FARGO, N.D. -- When Jim Gray joined the North Dakota Department of Agriculture in January 2000, a big focus of his new job was pesticide harmonization under the North American Free Trade Agreement.
It's still so.
"Back then, nobody thought a 'NAFTA label' was possible was possible," Gray says. "We spent a lot of time with Environmental Protection Agency and Canadian Pesticide PMRA (Pest Management Regulatory Agency) to remove regulatory barriers.
"Now we can say NAFTA labeling is possible. The difficulty is it's voluntary, and it's difficult to get registrants to step up and use it," he says.
In the late 1990s, with the exchange rate differences and a strong dollar, the majority of Canadian pesticides were significantly cheaper than in the United States, Gray says. Economic analysis then indicated that North Dakota farmers paid up to $45 million more for pesticides used in the state than if they'd been allowed to buy them at the Canadian prices.
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"Products were labeled with country-specific labels, and those products could not cross the border unless they were 'relabeled,'" Gray says.
U.S. regulations prevent a person from going to Canada, buying a product and relabeling it without consent off the manufacturer.
"Because of that regulation, pesticide markets are segmented and products can't cross that border based on free market demand," Gray says. "Price disparities can and do exist."
Since his time at the department, Gray has been working on various fronts to effect a change.
The department has worked with Congress to develop bills to try to address the situation. There is no active legislation on these bills; previous bills often have been sponsored by Rep. Earl Pomeroy and Sen. Byron Dorgan, both North Dakota Democrats.
There is a NAFTA Technical Working Group on Pesticides, which includes officials of the EPA and counterparts in Canada and Mexico. In early 2006, this group formed a NAFTA labeling subcommittee, which is made up of Canadian and U.S. pesticide officials, registrants and growers from the U.S. and Canada.
"In the last few years, we've been working with EPA and PMRA, as well as manufacturers and growers, to try and identify and resolve regulatory barriers," Gray says.
When discussions started in 2006, some manufacturers said this wasn't doable.
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"I will say that EPA and PMRA did an amazing task of working with registrants to resolve those regulatory and 'process' type of barriers," Gray says.
There are NAFTA labels for seven products because the process still is a voluntary thing, some registrants have volunteered products for NAFTA labels and others have not. There were no NAFTA labels proposed in 2009 and few if any "candidates" being considered.
"Growers have listed about 35 priority products that they'd like to see get NAFTA labels, but we have seen a waning of industry support for NAFTA labels," Gray says.
"When I talk to the registrants privately, their response, typically, is that they're in the business of creating profit for their shareholders," he says. "That's a legitimate position; these are not nonprofit entities. And, frankly, creating segmented markets does improve profitability for registrants in many settings."
Registrants wouldn't have to charge different prices in different countries, but if country-specific labeling allows them to charge more, they will.
"Why would they volunteer to 'de-
segment' those markets?" Gray says. "We're at the place that if we want to see more widespread use of NAFTA labels, we either need to 'pull' registrants by giving them something they want or 'push' them through legislative mandates."
Carrot or stick?
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Gray sees this as carrots or sticks.
"The registrants want longer data protection for their proprietary chemistry," Gray says. "Under FIFRA (Federal Insecticide and Rodenticide Act), the registrant gets 10 years of exclusive use of the data used to support the product's registration. Some have said that if they get another couple of years extended to use that data, then maybe that would entice them to put NAFTA labels on their products."
The down side of that, of course, is that generic products would be delayed for another two years.
"Growers need to decide if that's something they're willing to sacrifice," Gray says.
On the "stick" side of the issue, Congress would pass a law that if a company has a product registered for use both in the U.S. and Canada that it must have a NAFTA label, or there would be a penalty.
"U.S. mandate would have to be contingent on a similar mandate up in Canada," Gray says.
He thinks that would be enforceable. One of the bills was very close on the Senate side at a time when the price disparities were larger than they are now.
No consensus
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"It's more difficult to get folks revved up about this," Gray says. "Commodity groups are focused on other things that will impact them in the short term.
Once the exchange rates are back to where they were in the 1990s, then the growers are going to be fired up again."
"The ironic thing is, now is the time to fix it because Canadian growers are revved up on it. If there was ever a time for a joint U.S.-Canada fix, now is the time."
Opportunities for public awareness have been few.
In June 2000, then-North Dakota Agriculture Commissioner Roger Johnson, tried to allow North Dakota growers to access Achieve 80 DG herbicide from Canada, as a substitute for Achieve 40 DG sold this country, at a $6-per-acre cost disadvantage.
"It was one of the only instances where we had definitive information that a Canadian product was identical to the product registered here and cheaper," Gray says.
The product had a Canada-only label and couldn't enter the U.S. without a U.S. label.
"We got copies of the U.S. label for that product and told growers that when the product crossed the border it had to have a U.S. label on it. We provided labels to the farmers," Gray says.
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The growers went to Canada for a 40 percent cost savings, but the EPA quickly ruled that the state label was illegal.
"Relabeling is considered 'pesticide production' under U.S. regulations, and that can only occur at establishments registered with the EPA," he says. "Farmers were relabeling containers on sides of roads or in dealer parking lots, and that was deemed illegal."
On the other hand, Canada allows this very thing.
A few years ago, Canadian growers went to their PMRA to establish a Grower Requested Own Use Program. Canadian farmers identified 17 products they wanted under this program. They're hoping to get that to about 25 products in 2010.
"Under GROU, they can come down to a U.S. dealer, buy a chemical, relabel it with the Canadian label and go back to Canada and use it, as long as it's for their own use," Gray says.
GROU program for U.S.?
North Dakota Ag Commissioner Doug Goehring this summer contacted the EPA on this issue, asking for a "definitive legal review" on whether this relabeling under the GROU program is legal. The EPA said it isn't, so now PMRA has proposed allowing growers to do their relabeling at the Canadian port of entry, between the U.S. and Canadian customs.
Goehring and Gray will be asking for an equitable, parallel system.
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"We're going to see whether that would take a regulation change or some other change," he says.
Gray has tracked prices of various products since 2000 and sees little difference on prices stamped on either side of the border. Any differences are most significant on products for the larger markets in the United States -- corn, soybeans, horticultural products, he says. Those are cheaper here, while the products for cereals, where Canada is a bigger market, are less expensive there.
The U.S.-Canada exchange rate dictates the prices more, he says.
In an ideal world, the farmers would buy their products from a local dealer, he says. That way, growers can get the best service on such things as crop injury complaints or nonperformance.
"It's difficult to get that level of service if you're buying products across the U.S.-Canada border," he says. "We don't want to take money out of the local community.
"What we've seen from the Canadians, frankly, is that there's little product moving," he says. "They're going to their local dealer in Canada, asking if they'll match the price where they can get this product in the states. They're using it as a negotiating stance, which is a good thing. The GROU program creates a one-way safety valve for those price disparities, and we'd like a two-way safety valve."
