In 1989, the Board on Agriculture, a part of the National Academy of Sciences, published a report entitled Alternative Agriculture. This report suggested that nearly all segments of society would be better off without the use of fertilizers and pesticides. This study has been widely criticized as being incomplete and biased, but was warmly received by many farmers and nonfarmers.

Many interpreted these findings as suggesting that if American agriculture reduced the quantity of chemicals used, everyone would be better off. Producers would have a safer working environment and higher incomes, consumers would continue to have cheap food, but it would be safer, and the environment would be protected.

Many in agriculture found it hard to believe these con­clusions. In the ensuing months a group of agricultural interest groups funded a study to examine a “worst case scenario,” namely, what would be the impact upon farm income and consumer prices if the use of all pesticides were eliminated, and what would be the impact of removing both pesticides and nitrogen fertilizer.

The study involved dozens of scientists at several universities to estimate the productivity impacts of eliminating all pesticides and inorganic nitrogen fertilizer (Knutson, et al.). While no one is talking about eliminating all pesticides and fertilizer, these estimates at least provide a “worst case” scenario.

These researchers estimated that with the elimination of pesticides, per acre production would fall, more acres would be required, and grain farmers’ income would be about the same, due to higher prices. However, livestock farmers’ incomes would be reduced significantly, and consumer prices would increase. Prices paid by consumers are a reasonable focal point, because it is the consumer that will ultimately decide whether the cost would be offset by improvements in the quality of the food and the environ­ment. The prediction was that the average American household would spend an additional $228 annually for food and fiber if no pesticides were used in the production. Likewise, it was estimated that expenditures for food and fiber would increase by $428 per household under the no pesticide and no inorganic nitrogen case.

For some consumers, these cost estimates may seem extremely high. The $20-$40 per month increase in food and fiber costs would adversely affect low-income households and individuals with fixed incomes. On the other hand, for consumers concerned about environmental quality and food safety, this may appear to be a bargain, especially when viewed as less than $5 per week.

Omitted Factors

While these particular numbers ($228 and $428) repre­sent an extreme case of banning pesticide use and inorganic nitrogen in the U.S., there are a number of factors not addressed in the study which could alter their consumer costs.

One factor which may make their current cost estimates too high is the inability to accurately assess future input substitution possibilities. Although a ban on inorganic nitrogen might cause short-term problems for producers, a farmer could adopt alfalfa or other nitrogen-fixing crops in rotations to supply nitrogen to subsequent crops. This type of adjustment in crop production practices can decrease the cost estimate of reducing agricultural chemical use.

A second factor which may make the cost estimates of reduced agricultural chemical use too high regards the assumption on the imports of agricultural commodities. In this study, the price of com was projected to rise from $2.30/bu in 1990 to more than $7.98/bu in 1994 under the no-chemical case. Likewise, the price of soybeans was projected to increase from $5.39/bu in 1990 to more than $21.18/bu in 1993. This represents a 300% increase in the price of soybeans.

It is unrealistic to believe that, given these price levels, crop producers in other regions of the world would not seek to increase their crop output. This type of supply response will reduce the increase in crop prices, thereby decreasing the estimated consumer cost of reducing chemical use in agriculture.

A third factor which may make the cost estimate of $228 per household too high relates to the treatment of govern­ment budget savings relative to deficiency payments. Given the rapid increase in projected commodity prices, a per­household budget saving from no deficiency payment would be about $110 per household per year. This would imply a lower social cost of no pesticides of $118 per household per year as opposed to $228, assuming that deficiency cost savings were transferred back to consumers.

There are at least two factors neglected in the study which would raise the costs to consumers. On the production side, elimination of nutrient material will lead to an increase in production risk, namely yield variability. Yield variability from year to year can place pressure on the farmer to consistently meet financial obligation. Agricultural production without these materials will likely require a substitution of more labor and management skills for these materials. This substitution may be difficult given the general trend in agriculture to substitute capital for labor.

Finally, on the consumer side, one of the major omissions of this study was the impact of no pesticides on fruits and vegetables. These impacts may more than dominate the values that they estimated for the following reasons:

1. Horticultural specialists estimate that the fruit and vegetable industry is so dependent upon pesticides that certain products would not be available at any price without pesticides, and that others might increase in price as much as 200%.
2. Organic food stores typically charge a price premium of 25 to 50% above the price of nonorganic foods, and this is for relatively seasonal and local production.
3. Fruits and vegetables are a major part of consumers’ food dollars, and several estimates place the percentage of the consumer grocery dollars spent on fruits and vegetables at 17 to 18%. In addition, this has been increasing sub­stantially. Since the early 1970’s, per capita consumption of fresh vegetables has increased more than 40%.
4. Using a conservative estimate of a 100% increase in costs of fruits and vegetables to the consumer, this would amount to an additional annual $600 per household increase in the grocery bill, overshadowing the $228 increase resulting from no pesticides in the cash grain and livestock sector. Of course, consumers would certainly change their consumption of fruits and vegetables in response to higher prices.
5. An additional impact of no pesticides upon the fruit and vegetable market would be the obvious change in diets of the American public as consumers sought to utilize their food dollars most efficiently. The American Cancer Society and the American Heart Association both suggest increased consumption of fruits and vegetables for a healthy diet, but higher prices would lead to lower consumption. There are many unanswered questions about the impact of lower consumption of fruits and vegetables upon the incidence of cancer and heart disease in American society, but the factors should be considered in the calculation of social costs.
6. All this suggests that total social cost of removal of pesticides may be considerably higher than this study suggests, because of the additional cost to consumers of fruits and vegetables and the additional health costs resulting from lower consumption of fruits and vegetables.

Summary

The issue of reducing pesticide and fertilizer use is a complicated research problem. While the study reviewed in this article attempts to provide a “worst case” estimate, we believe that their data and underlying assumptions are extremely limited. These two factors raise a question regarding the validity of their cost estimates. Particularly, if the cost estimates are used as input information in the policy debate on the subject.

Obviously, as one might expect researchers to find, the questions raised here suggest the need for additional research into the impacts of pesticide removal. This article points out that looking at the total impact to society is indeed complex. If society and consumers are to make informed tradeoffs between the costs of pesticide use and the costs of pesticide removal, more information is necessary.

References

Knutson, Ronald D., C. Robert Taylor, John B. Penson, and Edward G. Smith, 1990. Economic lmpacts of Reduced Chemical Use. Knutson & Associates, College Station, Texas.

Lovejoy, Stephen B. and Jerald J. Fletcher, 1990. “Water Quality, Agriculture and Rural America,” in Rural Policy for the 1990’s, edited by Cornelius Flora and James Christenson, Boulder, Colorado: Westview Press.

National Research Council, 1989. Alternative Agriculture, Committee on the Role of Alternative Farming Methods in Modem Agriculture, Washington, D.C., National Academy Press.