USA CUN11 SOIL Orchard Replant Open Field Page 1 of 20 NOMINATING PARTY: The United States of America

FILE NAME: USA CUN11 SOIL ORCHARD REPLANT Open Field

BRIEF DESCRIPTIVE TITLE OF NOMINATION: Methyl Bromide Critical Use Nomination for Preplant Soil Use for Orchard Replant in Open Fields (Submitted in 2009 for 2011 Use Season)

CROP NAME (OPEN FIELD OR PROTECTED): Orchard Replant Open Field

QUANTITY OF METHYL BROMIDE REQUESTED:

T ABLE 1: Q UANTITY OF M ETHYL B ROMIDE R EQUESTED IN E ACH Y EAR OF N OMINATION

Year N OMINATION A MOUNT

2011 203,591 kilograms

NOMINATING PARTY CONTACT DETAILS: Contact Person: Hodayah Finman Title: Foreign Affairs Officer Address: Office of Environmental Policy U.S. Department of State 2201 C Street, N.W. Room 2658 Washington, D.C. 20520

U.S.A. Telephone: (202) 647-1123 Fax: (202) 647-5947

E-mail: finmanhh@state.gov

Following the requirements of Decision IX/6 paragra ph (a)(1) The United States of America has determin ed that the specific use detailed in this Critical Use Nominati on is critical because the lack of availability of methyl bromide for
this use would result in a significant market disru ption

. . ■ Yes  No

Signature Name Date

Title:

(Details on this page are requested under Decision Ex. I/4(7), for posting on the Ozone Secretariat we bsite under Decision Ex. I/4(8).)

This form is to be used by holders of single-year e xemptions to reapply for a subsequent year’s exempt ion (for example, a Party holding a single-year exemption fo r 2005 and/or 2006 seeking further exemptions for 2 007). It does not replace the format for requesting a critic al-use exemption for the first time.

In assessing nominations submitted in this format, TEAP and MBTOC will also refer to the original nomi nation on which the Party’s first-year exemption was approved , as well as any supplementary information provided by the Party in relation to that original nomination. As this earlier information is retained by MBTOC, a Pa rty need not re-submit that earlier information.USA CUN11 SOIL Orchard Replant Open Field Page 2 of 20 CONTACT OR EXPERT(S) FOR FURTHER TECHNICAL DETAILS:
Contact/Expert Person: Jack Housenger Title: Director (Acting) Address: Biological and Economic Analysis Division Office of Pesticide Programs U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, N.W. Mailcode 7503P Washington, D.C. 20460

U.S.A. Telephone: (703) 308-8200 Fax: (703) 308-7042 E-mail: Housenger.Jack@epa.gov

LIST OF DOCUMENTS SENT TO THE OZONE SECRETARIAT IN OFFICIAL NOMINATION PACKAGE:

1. PAPER DOCUMENTS: Title of paper documents and appendices No. of pages Date sent to Ozone

Secretariat

USA CUN11 SOIL ORCHARD REPLANT Open Field

2. ELECTRONIC COPIES OF ALL PAPER DOCUMENTS: *Title of each electronic file (for naming conventi on see notes above) No. of kilobytes Date sent to Ozone

Secretariat

USA CUN11 SOIL ORCHARD REPLANT Open Field

* Identical to paper documentsUSA CUN11 SOIL Orchard Replant Open Field Page 3 of 20 

### METHYL BROMIDE CRITICAL USE RENOMINATION FOR PREPLANT SOIL USE (OPEN FIELD OR PROTECTED ENVIRONM ENT)

ORCHARD REPLANT

1. SUMMARY OF THE NEED FOR METHYL BROMIDE AS A CRITICA L USE

The U.S. nomination for methyl bromide for orchard replant in 2011 is for the portion of replant sites where alternatives are not suitable, either b ecause of legal restrictions or physical characteristics, such as unacceptable soil type or moisture or topography. The orchard area previously nominated for methyl bromide ranged from 37 ha for raisin grapes to 752 ha for stone fruit replant. These critical areas represent a sm all portion of the entire orchard replant in

California.

Research studies are ongoing to identify methods an d technologies to reduce reliance on high rates of fumigants, including the use of GPS-based application equipment (e.g., Browne et al., 2008; Upadhyaya et al., 2008). According to Browne et al. (2008) “orchardists have shifted heavily towards use of 1,3-dichloropropene instead of MB for soil fumigation, but this transition does not appear to be stable in a regulatory sense or completely effective in terms of resulting crop performance.” Previously, McKenry et al. (200 7, 2006) and Caprile and McKenry (2006) have reported on methods that can help to replant m any orchard sites without methyl bromide. Methyl bromide continues to be a critical tool for sites that are not amenable to other treatments due to features such as soil type or soil moisture, or regulatory restrictions, or activity against certain pests, such as Armillaria root rot (e.g., U C Pest Management Guidelines, 2008). In addition, new regulations to reduce volatile organi c compound emissions may cause a delay of fumigation beyond October into November and Decembe r in some locations (e.g. San Joaquin Valley) when soils are colder. This may result in reduced efficacy of the primary alternative 1,3-

D.

The Orchard Replant sector comprises stone fruit, a lmond, and walnut orchards, and grape vineyards grown in California. Fumigation prior to replanting orchards or vineyards is used to optimize initial growth of young plants in orchard sites with minimal pest populations. Because of the perennial nature of orchards, fumigation occ urs only once and is the most efficient system to avoid slow tree growth, early tree removal, adde d costs, and lost revenue. In addition, effective fumigation appears to reduce the effects of a poorly understood disease complex called orchard replant “problem”, or “disorder” The probl em can be of varying severity depending on orchard location, crop, soil texture, soil moisture , or other factors. Orchards with replant problem have several visible symptoms—the most appa rent is poor tree growth during the early years of establishment (rejection component). Orch ard replant problem presents a challenge to growers when replanting orchards and vineyards, con sidering the long-term investment (typically fruit orchards and vineyards can produce for 20-25 years, walnut orchards can produce for 40 years, and almond orchards produce on averag e 25-30 years) that is necessary for fruit and nut orchard production. For orchard replant situat ions where other fumigants are not available, methyl bromide is critical.USA CUN11 SOIL Orchard Replant Open Field Page 4 of 20 2. SUMMARIZE WHY KEY ALTERNATIVES ARE NOT FEASIBLE

Alternatives are considered not feasible where 1) t hey have not been sufficiently tested or protocols have not been sufficiently developed for their use, 2) costs are excessive, 3) application difficulties exist due to such factors as hilly ter rain or equipment requirements, 4) areas of environmental sensitivity or characteristics reduce their efficacy, 5) regulatory restrictions prevent their use, 6) pest pressure is to such an e xtent that alternatives are not effective.

Only those orchard replant sites that have no alter natives are being nominated for critical use of methyl bromide, which represents a small portion of total replant sites (Table 1). There is a critical need for methyl bromide where there are le gally mandated township caps for 1,3-D, or because surface moisture requirements cannot be met (e.g., soils can not be adequately dried prior to use of 1,3-D). New regulations to reduce volatile organic compound emissions may reduce the efficacy of 1,3-D by requiring a delay i n fumigation to November or December when

soils are colder. The best alternatives for orchar d replant that have been identified are 1,3-D or 1,3-D with chloropicrin, and/or metam-sodium, espec ially in coarse-textured soils. Under certain soil and moisture conditions (less than 12% to 1.5 meters) 1,3-D is an effective management tool for replant problems and is current ly used to replant the majority of orchard and vineyard sites.

3. IS THE USE OF METHYL BROMIDE COVERED BY A CERTIF ICATION

STANDARD?

Methyl bromide is not used to meet a certification standard for orchard replant.

4. IF PART OF THE CROP AREA IS TREATED WITH METHYL BROMIDE,

INDICATE THE REASON WHY METHYL BROMIDE IS NOT USED IN THE OTHER AREA, AND IDENTIFY W HAT ALTERNATIVE STRATEGIES ARE USED TO

CONTROL THE TARGET PATHOGENS AND WEEDS W ITHOUT METHYL

BROMIDE THERE.

The current best alternatives for orchard replant a re 1,3-D or 1,3-D with chloropicrin, and/or metam-sodium, especially in light soils (e.g., Capr ile and McKenry, 2006). These alternatives are used effectively under optimal soil and moistur e conditions (high moisture at surface and less than 12% at depths to 1.5 meters) and methyl bromid e is not critical. There is a critical need for methyl bromide in orchards in California where alte rnatives cannot be used, either because of legally mandated township caps for 1,3-D, local per mit requirements for chloropicrin, buffer zone limitations, or surface moisture requirements cannot be met. If rain does not occur, growers without sprinkler systems have difficulty applying water for 1,3-D application.USA CUN11 SOIL Orchard Replant Open Field Page 5 of 20 5. WOULD IT BE FEASIBLE TO EXPAND THE USE OF THESE METHODS TO COVER AT LEAST PART OF THE CROP THAT HAS REQUESTED USE OF

METHYL BROMIDE? WHAT CHANGES WOULD BE NECESSARY TO ENABLE

THIS?

The replacement of methyl bromide to treat soils wi th alternatives is taking place as research and extension work indicates is appropriate. The curre nt nomination for methyl bromide is an

amount that allows a reasonable transition to alter natives in the small portion of replant sites that

cannot use alternative treatments. Field studies o n the perennial crops of this sector require a multi-season timeframe. Until replicated trials ca n be analyzed methyl bromide is being nominated for a small portion of replant sites (see Browne et al., 2008; Beede et al., 2008; Upadhyaya et al., 2008; Wang et al., 2008).

The best alternatives for orchard replant that have been identified in research plots are 1,3-D or 1,3-D with chloropicrin (e.g., Browne et al., 2008; Beede et al., 2008). Under specific soil and moisture conditions (high moisture at surface and l ess than 12% at depths to 1.5 meters) 1,3-D can be an effective management tool for replant pro blems. However, there is a critical need for methyl bromide in some orchards in California, eith er because of legally mandated township caps for 1,3-D or chloropicrin, or because surface moisture requirements cannot be met due to heavy soils (e.g., soils can not be adequately drie d prior to use of 1,3-D). In addition, a failure o f an alternative to manage some pests, such as Armill aria root rot (UC Pest Management Guidelines, 2008), may require the critical use of methyl bromide.

Regulations to meet air quality standards for groun d level ozone may change fumigation practices. Pesticides that have been identified as volatile organic compounds (VOC) react with nitrous oxides (NOx) to form ozone. In California, the most at-risk period for fumigation has been identified as May 1 through October 31.

Several areas in California, including the San Joaq uin Valley and some areas of Ventura County, will be subject to new regulations. The San Joaqui n Valley contains about two-thirds of the almond and stone fruit land, about one-half of the walnut land, and nearly all of raisin grape land. All sources of NOx and VOCs are being evaluated by the California Department of Pesticide Regulation (CDPR), which has the authority to regul ate the use of soil fumigants. CDPR has issued a rule to reduce the emissions, including re strictions on timing and methods of fumigation. For example, for orchard replant, the only method o f application allowed for methyl bromide or chloropicrin is HDPE-tarped, deep-shank, broadcast fumigation. Strip applications are not allowed in the May-October period. In the past, mo st orchard replant fumigations occurred during this period. Use of 1,3 D, however, may not be impacted as much as other soil

treatments.

6. SUMMARY OF RECENT RESEARCH

Research in California continues to identify ways t o optimize orchard replant to improve tree

survival and orchard health. Recent research resul ts for this sector were outlined in reports to the

2008 Annual International Research Conference on Me thyl Bromide Alternatives and Emissions Reductions (Browne et al., 2008; Upadhyaya et al., 2008; Wang et al., 2008; Beede et al., 2008)USA CUN11 SOIL Orchard Replant Open Field Page 6 of 20 as well as the 2007 Research Conference (Browne et al., 2007; Kluepfel and Beede, 2007; McKenry et al., 2007; Coates et al., 2007; Wang et al., 2007).

In general, due to new regulations in California to reduce volatile organic compound emissions, the timing of fumigation in some areas (e.g., San J oaquin Valley) may shift from October to November or December. This could result in applica tion of 1,3-D in cooler soils and a reduced efficacy of this alternative.

Stone Fruit and Almond: Research as part of the USDA Pacific Area-wide Pes t Management Program for Integrated Alternatives to Methyl Bromi de has been ongoing for stone fruit and almond (Browne et al., 2008). Objectives of resear ch are 1) To develop and demonstrate optimized integrated pest management (IPM) strategi es for control of almond and stone fruit replant problems without MB; 2) To provide comprehe nsive economic assessments of alternatives replant management strategies; 3) Educ ational outreach with a field demonstration day, May 2008. Stone fruit and almond replant tria ls continue since their establishment in 2006.

Thus far, results indicate that chloropicrin, iodom ethane/chloropicrin, and 1,3-D/chloropicrin

“are effective MB alternatives” for control of Prunus replant disease (PRD). Results also indicate that GPS-directed shank or drip spot appli cations may be “nearly” as effective as strip or broadcast application (see also, Upadhyaya et al., 2008, for a description of experimental sitespecific fumigant applications using GPS). Therefo re, drip application of 1,3-D and chloropicrin can reduce overall fumigant emissions. Nematodes h ave not been significant factors in replanted sites, although sites selected for trials in 2009 a ppear to be infested with ring nematode. Browne et al. (2008) stated that “future years’ growth and yield data are needed and will be accumulated

for economic assessments of these treatments”. Iod omethane is not currently registered in California and 1,3-D and chloropicrin are highly re gulated.

Wine Grapes, Raisin and Table Grapes: Research is part of the USDA Pacific Area-wide Pes t Management Program for Integrated Alternatives to M ethyl Bromide (Wang et al., 2008) and a continuation of an ongoing 3-year project (see Wang et al., 2007). Fumigants included were various experimental rates of 1,3-D/chloropicrin wi th VIF or not tarped, a cover crop, and methyl bromide (448 kg/ha with HDPE film). Citrus nematodes in buried bags were killed in all fumigant-treated plots, but survived in non-fumigat ed plots. Only methyl bromide controlled

Fusarium in the surface 15 cm of soil. No significant diff erences were found in Fusarium populations between any of the other treatments. A ll fumigated plots successfully control Pythium —non-fumigated plots did not control Pythium . VIF film significantly reduced emissions in the shank and subsurface drip treatmen ts.

Walnuts: There appears to be an increasing shift to alterna tives where they are not restricted by regulatory actions. According to the request from the California Walnut Commission, “ walnut growers appear to be shifting to tree site or strip applications, a short-sighted change driven by economic pressure .” A reduction in the use of all fumigants is like ly due to regulations to reduce volatile organic compound emissions. Restrictions on the use of fumigants may reduce the ability to use tree-site or strip fumigation (see S ection 7 below).USA CUN11 SOIL Orchard Replant Open Field Page 7 of 20 Results of research on walnut was recently reported (Beede et al., 2008) and is an ongoing attempt to: 1) identify cost-effective commercial f umigant alternatives to methyl bromide, 2) test new application technologies, and 3) initiate outre ach to growers for walnut production, and 4)

test clonal vs . seedling plant material.

Research indicates that the continued use of the pr eferred rootstock Paradox is not advisable. Research continues to search for resistance to ring and lesion nematode pests. Various regimes (different rates and application methods) with 1,3- D, chloropicrin, and methyl bromide were

evaluated. Conclusions thus far indicate that “a c ombination of 1,3-D and chloropicrin” are the best alternatives for the walnut industry. In addi tion, researchers concluded that fumigation alters the soil microbe community whereby pathogens appear to recolonize to higher population levels in previously fumigated soils as compared to non-fumigated soils.

7. ECONOMIC INFEASIBILITY OF ALTERNATIVES

Note that in this study net revenue is calculated a s gross revenue minus operating costs. This is a good measure as to the direct losses of income that may be suffered by the users. It should be noted that net revenue does not represent net incom e to the users. Net income, which indicates profitability of an operation of an enterprise, is gross revenue minus the sum of operating and

fixed costs. Net income should be smaller than the net revenue measured in this study. We did

not include fixed costs because it is often difficu lt to measure and verify.

The economic analysis of the orchard replant applic ation compares data on yields, crop prices, revenues and costs using methyl bromide and using a lternative pest control regimens in order to estimate the costs from the loss of methyl bromide availability. The alternatives identified as technically feasible - in cases of low pest infesta tion 1 – are different combinations of chloropicrin, metam sodium and 1,3-Dichloropropene (1,3-D).

The critical use nomination (CUN) for this sector d oes not include areas where soil conditions are ideal and township caps do not restrict the use of 1,3-D. This CUN only applies to areas where township caps or certain soil types do not pe rmit the use or effective use of 1,3-D. Where 1,3-D is not permitted there are no effective nemat icide alternatives to methyl bromide. Trees and vines that survive are not likely to be as heal thy and could suffer yield losses. If a nematode infestation causes the death of trees and vines, th en replacement trees would also suffer the same

infestation unless there use of an effective nemati cide, or possibly several years of fallow.

Without methyl bromide growers replanting orchards or vineyards can face losses from several

sources. These sources include:

• Delayed planting

• Fallow

• Additional use of herbicides

• Tree loss

1 It should be noted that the USG does not request m ethyl bromide for use in areas of low to moderate pest pressure. Only cases where key pests are present at moderate to high levels require methyl bromide for pest pressure.USA CUN11 SOIL Orchard Replant Open Field Page 8 of 20 • Replant costs to replace tree losses • Loss of trees replanted

• Yield loss of fruit or nuts • Delayed achievement of full yield potential • Earlier loss of productivity of whole orchard

A number of soil pathogens and nematodes, many stil l poorly understood, occur over the lifespan of an orchard. It is important that the grower be able to reduce the amount of inoculum in the soil to ensure that the young trees and vines have the opportunity to get off to a vigorous start to ensure survival. 1,3 D, chloropicrin, and metam-so dium have shown promise on some soil types, but long-term research on tree survival and on yield impacts is incomplete. If the alternatives do not work as effectively as methyl b romide, then it is possible that other losses could occur, such as additional replanting, higher yield losses, and shorter lifespan of the whole orchard or vineyard reducing the ability to amortiz e the initial investment costs.

The benefits of fumigation with methyl bromide for orchard or vineyard replant can be measured by future yields (orchard crops require several yea rs to begin bearing) when production may be adversely affected by poor tree growth and high pes t populations. In addition, fumigant treatments result in healthier young plants. Other fumigants besides methyl bromide are used for fumigation, but in some cases, such as where there are heavy soils or township caps on 1,3- Dichloropropene, these alternatives may not be avai lable.

The effects of orchard replant problem and nematode damage to young seedlings are experienced within the first three years of orchard and vine es tablishment, and are commonly observed within the first year. Costs associated with individual t ree replacement include delayed production as newly replanted trees lag behind previously planted ones. In more severe cases, when replant disorder or high nematode populations are not prope rly managed at the time of orchard establishment, the entire orchard or vineyard might be lost. Because of the long life of these perennial crops, optimal soil preparation, along wi th appropriate rootstocks, is a priority for successful production.

Typically, the alternatives to methyl bromide would be evaluated using a partial budget analysis to estimate the impacts of changes in production pr actices. That is, the consequences on a typical hectare of the crop grown are evaluated, ra ther than attempt to assess the impacts in the context of a whole enterprise, which could include multiple crops under cultivation. This approach allows the Agency to compare estimated los ses to net operating revenue, which is defined as the difference between gross revenue and variable operating costs, on a per-hectare basis. The analysis ignores fixed costs, which are highly dependent on land ownership and the size and diversity of the grower’s operation, and t herefore difficult to define on a per-hectare basis. As such, this analysis may understate the i mpacts as a percentage of the grower’s income.

An analysis of a single year, however, does not cap ture the full benefit of fumigation. Establishing an orchard involves considerable costs , including the maintenance of the orchard during the non-bearing years. The returns to this investment occur in the future. Therefore, another approach to evaluating the benefits fumigat ion is to calculate the net present value of the

orchard under different streams of costs and return s. Net present value (NPV) is a way ofUSA CUN11 SOIL Orchard Replant Open Field Page 9 of 20 comparing different investments by summing the disc ounted costs and returns over time to

calculate the value of the investment. The formula for NPV is: 

# ∑

= +

−

= T

t t t t

r NPV

0 ) 1( Cost Revenue

where t is the time period (year), T is the last year the orchard is in production and r is the discount rate. This analysis uses a rate of 7% to represent a private discount rate or an individual’s trade-off of money between time period s 2 . Since revenues and costs are not adjusted for future inflation, all measures are in real term s.

Since the choice of discount rate is somewhat arbit rary, BEAD also presents the internal rate of return (IRR), which is the discount rate that makes NPV = 0. One interpretation of this value is that it represents the maximum rate of return on an investment that an individual must be willing to accept before the investment would be considered . That is, if the IRR is 5%, only individuals willing to accept a rate of return less than 5% wou ld find the investment worthwhile.

California Walnuts and Almonds

The current practice for walnut replant is to fumig ate with methyl bromide and chloropicrin. An alternative is to use 1,3-D with chloropicrin, but 1,3-D does not penetrate heavier soils as well as methyl bromide and may not provide as effective con trol of nematodes and soil pathogens. Some growers may not be able to obtain permission t o use 1,3-D under California township caps, but in this case that possibility is not considered . Comparing methyl bromide and 1,3-D, both with chloropicrin, for establishing an orchard will be the basis for evaluating the benefits of methyl bromide.

Replacing methyl bromide with 1,3-D, is estimated t o result in a 4% decrease in yields during production (Carpenter et al. , 2000). Yield losses are due to soil pathogens th at infect the trees at an early age, stunting their growth. Table 7 prese nts the expected differences in production and revenue for California walnut, where operating cost s are taken from Buchner et al. (2002).

Elements of harvest costs are assumed to be directl y proportional to yield and we adjust costs accordingly.

2 The United States Office of Management and Budget suggests using a 3% and 7% rate when evaluating the cost and benefits of government regulation, whe re 7% is an estimate of the before-tax rate of retu rn to private capital (OMB, 2003).USA CUN11 SOIL Orchard Replant Open Field Page 10 of 20 Table 2. Gross revenue, operating costs, and net o perating revenues, California walnuts orchard at full production.

methyl

bromide + chloropicrin 1,3-D +

chloropicrin (% change) 1

Yield (kg/hectare) 1,505 1,445 (-4.0%) Price ($/kg) 1.43 1.43

Gross Revenue ($/hectare) 5,315 5,101 (-4.0%) Operating Costs ($/hectare) 1,403 1,403

Harvest Costs ($/hectare) 895 867 (-2.8%) Net Operating Revenue ($/hectare) 3,018 2,660 (-11.9%)
Source: USDA NASS (2002-2006), Buchner et al. (2002), BEAD calculations. Figures may not sum du e to rounding.

1 Percent change in comparison to methyl bromide wit h chloropicrin.

The analysis in Table E.1 indicates that even relat ively minor changes in yield can have large effects on net operating revenue. A 4% change in y ield results in a 12% change in net operating revenue. The analysis suggests that methyl bromide is worth about $150/hectare each year in terms of improved yield during the lifespan of the walnut orchard. If growers did not have access to methyl bromide or 1,3-D (because of township cap s, for example), the consequences would be

far more dire.

The analysis in Table E.1 does not consider the inv estment producers must make in establishing an orchard and maintaining it through several non-b earing years. Table E.2 presents the information on the net operating revenues, NPV and IRR for a walnut orchard under the four treatment options. Field preparation costs are sim ilar for any type of fumigation, but fumigation costs differ according to the mix of chemicals and the cost of application. Chemical costs are average per-hectare cost of products, which incorpo rates typical application rates. Tree planting costs are identical regardless of fumigant. BEAD a ssumes that some trees must be replanted the following year. We assume that 4%, or two trees, a re replanted following fumigation with methyl bromide and chloropicrin (Buchner et al. , 2002) but 6% are replanted with 1,3-D and chloropicrin. The higher replant rates represent t he lower survival rate if nematodes are controlled but orchard replant disorder or pathogen s are not. Trees begin to produce in the fourth year, initially at 10% of production, climbing to f ull production in the eighth year (Buchner et
al. , 2002). Returns during full production are shown in Table E.1.USA CUN11 SOIL Orchard Replant Open Field Page 11 of 20 Table 3. Net operating revenue, net present value (NPV), and internal rate of return (IRR)

of a walnut orchard.

Year Stage Methyl

bromide + chloropicrin 1,3-D +

chloropicrin

Field Preparation -585 -585 Fumigation 1 -3,127 -1,855 1

Establishment -3,789 -3,789 2 Non-bearing 2 -978 -1,018 3 Non-bearing -897 -897 4 Initial production 3 -637 -657 5 Partial production 5 -417 -457 6 Partial production 6 -106 -165 7 Partial production 6 1,331 1,213 8 Full production 7 3,018 2,660 9-25 Full production 7 3,018 2,660 NPV (7% discount rate) 9,495 9,495

IRR 13.8% 13.9%

Source: Buchner et al. (2002), and BEAD calculations. Net operating reve nues are not discounted; negative numbers represent costs greater than incom e. Net present value is calculated assuming 7%

discount rate.

1 Fumigation costs include chemical costs and applic ation costs.

2 In addition to operating costs, non-bearing costs include replanting trees.

3 Initial production is 10% of full production.

4 Production in the fifth year is 20% of full for co mbination treatments.

5 Production in the sixth year is 30% of full for co mbination treatments.

6 Production in the seventh year is 60% of full prod uction for combination treatments.

Assuming a 7% discount rate, establishing a walnut orchard, fumigating with methyl bromide and chloropicrin, yields future returns valued at a lmost $9,500/hectare today. This is about $530 more per hectare than an hectare treated with 1,3-D and chloropicrin, although the lower initial cost of fumigating with 1,3-D and chloropicrin mean s that the internal rate of return on the two investments are approximately equal. The IRR for a n orchards treated with methyl bromide or 1,3-D are similar, and close to 14%.

These results would also apply almonds grown on hea vier soils. Where almonds are replanted after an existing almond orchard, poor vegetative g rowth has been observed and tree mortality has been estimated as high as 50% (Browne et al., 2 006). This would be the case where no fumigant is used on replant sites. With a one year fallow, but no fumigant treatment, a 25-40% yield loss might be experienced (depending on roots tock) with a 24-35% reduction compared to methyl bromide treatment (Carpenter et al., 2000).

BEAD estimates that nearly 43% of almond hectares p lanted and 86% of walnut plantings are currently treated with methyl bromide. The benefit s of methyl bromide would eventually accrue to almost 97,000 bearing hectares of almonds and 74 ,000 hectares of walnut. At full production, additional yield is valued at about $370/hectare, t herefore methyl bromide adds about $63.3USA CUN11 SOIL Orchard Replant Open Field Page 12 of 20 million annually to the value of California nut pro duction. Currently, metam sodium provides little benefit to producers on heavy soils. Howeve r, if chloropicrin and methyl bromide were not available, control of soil pathogens would depend o n metam sodium. Without these fumigations, some orchards would probably not be established at all; thus these figures may understate the full value of the methyl bromide.

California Stone Fruit

Planting orchards with stone fruit trees requires a large investment of resources as well as numerous choices to establish a long-bearing and pr oductive orchard. Many of the pests associated with these crops and fumigation requirem ents are similar from crop to crop and location to location. However, management of these pests differs depending on particular crop, soil type, climatic region, availability and cost o f orchard land, availability of resistant rootstock to specific key pests, and local regulatory restric tions of some fumigants. In general, when fumigation is deemed necessary, few choices are ava ilable to the orchard manager.

We assess the benefits of fumigation with methyl br omide by comparing production under alternative approaches for controlling orchard repl ant disease. In this case, we focus on prune production in California that is broadly representa tive of stone fruit production with high fumigant use. This represents a heavy soil environ ment where methyl bromide and chloropicrin are used. We compare this use to fumigation with 1 ,3-D and chloropicrin, 1,3-D and metam sodium, and 1,3-D alone to evaluate the benefits of methyl bromide and chloropicrin. This result would also apply to cherry, peach and nectarine, an d plum grown on heavier soils. We assume in this analysis that 1,3-D is available for use as a fumigant, which will not necessarily be the case, due to township caps in California. If neith er methyl bromide or 1,3-D are available, the consequences are expected to be more dire.

Replacing methyl bromide with 1,3-D, while maintain ing the use of chloropicrin, is estimated to result in a 4% decrease in prune yields during prod uction (Carpenter et al. , 2000). Yield losses are due to soil pathogens that infect the trees at an early age, stunting their growth. Table E.3 presents the expected differences in production and revenue for California prune, where operating costs are taken from Buchner et al. (2001). Harvest costs are assumed to be directly proportional to yield. Differences in net operatin g revenue for even small changes in yield can be substantial. This analysis suggests that the be nefits of methyl bromide alone are approximately $125/hectare.USA CUN11 SOIL Orchard Replant Open Field Page 13 of 20 Table 4. Gross revenue, operating costs, and net o perating revenues, California prune orchard at full production.

Methyl

bromide + chloropicrin 1,3-D +

chloropicrin (% change) 1

Yield (dried ton/hectare) 4.4 4.2 (-4.0%) Price ($/ton) 1,125 1,125

Gross Revenue ($/hectare) 5,002 4,802 (-4.0%) Operating Costs ($/hectare) 2,080 2,080

Harvest Costs ($/hectare) 1,894 1,818 (-4.0%) Net Operating Revenue ($/hectare) 1,028 904 (-12.1%)
Source: USDA NASS (2002-2006), Bruchner et al. (2001), BEAD calculations. Figures may not sum due to rounding.

1 Percent change in comparison to methyl bromide wit h chloropicrin.

The analysis in Table E.3 does not consider the inv estment producers must make in establishing an orchard and maintaining it through several non-b earing years. Table E.4 presents the information on net operating revenue, NPV, and IRR for a prune orchard under the four treatment options. Field preparation costs are sim ilar for any type of fumigation, but fumigation costs differ according to the mix of chemicals and the cost of application. Chemical costs are average per-hectare cost of products, which incorpo rates typical application rates. Trees are planted the following spring and costs are identica l regardless of fumigant. BEAD assumes that some trees must be replanted the following year. W e assume that 2% are replanted following fumigation with methyl bromide an chloropicrin (Bru chner et al. , 2001); 3% are replanted with 1,3-D and chloropicrin; The higher replant rate rep resents the lower survival rate if nematodes are controlled but soil pathogens are not and amoun t to two or four trees. Trees begin to produce in the fourth year, initially at 20% of production, climbing to full production in the seventh year (Bruchner et al. , 2001). Returns during full production are show n in Table E.3.USA CUN11 SOIL Orchard Replant Open Field Page 14 of 20 Table 5. Net operating revenue, net present value (NPV), and internal rate of return (IRR) of a prune orchard.

Year Stage Methyl

bromide + chloropicrin 1,3-D +

chloropicrin

Field Preparation -618 -618 0 Fumigation 1 -2,519 -2,025 1 Establishment -3,137 -3,137 2 Non-bearing 2 -995 -1,018 3 Non-bearing -1,294 -1,294 4 Initial production 3 -1,336 -1,361 5 Partial production 5 -1,023 -1,072 6 Partial production 2 -82 7 Full production 1,028 904 8-40 Full production 1,028 904 NPV (7% discount rate) -874 -1,529

IRR 6.3% 5.7%

Source: Buchner et al. (2001), and BEAD calculations. Net operating reve nues are not discounted; negative numbers represent costs greater than incom e. Net present value is calculated assuming 7%

discount rate.

1 Fumigation costs include chemical costs and applic ation costs.

2 In addition to operating costs, non-bearing costs include replanting trees.

3 Initial production is 20% of full production. On- set of production is delayed one year if 1,3-D is u sed

alone.

4 Production in the fifth year is 40% of full for co mbination treatments.

5 Production in the sixth year is 67% of full for co mbination treatments.

Assuming a 7% rate of interest, prune production do es not appear to be a good investment using any of the fumigation options. It may be that the information we have on production costs are somewhat high. Relatively speaking, however, methy l bromide provides substantial benefits over 1,3-D. Failure to adequately control soil pat hogens substantially reduces the return to investing in a prune orchard. This result would al so apply to cherry, peach and nectarine, and plum grown on heavier soils.

California Grape

It appears that the current practice for vineyard r eplant is to fumigate with 1,3-D and chloropicrin. Methyl bromide, with chloropicrin, i s used on a few vineyards. Methyl bromide penetrates heavier soils, i.e. , higher clay content or lower porosity soils, bett er than 1,3-D, but vineyards tend to be planted on coarser soils. How ever, some growers may not be able to obtain permission to use 1,3-D under California township c aps, which would severely limit their options. Table E.5 presents the expected differenc es in production and revenue for California table grape where 1,3-D cannot be used. According to McKenry (1999), yield losses of up to 20% could occur on some highly problematic sites if no fumigation is conducted. Using metamUSA CUN11 SOIL Orchard Replant Open Field Page 15 of 20 sodium alone would result in higher yields than wit hout any fumigation, but would probably not be as effective as 1,3-D alone since metam sodium i s the least efficient at dispersing through soil.

For situation where 1,3-D is a workable alternative , such as those areas without heavy soils or restrictions from township caps, we assume that yie lds of a producing vineyard are the same with 1,3-D and methyl bromide. In heavy soils, or witho ut 1,3-D as an alternative, we assume that growers replanting orchards will instead use metam sodium, or no fumigation. Table E.5 presents the expected differences in production and revenue for California table grapes with these fumigation treatments. Baseline yield for ta ble grape and price for the fresh market are averages of 2001-2005, reported by USDA NASS (2002- 2006). Operating costs are taken from Vasquez et al. (2004). Harvest costs are assumed to be directly proportional to yield and BEAD adjusts costs accordingly.

As shown in Table E.5, methyl bromide shows no bene fit over 1,3-D once a vineyard is in production. In places where 1,3-D cannot be used, the loss of methyl bromide would be extremely costly. Fumigating with methyl bromide a nd chloropicrin is worth $270 per hectare relative to metam sodium, and almost $400 per hecta re more than no fumigation.

Methyl bromide with chloropicrin is used on a few v ineyards. Methyl bromide penetrates heavier soils, i.e. , higher clay content or lower porosity soils, bett er than 1,3-D, but vineyards tend to be planted on coarser soils. However, some growers may not be able to obtain permission to use 1,3-D under California township c aps, which would severely limit their options. Table E.5 presents the expected differenc es in production and revenue for California table grape where 1,3-D cannot be used. According to McKenry (1999), yield losses of up to 20% could occur on some highly problematic sites if no fumigation is conducted. Using metam sodium alone would result in higher yields than wit hout any fumigation, but would not be as effective as 1,3-D or methyl bromide.USA CUN11 SOIL Orchard Replant Open Field Page 16 of 20 Table 6. Gross revenue, operating costs, and net o perating revenues, California table grape vineyard at full production. Methyl

bromide + chloropicrin 1,3-D +

chloropicrin Metam

Sodium (% change) 1 No

fumigation (% change) 1

Yield (ton/hectare) 22 22 20 (-10%) 19

(-15%) Price ($/ton) 720 720 720 720

Gross Revenue ($/hectare) 15,828 15,828 14,244 (-10%) 13,454

(-15.0%) Operating Costs ($/hectare) 5,362 5,362 5,362 5,362

Harvest Costs ($/hectare) 9,137 9,137 8,223 (-10%) 7,776

(-15.0%) Net Operating Revenue ($/hectare) 1,329 1,329 659 (-50.3%) 326

(-75.5%)
Source: USDA NASS (2002-2006), Vasquez et al. (2004), BEAD calculations. Figures may not sum du e to rounding.

1 Percent change in comparison to methyl bromide wit h chloropicrin.

In situations where 1,3-D is not available or feasi ble, growers obtain substantial benefits from fumigation with methyl bromide and chloropicrin. T he increased value of production throughout the life of the orchard is worth about $670/hectare annually compared to metam sodium and about $990/hectare annually compared to no fumigati on.

The analysis in Tables E.5 does not consider the in vestment producers must make in establishing an orchard and maintaining it through several non-b earing years. Table E.6 presents the information on net revenue through time, the NPV an d the IRR for a table grape vineyard, assuming that 1,3-D is available. Field preparatio n costs are similar for any type of fumigation, but fumigation costs differ according to the mix of chemicals and the cost of application. Chemical costs are average per-hectare cost of prod ucts, which incorporates typical application rates. Vine planting costs are identical regardles s of fumigant. In the second year, a trellis is installed, which represents the majority of costs. BEAD assumes that some vines must be replanted the second year. We assume that 2% or ni ne vines are replanted following fumigation with 1,3-D and chloropicrin (Vasquez et al. , 2002); 6% are replanted with metam sodium; and 8% are replanted if there is no fumigation. The higher replant rates represent the lower survival

rate of vines if nematodes are controlled but soil pathogens are not. Vines begin to produce in the third year, initially at 80% of production, but are not of sufficient quality for the fresh market

. Grapes are harvested mechanically and sold for wine (Vasquez et al., 2004).USA CUN11 SOIL Orchard Replant Open Field Page 17 of 20 Table 7. Net operating revenue, net present value (NPV), and internal rate of return (IRR) of a California table grape vineyard.

Year Stage Methyl Bromide + chloropicrin 1,3-D +

chloropicrin Field Preparation -741 -741 Fumigation 1 -3,127 -1,198 1

Establishment -4,036 -4,036 2 Non-bearing 2 -9,164 -9,164 3 Initial production 3 62 62 4 Full production 1,329 1,329 5-25 Full production 4 1,329 1,329 NPV (7% discount rate) -3,359 -1,554

IRR 4.5% 5.7%
Source: Vasquez et al. (2004), and BEAD calculations. Net operating reve nues are not discounted; negative numbers represent costs greater than incom e. Net present value is calculated assuming 7%

discount rate.

1 Fumigation costs include chemical costs, according to EPA proprietary data, and application costs. 1,3-D and chloropicrin are applied as a single prod uct, but 1,3-D and metam sodium must be applied separately.

2 In addition to operating costs, non-bearing costs include replanting vines. The major expense is construction of a trellis system.

3 Initial production is 80% of full production (Vasq uez, et al. , 2004). Initial production is mechanically harvested and sold for wine.

4 Production ceases one year earlier with 1,3-D alon e.

Table grapes do not appear to make a particularly a ttractive investment. Using a 7% discount rate, the NPV is negative. The IRR for a vineyard established with a fumigation of 1,3-D and chloropicrin is about 5.7%. The difference in NPV’ s between fumigant treatments, however, is

substantial. Estimates of NPV and IRR for metam so dium alone and no fumigation are not provided, because losses are so great that they are negative for all discount rates, which is equivalent to a negative IRR.

About 200 hectares of grapes are fumigated with met hyl bromide and chloropicrin in California each year on average. This represents about 3.3% o f the planted hectares. The benefits of fumigation therefore accrue to about 10,800 bearing hectares. Assuming that this represents growers who cannot use 1,3-D because of township ca ps, and that the benefits of methyl bromide and chloropicrin are about $670/hectare to wine gra pes as well as table grapes, methyl bromide and chloropicrin contribute about $7.2 million annu ally to the California economy. This does not include the possibility that fumigating with me thyl bromide and/or chloropicrin make an investment in grape production viable for some grow ers.USA CUN11 SOIL Orchard Replant Open Field Page 18 of 20 TABLE 8. N OMINATION A MOUNT : 2011 Methyl Bromide Usage Newer Numerical Index (BUNNI) – Transition Use Reduction Description Spreadsheet

.

CA G&TFL -

Stone Fruit CA G&TFL -

Raisin Grape CA Walnut

Commission Almond Hullers

& Processors CA Wine Grapes
Replant Sector Total /

Average

Quantity Requested for 2010: Amount (kgs) 153,333 9,255

22,255

18,887

22,290

226,020

Quantity Recommended by

MBTOC/TEAP for 2010 : Amount (kgs) 150,400 7,400

21,800

18,600

17,600

215,800

Amount (kgs) 150,400

7,400

21,800

18,600

17,600

215,800

Area (ha) 752

37

109

93

88

1,079

Rate 200

200

200

200

200

200

Transition from 2010 Baseline Adjusted Value Percentage (%) -12% -8% 0% -7% -8% -10%

Amount (kgs) 134,695

8,544

22,200

17,575

20,577

203,591

Area (ha) 673 43 111 88 103 1018

Rate 200 199

200

200

200

200 SECTOR ORCHARD REPLANT

Quantity Approved by Parties

for 2010:

Quantity Required for

2011 Nomination:USA CUN11 SOIL Orchard Replant Open Field Page 19 of 20 CITATIONS

Beede, R. H., Kluepfel, D. A., McKenry, M, Yakabe, L. Garcia, T. 2008. Examination of preplant methyl bromide alternatives in a walnut tree replan t site. Annual International Research Conference on Methyl Bromide Alternatives (2008).

Browne, G., Lampinen, B., Holtz, B., Doll, D., Edst rom, J., Schmidt, L., Upadhyaya, S., Shafii, M., Hanson, B., Wang, D., Gao, S., Goodell, N., and Klo nsky, K. 2008. Integrated pre-plant alternatives to methyl bromide for almonds and othe r stone fruits. Annual International Research Conference on Methyl Bromide Alternatives (2008).

Browne, G., Lampinen, B., Holtz, B., Upadhyaya, S., Wang, D., Gao, S. Doll, D., Schmidt, L., Hanson, B., Goodell, N., McKenry, M., and Klonsky, K. 2007. Integrated pre-plant alternatives to methyl bromide for almonds and other stone fruit s. http://www.mbao.org/2007/Proceedings/008BrowneGmbao 2007.pdf

Browne, G. T., Connell, J. H., Schneider, S. M. 200 6. Almond replant disease and its management with alternative pre-plant soil fumigation treatmen ts and rootstocks. Plant Disease 90:869-876.

Caprile, J. and McKenry, M. 2006. Orchard replant c onsiderations. University of California Extension, Contra Costa County Crop Currents , Fall 2006, attached in University of

California Extension Tree Topics Oct. 30, 2006, vol 31, issue 8

. http://cecontracosta.ucdavis.edu/newsletterfiles/Cr op_Currents10064.pdf

Coates, R., Shafii, M., Upadhyaya, S. K., and Brown e, G. 2007. Tree planting site-specific fumigant application to control almond replant disease. Annu al International Research Conference on Methyl Bromide Alternatives (2007). http://www.mbao.org/2007/Proceedings/009UpadhyayaSM BATreePlantingSite.pdf

Kluepfel, D. and Beede, B. 2007. Methyl bromide alt ernatives for use in walnut production systems. Annual International Research Conference on Methyl Bromide Alternatives (2007). http://www.mbao.org/2007/Proceedings/010KluepfelMet hylbromidealterantives.pdf

McKenry, M., Buzo, T., and Kaku, S. 2007. Replantin g vineyards without soil fumigation. . Annual International Research Conference on Methyl Bromide Alternatives (2007). http://www.mbao.org/2007/Proceedings/050McKenryMRep lantVineyardswoutsoifumigMBAO2007.pdf

McKenry, M., Buzo, T., and Kaku, S. 2006. Replantin g stone fruit orchards without soil fumigation. Annual International Research Conference on Methyl Bromide Alternatives. http://www.mbao.org/2006/06Proceedings/028McKenrySu mmary2006.pdf.

NASS-USDA. 2006. Noncitrus Fruits and Nuts, Summary . National Agricultural Statistics Service, U.S. Department of Agriculture. http://usda.mannlib.cornell.edu/usda/nass/NoncFruiN u//2000s/2006/NoncFruiNu-07-06- 2006_final.pdfUSA CUN11 SOIL Orchard Replant Open Field Page 20 of 20 UC (University of California) Pest Management Guide lines. 2008. Armillaria root rot (oak root fungus)—Grapes. http://www.ipm.ucdavis.edu/PMG/r302100811.html

Upadhyaya, S. K., Browne, G. T., Lampinen, B. D., S hafii, M., and Udompetaikul, V. 2008. Tree planting site-specific fumigant application to cont rol almond replant disease. Annual International Research Conference on Methyl Bromide Alternatives (2008).

Wang, D., Gao, S., Gerik, J., Hanson, B., Tharayil, N., Qin, R., Browne, G., Smith, C., Klonsky, K., Westerdahl, B., Vasquez, S., and Yates, S. 2008. Me thyl bromide alternatives for vineyard replant. Annual International Research Conference o n Methyl Bromide Alternatives (2008).

Wang, D., Gao, S., Gerik, J., Hanson, B., Smith, C. , Klonsky, K., Westerdahl, B., Vasquez, S., Browne, G., and Yates, S. 2007. Methyl bromide alte rnatives for vineyard replant—assessment of control efficacy, fumigant movement, and crop re sponse. Annual International Research Conference on Methyl Bromide Alternatives (2007). http://www.mbao.org/2007/Proceedings/011WangDMBAO20 07areawide.pdf