NOMINATING PARTY: The United States of America

FILE NAME: USA CUN12 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 2010 for the 2012 Use Season)

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

QUANTITY OF METHYL BROMIDE NOMINATED:

Year N OMINATION A MOUNT

2012 18,324 kg

NOMINATING PARTY CONTACT DETAILS:

Contact Person: John Thompson

Title: Division Director

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) 647-9799 Fax: (202) 647-5947

E-mail: thompsonje2@state.gov

Following the requirements of Decision IX/6 paragraph (a)(1) The United States of America has determined that the specific use detailed in this Critical Use Nomination is critic al because the lack of availability of methyl bromide for this use would result in a significant market disruption

. .  Yes  No

Signature Name Date

Title:

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

This form is to be used by holders of single-year exemptions to reapply for a subsequent year’s exemption (for example, a Party holding a single-year exem ption for 2005 and/or 2 006 seeking further exemptions for 2007). It does not replace the format for requesting a critical-use exemption for the first time.

In assessing nominations submitted in this format, TEAP and MBTOC will also refer to the original nomination 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 Party need not re-submit that earlier information.

USA CUN12 SOIL Orchard Replant Open Field Page 1 of 19CONTACT OR EXPERT(S) FOR FURTHER TECHNICAL DETAILS:

C ontact/Expert Person: Jack Housenger

Title: Director

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 CUN12 SOIL ORCHARD REPLANT Open Field

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

Secretariat

USA CUN12 SOIL ORCHARD REPLANT Open Field

* Identical to paper documents

USA CUN12 SOIL Orchard Replant Open Field Page 2 of 19

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

ORCHARD REPLANT

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

The U.S. nomination for critical use of methyl bromide for orchard replant in 2012 is for a portion of replant sites in California where alternatives ar e not suitable, ei ther because of regulatory restrictions or physical characteristics, such as unacceptable soil type or moisture or topography. For 2012, four requests fo r critical use exemptions were received—stone fruit, table & raisin grapes, almonds, and walnuts. Thes e areas represent a small portion of the entire orchard replant in California.

The USG has reviewed all factor s affecting transition rates in this sector. Based on this assessment the transition rate has been greatly incr eased for most portions of this sector. For the area covered in this nomination, the USG believes that the narrative discussion included in this document is technically valid. The USG has no minated amounts of methyl bromide based only on those sub-sectors that cannot transition away from methyl bromide at the accelerated rate.

Research studies have been ongoing to identify methods and technologies to reduce reliance on high rates of fumigants. Res earch includes the use of GPS-ba sed application equipment (e.g.,

Browne et al ., 2008; Upadhyaya et al ., 2008). According to Browne et al . (2008) “orchardists have shifted heavily towards us e of 1,3-dichloropropene instea d 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 . (2007, 2006) and Caprile and McKenry (2006) have reported on methods that ca n help to replant many orchard sites without methyl bromide. One requirement is the use of nematode-tolerant rootst ocks, which may not be available (e.g., McKenry and Buz o, 2009). Methyl bromide continue s 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 certa in pests, such as Armillaria root rot (e.g., UC Pest Management Guidelines, 2008). In additio n, new regulations to reduce volatile organic compound emissions may cause a delay of fumi gation beyond October into November and December in some locations (e.g. San Joaquin Valley) when soils are colder. This may result in reduced efficacy of the pr imary alternative 1,3-D.

Fumigation prior to replanting or chards is used to optimize initial growth of young plants in orchard sites with minimal pest populations. Because of the perennial nature of orchards, fumigation occurs only once and is the most efficient system to avoid slow tree growth, early tree removal, added costs, and lost revenue. In addition, effective fumi gation appears to reduce the effects of a poorly understood disease comp lex called orchard replant “problem”, or “disorder” The problem can be of varying severity depending on orchard location, crop, soil texture, soil moisture, or othe r factors. Orchards and vineyards with replant problem have several visible symptoms—the mo st apparent is poor tree gr owth during the early years of

USA CUN12 SOIL Orchard Replant Open Field Page 3 of 19establishment (rejection component ). Replant problem presents a challenge to growers when replanting orchards and vineyards, considering the long-term invest ment (typically fruit orchards can produce for 20-25 years, walnut orchards can produce for 40 years, and almond orchards produce on average 25-30 years) that is necessa ry for fruit and nut orchard production. For orchard and vineyard replant situ ations where other fumigants are not available, methyl bromide

is critical.

2. SUMMARIZE WHY KEY ALTER NATIVES ARE NOT FEASIBLE

Alternatives are considered not feasible where 1) they have not been sufficiently tested or protocols have not been sufficiently developed for their use, 2) co sts are excessive, 3) application difficulties exist due to such factors as hilly terrain or equipment requirements, 4) areas of environmental sensitivity or characteristics re duce their efficacy, 5) regulatory restrictions prevent their use, 6) pest pressure is to such an extent that al ternatives are not effective.

Only those replant sites that have no feasible alte rnatives are being nominated for critical use of methyl bromide, which represents a small portion of total replant sites. There is a critical need for methyl bromide where there are legally ma ndated township caps for 1,3-D, or because surface moisture requirements cannot be met (e.g., so ils can not be adequately dried prior to use of 1,3-D). New regulations to reduce vola tile organic compound emissions may reduce the efficacy of 1,3-D by requiring a delay in fumigati on to November or December when soils are

colder. The best alternatives for orchard replant that have b een identified are 1,3-D or 1,3-D with chloropicrin, and/or metam- sodium, especially in coarse-tex tured soils. Under certain soil and moisture conditions (less than 12% to 1.5 mete rs) 1,3-D is an effective management tool for replant problems and is currently used to replant the majority of orchard and vineyard sites. In addition, research is being conduc ted with steam to disinfest soils for replant (e.g., Fennimore and Goodhue, 2009), although multi-year trials must be conducted to prove efficacy.

3. IS THE USE OF METHYL BROMIDE COVERED BY A CERTIFICATION

STANDARD?

Methyl bromide is not covered by a certi fication standard for orchard replant.

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

INDICATE THE REASON WH Y METHYL BROMIDE IS NOT USED IN THE OTHER AREA, AND IDENTIFY WHAT ALTER NATIVE STRATEGIES ARE USED TO

CONTROL THE TARGET PATHOGENS AND WEEDS WITHOUT METHYL

BROMIDE THERE.

The current best alternatives for orchard repl ant are 1,3-D or 1,3-D with chloropicrin, and/or metam-sodium, especially in light soils (e.g., Caprile and McKenry, 2006; Wang et al. , 2009). These alternatives are used effectively under op timal soil temperature and moisture conditions (high moisture at surface and less than 12% at depths to 1.5 meters) and methyl bromide is not critical. There is a critical need for methyl brom ide in orchards in California where alternatives

USA CUN12 SOIL Orchard Replant Open Field Page 4 of 19cannot be used, either because of legally mandated township caps for 1,3-D, local permit requirements for chloropicrin, buffer zone limita tions, or surface moisture requirements cannot be met. If rain does not occur, growers withou t sprinkler systems have difficulty applying water for 1,3-D application.

5. WOULD IT BE FEASIBLE TO EXPAND THE USE OF THESE METHODS TO

COVER AT LEAST PART OF THE CRO P THAT HAS REQUESTED USE OF

METHYL BROMIDE? WHAT CHANGES WOULD BE NECESSARY TO ENABLE

THIS?

The replacement of methyl bromide with alternatives to treat soils is taki ng place as is indicated by results of research and extension work (s ee “Summary of Recent Research” below). The current nomination for methyl bromide is an amount that allows a reasonable transition to alternatives in the small portion of replant s ites that cannot use alternative treatments.

The USG has reviewed all factor s affecting transition rates in this sector. Based on this assessment the transition rate has been greatly incr eased for most portions of this sector. For the area covered in this nomination, the USG believes that the narrative discussion included in this document is technically valid. The USG has no minated amounts of methyl bromide based only on those sub-sectors that cannot transition away from methyl bromide at the accelerated rate.

The best alternatives for orchard replant that have been identified in research trials 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 an d less than 12% at depths to 1.5 meters) 1,3-D can be an effective management tool for replant pr oblems. However, there is a critical need for methyl bromide in some orchards in California, either 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 dried prior to use of 1,3-D). In addition, a failure of an alternative to manage some pests, such as severe Armillaria root rot (UC Pest Management Guidelines, 2008), may require the cr itical use of methyl bromide.

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

Several areas in California, including the San Joaquin Valley and some areas of Ventura County, will be subject to new regulations. The San Jo aquin Valley contains about two-thirds of the almond and stone fruit land, and about one-half of the walnut land. All sources of NOx and VOCs are being evaluated by the California Depart ment of Pesticide Regulation (CDPR), which has the authority to regulate the use of soil fumi gants. CDPR has issued a rule to reduce the emissions, including restrictions on timing and methods of fumigation. For example, for orchard replant, the only method of application allowed for methyl bromide or chloropicrin is HDPEtarped, deep-shank, broadcast fumi gation. Strip applications are not allowed in the May-October

USA CUN12 SOIL Orchard Replant Open Field Page 5 of 19period. In the past, most orchard replant fumiga tions 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 met hods for orchard replant to improve tree survival

and orchard health. Recent resear ch results for this sector were outlined in presentations to the

2009 Annual International Research Conferen ces on Methyl Bromide Alternatives and Emissions Reductions (Beede et al. , 2009; Browne et al. , 2009; McKenry and Buzo, 2009; Klonsky et al. , 2009; Fennimore and Goodhue, 2009; Wang et al. , 2009). In addition, presentations to the 2007 and 2008 research c onferences provided re sults in ongoing projects (Browne et al ., 2008; Upadhyaya et al ., 2008; Wang et al ., 2008; Beede et al ., 2008; 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 Califor nia to reduce vo latile organic compound emissions, the timing of fumigation in some areas (e.g., San Joaquin Valley) may shift from October to November or December. This could result in ap plication of 1,3-D in cooler soils and a reduced efficacy of this alternative.

Stone Fruit and Almonds: Research including USDA Pacifi c Area-wide Pest Management Program for Integrated Alternatives to Methyl Bromide has been ongoing for stone fruit and almond (Browne et al. , 2009; Browne et al ., 2008; Fennimore and Goodhue, 2009; Klonsky et
al. , 2009; McKenry and Buzo, 2009). Objectives of the area-wide research are 1) To develop and demonstrate optimized integrated pest mana gement (IPM) strategies for control of almond and stone fruit replant problems without MB ; 2) To provide comprehensive economic assessments of alternatives replant management strategies; 3) Educationa l outreach with a field demonstration day, May 2008. Stone fruit and almond replant trials c ontinue since their

establishment in 2006.

Trials reported in 2009 were c onducted with 1,3-D, iodomethane, and chloropicrin alone and in combination with 1,3-D and iodomet hane. Trial results (Browne et al. , 2009) indicated that 1) row strip treatments with several alternatives performed as well as methyl bromide, where untreated rows showed moderate Prunus replant disease, 2) GPS-contro lled preplant spot fumigation (treating a 2.5 x 2.5 m area with a cen tered on tree site) has maintained very good tree growth with large savings in fumigant us e and costs, compared to strip and broadcast treatments, 3) in two trials, strip treatments a nd spot treatments provided comparable tree growth to methyl bromide treatments. An economic ev aluation of fumigation of almonds was conducted (Klonsky et al. , 2009) that found 1) the most efficient (cos t of an increase in weight of almonds) treatment was the Telone II ( 1,3-D) strip treatment at $0.32 per ~0.5 kg increased almonds, followed by chloropicrin strip treatment, followed by Telone C35 strip trea tm ent and Telone II strip treatment with tarp, 2) the methyl bromid e/chloropicrin strip tr eatment and Telone C35 broadcast had the highest cost ( $1 per ~0.5 kg increase in almond weight). The strip treatment was the most cost effective for Telone II, Te lone C35, and the methyl bromide/chloropicrin treatments due to the significantly lower trea tment costs compared to broadcast treatments

USA CUN12 SOIL Orchard Replant Open Field Page 6 of 19(although the yield was lower). Chloropicrin strip treatments not only lowered costs but increased yields compared to broadcast treatments . The cost of tarp was not cost effective for

any treatment.

Fennimore and Goodhue (2009) estimated costs of steam disinfestation of soils for almond replant with a commercial steam applicator from Italy and steam injection. The machine can disinfest an 8 x 1.5 m plot per heating, which could treat up to 0.66 ha per day. In addition, researchers are planning to test a tractor-pulled augur and a system to inject steam into soils. If research supports acceptable efficacy, costs of the sterilizing machine are estimated to be $2196 per acre ($5425 per ha) compared to $2500 per acre ($6175 per ha) for methyl bromide treatment. The steam augur system was estim ated to cost $341 per acre ($842 per ha) for planting 90 trees. Experiments to measure e fficacy of steam disinfestation are planned.

McKenry and Buzo (2009) continue to study the po ssibilities of a “starve and switch” approach to almond replant and management of Prunus replant disease. Herbicides are used to kill remnant roots of previous plantings to destroy ne matode nutrients and switch to a tolerant or resistant rootstock. While costs appear to be acce ptable, the availability of acceptable rootstocks for almond replant is lacking.

Grapes: Multi-season field trials, as part of the USDA Pacific Area-wide Pest Management Program, continue to identify method s to manage vineyard pests (Wang et al. , 2009; Wang et al.

, 2008; Wang et al. , 2007). Recent treatments were mustard cover crop, methyl bromide shanked at 448 kg/ha under HDPE, 1,3-D + 35% chloropicr in shanked with no tarp at 610 and at 305 kg/ha with no tarp or with VIF, and InLine drip at 305 kg/ha with no tarp or VIF. Preliminary

results indicated that control of total Pythium spp. was successful in all fumigated plots except InLine without tarps. Total Fusarium was significantly reduced on by methyl bromide. Live citrus nematodes were only found in the untreated plots. No other species of nematodes were found alive in any fumigated plot. Pruning weight (a measure of plant health) was highest in the soils treated with methyl bromide, 1,3-D + 35% chloropicrin (high rate), 1,3-D + 35% chloropicrin (low rate with VIF), and InLine with VIF. In addition, VIF significantly reduced fumigant emissions.

Walnuts: There appears to be an increasing shift to alternatives where they are not restricted by regulatory actions. According to the request from the Ca lifornia 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 fumigant s is likely due to regulations to reduce volatile organic compound emissions. Restrictions on the use of fumigants may reduce the ability to use tree-site or stri p fumigation (see Section 7 below).

Results of research on walnut was recently reported (Beede et al. , 2009; Beede et al ., 2008) and is an ongoing attempt to: 1) identify cost-effectiv e commercial fumigant alternatives to methyl bromide, 2) test new applicati on technologies, and 3) initiate outreach to growers for walnut production, and 4) test clonal vs . seedling plant material.

Research continues to indicate that the contin ued use of the common rootstock Paradox is not

advisable. Research continues to search for resistance to ring and le sion nematode pests.

USA CUN12 SOIL Orchard Replant Open Field Page 7 of 19USA CUN12 SOIL Orchard Replant Open Field Page 8 of 19 Various treatments (different rates and app lication methods) with 1,3- D, chloropicrin, and methyl bromide were evaluated. Conclusions from recent research (Beede et al. , 2009) confirms previous findings that 1,3-D and chloropicr in show comparable pathogenic nematode management potential to methyl bromide

7. ECONOMIC FEASIBILITY OF ALTERNATIVES

In this study net revenue is calculated as gross revenue minus operating costs. This is a measure of the direct losses of income that may be suffe red by the users. It should be noted that net revenue does not represent net income to the users. Net income, which indi cates 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 th is study. Fixed costs were not

included because it is often di fficult to measure and verify.

The economic analysis of the orchard replant appl ication compares data on yields, crop prices, revenues and costs using methyl br omide and using alternative 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 infestation 1 – are different combinations of chloropicrin, metam sodium and 1,3- D.

The critical use nomination (CUN) for this sect or does 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 permit the use or effectiv e use of 1,3-D. Where 1,3-D is not permitted there are no effective nematic ide alternatives to methyl bromide. Trees that survive are not likely to be as healthy and could suffer yield losses. If a nematode infestation causes the death of trees, then replacement trees would also suffer the same

infestation unless there use of an effective ne maticide, or possibly several years of fallow.

Without effective fumigation growers who replant orchards can face losses from: • Delayed planting

• Fallow

• Additional use of herbicides

• Tree loss • 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

If the alternatives do not work as effectively as methyl bromide, then it is possible that other losses could occur, such as addi tional replanting, higher yield losse s, and shorter lifespan of the whole orchard or vineyard reducing the ability to amortize the initial investment costs.

1 The USG does not request methyl bromide for use in areas of low to moderate pest pressure. Only cases where key pests are present at modera te to high levels require methyl bromide for

pest pressure.USA CUN12 SOIL Orchard Replant Open Field Page 9 of 19 The benefits of fumigation for orchard or vineya rd replant can be measured by future yields (orchard crops require severa l years to begin bearing) wh en production may be adversely affected by poor tree growth and high pest populati ons. In addition, fumiga nt treatments result in healthier young plants. Other fumigants beside s methyl bromide are used for fumigation, but in some cases, such as where there are heavy soils or township caps on 1,3-D, these alternatives may not be available.

The effects of orchard replant problem and nema tode damage to young seedlings are experienced within the first three years of orchard establishment, and are commonly observed within the first year. Costs associated with individual tree replacement include delayed production as newly replanted trees lag behind previous ly planted ones. In more severe cases, when replant disorder or high nematode populations are not properly managed at the time of orchard establishment, the entire orchard or vineyard might be lost. B ecause of the long life of these perennial crops, optimal soil preparation, along w ith appropriate rootstocks, is a priority for successful production.

Typically, the alternatives to methyl bromide wo uld be evaluated using a partial budget analysis to estimate the impacts of changes in producti on practices. 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 in clude multiple crops under cultivation. This approach allows the Agency to compare estim ated losses to net operating revenue, which is defined as the difference between gross revenue and variable operating co sts, on a per-hectare basis. The analysis ignores fixed costs, whic h are highly dependent on land ownership and the size and diversity of the grower’s operation, a nd therefore difficult to define on a per-hectare basis. As such, this analysis may understate the impacts as a perc entage of the grower’s income.

An analysis of a single year, however, does not capture the full benefit of fumigation. Establishing an orchard involves considerable co sts, including the maintenance of the orchard during the non-bearing years. Th e returns to this investment o ccur in the future. Therefore, another approach to evaluating the benefits fumiga tion is to calculate the net present value of the

orchard under different streams of costs and re turns. Net present value (NPV) is a way of comparing different investments by summing th e discounted 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 or chard is in production and r is the discount rate. This analysis us es a rate of 7% to represent a private discount rate or an

individual’s trade-off of money between time periods 2 . Since revenues and costs are not adjusted for future inflation, a ll measures are in rea l terms.

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, where 7% is an estimate of the before-tax rate of return to private capital (OMB, 2003).Since the choice of discount rate is somewhat arbi trary, 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% would find the investment worthwhile.

California Walnuts and Almonds

The current practice for walnut replant is to fumi gate 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 effect ive control of nematodes and soil pathogens. Some growers may not be able to obtain permi ssion to use 1,3-D under California township caps, but in this case that possibility is not consid ered. Comparing methyl bromide and 1,3-D, both with chloropicrin, for establishing an orchard wi ll be the basis for evaluating the benefits of methyl bromide.

Replacing methyl bromide with 1,3-D, is estimated to result in a 4% decrease in yields during production (Carpenter et al. , 2000). Yield losses are due to soil pathogens that infect the trees at an early age, stunting their grow th. Table 1 presents the expect ed differences in production and revenue for California walnut, where ope rating costs are taken from Buchner et al. (2002).

Elements of harvest costs are assumed to be dire ctly proportional to yiel d and we adjust costs accordingly.

USA CUN12 SOIL Orchard Replant Open Field Page 10 of 19Table 1. Gross revenue, operating costs, and net operating 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%) Sources: USDA NASS (2002-2006), Buchner et al. (2002), BEAD calculations. Figures may not sum due to rounding.

1 Percent change in comparison to me thyl bromide with chloropicrin.

The analysis from Table 1 indicates that even relatively minor changes in yield can have large effects on net operating revenue. A 4% change in yield 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 caps, for example), the consequences would be

far more dire.

The analysis in Table 1 does not consider the i nvestment producers must make in establishing an orchard and maintaining it through several non-bearing years. Tabl e 2 presents the information on the net operating revenues, NPV and IRR fo r a walnut orchard under the four treatment options. Field preparation costs are similar fo r 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, whic h incorporates typical applicati on rates. Tree planting costs are identical regardless of fumigant . BEAD assumes that some trees must be replanted the following year. We assume that 4%, or two trees, are re planted 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 the lower survival rate if nematodes are controlled but orchard replant disorder or pathogens are not. Trees begin to produce in th e fourth year, initially at 10% of production, climbing to full produ ction in the eighth year (Buchner et al. , 2002). Returns during full production are shown in Table 2.

USA CUN12 SOIL Orchard Replant Open Field Page 11 of 19Table 2. Net operating revenue, net present valu e (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%

Sources: Buchner et al. (2002), and BEAD calculations. Net operating revenues are not discounted; negative numbers represent costs greater than income. Net present value is calculated assuming 7%

discount rate.

1 Fumigation costs include chemical costs and application costs.

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

3 Initial production is 10% of full production.

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

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

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

Assuming a 7% discount rate, esta blishing a walnut orchard, fu migating with methyl bromide and chloropicrin, yields future returns valued at almost $9,500/hectare today. This is about $530 more per hectare than an hectar e treated with 1,3-D and chlor opicrin, although th e lower initial cost of fumigating with 1,3-D and chloropicrin means that the inte rnal rate of return on the two investments are approximately equal. The IRR fo r an orchards treated with methyl bromide or 1,3-D are similar, and close to 14%.

These results would also apply almonds grown on heavier soils. Where almonds are replanted after an existing almond orchard, poor vegetative growth has b een observed and tree mortality has been estimated as high as 50% (Browne et al ., 2006). 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 ro otstock) with a 24-35% reduction compared to methyl bromide treatment (Carpenter et al ., 2000).

BEAD estimates that nearly 43% of almond hectar es planted and 86% of walnut plantings are currently treated with methyl bromide. The bene fits of methyl bromide would eventually accrue to almost 97,000 bearing hectares of almonds a nd 74,000 hectares of walnut. At full production, additional yield is valued at about $370/hectar e, therefore methyl bromide adds about $63.3 million annually to the value of California nut production. Currently, metam sodium provides little benefit to producers on heavy soils. However, if chloropicrin and methyl bromide were not available, control of soil pat hogens would depend on metam sodi um. Without these fumigations,

USA CUN12 SOIL Orchard Replant Open Field Page 12 of 19some 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 establis h a long-bearing and productive orchard. Many of the pests associated with these crops and fumigation re quirements 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 of orchard land, availability of resistant rootstock to specific key pests, and local regulatory restrictions of some fumigants. In general, when fumigation is deemed necessary, few choices are available to the orchard manager.

We assess the benefits of fumigation with methyl bromide by comparing production under alternative approaches for contro lling orchard replant disease. In this case, we focus on prune production in California that is broadly representative of st one fruit production with high fumigant use. This represents a heavy soil en vironment 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 ch loropicrin. This result would also apply to cherry, peach and nectarine, and plum grown on heavier soils. We assume in this analysis that 1,3-D is available for us e as a fumigant, which will not necessarily be the case, due to township caps in California. If ne ither methyl bromide or 1,3-D are available, the consequences are expected to be more dire.

Replacing methyl bromide with 1,3-D, while maintaining the use of chloropicrin, is estimated to result in a 4% decrease in prune yields during production (Carpenter et al. , 2000). Yield losses are due to soil pathogens that in fect the trees at an early age, stunting their growth. Table 3 presents the expected differences in produc tion and revenue for Ca lifornia prune, where operating costs are taken from Buchner et al. (2001). Harvest costs are assumed to be directly proportional to yield. Differences in net operating revenue for ev en small changes in yield can be substantial. This analysis suggests th at the benefits of methyl bromide alone are approximately $125/hectare.

USA CUN12 SOIL Orchard Replant Open Field Page 13 of 19Table 3. Gross revenue, operating costs, a nd net operating 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%) Sources: USDA NASS (2002-2006), Buchner et al. (2001), BEAD calculations. Figures may not sum due to rounding.

1 Percent change in comparison to me thyl bromide with chloropicrin.

The analysis in Table 3 does not consider the i nvestment producers must make in establishing an orchard and maintaining it through several non-bearing years. Tabl e 4 presents the information on net operating revenue, NPV, and IRR for a prune orchard under the treat ment options. Field preparation costs are similar for any type of fu migation, 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 incorporates typi cal application rates. Trees are planted the following spring and costs are identical regardless of fumigant. BEAD assumes that some trees must be replanted the following year. We assume that 2% are re planted following fumigation with methyl bromide an chloropicrin (Buchner et al. , 2001); 3% are replanted with 1, 3-D and chloropicrin; The higher replant rate represents the lower survival rate if nematodes are controlled but soil pathogens are

not and amount to two or four tree s. Trees begin to produce in the fourth year, initially at 20% of production, climbing to full producti on in the seventh year (Buchner et al. , 2001). Returns during full production are shown in Table 4.

USA CUN12 SOIL Orchard Replant Open Field Page 14 of 19Table 4. Net operating revenue, net present valu e (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%

Sources: Buchner et al. (2001), and BEAD calculations. Net operating revenues are not discounted; negative numbers represent costs greater than income. Net present value is calculated assuming 7%

discount rate.

1 Fumigation costs include chemical costs and application costs.

2 In addition to operating costs, non-be aring 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 used

alone.

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

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

Assuming a 7% rate of interest, prune production does 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, methyl bromide provides substantial benefits over 1,3-D. Failure to adequately control soil pathogens substantially reduces the return to investing in a prune orchard. This result would also apply to cherry, peach and nectarine, and plum grown on heavier soils.

USA CUN12 SOIL Orchard Replant Open Field Page 15 of 198. RESULTANT CHANGES TO RE QUESTED EXEMPTION QUANTITIES

TABLE 5. N OMINATION A MOUNT :

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 2011: Amount (kgs) 134,696 8,544 22,200 17,575 20,577 203,592

Quantity Recommended by

MBTOC/TEAP for 2011 : Amount (kgs) 126,992 6,260 18,443 16,599 14,938 183,232

Amount (kgs) 126,992 6,260 18,443 16,599 14,938 183,232

Area (ha) 635 31 92 83 75 916

Rate 200 200 200 200 200 200

Transition from 2011 Baseline Adjusted Value Percentage (%) -90% -90% -90% -90% -90% -90%

Amount (kgs) 12,700 626 1,844 1,660 1,494 18,324

Area (ha) 63 3 9 8 7 92

Rate 200 200 200 200 200 200 SECTOR ORCHARD REPLANT

Quantity Approved by Parties

for 2011:

Quantity Required for

2012 Nomination:

USA CUN12 SOIL Orchard Replant Open Field Page 16 of 19CITATIONS

Beede, R. H., Kluepfel, D. A., McKenry, M. 2009. Update on a preplant methyl bromide alternatives trial in a walnut replant site. Annual Intern ational Research Confer ence on Methyl Bromide Alternatives (2009). http://www.mbao.org/2009/Proceedings/034BeedeBMBAOabstr2009.pdf

Beede, R. H., Kluepfel, D. A., McKenry, M., Yaka be, L. Garcia, T. 2008. Examination of preplant methyl bromide alternatives in a walnut tree replant site. Annual International Research Conference on Methyl Bromide Alternatives (2008). http://www.mbao.org/2008/Proceed ings/016KluepfelDMBAOabstr2008.pdf

Browne, G., Holtz, B., Upadhyaya, S., Lampinen, B., Doll, D., Schmidt, L., Edstrom, J., Shafii, M., Hanson, B., Wang, D., Gao, S., and Klonsky, K. 2009. Integrated pre-pl ant alternatives to methyl bromide for almonds and other stone fru its. Annual Internationa l Research Conference on Methyl Bromide Alternatives (2009). http://www.mbao.org/2009/Proceed ings/033BrowneGm bao2009fin.pdf

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 Klonsky, K. 2008. Integrated pre-plant alternatives to methyl brom ide for almonds and other stone fruits. Annual International Research Conference on Methyl Bromide Alternatives (2008). http://www.mbao.org/2008/Proceed ings/012BrowneGm bao2008fin.pdf

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 fruits. http://www.mbao.org/2007/Proceedings/008BrowneGm bao2007.pdf

Browne, G. T., Connell, J. H., Schneider, S. M. 2006. Almond replant dis ease and its management with alternative pre-plant soil fumigation treat ments and rootstocks. Plant Disease 90:869-876.

Buchner, R. P., Edstrom, J. P., Hasey, J.K, Kruege r, W. H., Olson, W. H., Reil, W. O., Klonsy, K. M., and DeMoura, R. L. 2002. Sample costs to es tablish a walnut orchar d and produce walnuts. University of California Coope rative Extension, WN-SV-02. http://cetehama.ucdavis.edu/files/47479.pdf

Buchner, R. P., Edstrom, J. P., Krueger, W. H ., Olson, W. H., Reil, W. O., Klonsy, K. M., and DeMoura, R. L. 2001. Sample costs to es tablish a prune orchard and produce prunes. University of California Coope rative Extension, WN-SV-02. http://coststudies.ucdavis .edu/files/prunesac2001.pdf

Caprile, J. and McKenry, M. 2006. Orchard replant considerations . 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/C rop_Currents10064.pdf

USA CUN12 SOIL Orchard Replant Open Field Page 17 of 19Coates, R., Shafii, M., Upadhyaya, S. K., and Browne, G. 2007. Tree planting site-specific fumigant application to control almond replant disease. Annual Intern ational Research Conference on Methyl Bromide Alternatives (2007). http://www.mbao.org/2007/Proceedings /009UpadhyayaSMBATreePlantingSite.pdf

Fennimore, S. and Goodhue, R. 2009. Estimated costs to disinfest soil with steam. Annual International Research Conference on Methyl Bromide Alternatives (2009). http://www.mbao.org/2009/Proceedings/ 003Fennim oreSMBAOAbstractSteambusiness.pdf

Klonsky, K., Lampinen, B., and Browne, G. 2009. Economic performance of alternative preplant fumigation treatments for almonds. Annual Inte rnational Research Conference on Methyl Bromide Alternatives (2009). http://www.mbao.org/2009/Proceedi ngs/007KlonskyKMBAOsub missoin.pdf

Kluepfel, D. and Beede, B. 2007. Methyl bromide al ternatives for use in wa lnut production systems.

Annual International Resear ch Conference on Methyl Br omide Alternatives (2007). http://www.mbao.org/2007/Proceedings/ 010KluepfelMethylbrom idealterantives.pdf

McKenry, M. and Buzo, T. 2009. Evaluation of ‘sta rve and switch’ approach to replanting trees.

Annual International Resear ch Conference on Methyl Br omide Alternatives (2009). http://www.mbao.org/2009/Pr oceedings/048McKenryMMBAO09.pdf

McKenry, M., Buzo, T., and Kaku, S. 2007. Replan ting vineyards without soil fumigation. Annual International Research Conference on Methyl Bromide Alternatives (2007).http://www.mbao.org/2007/Proceedings/050McKenryMReplantVineyardswoutsoifumigMBAO2007.pdf

McKenry, M., Buzo, T., and Kaku, S. 2006. Replanti ng stone fruit orchards without soil fumigation. Annual International Research Conference on Methyl Bromide Alternatives. http://www.mbao.org/2006/06Proceedings/028McKenrySummary2006.pdf

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UC (University of California) Pest Management Guidelines. 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., Shafii, M., and Udompetaikul, V. 2008. Tree planting site-specific fumigant application to control almond re plant disease. Annual International Research Conference on Methyl Bromide Alternatives (2008). http://www.mbao.org/2008/Proceedings/019UpadhyayaSMBA2008.pdf

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