) (152,829.7) (119.856.6)
23,596.7 33,274.5 33,781.1 32,420.4

84,960.0 63.748.7 74,389.5 54,994.9
313,075.5 (37,759.3) (44,659.0) (32,441.3)

65,765.4 (6,196.1) (16,040.5) (1,886.4)

51,130.7 1,754.2 4,870.4 492.8
116,896.1 (4,441.9) (11,170.1) (1,393.7)

36,060.9 (192.2) (1,503.1) (11.1)

29,791.3 57.5 420.1 21.8


65,852.2


(134.7)


(1,083.1)


10.6










Table 6 (cont.). Baseline revenues and changes in revenues from a ban on methyl bromide with
expected impacts on yield, high impacts on yield and low impacts on yield, by crop and area.

Crop/ Expected High Low
Area Baseline Impact Impact Impact

Eggplant ($1,000) (------change in revenues, $1,000 ------)
Florida 41,784.1 (27,649.8) (41,784.1) (20,080.9)
Mexico
Sinaloa 24,431.5 17,793.6 25,605.5 14,705.4
Total 66,215.6 (9,856.2) (16,178.6) (5,375.4)
Watermelon
Florida 63,323.6 (3,437.4) (8,693.9) (1,896.0)
Strawberries
Florida 94,565.0 22,682.8 43,313.7 8,657.4
California
Northern 182,648.8 (182,648.8) (182,648.8) (145,206.3)
Southern 293,196.1 (32,862.9) (103,747.2) 3,726.6
Total 570,409.9 (192,828.9) (243,082.3) (132,822.2)
* Parentheses contain negative numbers.









Table 7. Baseline revenues and changes in revenues from a methyl bromide ban with
expected impacts on yields, high impacts on yield and low impacts on yield.

Producing Baseline Expected High Low
Area Revenues Impacts Impacts
Impacts

($1,000) (-----------change in revenues, $1,000 ---------)

Florida 1,067,446 (218,382.7) (349,335.3) (179,548.7)

California 752,641 (218,075.7) (290,983.5) (143,679.1)

Texas 23,597 33,274.5 33,781.1 32,420.4

Alabama/Tennessee 10,616 (4,538.4) (1,129.1) (5,152.6)

South Carolina 64,269 9,427.6 8,032.9 9,678.9

Virginia/Maryland 32,057 (756.5) 197.0 (928.3)

Mexico 602,622 134,871.7 213,299.2 111,552.7

Total 2,533,248 (264,179.4) (386,137.7) (175,656.9)
* Parentheses contain negative numbers.





Table 8. Loss in consumer surplus from bans on methyl bromide with expected impacts on
yield, high impacts on yield and low impacts on yield.
Scenario Consumer surplus loss
Expected impact $111.68 million
High Impact $176.36 million
Low Impact $66.56 million












APPENDIX A


A MATHEMATICAL MODEL OF THE NORTH AMERICAN FRESH VEGETABLE
MARKET

The North American fresh vegetable market model was developed by modifying
the North American winter vegetable market model developed by Spreen et al.(1995).
The North American fresh vegetable market can be characterized as a spatial equilibrium
problem. The model is limited to those commodities which utilize methyl bromide as a
pre-plant fumigant. To mathematically state the model, let
i index the supply regions, i = 1,...,I
j index the demand regions, j = 1,...,J
k index the commodities, k = 1,...,K
m index the months, m=1,...,12
Many producers in Florida utilize double cropping systems in which two different
commodities are produced on the same acre. Let
li -index the cropping systems employed in supply region i, li = 1,...Li.
Define
Wli = number of acres planted to cropping system li in region i.
Let
dlikm = per acre yield of commodity k in month m from cropping system li.
So that
Ulikm = dlikm Wl,
Is the production of commodity k in region I and month m for cropping system li. Let
c ll = per acre preharvest production cost of cropping system li.
so that cli Wli is the total preharvest production cost associated with cropping system li.
The total supply of commodity k from supply region I in month m is
Zikm = 1 Ulikm,
li
that is, total production of commodity k in region i and month m is the sum of the
production of that commodity from each cropping system.
Let
c2ik = per unit harvest and post harvest cost associated with commodity k in
region i. The parameter c2ik includes harvest cost, costs for hauling to the packing plant,
packing costs, and shipment to a distribution point.' It should be noted that post harvest
costs are assumed to be invariant to the month of harvest. Then c2ik Zikm is the post cost
associated with commodity k produced in region I and month m.
The demand side of the model is delineated by defining
Pjkm = ajkm bjkm Qjkm



In the case of Mexico, charges are included for hauling from the production area in
Sinaloa to Nogales and from Baja to San Diego. Charges for inspection and tariffs
collected as the shipment crosses the border are also included in the cost.










as the inverse demand for commodity k in demand region k in month m. Qjkm is the
quantity of commodity k consumed in demand region j in month m and the parameters
ajkm and bjkm are both assumed to be non-negative.
Let
Xijkm = quantity of commodity k shipped from supply region i to demand region j
in month m
c3ijkm = per unit transportation cost from supply region I to demand region j for
commodity k in month m.
With these definitions, the quadratic programming model can be written as

J K 12 I Li
MAX I [ ajkm Qjkm (1/2)bjkm Q2jkm] Clhi Wli
J=1 k=l m=1 1=1 li=l
1 K 12 1 J K 12
CI c2ikZikm Z I C C3ijkmXijkm
j=I k=l m=l I=1 j=l k=l m=I

subject to

Ulikm = dlikm i h= l ,...,Li; i= 1,...,I;k= 1,...,K ; m=l,...,12

Zikm= Ulikm, i= ...,I; k=l,...,K ; m=1,....,12
Li
J
SXijkm Zikm i=l,...,I; k=1,...,K ; m=1,....,12
j=i

SXijkm Qjkm i= ,...,I; k=l,...,K ; m=1,....,12
i=1


Qjkm.Wi. Zikm.Uikm, Xijkm 0 for all i,j, k, m, and li

The optimal solution to this model provides the equilibrium consumption of each
commodity in every month in each demand region (Qjkm), the optimal level of shipments
between each supply area and each demand region (Xijkm), the optimal production of each
cropping system by production area (W1i) and the quantity of each commodity produced
in each supply region by month (Zikm). The optimal dual solution provides market
clearing prices in each demand area by month and commodity.
This model incorporates a fixed proportions technology to generate supply.
Although the production functions used in the model follow the fixed proportions
assumption, the supply curves generated by the model are not perfectly elastic. The
upward sloping supply curves result, in part, because of increasing transportation costs to
market as production from a particular supply region expands. This is the implicit supply
model as discussed by McCarl and Spreen (1980) and Peters and Spreen (1989). The
other important simplification imposed on the model is that all parameters are assumed to
be non-stochastic.




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