EPA-230/l-7B-065f
SEPTEMBER 137G
This document has not been
submitted to NTIS, therefore it
should be retained.
ECONOMIC ANALYSIS OF
INTERIM FINAL EFFLUENT GUIDELINES
FOR THE
PESTICIDES AND AGRICULTURAL
CHEMICALS INDUSTRY GROUP II
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Water Planning and Standards
Washington, D.C. 20460
\
UI
o
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This document is available in limited quantities through the
U. S. Environmental Protection Agency, Economic Analysis
Staff (WH-586), 401 M Street, S.W., Washington, D.C. 20460.
This document will subsequently be available through the
National Technical Information Service, Springfield, VA 22151.
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EPA-230/1-76-065f
ECONOMIC ANALYSIS OF INTERIM FINAL
EFFLUENT GUIDELINES FOR THE PESTICIDES
AND AGRICULTURAL CHEMICALS INDUSTRY —
GROUP II
Prepared for
OFFICE OF WATER PLANNING AND STANDARDS
ENVIRONMENTAL PROTECTION AGENCY
Washington, D.C. 20460
under
Contract No. 68-01-1541
Task Order No. 39
September 1976
*****
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This report has been reviewed by the Office of Water Planning and Standards, EPA, and
approved for publication. Approval does not signify that the contents necessarily reflect the
views and policies of the Environmental Protection Agency, nor does mention of trade
names or commercial products constitute endorsement or recommendation for use.
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PREFACE
The attached document is a contractor's study prepared for the Office of Water Planning
and Standards of the Environmental Protection Agency (EPA). The purpose of the study is to
analyze the economic impact which could result from the application of alternative effluent
limitation guidelines and standards of performance to be established under sections 304(b) and
306 of the Federal Water Pollution Control Act, as amended.
The study supplements the technical study (EPA Development Document) supporting the
issuance of proposed regulations under sections 304(b) and 306. The Development Document
surveys existing and potential waste treatment control methods and technology within particular
industrial source categories and supports proposal of certain effluent limitation guidelines and
standards of performance based upon an analysis of the feasibility of these guidelines and
standards in accordance with the requirements of sections 304(b) and 306 of the Act. Presented
in the Development Document are the investment and operating costs associated with various
alternative control and treatment technologies. The attached document supplements this analy-
sis by estimating the broader economic effects which might result from the required application
of various control methods and technologies. This study investigates the effect of alternative
approaches in terms of product price increases, effects upon employment and the continued
viability of affected plants, effects upon foreign trade and other competitive effects.
The study has been prepared with the supervision and review of the Office of Water
Planning and Standards of EPA. This report was submitted in fulfillment of Contract No. 68-01-
1541, Task Order No. 39 by Arthur D. Little, Inc. Work on the main report was completed as of
September 1976, and on the supplement as of December 1976.
This report is being released and circulated at approximately the same time as publication
in the Federal Register of a notice of interim final rule-making under sections 304(b) and 306 of
the Act for the subject point source category. The study is not an official EPA publication. It will
be considered along with the information contained in the Development Document and any
comments received by EPA on either document before or during proposed rule making pro-
ceedings necessary to establish final regulations. Prior to final promulgation of regulations, the
accompanying study shall have standing in any EPA proceeding or court proceeding only to the
extent that it represents the views of the contractor who studied the subject industry. It cannot be
cited, referenced, or represented in any respect in any such proceeding as a statement of EPA's
views regarding the subject industry.
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TABLE OF CONTENTS
Page
List of Tables vU
1.0 EXECUTIVE SUMMARY 1
1.1 INTRODUCTION 1
1.2 PURPOSE AND SCOPE 2
1.3 PRESCREENING 2
1.4 CHARACTERIZATION OF THE PESTICIDE INDUSTRY 3
1.4.1 The Manufacturers 3
1.4.2 The Formulators 4
1.5 CONCLUSIONS - ECONOMIC IMPACT ON THE
PESTICIDE MANUFACTURERS 4
1.5.1 Economic Analysis for AH Pesticide Products
Based Upon the Farmers' Decision-Making Process 5
1.5.2 Economic Analysis of Selected Pesticide Products
Based on Price and Production Effects 5
1.5.3 Technical Analysis 6
1.5.4 Telephone Survey 6
1.5.5 Estimated Cost of Compliance 7
1.6 LIMITATIONS OF THE ANALYSIS 7
2.0 INDUSTRY CHARACTERIZATION 9
2.1 GENERAL PESTICIDE INDUSTRY DESCRIPTION 9
2.2 DESCRIPTION OF SUBCATEGORIES OF THE INDUSTRY 9
2.2.1 Subcategory A — Halogenated Organics 9
2.2.2 Subcategory B — Phosphorus-Containing Compounds 17
2.2.3 Subcategory C — Nitrogen-Containing Compounds 17
2.2.4 Subcategory D — Metallo-organics 18
2.2.5 Subcategory E - Formulators 18
2.3 PRICES BY SUBCATEGORY 20
2.3.1 Structure and Pricing Policy of the Pesticide Industry 20
2.3.2 Estimated Subcategory Prices 20
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TABLE OF CONTENTS (Continued)
Page
3.0 PROPOSED TREATMENT TECHNOLOGY AND ASSOCIATED COSTS 23
3.1 SUBCATEGORY A 23
3.2 SUBCATEGORY B 24
3.3 SUBCATEGORY C 25
3.4 SUBCATEGORY D 25
4.0 PRESCREENING OF ECONOMIC IMPACT OF EFFLUENT GUIDELINES 31
4.1 PRESCREENING METHODOLOGY 31
4.2 ECONOMIC AND TECHNOLOGICAL FACTORS 33
5.0 ECONOMIC IMPACT OF THE INTERIM FINAL EFFLUENT GUIDE-
LINES ON THE PESTICIDES INDUSTRY 35
5.1 ECONOMIC ANALYSIS 35
5.1.1 Analysis of all Pesticide Products Based Upon the
Farmers' Decision-Making Process 35
5.1.2 Analysis of Selected Pesticide Products Based
on Price and Production Effects 41
5.2 TECHNICAL ANALYSIS 42
5.3 TELEPHONE SURVEY 44
5.3.1 Manufacturers 44
5.3.2 Formulators 44
5.4 ESTIMATED COST OF COMPLIANCE 46
6.0 LIMITATIONS OF THE ANALYSIS 51
6.1 TECHNICAL LIMITATIONS 51
6.2 ECONOMIC LIMITATIONS 52
APPENDIX A - INFORMATION ON PESTICIDE MANUFACTURE 53
APPENDIX B - PATENT EXPIRATIONS (1975-1986) 89
SUPPLEMENT 93
vi
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LIST OF TABLES
Table No. Page
1.4 Estimated Composition of Pesticide Sales in the
United States in 1975 4
2.1A Manufacturers Producing Pesticides in 1974 10
2.1B Total U.S. Pesticide Production - (1960-1974) 12
2.1C Estimated Composition of U.S. Pesticide Sales (1975) 13
2.1D U.S. Herbicide Production (1960-1974) 14
2.1 E U.S. Insecticide Production (1960-1974) 15
2.1 F U.S. Fungicide Production (1960-1974) 16
2.2.1 Halogenated Organic Pesticide Groupings and Use 17
2.2.3 Nitrogen Containing Pesticide Groupings and Use 18
2.3.2 Estimated U.S. Pesticide Subcategory Prices (1975) 21
3.0A Effluent Limitations Guidelines — Best Practicable
Control Technology Currently Available (BPCTCA)
Pesticides and Agricultural Chemicals Industry 24
3.4A Effluent Guidelines Wastewater Treatment Capital
Investment for Representative Manufacturing Plants
in the Pesticides and Agricultural Chemicals Industry 26
3.4B Effluent Guidelines Wastewater Treatment Costs
Pesticides and Agricultural Chemicals Industry 27
3.4C Comparison of Unit Wastewater Generation Rates 29
4.2 Information Table — Miscellaneous Chemicals Industry,
Industry Category — Pesticides 34
5.1.1 Input Elements for Decision-Making Regarding
Pesticide Usage 38
VII
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LIST OF TABLES (Continued)
Table No. Page
5.1.2 Summary of Economic Impact Probabilities Due to
Added Waste Treatment Costs - Selected Pesticide
Chemicals 43
5.2 Review of Development Document Information on
Installed Treatment Vs. BPCTCA Cost Models 45
5.3.2 Results of the Telephone Survey 47
VIM
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1.0 EXECUTIVE SUMMARY
1.1 INTRODUCTION
This report is one of a series of reports being prepared by Arthur D. Little, Inc. (ADL), for
the Environmental Protection Agency (EPA) under Contract No. 68-01-1541, Task No. 39. The
overall objective of this task is the determination of the economic impact that the EPA interim
final effluent limitations will have on eight point-source categories. The EPA has named the
following industries as point-source categories:
• Pharmaceuticals (SIC 2831, 2833, and 2834);
• Gum and Wood Chemicals (SIC 2861);
• Pesticides and Agricultural Chemicals (SIC 2879 and those establishments en-
gaged in manufacturing agricultural pest control chemicals covered under SIC 281
and 286);
• Adhesives (SIC 2891);
• Explosives (SIC 2892);
• Carbon Black (SIC 2895);
• Photographic Processing (SIC 7221, 7333, 7395, 7819); and
• Hospitals (SIC 8062, 8063, and 8069).
This report on the Pesticides and Agricultural Chemicals Industry is concerned only with
point source dischargers of pesticides (including insecticides, fungicides and herbicides). For this
reason, we will refer only to the Pesticides Industry in the remainder of this report.
The primary sources of effluent treatment information used to prepare this report were the
Development Document for Interim Final Effluent Limitations Guidelines and Proposed New
Source Performance Standards for the Pesticide Industry, dated August 1976, with revisions
dated August 16, 1976, and the Draft Development Document for the Agricultural Chemicals
Point-Source Category, dated February 1975, by Roy F. Weston, Inc. In addition to the previously
listed documentation, estimates of costs required by each plant in the industry to meet the
effluent guidelines are being prepared for EPA by Environmental Science and Engineering, Inc.
(ESE). The report containing the ESE estimates is unfinished. A supplement to this report
incorporating the ESE estimates will be prepared at a later date.
The Development Document has broken the Pesticide Industry into five subcategories:
1. Manufacturers of halogenated organic pesticides — In most cases, the halogen
component is chlorine. The chlorine groups are generally added via direct chlorina-
tion or via substitution from another chlorinated organic.
2. Manufacturers of organo-phosphorus pesticides — This subcategory covers phos-
phates, phosphonates, phosphorothioates, phosphonothioates, and phosphorus-ni-
trogen pesticide types.
3. Manufacturers of organo-nitrogen pesticides — This subcategory has more family
groups and is the most diverse of all the pesticide subcategories.
4. Manufacturers of metallo-organic pesticides.
5. Formulators.
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1.2 PURPOSE AND SCOPE
The purpose of this report is to assess the economic impact on the Pesticides and Agricul-
tural Chemicals Industry of the cost of meeting the BPCTCA* standards for pollution abatement
applicable to the discharge of water effluents from point sources.
Compliance with the BPCTCA water pollution abatement standards may require the
industry to install new physical facilities in its present operations, modify its current technical
operations, or incorporate specialized facilities in new installations. Eventually, the industry may
have to install equipment and facilities capable of treating effluent water at three levels such
that:
• Level I — By 1977, for current industry installations, the BPCTCA is being used to
control the pollutant content in the streams discharged by the industry;
• Level II — By 1983, for current industry installations, the best available technology
economically achievable (BATEA) is being similarly used; and
• Level III — New source performance standards (NSPS) for new industry installa-
tions discharging directly in navigable waters that will be constructed after the
promulgation of applicable guidelines for water pollution abatement; facilities will
be incorporated that will be capable of meeting these guidelines.
This report presents the results of a prescreening process and further technical and eco-
nomic analyses applied to the manufacturers of pesticides to determine the economic impact of
the proposed BPCTCA effluent limitations.
1.3 PRESCREENING
As the first step in our prescreening procedure, we developed methodologies for selected
segments of the eight industries studied under this contract, to aid our industry experts in
selecting those industry categories or subcategories that would probably not be significantly
impacted by the Interim Final Effluent Guidelines.
ADL industry experts initiated the project by studying the Development Document, com-
piling prescreen information, and preparing statements on factors which they believed would
have an economic impact on the industry. To aid them in preparing their comments, the ADL
experts used a table which described the information to be covered, and they completed the table
with brief descriptions. In preparing their comments and completing the information table, the
industry experts based their comments only on their own personal knowledge, or information they
could readily retrieve, as directed. This limitation was invoked to prevent an excessive use of
available resources in conducting the prescreen exercise. The completed information tables and
the accompanying industry expert comments are contained in Table 4.2 in this report.
•Best practicable control technology currently available.
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To determine which industry subcategories we could recommend for elimination from
further economic impact study, we analyzed the information of the industry experts against
several criteria. If an industry subcategory met any one (or a combination) of these criteria, we
considered its elimination. The criteria:
1. The industry subcategory was generating no wastewater.
2. The ratio of BPCTCA* plus BATEA** to selling price was less than 2% and/or the
ratio of BPCTCA plus BATEA to profits was less than 15%.
3. Practically all of the plants in the subcategory were currently discharging into
municipal sewage systems and would continue to do so with little or no pre-
treatment costs incurred.
4. The treatment facilities recommended in the Development Document had already
been installed in practically all of the plants of the subcategory.
The prescreen indicated that all the subcategories of pesticide manufacture that do dis-
charge wastewater might be adversely affected by the proposed standards. Thus further analysis
was required.
1.4 CHARACTERIZATION OF THE PESTICIDE INDUSTRY
The pesticide industry is a major sector of the U.S. Chemical Industry with 1975 sales
exceeding $2160 million (manufacturers' value). Table 1.4 summarizes pesticide sales in 1975.
The major market for pesticides in the United States is agriculture which we estimate consumes
more than 90% of the pesticides used in the country.
Pesticides are usually classified as herbicides, fungicides, or insecticides. Virtually all
domestic production of pesticides falls within these three classes, although small amounts of
rodent- and bird-control materials are also produced.
1.4.1 The Manufacturers
Between 1970 and 1974 the quantity of pesticides produced more than doubled, and the
manufacturers' value of pesticide production increased by more than fourfold. The largest single
component of U.S. pesticide production is herbicides which account for about 60% of the total
pesticide value. During the 1960's herbicide production experienced considerable growth. How-
ever, since 1968 pesticides and fungicides have shown faster growth rates.
A relatively small number of firms is involved in the manufacture of pesticides, but they
manufacture a wide variety of products. Of these firms, we estimate that the 10 largest account
for about 75% of total U.S. pesticide sales.
The companies which dominate the pesticide industry, for the most part, achieved their
position through the sale of proprietary products. Industry observers estimate that the relative
profitability (per sales dollar) of proprietary products is normally at least double that for products
which do not have patent protection.
*Best Practicable Control Technology Currently Available.
"Best Available Technology Economically Achievable.
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TABLE 1.4
ESTIMATED COMPOSITION OF PESTICIDE SALES
IN THE UNITED STATES IN 1975
Volume Manufacturers' Value* Average Price
Class Metric Tons Million Lb Percent Million $ Percent $/kg $/lb
Herbicides 281,000 620 43 1,350 63 4.80 2.18
Insecticides 299,000 660 46 650 30 2.16 0.98
Fungicides 77,000 170 11 160 7 2.07 0.94
657,000 1,450 100 2,160 100
"Represents the value of active ingredients at the manufacturer's level.
Source: Arthur D. Little, Inc., estimates based on U.S. Department of Commerce data.
1.4.2 The Formulators
The formulators are difficult to characterize with any degree of accuracy. There are many
small formulators for whom statistics are not readily available. Midwest Research Institute has
indicated that there are 5300 plants manufacturing pesticide formulations. However, the 1972
Census of Manufactures shows only 388 establishments whose primary business is in SIC 2879,
the SIC category covering pesticide formulators. Economic data specific to the formulator
segment of the industry are virtually nonexistent, because pesticide manufacturing and formulat-
ing are often intertwined, both physically and financially.
1.5 CONCLUSIONS — ECONOMIC IMPACT ON THE PESTICIDE
MANUFACTURERS
The prescreen exercise indicated that there was a possibility of significant impact to each
subcategory of the pesticide industry if the Development Document treatment costs were in-
curred. To determine whether there would indeed be a significant impact to the industry, we
undertook four tasks:
1) examined the farmers' decision-making process for purchasing pesticides;
2) examined price and production effects that the proposed standards might have on
20 representative pesticides if the Development Document treatment costs were
incurred;
3) evaluated the technology presently installed; and
4) surveyed pesticide manufacturers and formulators (by telephone) to determine
their present effluent treatment practices.
We selected the 20 representative products used for the examination of price and production
effects on a subjective basis. We believe they reflect a broad spectrum of the chemical sub-
categories, product cost, pesticidal action, proprietary status, and market environment. The
representative products have annual sales volumes substantially above the industry average.
Selection of such products was necessary to ensure that adequate economic data were available
for the impact analyses.
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We based our economic analysis heavily on the cost estimates presented in the Development
Document, and we developed those estimates using a "model plant" approach. The model does
not consider the fact that some of.the required treatment measures are now in place. Thus, in
terms of industry-wide treatment costs, the use of the Development Document cost model results
in an overestimation. Because the cost model overestimates treatment costs, EPA commissioned
an estimation of the plant-by-plant costs that would be incurred in meeting the effluent guide-
lines. The plant-by-plant estimates were not available for inclusion in this report. Consequently,
they will be covered in a supplement to this report when they become available.
1.5.1 Economic Analysis for All Pesticide Products
Based Upon the Farmers' Decision-Making Process
The conclusions we reached by examining how farmers make decisions concerning pesticide
use are:
• There is no "typical" farmer with respect to decisions regarding pesticide usage.
Thus, while generalizations are possible for specific compound use/crop situations,
generalizations are seldom valid for agriculture as a whole.
• The principal determining factor as to the extent and manner in which a farm
enterprise employs pesticides is the potential or expected increase in income
resulting from chemical treatment.
• Three factors tend to influence a farmer's decision as to how he will employ
pesticides: (1) the level of pesticide price increase; (2) the presence and degree of
any crop price change; and (3) the efficacy of the control compound, i.e., the
marginal yield-response relationship for each unit of pesticide input.
• If crop prices remain relatively stable, a small increase in pesticide price is unlikely
to cause any shift in usage patterns since benefits from control generally far exceed
costs.
• Crop prices have not been relatively stable, but in some instances they have been
decreasing. For example, the price of corn has fallen, and this drop has resulted in
the yield increase attributable to the use of herbicides being worth less than the
cost of treatment.
• Continued increases in pesticide prices in the face of stabilizing, or even falling,
crop prices are causing more and more farmers to reexamine their position with
respect to pesticide use. Additional increases in pesticide prices will further antag-
onize the worsening cost benefit situation of pesticide control programs for many
crops. A consequence of this will be a search for cheaper alternative pesticide
programs by many farmers.
1.5.2 Economic Analysis of Selected Pesticide Products
Based on Price and Production Effects
The conclusions we reached from examining price and production effects include:
• In each subcategory, there is a likelihood of a significant impact on small plants
producing low-price pesticides.
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• The competitive situations in major markets tend to be stringent. In all cases,
alternate pesticide products or pest control techniques are available to users of the
products studied. In only one case (MSMA) did a product have near total domi-
nance of the competitive environment in the product's major market observed.
• The marginal benefits associated with pest control in the major markets are in all
cases favorable. Users of the products are aware of their benefits.
• The ability to pass production cost increases through to pesticide consumers
appears to be a function of the competitiveness of the market. In cases where
strong competition for a crop/pest market was observed, pricing flexibility was
decreased.
• The most important factor affecting potential economic impact appears to be the
proprietary status of the product. Of the 10 non-proprietary products studied, we
judged eight products to be susceptible to medium or high impact. Some of the
reasons for this susceptibility are: (1) the presence of a single dominant firm in the
industry and a number of smaller firms likely to be impacted through lack of
pricing flexibility; (2) the presence of competition from strong non-U.S. produc-
ers; and (3) sales of low-price products in extremely price-sensitive markets.
The significance of the high impact on non-proprietary compounds is likely to increase. We
estimate that there are 300 major pesticide products and that one-third of the products now have
proprietary status. In the near future, many products will lose their patent protection.
1.5.3 Technical Analysis
We attempted to compare the existing treatment with the treatment methods used in
developing the BPCTCA cost models. Of all the plants in categories A, B, C, and D discussed in
the Development Document, not one has installed all the treatment steps included in the
respective BPCTCA cost models. In fact, the majority of the plants had treatment systems that
were far less complex than those upon which the Development Document cost models were based.
1.5.4 Telephone Survey
At the beginning of this study, we conducted an informal telephone survey of pesticide
manufacturers and formulators. Survey results showed that no formulators and only one pesticide
manufacturer did not meet the guidelines then being proposed. Subsequent to the survey, the
proposed BPCTCA standards for manufacturers were changed, but no changes were made in the
standards for formulators. The addition of a COD requirement and total pesticides requirement
were the two major changes made to the standards for manufacturers. A treatment system
presently meeting a BOD standard will not necessarily be able to meet a COD requirement.
Meeting BOD and COD requirements simultaneously in many instances involves one step for
removing BOD and another step for removing COD. Control of total pesticides requires addi-
tional treatment steps and complicated chemical analyses to assure compliance.
We believe that the changes in the effluent standards for manufacturers have invalidated
the findings of our original telephone survey. If actual plants incur costs that are similar to those
presented for the model plants in the Development Document for achieving the BPCTCA
standards, it is possible that compliance with the standards could cause substitutions and other
impacts to the manufacturers. This possibility is more likely for small plants manufacturing low-
price pesticides.
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While this survey is being completed, we were preparing a plant-by-plant estimation of
BPCTCA costs. The results of this estimation may permit refinement of the preceding
conclusions.
1.5.5 Estimated Cost of Compliance
The costs in the Development Document, based on a model plant approach, were intended
for use in a microeconomic impact analysis of the effluent guidelines. They do not permit an
estimate of the total capital and operating costs that the industry will actually incur. As
mentioned previously, ESE is preparing an estimate of actual plant-by-plant costs. This esti-
mate, however, is not presently available. Consequently, the estimated cost of compliance will be
covered in a supplement to this report.
1.6 LIMITATIONS OF THE ANALYSIS
When we completed our initial analysis in April 1976, we concluded that the BPCTCA
standards being proposed at that time would not have a measurable economic impact on the
manufacturers of pesticides. Subsequent to the analysis, however, a new Development Docu-
ment, dated July 6,1976, was prepared. Revisions to this document, dated August 16,1976, were
made. The differences between the old and new Development Documents and our earlier infor-
mation invalidated our initial findings, as they were made on different bases.
Thus, the analysis described in this report had to be qualitative in nature. Quantitative
determination of the price and output effects of compliance costs requires data that are not
available. One type of data required is the estimated plant-by-plant costs required to meet the
BPCTCA standards. These data are presently being prepared by ESE and will be incorporated
into a supplement to this report which will be prepared at a future date.
While making the economic assessment discussed in this report, we identified certain
deficiencies and omissions in the cost models. These placed further limitations on the analysis
discussed in this report. Among the technical areas which have contributed to the limiting of the
economic analysis are:
1) Effluent loadings from the production of pesticide intermediates are not taken into
account. Taking these effluents into account will tend to lower the treatment costs
shown in the treatment cost models.
2) Simultaneous standards for BOD and COD, as well as the inclusion of a "total
pesticides" effluent requirement, impose different treatment requirements for indi-
vidual plants within a subcategory. Therefore, to make a meaningful estimate of
BPCTCA treatment costs necessitates a plant-by-plant assessment of required
wastewater treatment steps and their associated costs instead of a model plant
approach.
3) The analytical costs that would be incurred in meeting the BPCTCA standards
ought to be included. Complicated chemical analyses are required to assure com-
pliance with the BPCTCA standard for total pesticides.
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2.0 INDUSTRY CHARACTERIZATION
2.1. GENERAL PESTICIDE INDUSTRY DESCRIPTION
In 1974, 82 companies reported the manufacture of pesticides to the U.S. International
Trade Commission (Table 2.1 A). Not all of those companies manufactured large volumes of
pesticides and not all of the pesticides manufactured were covered by the proposed effluent
guidelines. The pesticides manufacture reported to the Commission included inorganic chemicals
with pesticide applications and organic reagents, such as methyl bromide, which are sometimes
used as a pesticide.
The Pesticide Industry, with 1975 sales in excess of $2160 million (manufacturers' value), is
a major sector of the U.S. Chemical Industry. The major market for pesticides in the United
States is agriculture. We estimate that more than 90% of all pesticides consumed domestically
are used for the protection of agricultural products.
The most common categorization of pesticides is by type of pest controlled, viz., weeds,
insects, fungal diseases, etc. Three classes of products — herbicides, fungicides, and insecticides
(including nematocides and acaracides) — compose virtually all domestic pesticide production,
although small amounts of rodent and bird control materials are also produced.
The physical volume of pesticide production more than doubled between 1960 and 1974.
During the same period, the manufacturers' value of this production increased by more than
400%. Historical information on U.S. pesticide production, value, and average price are presented
in Table 2.IB.
The largest single component of U.S. pesticide production in terms of value is herbicides.
Herbicides, with an average manufacturer's price of $4.80/kg ($2.18Ab), accounted for about 60%
of total pesticide value in 1975, while providing less than 45% of pesticide poundage. The relative
importance of the three product classes is given in Table 2.1C.
The proportionate value of these components has changed considerably since 1960 with
herbicide production exhibiting dramatic growth during the 1960's. Since 1968, however, both
insecticides and fungicides have exhibited a greater annual growth rate in sales than herbicides.
Historical production and value data for herbicides, insecticides and fungicides is presented in
Tables 2.1D, 2.1E, and 2.1F.
2.2 DESCRIPTION OF SUBCATEGORIES OF THE INDUSTRY
2.2.1 Subcategory A — Halogenated Organics
The Roy F. Weston, Inc. (Weston) report identified 98 products as members of this sub-
category. The subcategory was further broken down into five groups. A listing of these groups and
the major use of the products within the groups are given in Table 2.2.1.
The halogenated organic compounds cover the entire spectrum of pesticide usage, as the
information presented in Table 2.2.1 indicates. Several of the more significant compounds (in
terms of volume and/or value) in this subcategory are listed therein. The compounds marked with
an asterisk were selected as being representative of the subcategory and were used in the
economic impact analysis of the proposed standards on the subcategory. Data on those com-
pounds are presented in Appendix A.
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TABLE 2.1A
MANUFACTURERS PRODUCING PESTICIDES IN 1974
Name of Company
Name of Company
Abbott Laboratories
Allied Chemical Corp., Union Texas
Petroleum Div., Agricultural Dept.
American Cyanamid Co.
Alco Chemical Corp.
Alpha Laboratories, Inc.
Amchem Products, Inc.,
Div. of Rorer-Amchem, Inc.
Kerr-McGee Chemical Corp.
Arapahoe Chemical, Inc. Sub. of
Syntex Corp. (U.S.A.)
Ashland Oil, Inc., Ashland
Chemical Co. Div.
Ansul Chemical Co.
Buckman Labs., Inc.
Interstab Chemical, Inc.
Ciba-Geigy Corp.,
Ciba Agricultural Co.
Chemical Formulators, Inc.
Mobay Chemical Corp., Chemagro Agricultural
Div.
W.A. Cleary Corp.
Upjohn Co., Fine Chemical Div.
Diamond Shamrock Corp.
Dow Chemical Co.
E.I. duPont de Nemours & Co., Inc.
E.F. Houghton & Co.
Eagle River Chemical Corp.
Ferro Corp., Ferro Chemical Div.
FMCCorp.:
Agricultural Chemical Div.
Industrial Chemical Div.,
Organic Business Group
Fairmount Chemical Co.
Vulcan Materials, Co., Chemical Div.
GAF Corp., Chemical Div.
Gulf Oil Corp., Gulf Oil
Chemical Co.-U.S.
Guth Chemical Co.
Great Lakes Chemical Corp.
Hooker Chemicals & Plastics Corp.
Tenneco Chemicals, Inc.
Hercules, Inc.
Lakeway Chemicals, Inc.
Eli Lilly & Co.
Mallinckrodt Chemicals Works
Michigan Chemical Corp.
Millmaster Onyx Corp., Millmaster Chemical
Co. Div., Berkeley Chemical Dept.
Mooney Chemical Corp.
McLaughlin, Gormley & King Co.
Monsanto Co.
Motomoco, Inc.
Merck & Co., Inc.
Morton Chemical Co. Div. of Morton-Norwich
Products, Inc.
Montrose Chemical Corp. of California
Nease Chemical Co., Inc.
Nalco Chemical Co.
Niklor Chemical Co.
Olin Corp.
Chevron Chemical Co.
Story Chemical Corp.
Pennwalt Corp.
Pfister Chemical, Inc.
CPC Internationa!, Inc., Penick Div.
Pfizer, Inc.
Pierce Organics, Inc.
Phillips Petroleum Co.
PPG Industries, Inc.
Pike Chemicals, Inc.
Reichhold Chemicals, Inc.
Rhodia, Inc.
Rohm & Haas Co.
Riverdale Chemical Co.
R.S.A. Corp.
Sandoz Corp., Crop Protection Dept.
Sobin Chemical Co.
Stauffer Chemical Co.:
Agricultural Div.
Calhio Chemicals, Inc. Div.
Shell Oil Co., Shell Chemical Co. Div.
Mobil Oil Corp., Mobil Chemical Co. Div.
Thompson-Hayward Chemical Co.
Troy Chemical Corp.
Union Carbide Corp.
Universal Oil Products Co., UOP Chemical
Div.
Uniroyal, Inc., Chemical Div.
10
-------
TABLE 2.1A (Continued)
Name of Company Name of Company
Vinings Chemical Co. Vanderbilt Chemical Corp.
Velsicol Chemical Corp. Vicksburg Chemical Co. Sub. of Vertac
Vineland Chemical Co. Consolidated
Witco Chemical Co., Inc.
Source: U.S. International Trade Commission.
11
-------
TABLE 2.1B
TOTAL U.S. PESTICIDE PRODUCTION1 (1960-1974)
Volume
1. Herbicides, Insecticides, Fungicides.
2. Manufacturers' value.
3. Estimates.
Source: U.S. Tariff Commission and Arthur D. Little, Inc., estimates.
12
Average Price
Year
1960
1961
X
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
19743
Annual
)-1968
M974
Metric Tons
295,000
318,000
332,000
347,000
356,000
399,000
460,000
477,000
542,000
502,000
470,000
516,000
526,000
585,000
642,000
Growth (%)
Million
Ib.
648
700
730
764
783
877
1,013
1,050
1,192
1,104
1,034
1,135
1,157
1,289
1,415
8
2
Value2
Million $
306
366
458
453
513
607
761
988
1,138
1,113
1,087
1,276
1,313
1,453
1,950
18
6
$/kg
1.03
1.14
1.39
1.30
1.45
1.52
1.65
2.07
2.09
2.22
2.31
2.46
2.49
2.49
3.04
S/lb
0.47
0.52
0.63
0.59
0.66
0.69
0.75
0.94
0.95
1.01
1.05
1.12
1.13
1.13
1.38
9
3
-------
TABLE 2.1C
ESTIMATED COMPOSITION OF U.S. PESTICIDE SALES (1975)
Manufacturer's Value*
Class Metric Tons Million Percent Million $
Ib.
Herbicides 281,000 620 43 1,350
Insecticides 299,000 660 46 650
Fungicides 77,000 170 11 160
657,000 1,450 100 2,160
*Represents the value of active ingredients at the manufacturer's level.
Source: Arthur D. Little, Inc., estimates, based on U.S. Department of Commerce data.
Percent
63
30
100
Average Price
$/kg
4.80
2.16
2.07
$/lb
2.18
0.98
0.94
-------
TABLE 2.1D
U.S. HERBICIDE PRODUCTION (1960-1974)
Volume
*Manufacturers' value.
**Estimates.
Average Price
Year
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974**
Annual
3-1968
5-1974
Metric Tons
47,000
55,000
69,000
80,000
103,000
120,000
147,000
1 86,000
213,000
179,000
184,000
195,000
205,000
225,000
239,000
Growth (%)
Million
Ib.
103
121
151
175
226
263
324
409
469
393
404
429
451
496
525
21
2
Value*
Million $
79
113
147
166
243
302
386
617
718
662
663
800
816
844
925
32
4
$/kfl
1.69
2.05
2.13
2.09
2.38
2.53
2.62
3.32
3.37
3.70
3.61
4.09
3.98
3.74
3.87
$/lb
0.77
0.93
0.97
0.95
1.08
1.15
1.19
1.51
1.53
1.68
1.64
1.86
1.81
1.70
1.76
9
2
Sources: U.S. Tariff Commission and Arthur D. Little, Inc., estimates.
14
-------
TABLE 2.1 E
U.S. INSECTICIDE PRODUCTION (1960-1974)
Volume
Year
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974**
Annual
3-1968
3-1974
Metric Tons
166,000
187,000
210,000
217,000
202,000
223,000
251,000
225,000
259,000
260,000
223,000
254,000
256,000
290,000
302,000
Growth (%)
Million
Ib.
366
411
461
478
444
490
552
496
569
571
490
558
564
639
665
6
3
Value*
Million $
157
193
258
234
219
248
317
304
347
383
340
393
406
495
550
10
8
Average Price
$/kg
0.95
1.03
1.23
1.08
1.08
1.12
1.25
1.34
1.34
1.47
1.52
1.54
1.58
1.69
1.83
$/lb
0.43
0.47
0.56
0.49
0.49
0.51
0.57
0.61
0.61
0.67
0.69
0.70
0.72
0.77
0.83
4
5
*Manufacturers' value.
** Estimates.
Sources: U.S. Tariff Commission and Arthur D. Little, Inc., estimates.
15
-------
TABLE 2.1 F
U.S. FUNGICIDE PRODUCTION (1960-1974)
Volume
Year
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974**
Annual
D-1968
B-1974
Metric Tons
82,000
76,000
54,000
50,000
51,000
56,000
62,000
65,000
70,000
64,000
64,000
68,000
65,000
70,000
73,000
Growth (%)
Million
Ib.
180
168
118
111
113
124
137
144
154
141
140
149
143
154
160
-2
1
Value*
Million $
70
60
53
53
51
58
60
66
72
68
71
82
92
114
125
<1
10
Average Price
S/kg
0.86
0.79
0.99
1.06
0.99
1.03
0.97
1.01
1.03
1.06
1.12
1.21
1.41
1.63
1.72
S/lb
0.39
0.36
0.45
0.48
0.45
0.47
0.44
0.46
0.47
0.48
0.51
0.55
0.64
0.74
0.78
2
9
'Manufacturers' value.
"'Estimates.
Sources: U.S. Tariff Commission and Arthur D. Little, Inc., estimates.
16
-------
TABLE 2.2.1
HALOGENATED ORGANIC PESTICIDE GROUPINGS AND USE
Group Compound Use
A1 DDT* Insecticide
Dithiocarbamates Fungicide
Methoxychlor Insecticide
A2 2,4-D Herbicide
2,4,5-T* Herbicide
MCPA Herbicide
A3 Toxaphene Insecticide
Chlordane/heptachlor Insecticide
Endrosulfan Insecticide
Endrin Insecticide
A4 Methyl bromide Fumigant (insects,
weeds, rodents,
etc.)
Lindane Insecticide
A5 Dicamba* Herbicide
Amiben* Herbicide
Propanil Herbicide
* Representative of the subcategory and used in the economic impact analy-
sis of the prepared standards on this subcategory.
2.2.2 Subcategory B — Phosphorus-Containing Compounds
Ninety-three pesticide compounds were identified by Weston as belonging to this sub-
category. Although Weston further categorizes phosphorus compounds, in general it can be stated
that the major use of the phosphorus-containing compounds is insecticidal. The compounds
below marked with an asterisk were selected as being representative of the subcategory and were
used in the economic impact analysis of the proposed standards on this subcategory. Data on
them are presented in Appendix A. Some of the widely used compounds within this subcategory
are listed herein.
Methyl parathion* Guthion
Fenthion* Malathion*
Ronnel Disulfoton
Diazinon*
2.2.3 Subcategory C — Nitrogen-Containing Compounds
The 209 compounds Weston identified as being in this subcategory were subdivided into
seven groups. The groupings and primary uses of the products in these groupings are given in
Table 2.2.3.
17
-------
This subcategory contains some of the largest selling pesticide products in terms of value in
the United States. Among these "high sales" compounds are: Barban, Carbofuran, Carbaryl,
Butylate, EPTC, Alachlor, Linuron, Atrazine, Bladex and Trifluralin. All of these compounds,
except Carbaryl, are herbicides. With the exception of phenoxy herbicides and some other minor
products, all the significant herbicides used in the United States belong to this subcategory. In
addition, a limited number of significant fungicide and insecticide products are among the
nitrogen-containing compounds.
For evaluating the economic impact of the proposed standards, Barban, Linuron, and
Captan were selected as being representative of the subcategory, and data on them are also
presented in Appendix A.
TABLE 2.2.3
NITROGEN CONTAINING PESTICIDE GROUPINGS AND USE
Grouping Primary Use
CD Aryl and alkyl carbonates Insecticides, herbicides
C2) Thiocarbamates Herbicides
C3) Amides and amines Herbicides
C4) Ureas and uracils Herbicides
C5) s-Triazines Herbicides
C6) Nitro compounds Herbicides
C7) Other Fungicides, herbicides
2.2.4 Subcategory D — Metallo-organics
Of those considered, this subcategory is the smallest in both volume and value of pesticide
sales. The metallic compounds included in this category are primarily fungicides and herbicides,
although compounds with acaracidal action are also produced. The products MSMA and Plictran
were selected as case study subjects.
2.2.5 Subcategory E — Formulators
Pesticide formulation is difficult to characterize with any degree of accuracy. There are a
large number of small formulators for whom statistics are not readily available. According to
Midwest Research Institute, there are presently 5300 plants involved in pesticide formulations.
However, the 1972 Census of Manufactures shows only 388 establishments whose primary busi-
ness is in SIC 2879, the SIC category covering pesticide formulators.
18
-------
Companies owning pesticide formulation plants range in size from those having only one or
two registrations to those having hundreds. Plants in the formulation industry fall into one of the
following three categories: (1) the pesticide producer and formulator, (2) the independent for-
mulator, and/or (3) the small packager. However, for the purpose of establishing effluent guide-
lines, the Development Document groups all formulating and related activities, such as blending,
packaging, canning, etc., into a single subcategory. It is also important to recognize that in the
assembly of economic data for the Pesticides Industry a sharp distinction is not always made
between the actual manufacturer of the active ingredient and the formulator who provides the
finished product. Formulators are sometimes treated as pesticide manufacturers, in that they
"manufacture" the finished product. Thus, there is some overlap in terminology.
The independent formulator typically formulates a number of products which he markets
under his own brand, although he may also formulate products under a contractual arrangement
for a manufacturer. He often manufactures the contracted products under the manufacturer's
brand. The reason for contract formulation is that a number of large pesticide manufacturers do
not formulate any of their own products.
The small packager typically produces one to five formulations which he markets under his
own brand. Pesticide formulation often represents only a small portion of his business, and
sometimes small packagers will contract an independent formulator to do their formulation work.
A formulator takes technical-grade, pesticide-active ingredients, dilutes them, and trans-
forms them into a usable form. The dilution is carried out by combining the technical-grade
pesticides with an inert material. For efficacy reasons, a pesticide formulation will often be
composed of more than one type of active ingredient. For example, many formulations often
combine methyl parathion with toxaphene. In its final physical form, a formulation can be an
emulsifiable concentrate, a powder, a dust, or granules.
Emulsifiable concentrates are combinations of technical-grade pesticides and emulsifiers in
a solvent. The emulsifiable concentrate formulations are always diluted with water or oil before
application. Emulsifiable concentrates usually contain 15% to 50% concentrations of the techni-
cal-grade pesticide, although they can contain up to an 80% concentration of pesticide material
when combinations of different technical-grade materials are used. The concentration of emulsi-
fiers is usually 5% or less. Typical solvents used to make emulsifiable concentrates include
xylenes, methyl isobutyl ketone, and deodorized kerosene.
Powders are a mixture of pesticide, inert carriers, and adjuvants that are mixed with water
by the user before application. The powders usually contain a concentration of 15% to 95% of the
technical-grade pesticide and a concentration of 1% to 5% surfactant to improve wettability and
suspendability.
Dusts are formulations which contain a relatively low concentration of the technical-grade
pesticide absorbed onto an inert powder. While the toxicity of dusts is low, they are relatively
inexpensive and simple to apply. However, their use is becoming less common because of
problems caused by the ease with which they can be blown away by the wind.
Granules are similar to dusts and are formed by impregnating the technical-grade material
onto granular carriers. Common carriers include clay, vermiculite, sand, carbon, and dia-
tomaceous earth. The content of fine particles is minimized to prevent the problems that occur
with the use of dust.
19
-------
2.3 PRICES BY SUBCATEGORY
The diversity of the pesticide industry makes calculation of representative prices for prod-
ucts within each subcategory difficult. In the following section of the report, the structure of the
Pesticide Industry and pesticide pricing policy are described. These descriptions will help the
reader to consider our price estimates in perspective.
2.3.1 Structure and Pricing Policy of the Pesticide Industry
The Pesticide Industry is composed of a relatively small number of firms which produce a
wide variety of products, numbering approximately 1500. The industry is marked by considerable
concentration, with the 10 largest firms estimated to account for about 75% of total U.S. pesticide
sales. The industry is further stratified since less than 5% of the products (45) are estimated to be
responsible for nearly 70% of total pesticide sales value. In fact, industry experts estimate that as
few as 12 products comprise more than 40% of the total value of pesticide sales.
The significance of the stratification of the industry is as follows: a total of 486 compounds
(total for all subcategories) have been identified as being potentially relevant to this study and
300 of these compounds are judged to be major pesticide products. We estimate that 45 of the
compounds account for about 70% of total sales dollars (an average of about $25 million in annual
sales per product). Thus, the remaining 441 compounds have average annual sales of about $1
million each. The stratification of the industry results in the vast majority of products (about
90%) having either relatively low physical sales volume or relatively low product price. Either of
these situations would raise the possibility of substantial impact if increased production costs
were incurred.
Another critical factor in product pricing is the proprietary advantage which a company
may possess. The companies which dominate the Pesticide Industry, for the most part, achieve
their dominant positions through sales of proprietary products, i.e., products for which they hold
a patent position. Industry observers estimate that the relative profitability (per sales dollar) is
normally at least doubled for proprietary products versus commodity products (no patent pro-
tection). This profit relationship will, of course, vary with manufacturing costs, value of crop
protected, potential pest damage, etc.
The relative profitability of a product is also affected by the degree of competition existing
for control of a specific pest. For instance, some industry personnel believe that profitability per
sales dollar is generally higher for herbicides than for insecticides, because of the high degree of
competition in the insecticide market. The willingness/ability of the pesticide user to allow
profitable product pricing will also vary by crops, pest, and crop value. Growers of a high-value
crop would normally be more willing to absorb price increases than growers of low-value crops,
such as grain.
2.3.2 Estimated Subcategory Prices
Average product prices for the Pesticide Industry tend to be misleading because of the
extreme variance in any sample of prices. The following estimates therefore are presented as an
average and the range of prices from which that average was calculated (Table 2.3.2). The prices
presented in this table are prices to the pesticide user.
20
-------
Two things ought to be noted about the information in Table 2.3.2: (1) the range of prices
from which the average prices were calculated was quite large and, (2) the sample used to
calculate the average price tends to be of higher priced products.
TABLE 2.3.2
ESTIMATED U.S. PESTICIDE SUBCATEGORY PRICES (1975)
(User Level)
Category
Halogenated Organics*
Phosphorus-Containing*
Nitrogen-Containing*
Metallo-Organic*
All Herbicides
All Fungicides
All Insecticides
*Subcategory prices based on sample of 60 compounds total.
Source: Arthur D. Little, Inc., estimates.
Average
$/kg
6.40
4.62
10.23
5.72
6.82
2.64
3.19
Price
$/lb
2.91
2.10
4.65
2.60
3.10
1.20
1.45
Price
$/kg
0.77-15.40
1.87- 9.90
1.32-48.40
1.98-15.40
N
N
N
Range
$/lb
0.35- 7.00
0.85- 4.50
0.60-22.00
0.90- 7.00
.A.
.A.
.A.
21
-------
3.0 PROPOSED TREATMENT TECHNOLOGY
AND ASSOCIATED COSTS
Pesticide manufacturing operations are diverse, and the wastewaters from such operations
typically contain a wide variety of pollutants, including raw materials and reaction byproducts,
along with quantities of the product pesticide itself. Certain pesticides (such as aldrin/dieldrin,
DDT, endrin, and toxaphene) have been shown to be of sufficient environmental concern to
warrant regulations aimed at controlling the discharge levels of the specific pesticide itself. The
discharge of those specific pesticides will largely be governed by a set of regulations outside the
scope of this study. They are the Proposed Toxic Pollutant Effluent Standards, found under
section 307(a) of the Federal Water Pollution Control Act Amendments.
The Interim Final Effluent Guidelines and Standards of Performance for the Pesticides and
Agricultural Chemicals Industry do not regulate the discharge of specific pesticides, but rather
are directed toward controlling the discharge of the total regime of pesticides, as well as con-
trolling general pollutional parameters and groups of compounds associated with the defined
subcategories within the industry. Table 3.0A presents the effluent characteristics that are to be
regulated under the Interim Final Effluent Guidelines.
According to the Development Document, the effluent limitations were established by
assessing the ability of various wastewater treatment measures to effect reductions in the
quantities of pollutants present in the raw wastewaters emanating from plants surveyed in the
preparation of the Development Document. The assessment was performed both by observing the
performance of existing treatment systems and by extrapolating the performance from similar
applications.
The recommended treatment measures that are believed to be capable of achieving the
BPCTCA level are summarized below:
3.1. SUBCATEGORYA
1. Incineration of strong organic wastes, vent vapors, and oil skimmings.
2. The general process wastewater to be subjected to:
u
neutralization,
oil removal,
equalization,
granular media filtration,
activated carbon adsorption, and
biological treatment via the activated sludge process.
3. Waste sludge treatment consisting of:
• thickening,
• aerobic digestion, and
• vacuum filtration.
23
-------
TABLE 3.0A
EFFLUENT LIMITATIONS GUIDELINES
BEST PRACTICABLE CONTROL TECHNOLOGY CURRENTLY AVAILABLE (BPCTCA)
PESTICIDES AND AGRICULTURAL CHEMICALS INDUSTRY
Subcategory
Effluent
Characteristics
Effluent Limitations
Average of Daily Values
for 30 Consecutive Days
(kg/kkg product)
Daily
Maximum
(kg/kkg product)
BOD
COD
TSS
Phenol
Total Pesticides
BOD
COD
TSS
NH3-N
Total Pesticides
BOD
COD
TSS
NH3-N
Total Pesticides
D1
E
2.72
11.8
2.53
0.00100
0.00100
1.65
16.2
2.01
2.45
0.000700
2.70
11.7
3.18
2.71
0.000454
No Discharge of Pollutants
No Discharge of Pollutants
6.82
29.4
5.65
0.00230
0.0219
4.75
41.2
4.93
5.88
0.00219
7.77
22.8
7.80
6.50
0.000821
Source: EPA Development Document, Table 11-1 (August 1976 version).
3.2 SUBCATEGORY B
1. Incineration of strong organic wastes, vent vapors, and oil skimmings.
2. The general process wastewater to be subjected to:
ammonia stripping,
oil removal,
alkaline hydrolysis,
neutralization,
equalization, and
biological treatment via the activated sludge process.
24
-------
3. Waste sludge treatment consisting of:
• thickening, and
• vacuum filtration.
3.3 SUBCATEGORYC
1. Incineration of strong organic wastes, vent vapors and oil skimmings.
2. The general process wastewater to be subjected to:
ammonia stripping,
neutralization,
oil removal,
equalization,
biological treatment via the activated sludge process, and
final sedimentation.
3. Waste sludge treatment consisting of:
• thickening,
• aerobic digestion, and
• vacuum filtration.
3.4 SUBCATEGORY D
1. Incineration of strong wastes (with metal-laden scrubber water sent to general
process wastewater treatment system).
2. The general process wastewater to be subjected to:
precipitation, flocculation, and sedimentation,
neutralization,
equalization,
biological treatment via the activated sludge process, and
final sedimentation.
3. Waste sludge treatment consisting of:
• thickening, and
• vacuum filtration.
The Development Document makes use of a "cost model" in providing the wastewater
treatment cost estimates for the various industry subcategories. Basically the cost model consists
of applying the suggested treatment technology to the wastewater streams emanating from a
"typical" plant. The "typical" plant is intended to reflect representative production rates (metric
tons/day) and representative unit wastewater generation rates (liters/metric ton of production)
for the various subcategories. These two factors are extremely important, because when factored
together, they generate the key design parameters in the costing of the wastewater treatment
25
-------
system, i.e., the volume of wastewater treated per day. For these types of treatment, the capital
investment and many of the operating costs are highly dependent on the volume of wastewater
treated.
Once the representative plant was established with its respective production rate and
wastewater generation rate, capital and operating costs were developed using normally practiced
cost-estimating procedures. The ultimate basis of economic impact evaluation is the unit treat-
ment cost, i.e., the cost of treatment per unit of production. This cost is calculated by dividing the
total annual cost associated with wastewater treatment by the annual production rate. Capital
investments for the representative plants in each subcategory are presented in Table 3.4A. Unit
wastewater treatment costs are presented in Table 3.4B.
We believe that the wastewater treatment cost estimates presented in the Development
Document are reasonably accurate to the extent that they reflect the capital and operating costs
of the wastewater treatment technology used in the cost model. However, we do have some
reservations about the number and type of wastewater treatment steps recommended.
For instance, in Subcategory A the BPCTCA treatment scheme includes filtration and
carbon adsorption upstream of the biological treatment system. Presumably, this highly unusual
arrangement would be used to prevent pesticides from entering the biological treatment system
and disrupting its operation. Since the activated carbon would also remove a substantial portion
of the organic material contained in the wastewater, we question whether the biological treatment
system is necessary or properly sized.
TABLE 3.4A
EFFLUENT GUIDELINES WASTEWATER TREATMENT CAPITAL INVESTMENT
FOR REPRESENTATIVE MANUFACTURING PLANTS IN THE
PESTICIDES AND AGRICULTURAL CHEMICALS INDUSTRY*
Development Document Cost
Model Plant Production Rate BPCTCA Capital Investment
(metric tons/day) ($1000)
Industry
Category Small Plant Large Plant Small Plant Large Plant
A 16.2 85.7 3,036 5,992
B 12 126 2,925 7,621
C 11 133 2,794 7,613
Source: EPA Development Document, August 1976 version, plus Aug. 16, 1976 revisions.
*AII costs have been adjusted to the 1975 level using the Engineering News Record Construc-
tion Cost Index (1975: ENR-2,276).
26
-------
TABLE 3.4B
EFFLUENT GUIDELINES WASTEWATER TREATMENT COSTS
PESTICIDES AND AGRICULTURAL CHEMICALS INDUSTRY1'3
Industry
Category
Development Document
Representative
Production Rate
(metric tons/day)
Small Plant
Large Plant
BPCTCA Total
Annual Treatment Cost
for Model Plant
($1000/Year)
BPCTCA Unit Treatment
Cost Based on Model Plant
($/metric ton)
Small Plant
Large Plant
N)
-J
A
B
C
16.2
12
11
85.7
126
133
1,053.4
755.8
730.9
1,858.8
1,940
1,948
197
196
201
65.7
59.7
44.4
Sources: EPA Development Document, August 1976 version, plus Aug. 16, 1976, revision.
Notes: 1. All costs have been adjusted to the 1975 level using the Engineering News Record Construction Cost Index (1975: ENR = 2,276).
2. All treatment costs are based on total annual cost and include all direct operating costs, plus capital recovery @ 16.3% of initial capital invest-
ment per year.
3. Unit costs are based on 330 production days per year.
-------
The cost model also employs a rather complete sludge-handling and treatment scheme,
consisting in some cases of thickening, aerobic digestion, and vacuum filtration capabilities. For
small plants, especially those in rural areas where acceptable sludge-disposal sites are more
abundant, it is doubtful that such elaborate measures would be employed. In our opinion, the
cost model contains capital and operating costs for many treatment steps which have little
likelihood of actually being used throughout the industry.
Another important factor is the effect on cost of multiple product plants sharing a common
waste treatment system. In such cases, the wastewater treatment costs would be allocated among
the products, and in most cases this would result in a reduction of the unit wastewater treatment
costs assigned to individual pesticides.
In applying the costs presented in the Development Document cost model, it is essential to
recognize that the costs are for green field wastewater treatment plants and, therefore, do not
acknowledge wastewater treatment steps already in place. In addition, it should be recognized
that the treatment cost models do not take into account the simultaneous requirement for
controlling BOD and COD. This simultaneous requirement will very likely result in a large
variability between plants in the treatment needed to meet the BPCTCA standards.
With regard to evaluating economic impact, it is important to recognize that the diverse
nature of this industry, characterized by widely varying production rates and wastewater gener-
ation rates, unavoidably introduces a high degree of inaccuracy when one tries to apply a single
treatment cost to an entire subcategory. In recognition of this factor, the Development Document
presents two sets of cost estimates for three of the four subcategories: one estimate for a small
plant and another for a large plant. While this step at least acknowledges the high degree of cost
variability, there is still a high degree of uncertainty remaining when one attempts to use these
costs to make conclusions regarding economic impact.
To illustrate this variability, the reported unit wastewater generation rates for the various
plants surveyed for the Development Document study are compared in Table 3.4C with those
used in the cost model.
28
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TABLE 3.4C
COMPARISON OF UNIT WASTEWATER GENERATION RATES
(Gal/1000 Lb)
Reported Values Wastewater Generation Rate
Subcategory Low High Used in Cost Model
A 377 49,200 Small Plant - 4,000
Large Plant - 10,700
B 333 12,900 Small Plant - 2,900
Large Plant - 2,900
C 156 10,200 Small Plant - 3,700
Large Plant - 3,700
D 7,000 9,150 Typical Plant - 8,000
Source: EPA Development Document, August 1976 Version, plus August 16,
1976, Revision.
29
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4.0 PRESCREENING OF ECONOMIC IMPACT
OF EFFLUENT GUIDELINES
4.1 PRESCREENING METHODOLOGY
The objective of the prescreening exercise was to provide the EPA with sufficient informa-
tion to permit it to choose which industry subcategories it could eliminate from further study by
ADL. Of course, eliminating some of the subcategories would permit a more cost-effective
utilization of the available resources for studying the economic impact of the proposed effluent
guidelines.
For any prescreening process to be effective, it must:
• exclude only those subcategories for which there is strong evidence readily avail-
able that the economic impact would be insignificant; and
• not consume a large amount of the available resources.
Initiating the study, ADL interviewed its own experts for each industry category to develop
information which characterized the industry, its markets, its pollution control practices, and
any consideration the industry expert felt EPA should know about respective industry sub-
categories. To guide the experts on the kind of information they should provide, we developed an
outline (in tabular form) of the information needed.
The experts were instructed to prepare their comments utilizing only personal knowledge or
information that was immediately available to them in completing the information table for their
respective industry subcategories. In many instances, there were areas in the information table on
which no comment was possible, either because the expert did not have the required information
immediately available, or because the answer was too complex to be answered at the prescreening
level.
The information contained in the experts' comments and on the information table not only
provided the basis for our recommendations concerning the categories EPA should consider
eliminating, but also generalized the condition of the industry with respect to the proposed
regulations.
In developing our recommendations, we wanted to have a high degree of certainty that any
category we recommended for elimination could not, on further study, be shown to be seriously
impacted. Thus, we developed four criteria, any one of which if met by an industry subcategory
would be enough to warrant tentative elimination of that subcategory. Before we recommended
that EPA consider elimination of a subcategory from further study, we made an overall assess-
ment involving other data known to the industry expert. The criteria we used follow:
(1) The industry subcategory is generating no waste water.
(2) The ratio of BPCTCA plus BATEA costs to selling price is less than 2%, and/or
the ratio of BPCTCA plus BATEA costs to profits is less than 15%.
31
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(3) Virtually all of the plants in the subcategory are currently discharging into
municipal sewage systems and may continue to do so with little or no pre-
treatment costs incurred.
(4) Virtually all of the recommended treatment facilities have already been installed
in most of the plants in the subcategory.
Criterion (1) obviously represents the strongest reason for eliminating an industry from
further study. If the industry does not discharge waste water, water pollution regulations would
have no impact upon the industry.
Criterion (2) is based on discussions with ADL economic experts. We decided that if this
criterion were met, the proposed standards would likely not result in a significant economic
impact. Often our experts had no profit margin information available. In those instances, when
the ratio of treatment cost to selling price was less than 2%, we still recommended that EPA
consider removing the subcategory from further study. However, this recommendation is not so
strong as the recommendations made using profit information.
In considering treatment cost/selling price and treatment cost/profit margin ratios, it is
important to realize that the treatment costs presented in the Development Document are for a
total treatment system and represent the costs incurred by a plant having no wastewater
treatment already in place. Most facilities within the eight industries studied under this contract
have some form of wastewater treatment already installed.
Criterion (3) also represents a very strong reason for eliminating a subcategory from further
study. If the wastewater treatment practice within a subcategory consists mainly of discharging
to municipal sewage systems, the cost of that treatment is already being incurred via sewer
charges. If the subcategory can continue this practice, be consistent with the pretreatment
standards set forth in the Development Document, and yet incur little or no pretreatment cost,
then the incremental economic impact to that subcategory would be nil. Since the Development
Document does not provide pretreatment costs, criterion (3) was used to eliminate a category
only when it was very clear that pretreatment would be either unnecessary or minimal.
Criterion (4) represents a reason for eliminating an industry from further study on the basis
that, should the industry meet criterion (4), it would not have to expend as much money as the
Development Document indicates to meet the proposed standards.
The wastewater treatment already installed to meet other Federal or State regulations may
be adequate to meet the requirements of the proposed guidelines. Therefore, the incremental
treatment costs attributable to the guidelines may be zero for many facilities. In any event, the
treatment costs in the Development Document represent maximum costs, so that for plants with
treatment facilities in place we expect that actual costs will be less than indicated by the
Development Document and the 2 percent or 15 percent criteria used in the prescreening process
are therefore conservative.
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4.2 ECONOMIC AND TECHNOLOGICAL FACTORS
Economic and technological information used in the prescreening exercise is shown in
Table 4.2. The ratio of BPCTCA unit treatment costs to selling price is based on the average
selling price of the pesticides in each subcategory. Table 4.2 shows that for subcategory A
(halogenated organics), this ratio varies from 1.0 to 3.0 percent. For subcategory B (organo-
phosphorus), the ratio varies from 1.3 to 4.2 percent; for subcategory C (organo-nitrogen), the
ratio varies from 0.4 to 2.0 percent; and for subcategory D (metallo-organic), the ratio is virtually
0 percent due to essentially zero discharge from this subcategory.
Had the above information been available early in the study, we would have recommended
the exclusion of subcategory D from further study. However, the earlier versions of the Devel-
opment Document did not contain the zero discharge information for subcategory D, and we
were therefore unable to recommend exclusion of the subcategory. Likewise additional informa-
tion was desired for subcategory E (formulators) and it was necessary to set up an informal
telephone survey to obtain it.
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TABLE 4.2
/ON TABLE - MISCELLANEOUS CHEMICALS INDUSTRY
INDUSTRY CATEGORY - PESTICIDES
i. .
2. Produi..
3. Representative
Prices,* $/metnc tori
4. Estimated Profit Margin (% of selling
pncel
5. BPCTCA (1977) Treatment Cost"
($/metric ton of product)
Technical and Economic Factors Pertinent
to Economic Impact Analysts
Technical Factors
6 Possibility of drastically reducing or
totally eliminating wastewater flow rate.
7 Possibility of substantially reducing
cost of end-of-pipe treatment via
m-plant changes and/or process
modification.
8. Fraction of plants with substantial
wastewater treatment facilities
m-place.
9 Fraction of plants presently dis-
charging into municipal wastewater
treatment facilities.
10. Frequency or likelihood of plants
sharing waste treatment facilities
with other manufacturing operations.
11. Degree to which proposed treatment
departs from currently employed
treatment.
12. Seriousness of other pending
environmental control problems
(including OSHA).
Economic Factors
13 BPCTCA unit treatment
cost as percent of unit selling
price.
14. BPCTCA unit treatment
cost as percent of unit profit
margin
15. Would the demand for the
industry's product be signifi-
cantly affected by an increase
in price7
16. Would the impact on this industry
category be felt in other
industries?
A. Halogtnattd Organic*
Small Plant/Large Plant
Not Determined
Not Determined
6,400
Not Determined
197/65.7
Highly Varied
Low to Moderate
Moderate
Low
Low
Highly Varied
High
1.0-3.0
Not Determined
Subcatagoriai
B. Organo-photphoroui C. Organo-nltrogcn
Small Plant/Large Plant Small Rant/Larga Plant
Not Determined
Not Determined
4,620
Not Determined
196/59.7
Highly Varied
Low to Moderate
Moderate
Low
Low
Highly Varied
Moderate
1.3-4.2
Not Determined
Not Determined
Not Determined
10,230
Not Determined
201/44.4
Highly Varied
Low to Moderate
Moderate
Low
Low
Highly Varied
Low
0.4-2.0
Not Determined
Highly Dependent on Crop Prices and Other Agricultural Factors
D. Matallo-organie
Not Determined
Not Determined
5,720
Not Determined
0
Highly Varied
Low to Moderate
Moderate
Low
Low
Highly Varied
Very High
Not Determined
Yes
Yes
Yes
Yes
'Average 1975 selling price.
*"BPCTCA treatment costs have been adjusted from 1972 to the 1975 level using the Engineering News Record Construction Cost Index (1972 = 1780, 1975 = 2276).
Note: Source of BPCTCA treatment costs is the August 1976, version of the Development Document for subcategories A and D and August 16, 1976, revision for sub-
categories B and C.
34
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5.0 ECONOMIC IMPACT OF THE
INTERIM FINAL EFFLUENT GUIDELINES
ON THE PESTICIDES INDUSTRY
The prescreening of the Pesticides Industry (Section 4.0) indicated that there was a possi-
bility of significant impact on each subcategory of the industry, if the Development Document
treatment costs were incurred. To determine whether there would indeed be a significant impact
on the industry we performed four tasks:
(1) made a general economic analysis of all pesticide products, based upon how
farmers decide what pesticide purchases to make;
(2) examined price and production effects that the proposed standards might have on
20 representative pesticides;
(3) performed a cursory technical analysis to determine the extent to which the
treatment required to meet the BPCTCA standards had already been installed;
and
(4) conducted an informal telephone survey of pesticide manufacturers.
Based on the work done and the information presently available we have concluded that:
(1) the formulators will not be affected by the regulations because there are no
formulators who are direct dischargers;
(2) for some pesticide control programs, the cost-benefit ratio has been worsening, a
trend which would be further antagonized by any price increase; and
(3) if the treatment costs shown in the Development Document are actually incurred,
there may be an impact on small plants producing low-price pesticides.
5.1 ECONOMIC ANALYSIS
5.1.1 Analysis of all Pesticide Products Based Upon
the Farmers' Decision-Making Process
5.1.1.1 Growth in Pesticide Usage
Over the past 25 years, agricultural pesticide usage in the United States has expanded
dramatically, particularly on major crops. Between 1966 and 1971 alone, the share of cropland
acreage (including pasture) treated with pesticides has increased from 36 to more than 50
percent.1 Currently an estimated 60-70 percent of all farmers are using either herbicides, in-
secticides, fungicides, or other chemical control compounds to produce non-pasture crops.2 On
some crops, such as rice, corn, cotton, peanuts, sugar beets, vegetables, and fruits, it is not
uncommon to find 80-95 percent of farmers employing pesticides. With such widespread and still
increasing use of agricultural pesticides in the United States, understanding the decision process
by which farmers choose to use pesticides is an important consideration in assessing the potential
economic impact of regulations affecting pesticide manufacturers. The subsequent discussion is
an analysis of this decision process.
1. "Farmer's Use of Pesticides in 1971: Extent of Use," Agricultural Economic Report No. 268, ERS, USDA, 1975.
2. Arthur D. Little, Inc., estimate.
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From the outset it should be understood that there is no "typical" farmer with respect to
decisions regarding pesticide usage. While generalizations are possible for specific compound-use
crop situations, generalizations are seldom if every valid for agriculture as a whole. Decision
parameters vary according to type of crop, size of operation, form of management, pesticide type,
and others. To say that the decision process for using pesticides is the same for a small cotton
farm in Mississippi, a large corn farm in Illinois, and a cooperative managed citrus grove in
Florida would be unrealistic. Consequently, since both the conditions and process in each
situation are different, the final decisions as to usage patterns will also be different.
5.1.1.2 Reasons for Using Pesticides
There is, however, a common thread which should run through each and every farmer's
decision process, and that is the fundamental reason for using a pesticide in the first place. The
principal determining factor as to the extent and manner in which a farm enterprise employs
pesticides is the potential or expected increase in income resulting from chemical treatment.
Theoretically, pesticides would never be applied unless an "economic threshold" had either been
reached (for curative treatments) or could be reasonably predicted (in the case of preventive
treatments). In other words, pesticide application is utilized for two discernible reasons: as an
insurance against risk, or as a control once risk had become reality. In simple economic terms, the
financial gain from that portion of the crop saved due to treatment is expected, on the average (as
a minimum), to exceed the cost of the pesticides and their application. "Theoretical" has been
emphasized in the preceding statement since, under actual field conditions, determination of
thresholds is inaccurate at best, and decisions to use pesticides are based on numerous subjective,
non-economic, decision-making elements. Nonetheless, in spite of the seemingly apparent eco-
nomic irrationality in their decision-making, farmers are motivated to use pesticides in hopes of
increasing their incomes.
5.1.1.3 The Decision Process
There are four steps in the decision-making process whereby a farmer may eventually
choose to apply a pesticide. He must in some manner, either formally or informally, ask and
answer each of the following questions:
(1) Is any control necessary?
(2) If so, what should be the control method (pesticides, cultivation, predator insects,
manual, etc.)?
(3) If pesticides are chosen as the control, which pesticide should be used?
(4) Once a specific pesticide is selected for use, at what rate should it be applied?
(This may be one of the determining factors in answering (3) above. However, it
can also be a factor by itself once a pesticide has been selected, or if only one
pesticide exists for a specific use.)
Most farmers will probably not have answered each of these questions systematically, but in
some way each will have been answered to his satisfaction, given his style of farm management.
Some farmers will have answered these questions when they first started using pesticides and will
not have reexamined their answers in subsequent years. Other farmers will reevaluate their
positions each year. Most farmers, however, reexamine their situation only when they acquire
new "information," e.g., the awareness of a new product, experienced resistance problems,
36
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receipt of new Extension recommendations, incurred increased product costs, etc. However, each
farmer's perception or interpretation of this new information often tends to be different, even
among farmers operating under very similar conditions.
Input elements to decision-making (i.e., answering the above four questions) fall into four
major categories with some overlapping between categories (Table 5.1.1). No one input element
or category of elements is necessarily dominant, or even prevalent, in making pesticide usage
decisions. As stated earlier, the importance of each will vary between farmers, crops, regions, and
individual pesticides or categories of pesticides. However, in an effort to provide insight into how
farmers respond to a changing agricultural environment with respect to pesticide usage, various
actual examples are cited below.
Often the value of pest control to the farmer is directly related to crop value, which
fluctuates with crop prices. For example, tests of corn weed control conducted over a nine-year
period in Illinois showed that herbicide treatment increased yield by an average of 24 bushels per
acre for typical crop rotations. In 1971 the value of this increase in production would have been
$26 per acre. At that time chemical and application costs would have been approximately $11 per
acre, thus providing a net benefit of $15 per acre attributable to herbicide usage. During harvest
1974 the value of the 24 bushel per acre yield increase was $84. Although chemical and appli-
cation costs had risen to $69 per acre, the net gain from herbicide usage has remained constant at
$15 per acre. Therefore, although treatment costs had increased six-fold there was no major move
away from past levels of herbicide usage, since net benefits from control had actually remained
constant during that period.
5.1.1.4 Soybean/Cotton Farmer Differences
An Extension economist in Mississippi typically found the following situation with respect
to soybeans and cotton: Soybean farmers relate input costs to bushels of soybeans. They are
willing to "allocate 4-5 bushels of soybeans" per acre for weed control. Thus, if soybeans sell at $5
per bushel, they are willing to spend $20-25 on weed control. If the price were to drop to $4 per
bushel, they would try to devise a weed-control program which would cost only $16-20 per acre.
Soybean farmers, although accepting that herbicides, insecticides, etc., do often have a positive
effect on yields, feel that weather is by far the dominant factor. If weather is bad, they surmise
their yields will probably not exceed 20 bushels per acre (5-15 below normal), no matter what else
is done. Consequently, the soybean farmer is quite reluctant to invest inputs which may have
little additional effect on yield during less than ideal weather conditions. Therefore, one finds the
above situation where farmers will not maintain a comparable weed-control program if crop
prices are expected to fall, since most herbicide usage occurs early in the growing season, long
before the final effects of weather on the crop can be known.
A final point should also be noted: If the crop price for soybeans holds while herbicide costs
increase, one might also find a reorganization of the control program such that less herbicides are
employed. Thus soybean farmers in Mississippi might be considered quite responsive both to crop
and chemical price changes.
Cotton farmers are somewhat different. Although weather is important after the crop is
planted, it is not seen to be the dominant factor that it is in raising soybeans. Cotton is more
input-in tensive than soybeans. Additionally, to pay for a $5 increase in inputs (say, herbicides)
37
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TABLE 5.1.1
INPUT ELEMENTS FOR DECISION-MAKING REGARDING PESTICIDE USAGE
Economic
Pesticide Costs
Projected Crop Prices
Cost of Alternative
(non-pesticide)
Controls
u>
00
Technical
Pesticide:
Efficacy
Reliability
Rotation
Preventive vs. Curative
Broad Spectrum vs. Selective
Pest:
Combinations
Resistance
Characteristics
Merchandising
Promotion
Service
"Official" Recommend-
ations:
Extension Service
Growers Organizations
Management
Attitudes/Perceptions
Crop Status/Pest Severity
Financial Risk Manage-
ment Style
Pesticide:
Ease of Handling
Health Hazard
Residual Effect
Need for:
Preventive vs.
Curative
Broad Spectrum vs.
Selective
Attitude toward
Pesticides in
General
Pesticide Alternatives:
Availability
Practicality
East of Management
-------
may require only a 1.5% increase in yield to justify the expense. Whereas, in soybean farming, to
justify a $5 expense would mean increasing the yield by 3-4.5%, a much less certain proposition
given the perceived weather variability of soybean yields. (Actually cotton yields can vary
considerably based on weather variability; however, the perception of cotton farmers of the input-
weather-yield relationship is different from that of the soybean farmer.
5.1.1.5 Pesticide Recommendations, Efficacy Considerations, and
Regulatory Decisions
Recent events in the pecan industry with respect to fungicides illustrate the importance of
official pesticide recommendations, as well as the importance of technical efficacy considerations.
Until 1974 there were only two major compounds available for pecan scab control, one of which
had problems with phytotoxicity. Consequently, in Georgia, the Pecan Growers Association, in
conjunction with the Extension Service, recommended that only the one compound be used for
scab control. As a result, through the early 1970's, nearly all scab treatment was effected with this
single compound. In 1974, a third, apparently extremely effective compound was registered and
introduced to the market. Because of the apparent effectiveness of this new compound, the
Growers Association and Extension Service changed their recommendation from the standard
control agent to the new agent. By the 1975 season, nearly all growers had switched to the new
compound. However, in 1975, indications of resistance to the new compound were uncovered.
Therefore, for the 1976 season, recommendations were changed once again, and thus a large-scale
movement back to the use of the old, standard compound resulted.
Merchandising, too, can play a dominant role in whether one compound is used over another
and at what level. Again, using the pecan industry as an example, one finds producing areas in
Louisiana where the standard compound used for scab control in Georgia is glaringly absent,
while the compound with some phytotoxic problems is widely used. The reason is apparently the
ineffectiveness or even non-existence of a marketing program in Louisiana for the apparently
better compound. It is interesting to note that while the non-phytotoxic chemical is among those
compounds recommended for scab control in Louisiana, yet the low level of use exists because of
poor merchandising.
Presently, there are various regulatory decisions being made which will impact both pesti-
cide manufacturers and formulators, and which will potentially drive up production costs. This
latter effect could, in turn, cause farmers to pay increased pesticide prices. Given such a
situation, it becomes important to select the decision-making input elements which will most
influence whether a pesticide will continue to be used at the same level, even though its price has
increased. To assess this situation, one must first consider a situation where no alternative exists
and then a situation where other control alternatives are available.
When there is only a single viable control alternative, three factors tend to influence a
farmer's decision as to whether and how he will employ that control:
(1) the level of the pesticide price increase;
(2) the presence and degree of any crop price change; and
(3) the efficacy of the control compound, i.e., the marginal yield-response relationship
for each unit of input.
39
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If one assumes relative stability in crop prices, a small increase in pesticide price is unlikely
to cause any shift in usage patterns. Since in the past (and even in some cases into the present)
benefits from control generally far exceeded costs, even fairly substantial price increases may be
absorbed by the producer without any significant alteration in usage levels. However, there are
now situations where any further substantial increase in pesticide prices will cause a reexam-
ination of current control programs. Such a reexamination will be especially true if crop prices
also fall. Referring to the corn-weed control example cited above, and assuming that herbicide
prices had not increased since 1974, we note that corn prices have fallen to $2.35-2.90 per bushel.
If we use a $2.50 per bushel value, the 24 bushel yield increase is now worth only $60, while
treatment costs are $69. As a result farmers are being forced to reevaluate their entire production
program as it regards herbicide usage.
Other crops, however, still have a margin for either increased pesticide prices or reduced
crop prices. In some vegetables, for example, non-control of certain insects may mean the total
destruction of a crop. In such a situation, once the crop has been planted, there is virtually no
price change for either pesticides or the crop which will cause an alteration in insecticide use
patterns.
In the second situation, where alternative controls (to that compound which has suffered a
price increase because of regulatory decisions) do exist, four elements tend to influence pesticide
usage decisions:
(1) level of pesticide price increase in relation to price changes for alternatives;
(2) change in crop price;
(3) comparative efficacy of all control methods (i.e., comparative marginal yield
response per unit of input for each alternative); and
(4) comparative merchandising effectiveness which capitalizes on price changes.
Under the multi-alternative situation, if the price increase for the control compound is
minimal, there will probably be no shifting of usage away from the now more expensive com-
pound. If regulatory decisions or other factors affect the per acre application cost of all alterna-
tives equally and the cost change is significant, the various possible responses outlined above in
the "no alternative" situation will be applicable for the acreage treated with each respective
alternative. Again, there should be no significant shifting between compounds. However, if one
compound forces a farmer to raise his price disproportionately to his competition, then shifting
away from that compound to the alternatives is likely. The degree of this shift will depend
primarily on whether or not the adversely affected compound is considered the benchmark
control method (based on either technical fact or consumer perception) and whether competition
is able to effectively capitalize on the change in price relationships in their merchandising
programs. Depending on the chemical compound, crop, pest, and producing region, this shift
could be from very small to almost absolute.
5.1.1.6 Reexamination of Pesticide Control Programs
Continued increases in pesticide prices in the face of stabilizing, or even falling, crop prices
are causing more and more farmers to reexamine their position with respect to pesticide control
programs. This is true for even those crops which still enjoy a comfortable net benefit margin
resulting from treatment. In the long run, any commercial enterprise which uses an input whose
40
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costs continue to increase disproportionately with respect to output and other input costs will
eventually begin seeking cheaper alternatives. This is now evident in the U.S. agriculture with
respect to pesticides. For example, a few years ago, integrated pest management using various
biological and other non-chemical controls (as well as perhaps some pesticides although at
reduced levels) was viewed rather skeptically by farmers. Now, both in the cotton and citrus
industries, the possibility of using such programs on a widespread basis is gaining credibility as
more and more favorable test results are forthcoming. Therefore, without debating the merits of
such an impact, any further increase in pesticide prices, no matter how small, will further
antagonize a worsening cost-benefit situation for many chemical pesticide control programs.
5.1.2 Analysis of Selected Pesticide Products Based
On Price and Production Effects
For this analysis, we used case studies of 20 "representative" pesticide products. This
product sample was selected on a subjective basis and was designed to reflect a broad spectrum of
the chemical subcategories, product cost, pesticidal action, proprietary status and market envi-
ronment. The products comprising this sample have annual sales volumes substantially above
the industry average, and were chosen to ensure that adequate economic data could be developed.
The examination of the price and production effects of this product sample involved the
following tasks:
(1) Estimation of the ratio of waste treatment costs (as presented in the Development
Document) to manufacturer's selling costs.
(2) Evaluation of the competitive situation in the major markets for these products.
This evaluation required discussions with industry personnel and agricultural
experts, a literature review, etc. The criteria for this evaluation were the number
and price competitiveness and efficacy of other products capable of being sub-
stituted for the product being studied.
(3) Estimation of the value of pest control in the major markets for the product, i.e.,
does the user of control methods for those pests (of any type) receive marginal
benefits substantially greater than the cost of treatment under present technology.
(4) Given the results of Tasks 2 and 3, what is the likelihood that the manufacturer
will be able to pass on to the consumer all (or a significant portion) of the
incremental waste treatment costs without significantly affecting either total sales
or per unit profitability of the product? (Is the manufacturer facing an inelastic
demand for this product?)
(5) Estimation of Economic Impact Potential — Based upon the results of Tasks 1-4,
the likelihood of significant economic impact on basic producers of the products
was estimated, with the economic impact potential ranked as low, medium, or
high, according to the following definitions:
• Low —The costs associated with the addition of proposed waste treatment
standards to the cost structure of the product will probably not alter profit-
ability or product sales to such an extent as to cause major changes in annual
product output.
41
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• Medium — The costs associated with the addition of proposed waste treat-
ment standards to the cost structure of the product may reduce the profit-
ability of the producer through either absorption of these costs or reduced
total sales because of higher product prices. Annual product output would
likely be affected.
• High — The producers will likely be forced to reevaluate the present produc-
tion rationale for the product. A decision to discontinue production may be
appropriate for some or all producers of the product.
The results of this analysis are summarized in Table 5.1.2. The conclusions we reached
from just this examination follow:
(1) In each subcategory, there is a likelihood of a significant impact to small plants
producing low-price pesticides.
(2) The competitive situations in major markets tend to be stringent. In all cases,
alternative pesticide products or pest control techniques are available to users of
the products studied. In only one case (MSMA) was a near total dominance of the
competitive environment in the product's major market observed.
(3) The marginal benefits associated with pest control in the major markets are in all
cases favorable. Users of the products are aware of the benefits of these products.
(4) The ability to pass production cost increases on to pesticide consumers appears to
be a function of the competitiveness of the market. In cases where strong com-
petition for a crop/pest market was observed, pricing flexibility was decreased.
(5) The most important factor affecting potential economic impact appears to be the
proprietary status of the product. Of the 10 non-proprietary products studied, 8
products were judged to be susceptible to medium or high impact. Some of the
reasons for this susceptibility are: (a) the presence of a single dominant firm in the
industry and a number of smaller firms, likely to be impacted through lack of
pricing flexibility; (b) the presence of competition from strong non-U.S. produc-
ers; and (c) sales of low-price products in extremely price-sensitive markets.
The significance of the high impact to non-proprietary compounds is likely to increase. We
estimate that there are 300 major pesticide products and that one-third of the products now have
proprietary status. In the near future, many products will lose their patent protection.
Because patent protection is an important factor affecting economic impact and many
pesticides will be losing their patent protection in the near future, a tabulation of patent
expirations (1975-1986) is included as Appendix 8.
5.2. TECHNICAL ANALYSIS
In this section we discuss a cursory technical analysis that we made to determine the extent
to which the recommended BPCTCA treatment is already installed. This analysis is based on
Development Document information on the treatment steps currently installed at more than 50
pesticide manufacturers. The Development Document information is of varying completeness for
each plant. We attempted to compare the existing treatment with the treatment methods used in
developing the BPCTCA cost model. In most cases we had little information available on the
42
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TABLE 5.1,2
SUMMARY OF ECONOMIC IMPACT PROBABILITIES DUE TO ADDED WASTE TREATMENT COSTS
SELECTED PESTICIDE CHEMICALS
Organo-Phosphorus
Organo-Nitrogen
Met alto-Organic
Subcateoory
Halogen* ted Or games DDT
Product
Estimated Ratio of
Watte Treatment Coit
to Manufacturers Competitive Cost/Benefit' Ability to6
Type Sailing Price* fituitionin Relationship Faai Through
of Action (Percent) Major Markets4 for Users Cottlncnaae
Likelihood of
Proprietary Significant
Status Economic Impact
Comments
DDT
2,4-0
2,4.5-T
Toxaphene*
DiCamba
Chloramben
Endrin
Methyl Parathion"
Diazinon
Malathion
Barban
Carbofuran
Cartaaryl*
Linuron
Trifluralin
Atrazina
Captan
MSMA*
Pectran®
Dithio-carbamates
Insecticide
Herbicide
Herbicide
Intecticide
Herbicide
Herbicide
Insecticide
Insecticide
Insecticide
Insecticide
Herbicide
Insecticide
Insecticide
Herbicide
Herbicide
Herbicide
Fungicide
Herbicide
Miticide
Fungicide
6.2
2.8
8.4
4.0
7.6
22.4
1.6
2.2
3.9
2.7
9.0
2.7
2.6
0.85
0.3
1.7
7.7
0.75
0.5
0.86
2.7
(L)>
(L)
IS)
IS)
(U
(S)
(S)
(SI
(S)
(U
IS)
(S)
IL)
(S)>
-------
degree of treatment achievable in each item of installed equipment and had to assume that the
performance of installed equipment was comparable to a similar item of equipment used in the
cost models.
Of all the plants in categories A, B, C and D discussed in the Development Document, none
has installed all of the treatment steps included in the respective BPCTCA cost models. Indeed,
while an average of 11 treatment steps are required in the cost model, we found that no plant had
installed more than 8 steps at this time. On average, only three treatment steps are currently
installed at a plant. Table 5.2 summarizes what we found when we reviewed the Development
Document information on treatment now in place.
Some data were available on multi-product plants. Because of the manner in which the
information was presented, it was not readily possible to draw meaningful conclusions on
treatment steps installed versus cost model treatment steps. A review of the Development
Document description of the installed treatment in multi-product plants led us to believe that the
amount of treatment currently installed is similar to that installed in plants producing a single
category of products.
5.3 TELEPHONE SURVEY
5.3.1 Manufacturers
At the beginning of this study, we conducted an informal telephone survey of pesticide
manufacturers. The objective of this survey was to determine whether the manufacturers would
incur the full costs shown by the treatment cost models. At the time of the survey, we found only
one plant which could not meet the guidelines as they were then being proposed. Subsequent to
this telephone survey, the proposed guidelines were changed, and the changes made the guide-
lines more stringent and consequently more difficult to meet. The most significant changes were
the addition of a COD and total pesticides limitation.
Based on the findings of the telephone survey, we had concluded that most of the pesticide
industry was currently meeting the proposed standards, and that the standards would not have a
significant impact on the industry. However, we believe that the changes in the effluent guide-
lines made subsequent to our telephone survey have invalidated our findings. We believe that if
the full costs shown in the Development Document were incurred, the effluent guidelines would
cause product substitutions and other impacts to the manufacturers. Small plants manufac-
turing low-price pesticides would have a high probability of being significantly impacted by the
guidelines. Whether the manufacturers would incur the costs shown in the Development Docu-
ment will be covered in a supplement to this report. ESE is presently making a plant-by-plant
survey of the treatment that will actually be required at each facility to meet the effluent
guidelines. Once the ESE work is completed, the supplement will be prepared.
5.3.2 Formulators
ADL conducted a telephone survey of 16 companies which manufacture pesticide formula-
tions. These 16 companies operate 32 plants of various sizes; the largest operation has around 60
employees and the smallest operation has only 3 employees. The plants surveyed are scattered
throughout the United States.
44
-------
TABLE 5.2
REVIEW OF DEVELOPMENT DOCUMENT INFORMATION ON
INSTALLED TREATMENT VS. BPCTCA COST MODELS
Subcategory
A
B
C
D
Subtotal
% of Subtotal
No. of
Plants
Visited
18
6
11
7
42
Plants Not Impacted by
Effluent Guidelines
Sent to
Municipal
7
1
2
3
13
31
"Zero
Discharge"
3
-
1
1
5
12
Ocean or
Deep-well
1
2
1
-
4
10
Treatment
Required
2
-
-
1
3
7
No. of Plants
Affected
by
Effluent
Guidelines
5
3
7
2
17
40
No. of
Recommended
Treatment
Steps
11
11
11
10
-
Avg. No. of
Treatment
Steps
Installed
4
3
3
6
-
Source: Development Document, dated July 6, 1976, with revisions dated August 16, 1976.
-------
Table 5.3.2 shows the size and location of the plants contacted and the results of the
telephone survey. None of the plants surveyed would be expected to incur any significant capital
costs in meeting the proposed BPCTCA standards. Some of the small formulators, however,
indicated concern about the administrative and monitoring costs that they might incur.
ADL believes that the findings of the telephone survey are representative of the practices in
the pesticide formulation industry, and that it is very unlikely that any formulators will incur
significant costs attributable to the BPCTCA standards. The findings from the telephone survey
are in agreement with the information in the Development Document.
5.4 ESTIMATED COST OF COMPLIANCE
Thexcosts in the Development Document, based on a model plant approach, were intended
for use in a microeconomic impact analysis of the effluent guidelines. They do not permit an
estimate of the total capital and operating costs that the industry will actually incur. As
mentioned previously, ESE is preparing an estimate of actual plant-by-plant costs. This esti-
mate, however, is not presently available. Consequently, the estimated cost of compliance will be
covered in a supplement to this report.
46
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TABLE 5.3.2
RESULTS OF THE TELEPHONE SURVEY
Company
Contact
No.
States in Which
Formulation Plants
are Located
Number of
Plants
Number of
Employees
GA
SC
KS
NC
45 All formulation is done indoors. Raw
materials, including technical grade tox-
aphene, are stored in tanks, while for-
mulated product is stored outdoors on
a concrete slab. The loading dock is cov-
ered but not enclosed. In the event of
a spill, soda ash is applied to neutralize
the toxaphene and then an absorbent
is applied. The absorbent is then picked
up and sent to an EPA-approved land-
fill.
45 Formulate mainly toxaphene products.
They used to formulate a lot of endrin,
but do very little endrin formulation
now. Formulation is carried out under
a roof; the formulation area has no
walls. Any spills go to a sump tank, the
contents of which will be disposed of
at an EPA-approved landfill. Raw ma-
terials are stored in a warehouse which
has a concrete floor. The loading area
is uncovered. Any spills on it would be
picked up with absorbents.
60 Storage is in tanks which are surroun-
ded by dikes. The formulation area is
indoors. Liquid spills either go down a
drain to a sump and are evaporated, or
are picked up with absorbent which is
taken to an EPA-approved landfill. The
loading dock which is 12' x 60' is not
covered. Any spills on it are immedi-
ately picked up with an absorbent.
12 Formulation is done under a roof; the
structure has no sides. Formulated pro-
duct is stored in a shed. The loading
dock is covered. All toxaphene spills
are immediately neutralized with soda
ash and then picked up.
47
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TABLE 5.3.2 (Continued)
Company
Contact
No.
States in Which
Formulation Plants
are Located
NC
Number of
Plants
1
Number of
Employees
AR, MO, MS
TN, TX, NC
SC, AL, FL
GA,CA
17
1000 total
for company.
Some plants
have as few
as 3 em-
ployees.
FL
CA
50
CA
10
Formulation and storage are all with-
in buildings. The loading dock is cov-
ered by an awning. They formulate
only toxaphene dust. Any spills are
immediately vacuumed up.
All the toxaphene formulations are
emulsifiable concentrates. The form-
ulations typically contain toxaphene
combined with methyl parathion,
an emulsifier, and a solvent such as
xylene or mineral spirits. All tank
farms are diked and pumps are loca-
ted in the diked areas. Toxaphene
arrives by tank truck. Endrin form-
ulation is also done. The endrin ar-
rives at the plant in drums. Four
plants use a slab height loading sta-
tion with the truck located in a de-
pressed loading pit. The concrete
floor of the pit ends in a sump which
can be pumped to an evaporation
tank. All the other plants have a can-
opy-covered loading dock which is at
truck height.
The whole operation — storage,
formulation, and loading — is car-
ried out within one building.
Formulation is in a steel-roofed shed
building. The plant has a cement
curb around it, so spills cannot be
washed off the plant site. The load-
ing dock is wide open. Any spills
are immediately covered with ab-
sorbent which is shipped away for
disposal.
They formulate relatively dilute
formulations for use by homeown-
ers. The entire operation is carried
out indoors. The loading area is cov-
ered with a roof. The loading dock
also slopes toward the plant so any
spills would drain into the building.
The packing materials they use
would absorb any spills resulting
from broken containers.
48
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TABLE 5.3.2 (Continued)
Company
Contact
No.
10
States in Which
Formulation Plants
are Located
CA
Number of
Plants
1
Number of
Employees
20
11
OR
45
12
MS
15
13
IL
50
14
15
GA
SC
23
The contour of their land, combined
with the large acreage of their plant
site, precludes any runoff. Their pre-
sent operations meet local regula-
tions which do not permit any dis-
charge by them to sewage, rivers,
etc., no matter how indirect. Pre-
sently their entire operation is con-
ducted outdoors. To roof their
formulation area, they would have
to cover an area 50 feet by 40 feet.
All formulation work is done in-
doors. Storage tanks are surroun-
ded by dikes and the loading dock is
covered.
Manufacture only about 1000
pounds of toxaphene formulation
per year. The firm is located next to
a cotton field where toxaphene is
applied by airplane. All their opera-
tions are indoors. Trucks back to the
edge of the building for loading.
The open space between the build-
ing and the truck is not greater than
six inches.
Have ceased formulating pesticides
subject to the proposed toxic stan-
dards. They used up their last sup-
plies of aldrin/dieldrin two years
ago. They said they contacted Shell
for more, but Shell indicated that
there was no more available any-
where. Toxaphene has not been
formulated in the plant for over
five years.
Formulation is done indoors. The
loading dock is covered.
The formulations are done out-
doors. The plant has catch basins
so that all runoff is collected. If a
catch basin should exceed a critical
49
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TABLE 5.3.2 (Continued)
Company States in Which
Contact Formulation Plants Number of Number of
No. are Located Plants Employees
level, it is drained into drums which
are disposed of at an approval land-
fill.
16 IL 1 17 Purchase formulated material and
mix it into only one product. Sto-
rage and formulation are indoors.
Loading is direct from the building
into vehicles which drive up against
it.
50
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6.0 LIMITATIONS OF THE ANALYSIS
6.1 TECHNICAL LIMITATIONS
We completed our initial analysis in April 1976. At the time of its completion, we concluded
that the BPCTCA standards being proposed at that time would not have a measurable economic
impact on the manufacturers of pesticides. Subsequent to the analysis, a new Development
Document, dated August 1976, was prepared. Subsequent revisions were made to the cost models
in the new Development Document; these revisions were dated August 16. 1976. The new
Development Document and its revisions made the proposed BPCTCA standards more stringent.
The net effect of the revisions was to invalidate the bases for our initial conclusion that there
would be no economic impact from the BPCTCA standards. The equipment that the pesticide
industry currently has in place meets, or nearly meets, the initially proposed effluent standards.
However, for the standards now proposed, it might be necessary for the industry to install a large
fraction of the equipment contained in the treatment model.
The information required to determine — on a plant-by-plant basis — what needs to be
done to meet the effluent guidelines was not available while the report was being prepared. The
information is being prepared by ESE and will be published as a supplement to this report.
While making the economic assessment discussed in this report, we identified certain
deficiencies and omissions in the cost models which placed further limitations on the analyses.
Among the technical areas which have contributed to the limiting of the economic analysis are:
1. The Development Document does not adjust the effluent loadings to take into
account effluents generated during the production of pesticide intermediates. Fail-
ure to exclude these loadings from the cost model causes the cost model to over-
estimate the treatment costs that will be incurred. It should be noted, however,
that the EPA's plan to have effluents generated by the production of intermediates
covered by the organic chemicals standards might result in some economic advan-
tage to manufacturers who have a large effluent flow from their intermediate
operations, or who are located within large organic chemical complexes.
2. Simultaneous standards for BOD and COD, as well as the inclusion of a "total
pesticides" effluent requirement, impose different treatment requirements for indi-
vidual plants within a subcategory. For instance, a plant with an effluent having a
high fraction of marginally biodegradable material could conceivably meet the
BOD requirement by upgrading its existing biological treatment system, while the
COD standard could conceivably force the plant to install carbon adsorption.
However, plants whose effluents have a lower fraction of marginally biodegradable
material may not be forced to install carbon adsorption. Usually, the more the
number of effluent parameters that must be controlled, the less possible it is to
generalize about the type of treatment required. Therefore, an accurate estimate of
BPCTCA treatment costs will require a plant-by-plant assessment of required
wastewater treatment equipment and processes.
3. No estimate was made of the analytical costs that would be incurred in meeting the
BPCTCA standards. The standards now set a limitation on the total pesticide
content of the effluent. Consequently, complicated chemical analyses which will
significantly increase the cost of compliance are now required.
51
-------
6.2 ECONOMIC LIMITATIONS
The economic impact of increased production costs for an industry is customarily measured
in terms of the resulting change in the industry's production quantity and the prices of its
products. The effect of compliance costs is to modify upward the fixed and variable costs (in some
combination) of each complying plant in the industry. To the extent that variable costs are
raised, the likely resultant increase in marginal costs relative to marginal revenue leads to
reductions in output. These reductions, coupled with the pricing decisions of sellers who are able
to affect price, result in higher prices in the industry's market. From the new equilibrium level of
price and output one can then estimate the effects on industry profitability and employment.
In this report, price and output effects from compliance costs are treated qualitatively.
Quantitative determination of economic impact with estimation of price and output levels was
not considered practical for the reasons described below.
Quantitative determination of the price and output effects from compliance costs requires
data such as historical output quantities and prices, raw materials quantities and prices, plant
capacity, and fixed and variable costs for typical plants and typical companies within the
industry. These data were not available for use in this analysis, and to generate them would
require an effort that exceeds the time and resources available.
In lieu of data analysis, we relied on the judgment of ADL industry specialists who are
knowledgeable about the pesticide industry, its economics, and the economics of pesticide use.
This was particularly true in regard to the question of price elasticity of demand — i.e., the
responsiveness of the quantity of a pesticide demanded to a change in its price or to a change in
the price of a substitute product. Given the availability of data, elasticities can be inferred for
specific ranges of output and sales levels. The unavailability of data resulted in a qualitative
consideration of elasticity, based on ADL industry specialists' knowledge of the economics of
pesticide use and the factors influencing the demand for pesticides.
The qualitative approach involved judgments as to whether all or significant portions of
compliance costs could be passed on to consumers. These judgments were based primarily on the
number and price competitiveness and efficacy of other products capable of substituting for the
product being studied and the cost/benefit aspects of pesticide use. It should be noted, however,
that cost increases are seldom totally absorbed or totally passed on to the consumer.
It is more realistic to expect that some portion of the cost increase would be passed on to
consumers in the form of higher prices, and that some would be absorbed by producers, resulting
in a lower output and profits. Our judgmental approach precluded a precise determination of
these effects. So while we do conclude that the economic impact for certain subcategories in the
pesticide industry will be low, medium, or high in terms of their effects on output or profitability,
we cannot be more specific as to the magnitude of these impacts and cannot reasonably antici-
pate possible plant closings, employment effects, or community impacts.
52
-------
APPENDIX A
INFORMATION ON PESTICIDE MANUFACTURE
53
-------
FIRM:
PRODUCT:
PLANT LOCATION:
EMPLOYMENT:
Kerr-McGee Chemical
Oklahoma City, Oklahoma
Methyl parathion (organo-phosphate subcategory)
Hamilton, Mississippi
N.A.
CAPACITY:
EXPANSION PLANS:
17 million Ibs. (increased from 14 million Ibs. in
1974); capacity utilization is believed to be light.
N.A.
INTEGRATION:
Backward: none — purchased raw materials
Forward: N.A.
PRODUCTION:
VALUE OF PRODUCTION, MFC:
FOREIGN SALES:
U.S. MARKET SIZE:
MARKET SHARE:
COMPETITION:
WASTE TREATMENT:
COMMENT:
N.A.
Price (1974) = $.78/lb. (based on Tariff Commis-
sion) Value of production = S12MM (est.)
N.A. — (a substantial share of U.S. production is
exported)
70 million Ibs. (est. 1974); production
Kerr-McGee - Estimated to be approximately 18%.
Other producers: Monsanto, Stauffer
Other products: Methyomyl, toxaphene, azodrin
(Shell)
Kerr-McGee is currently attempting to comply with
state regulatory requirements. They are separating
waste stream from the methyl parathion manufactur-
ing process in order to install both primary and secon-
dary treatment for the phosphorus waste products.
The market for methyl parathion is highly competi-
tive because of its nonproprietary status and because
of a wide variety of competing products. In the late
1960's and early 1970's, there was substantial over-
capacity for methyl parathion and as a result, several
producers closed down.
55
-------
COMMENTS: (cont.) In recent years, the ban on DDT and shortages of
competing products increased demand for methyl
parathion significantly to the extent that methyl
parathion was also in short supply.
Monsanto, the major producer of methyl parathion,
has what ADL believes are important competitive
advantages over Kerr-McGee. First, Monsanto is
backward integrated into raw material production
(Monsanto produces P2 S5 and elemental phospho-
rus). Second, Monsanto discharges their wastes into a
municipal sewage system.
Kerr-McGee is currently planning to install waste
treatment facilities for their production of methyl
parathion. At current price levels they should be
able to absorb the increased manufacturing costs.
However, an increase in the supply of competing
products expected in 1976 may place methyl
parathion under price pressure for the next several
years. If so, Kerr-McGee may reconsider their plans
to install waste treatment facilities.
56
-------
FIRM: Shell Chemical Company,
San Ramon, California
PLANT: Denver, Colorado
PRODUCT: Methomyl, azodrin®, bidrin®, ciodrin®, DDVP
EMPLOYMENT: 320
CAPACITY: N.A.
EXPANSION PLANS: Shell is building a large triazine facility in Mobile,
Alabama for the production of Bladex (current prod-
uct is contracted in both Europe and U.S.)
INTEGRATION: Backward: Shell Chemical produces most of its raw
materials.
Forward: Formulate at Denver
Mobile (DDVP)
Princeton, N.J. (DDVP)
PRODUCTION: N.A.
VALUE OF PRODUCTION, MFC: N.A.
FOREIGN SALES: N.A.
U.S. MARKET SIZE: N.A.
MARKET SHARE: N.A.
COMPETITION: These products are proprietary except methomyl
which is also produced by DuPont. The products do
compete with other proprietary products.
DDVP competes with Dibrom (Chevron), Dursban
(Dow), Diazinon (Ciba Geigy) in the domestic market.
Azodrin competes with methyl parathion/toxaphene
and Galecron (Ciba Geigy) in the cotton market.
57
-------
TREATMENT PRACTICES: Shell is currently installing an incineration facility
required by the state to dispose of waste products.
Residue material will be shipped to an approved land-
fill.
IMPACT ON OPERATION: In the past several years, Shell has been able to pass
on increased costs for pollution control. However, in
1976, ADL believes the supply/demand situation will
make it unlikely for Shell to pass on the additional
treatment costs from the incineration of waste
products.
58
-------
FIRM: Vineland Chemical Company
Vineland, N.J.
PRODUCT: Arsenicals (MSMA, DSMA, Cacodylic Acid)
PLANT LOCATION: Vineland, N.J.
EMPLOYMENT: 60-80
CAPACITY: N.A.
EXPANSION PLANS: N.A.
INTEGRATION: N.A.
PRODUCTION: 2-3 MM Ibs. (est.)
VALUE OF PRODUCTION, MFC: N.A.
FOREIGN SALES: N.A.
U.S. MARKET SIZE: 40 MM Ibs. (est.)
MARKET SHARE: N.A.
COMPETITION: Other Producers: Ansul, Diamond Shamrock
Other Products: The competition by other prod-
ucts is limited.
WASTE TREATMENT: Have no process water discharge.
COMMENT: There are few competing products with the arsenicals
and because of its necessity in the cotton market, it
is highly price inelastic.
59
-------
FIRM: Chevron Chemical Company
Ortho Division
San Francisco, California 94104
PRODUCT: Captan (chlorinated organo-sulfur compound)
PLANT LOCATION: N.A.
EMPLOYMENT: N.A.
CAPACITY: N.A.
EXPANSION PLANS: N.A.
INTEGRATION: N.A.
PRODUCTION: (1974) 19 million Ibs. (est.); plant built in 1954.
FOREIGN PRODUCTION: Chevron (in joint with Stauffer) also produces Captan
in France and Israel.
VALUE OF PRODUCTION, MFC: 1974 - 19 MM Ibs. x $.75/lb = $14.3 MM
FORMULATION: Chevron (in joint with Stauffer) has formulation
facilities in New Jersey (2), Midwest (2), West Coast
(3), Florida (1)
COMPETITION: Other producers - production is a joint venture with
Stauffer.
Other products — dithiocarbamates, benolates
(DuPont)
COMMENTS: Although Captan is competitive with other fungi-
cides, it is a low cost product. Assuming treatment
costs are moderate, Chevron might be able to pass on
treatment costs and still remain highly competitive.
WASTE TREATMENT: N.A.
60
-------
FIRM:
PRODUCT:
PLANT LOCATION:
EMPLOYMENT:
CAPACITY:
EXPANSION PLANS:
INTEGRATION:
PRODUCTION:
VALUE OF PRODUCTION, MFG.
PERCENT OF TOTAL
PESTICIDE SALES:
U.S. MARKET SIZE:
EXPORTS:
DISTRIBUTION, U.S.:
COMPETITION:
COMMENT:
Rohm & Haas
Philadelphia, Pa.
Dithiocarbamates
Philadelphia, Pa.
(some production of other pesticides at Bristol, Pa.)
300 (200 hourly); for all pesticide manufacturing
N.A. (Believed to be operating close to capacity
levels)
None announced
Backward: Purchase most raw materials
Forward: Formulate 100% at Philadelphia plant
300 million Ibs.
1974 - 30 MM Ibs. x $.68/lb. = $20.4 MM
15.3%
1974 production = 35.4 MM Ibs. (based on Tariff
Commission)
25% of production
Own formulation - 100% of production
Plant - Philadelphia
Common Form — 80% powder
Other Producers: DuPont, FMC, Alco Chemical,
Buckman Labs, Vanderbilt
Chemical
Other Products: Bravo® (Diamond Shamrock)
Benlate (DuPont)
Captan (Chevron)
Dithiocarbamates are nonproprietary products which
compete in a highly competitive market. The smaller
producers may be more adversely impacted because
of the lack of economies of scale in treatment. The
larger producers, however, may be unable to fully
pass on cost increases because of competition from
nonmetallo-organic products. The ability to pass on
costs depends on how severely the proposed stan-
dards impact other fungicide products.
61
-------
OTHER PRODUCTS:
PLANT:
PRODUCTION:
CAPACITY:
FOREIGN SALES:
FORMULATION:
COMPETITION:
OTHER PRODUCTS:
PLANT:
PRODUCTION:
CAPACITY:
FORMULATION:
COMPETITION.
1. Kelthane® (Dicoful) — halogenated organic
sub category
Philadelphia
4MMlbs. (1975)
N.A.
25%
100%, Philadelphia, Pa.
Other Producers: None (patent reacting expiration)
Other Products: Chlorobenzilate (acaricide Ciba-
Geigy)
Comment:
Highly cost competitive.
2. Karathane® (dinocap) — foliage fungicide and
miticide [2-(l-Methyl-n-heptyl) — 4, 6-dinitro-
phenylcrotonate]
Philadelphia
< 1 MM Ibs. (est.)
N.A.
Dikar® - 90% dithane/10% Karathane; a fungicide/
miticide for the citrus market.
R&H claims that because of unique characteristics,
dinocap experiences minimal competition in its
particular markets.
62
-------
FIRM:
PRODUCT:
PLANT LOCATION:
EMPLOYMENT:
CAPACITY:
INTEGRATION:
PRODUCTION:
VALUE OF PRODUCTION, MFG.
FOREIGN SALES:
U.S. MARKET SIZE:
WASTE DISPOSAL:
COMPETITION:
COMMENT:
Thompson-Hayward
Kansas City, Kansas
2,4,5-T, iso-octylester (2,4,5 trichlorophenoxyacetic
acid, iso-octylester)
2,4-D salts & esters, silvex
Kansas City, Kansas
N.A.
5 MM Ib/year (est.)
Forward: Formulate at Kansas City plant
Backward: Purchases raw materials
2-4 MM Ibs. (est.)
N.A.
N.A.
8-10 MM Ibs.
Oxidation pond, chemical treatment (acid or caustic),
disposal to city sewer
Other Producers:
Other Products:
Dow
Brush control products; i.e.,
Banvel
Thompson-Hayward is a small pesticide manufacturer
with a small manufacturing facility. The cost impact
of effluent controls could be more severe than the
costs developed for the "small" plant in the Develop-
ment Document; however, T-H now discharges into
the municipal treatment system. T-H would probably
be placed at a severe competitive disadvantage
vis-a-vis Dow, the major producer of 2,4,5-T if it
incurred the estimated treatment costs in the Devel-
opment Document in order to meet the proposed
standards.
63
-------
FIRM: American Cyanamid Company
Princeton, N.J.
PRODUCT: Principally Malathion and Thimet®
PLANT LOCATION: Linden, N.J.
EMPLOYMENT: N.A.
CAPACITY: N.A.
EXPANSION PLANS: N.A.
INTEGRATION: Backward: Purchase P2 S5
Forward: Contract formulation of Thimet® — sell
technical malathion to formulators —
(some on site formulation)
PRODUCTION: Malathion - 30 MM Ibs. (est.)
Thimet® - 6 MM Ibs. (est.)
VALUE OF PRODUCTION, MFG.: Malathion - 30 MM Ibs. x $1.10 = $33 MM
Thimet® - 6 MM Ibs. x $2.50 = $ 15 MM
EXPORTS: Malathion (5% of production)
Thimet® - small
COMPETITION: Other Producers - None
Other Products — Malathion — toxaphene, methyl
parathion, methanomyl
— Thimet — other systemic
insecticides
DISTRIBUTION, U.S.: Own Formulation - Malathion 5% (for export)
- Thimet® - small
Common Forms — Malathion — dust and powder
- Thimet® - EL
Shipped in (Technical material):
- Malathion - tanks (10-12%),
5,30, 55 gal. drums
— Thimet® — 55 gal. drums
64
-------
FIRM:
PRODUCT:
PLANT LOCATION:
EMPLOYMENT:
CAPACITY:
OTHER PRODUCTS:
INTEGRATION:
ANNUAL PRODUCTION:
VALUE OF PRODUCTION, MFG.
COMPETITION:
Elanco Products, Div. of Eli Lilly Company
Indianapolis, Indiana
Treflan® (trifluralin)
Lafayette, Indiana
N.A.
N.A.
Large pharmaceutical manufacturing complex
Backward: Purchase raw materials
Forward: Formulate on site
20-25 MM Ibs. (est.)
1974 - 25 MM Ibs. x $3.90/lb. A.I. = $97.5 MM
Other Producers
Other Products
Lasso, Amiben,
- None
— Soybeans:
Sencor
- Cotton: Cotoran, Sencor
SHARE OF U.S. MARKET:
EXPORTS:
DISTRIBUTION, U.S.:
OTHER FORMULATIONS:
WASTE TREATMENT:
Soybeans - 35-40%
Cotton - ?
Large (25-30% of production?)
Own Formulation: on-site 99+%)
Common Form: Liquid
Shipped in: 5-gal. cans
< 1%, contract formulations
Common form: Granules (2.5% A.I.)
NaCl and process water are sent to a biological
treatment plant which services all of the Lafayette
facility. The plant uses neutralization, settling,
aeration, and biological treatment. The Treflan
units constitute a significant part of the waste going
to the treatment facility.
65
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FIRM: Ciba-Geigy
PRODUCT: Atrazine
PLANT LOCATION: St. Gabriel, La.
EMPLOYMENT: N.A.
CAPACITY: 120 MM Ibs. (est.)
OTHER PRODUCTS PRODUCED: Other triazine products
INTEGRATION: Backward: Purchase raw materials
Forward: Formulation on site
PRODUCTION: 100 MM Ibs.
VALUE OF PRODUCTION, MFG.: (1974) 100 MM Ibs. x $2.30/lb. = $230 MM
EXPORTS: Small
DISTRIBUTION, U.S.: Own formulation: on site
Common Form: WP (80% A.I.) and Liquid (4 lb./
gal.)
Shipped in: WP - 5 lb. bags liquid
— 1,5 gal. containers.
Other formulators: Not known
WASTE TREATMENT: Waste produced: NaCl and HCN from cyanuric
chloride. Other liquid waste in
pesticide production.
Waste Disposal: Wastes from cyanuric chloride
production receive preliminaary
treatment (pH adjustment and fil-
tration) and then disposed of in
a deep well. Other wastes were
disposed of in the river; however,
in recent years significant invest-
ment has been made in waste
treatment facilities.
66
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FIRM: Union Carbide
New York, New York
PRODUCT: Sevin (Carbaryl)
OTHER PRODUCTS PRODUCED: Pesticide intermediates as well as many other petro-
chemical products in a large chemical complex.
PLANT LOCATION: Institute, W. Virginia
EMPLOYMENT: N.A.
CAPACITY: 90 MM Ibs. (est.)
EXPANSION PLANS: Carbide has announced plans to increase produc-
tion of Sevin by 50% and also begin production of
Temik at the Institute site.
INTEGRATION: Backward: Carbide manufactures most of its own
raw materials
Formulation: none
PRODUCTION: 80-90 MM Ibs. (est.)
VALUE OF PRODUCTION, MFG.: (1974) 80 MM x $.95/lb. - $75 MM
EXPORTS: An estimated 1/3 — 1/2 of production is exported.
DISTRIBUTION, U.S.: Own Formulation: None
Shipped in (technical materials): 50 lb. bags
Other Formulators: 6 contract and 20 customer
formulators
Common Form: WP (2-5 lb. bags)
Liquid (5 gal. drums)
COMPETITION: Other producers: None
WASTE TREATMENT: All processes water goes into the plant's secondary
waste treatment systems.
67
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FIRM: Rhodia, Inc./Chipman Division
PRODUCT: 2,4-D
PLANT LOCATION: Portland, Oregon
EMPLOYMENT: N.A.
CAPACITY: N.A.
EXPANSION PLANS: None announced
INTEGRATION: Forward: some formulation on site
PRODUCTION: 3-5 MM Ibs./year
VALUE OF PRODUCTION, MFG.: (1974) 4 MM Ibs. x $.85/lb. A.I. = $3.4 MM (est.)
FOREIGN SALES: None
U.S. MARKET SIZE: 60 MM Ibs. (est.)
MARKET SHARE: 5-10%
COMPETITION: Dow is major producer (90% of production)
WASTE TREATMENT: Over $1 MM investment in continuous flow charcoal
absorption plant which is said to reduce phenolics
below l.OMg/1.
68
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FIRM: Great Lakes Chemical Corporation
PRODUCT: Methyl bromide
PLANT LOCATION: El Dorado, Arkansas
EMPLOYMENT: N.A.
CAPACITY: 10 MM Ibs./year 1973
EXPANSION PLANS: Currently expanding capacity
INTEGRATION: Backward - Bromine
PRODUCTION: N.A.
VALUE OF PRODUCTION, MFG.: (1973) 10 MM Ibs. x $.34/lb. = $3.4 MM (est.)
FOREIGN SALES: 0
U.S. MARKET SIZE: 30 MM Ibs. (est.)
MARKET SHARE: 33% (est.)
COMPETITION: Other Producers: Dow, Michigan Chemical
WASTE TREATMENT: They claim to have no effluent to surface water.
Scrub with caustic, convert to bromine which they
recover.
69
-------
FIRM: Hooker Chemical Corporation
Niagara Falls, New York
PRODUCT: Lindane, BHC
PLANT LOCATION: Niagara Falls, New York
EMPLOYMENT: N.A.
CAPACITY: 7 MM Ibs. BHC/year
EXPANSION PLANS: None - its production has been declining for a num-
ber of years because of replacement by phosphate-
based insecticides
INTEGRATION: Hooker produces both benzene and chlorine, the
principal raw material for BHC product.
PRODUCTION: 0.5 MM Ibs. (1972)
VALUE OF PRODUCTION, MFG.: 0.5 MM Ibs. x $.67/lb. = $0.3 mm
FOREIGN SALES: N.A.
U.S. MARKET SIZE: 0.5 MM Ibs.
MARKET SHARE: 100%
COMPETITION: N.A.
WASTE TREATMENT: They do not believe they are producing effluents.
70
-------
FIRM: Bayer/Chemagro
PRODUCT: Disulfoton (di-Syston)
PLANT LOCATION: Kansas City, Missouri
EMPLOYMENT: N.A.
CAPACITY: N.A.
EXPANSION PLANS: None
INTEGRATION: Backward: Purchase raw materials
Forward: Formulate on site
PRODUCTION: 6 MM Ibs./year
VALUE OF PRODUCTION, MFG.: (1974) 6 MM Ibs. x $1.75/lb. = $10.5 MM
FOREIGN SALES: N.A.
U.S. MARKET SIZE: N.A.
MARKET SHARE: 100%
COMPETITION: Other producers: none
WASTE TREATMENT: $ 1.9 MM wastewater treatment plant.
COMMENT: N.A.
DISTRIBUTION: Technical Material - 40% shipped in 55 gal. drums
Formulated Product — EC — (6 Ib./gal.) granular
Shipped In — EC — 1, 30, 50 gal. drums; granular
55 gal. drums
71
-------
OTHER FORMULATORS: Malathion - N.A.
Thimet® — Contract Formulators
COMMON FORMS: Malathion - dust and powder
Thimet® - 10-15% granules (10, 15, 50 Ib. bags)
WASTE TREATMENT: The wash water and other liquid waste from pesticide
production goes to a holding pond. The waste is
eventually barged to sea and dumped.
72
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FIRM: Shell Chemical
San Ramon, California
PRODUCT: Aldrin/Dieldrin
PLANT LOCATION: Denver, Colorado
OTHER PRODUCTS PRODUCED: Numerous other products are produced at Denver;
Aldrin/Dieldrin was a separate unit which has been
closed down completely and is standing by.
EMPLOYMENT: Approximately 80
CAPACITY: ADL estimates they were operating at around 50%
capacity.
EXPAN S1ON PLAN S: Believe it is unlikely.
INTEGRATION: Backward: No; did not make raw materials.
Forward: Sell all products under Shell label.
However, Shell contracted formulation
of some products with firms in Midwest.
Some formulation by Shell.
PRODUCTION: None at present, 8-10 million Ibs. in 1971.
VALUE OF PRODUCTION, MFG.: None at present, $1.35/lb. x 9 MM Ibs. = $12.15 MM
(1971 volume at 1975 prices)
U.S. MARKET SIZE: Approximately 8 MM Ibs. (1971)
EXPORTS- In 1971: 0.5-1.0 MM Ibs.
VALUE OF EXPORTS: $0.675 - 1.350 MM (1971 volume at 1975 prices)
WORLD MARKET SIZE: Contact Shell (London).
DISTRIBUTION SYSTEM, U.S.: Own Formulation - Percent of Product Produced:
<5%
Plant Location: at Denver
Other Formulation at Plant: Yes
Common Forms: See Other Formulators
Mixed with: No mixing
73
-------
Shipped In:
From Manufacturer: 30 gal. (350 Ib.) drums —
95% solution
From Formulator: 50 Ib. bags, 5 and 30 gal.
containers.
Other Formulators:
— Percent of Product Pro-
duced - 95%
— Number of Formulators:
Two companies — had
multiple locations for for-
mulating.
— Names and locations of
some major formulators:
Helena Chemical, Des
Moines, Iowa
Imperial Chemical (out of
business) Shenandoah,
Iowa
Dwight Habermill (shut
down formulating opera-
tion when contract was
lost)
Common forms: Granular — oil solutions, EC,
liquid fertilizer
Mixed with: None
Shipped In: From formulator: 5, 30 and 55 gal.
containers, 50 Ib.
bags
74
-------
DISTRIBUTION SYSTEM, FOREIGN. Public Sector:
Some governments, Egypt as an
example, purchase the entire
year's requirement for a pesti-
cide on a government tender
basis.
Private Sector: Shell (London) has controlling
interest in firms in 102 countries
who either formulate and/or man-
ufacture. These firms handle Shell
as well as other firms' products.
Essentially the foreign marketing
system is very similar to U.S.
(except in cases such as Egypt):
manufacturer, formulator, dis-
tributor, dealer.
75
-------
FIRM: Riverside Chemical
Memphis, Tennessee
PRODUCT: Toxaphene
PLANT LOCATION: Groves, Texas
(Bison bought Sonford, tore down old plant, and
built new one which Riverside bought.)
OTHER PRODUCTS PRODUCED: Chlorinated organic compounds (75% of plant sales
are toxaphene; 25% are other chlorinated organics.)
EMPLOYMENT: 291 or 5.8% of Riverside employment of 500.
CAPACITY: Approximately 15 MM Ibs.; operating at 60%
capacity.
EXPANSION PLANS: No announced plans. Recently finished (August 1975)
doubling plant capacity. This permitted them to
produce all the toxaphene utilized by Riverside.
INTEGRATION: Backward: None
Forward: Own 15 formulators which formulate all
toxaphene produced by Riverside. River-
side distributes all its toxaphene prod-
ucts. 50% is sold through own dealers.
PRODUCTION: 8-10 million Ibs.
VALUE OF PRODUCTION, MFG.: Using 1974 price and 1975 production: $2.3 to
$2.9 MM
PERCENT OF TOTAL MANU-
FACTURER SALES: Using 1974 price, 1975 production, and 1974 com-
pany sales: 2.3-2.9%
U.S. MARKET SIZE: 50-65 MM Ibs. (1972-1975)
PERCENT OF U.S. MARKET: 12-20%
1. For entire plant.
76
-------
EXPORTS:
VALUE OF EXPORTS:
WORLD MARKET SIZE:
1974 — exported one small lot in contract which
came with purchase of production plant. 1975 —
No exports.
N.A.
No estimate
PERCENT OF WORLD MARKET: Presently 0%
DISTRIBUTION SYSTEM, U.S.:
Own Formulation - Percent of Product Produced:
100%
Plant Locations: 15 facilities
Other Formulation at Plants: Formulate other
materials particularly for cotton (EPN-methyl
parathion, endrin-methyl parathion, malathion). 40-
50% of formulation business is toxaphene based.
Common Forms: EC
Mixed with: Methyl parathion
Shipped in:
From Manufacturer: 30 and 55 gal. drums
From Formulator: 5, 30 and 55 gal. containers
Shipped to:
Distributors: None goes to non-Riverside dis-
tributors
FOREIGN DISTRIBUTION
SYSTEMS:
Dealers: 50% moves through Riverside
dealers.
Riverside has no market structure or experience in
foreign marketing of pesticides.
77
-------
FIRM:
PRODUCT:
PLANT LOCATION:
OTHER PRODUCTS PRODUCED:
EMPLOYMENT:
CAPACITY:
EXPANSION PLANS:
INTEGRATION:
Montrose Chemical Company
Union, New Jersey
DDT
Torrance, California
Montrose only produces DDT input products, DDT
and DDT byproducts.
Torrance plant for DDT - 175-200 depending on
current production levels. Nevada plant for inputs
-85
80 MM Ibs.; operating at 50-70% capacity.
At present they are operating under capacity so
they probably have no plans for expansion. Presently
there are numerous production facilities in the
world: Eastern Europe — 4 to 5; Germany — 1;
France — 1; Spain — 1 (subsidiary of France);
Argentina — 1; Mexico — 2 (Govt. and Diamond);
Brazil — 1 (Hoechst); Pakistan — 2; India — 1; Main-
land China — produces, but unknown quantity;
Japan — discontinued operations; South Africa —
discontinued but considering starting up again.
Backward: Produce chloral and mono-chlorobenzine
in Nevada (some small quantities are
sold; most is used in producing DDT at
Torrance). These are two of the three
products used in DDT production. The
third is sulfuric acid which they pur-
chase from outside sources.
Forward: Formulate all their public health com-
pounds; they formulate only minimal
amounts of DDT used for agricultural
purposes. They own no distributors
facilities.
PRODUCTION:
40-60 MM Ibs. depending on market conditions for
given year.
78
-------
VALUE OF PRODUCTION, MFG.: Use 50 MM Ibs. - $22.7 MM
PERCENT OF TOTAL MANU-
FACTURER SALES:
EXPORTS:
VALUE OF EXPORTS:
WORLD MARKET SIZE:
DISTRIBUTION SYSTEM, U.S.:
Since they sell only DDT inputs, DDT, and DDT
byproducts, 100% of their market is related to
their DDT production.
40 to 60 MM Ibs.
$22.7 MM
80-100 MM Ibs. depending on foreign aid and public
health budgets, and on crop acreage.
PERCENT OF WORLD MARKET: 50%
Own Formulation - Percent of Product Produced:
52% (100% of public health; < 5% of agricultural)
Plant Location: Torrance, California
Other Formulation at Plant: No
Common Forms: 75% water dispersable powder for
public health use
Mixed with: dusts, solutions, wettable powders,
emulsifiable concentrates
Shipped in:
From Manufacturer: Sell in 50 Ib. bags which
may be palletized up to a
ton.
From Formulator:
For public health market, sell
in fiber cartons or drums of
75-200 Ibs.; for public health
market like WHO, 35 kilo
(77 Ib.) container is standard.
Other Formulators: Percent of Product Produced:
48%
Number of Formulators: Unknown.
79
-------
DISTRIBUTION SYSTEM, U.S.:
/cont \ Common Forms: dusts, solutions, wettable powders,
emulsifiable concentrates.
Mixed with: Pyrophyllite or Talc to prevent caking.
FOREIGN DISTRIBUTION
SYSTEM: Public Sector: Sold to various international agencies
such as Pan American Health Organization, WHO,
UN, and to ministries of health of various govern-
ments. Sold on competitive bid basis in most
instances. Demand usually exceeds ability to buy.
Private Sector: For use primarily on cotton with
some soybean use. System of distribution varies from
government purchase and control to systems similar
to that found in U.S. agricultural market is slowly
declining due to increased competition of other
products; acreage drops and banning in some
countries have also caused agricultural usage to fall.
80
-------
FIRM: Hercules
Wilmington, Delaware
PRODUCT: Toxaphene
PLANT LOCATION: Brunswick, Georgia and joint-venture in Nicaragua
OTHER PRODUCTS PRODUCED: (See listing in Directory of Chemical Producers)
EMPLOYMENT: 80 in production; 50 in sales and sales-related work.
CAPACITY: Unknown
EXPANSION PLANS: Have begun construction on a plant in Brazil with a
25 MM ton capacity. Construction has been tem-
porarily halted due to Brazilian government's desire
to move location to northern Brazil. Problem has not
been resolved. No other expansion plans announced.
INTEGRATION: Backward: Hercules produces its own camphene.
Forward: None. However, Hercules does contract
in the U.S. for small amount of formulation to meet
market needs in certain countries with no formul-
ators.
PRODUCTION: 1974 - 54 MM Ibs.
VALUE OF PRODUCTION, MFG.: 1974 - $ 15.7 MM
1975 - $20.5 MM
PERCENT OF TOTAL MANU-
FACTURER SALES: 1974 - 1% (based on Hercules sales of $ 1,525 MM)
U.S. MARKET SIZE: 50-65 MM Ibs. (1972-75 range)
PERCENT OF U.S. MARKET: 40-60%
EXPORTS: Hercules exports are estimated to be 24-28 MM Ibs.
VALUE OF EXPORTS: 1974 - $7-8 MM (1974 price and quantity)
1975 - $9-11 MM (1975 price; 1974 quantity)
WORLD MARKET SIZE: < 50 MM Ibs. (excluding U.S.)
81
-------
PERCENT OF WORLD MARKET: 45-55%
DISTRIBUTION SYSTEM, U.S.:
DISTRIBUTION SYSTEM,
FOREIGN.
Own formulation — Percent of Product Produced:
Essentially none
Other Formulators — Percent of Product Produced
Essentially 100%
Number of Formulators: ~ 80; 15-20 formulate
bulk of the toxaphene produced by Hercules
Names and locations of some major formulators:
Walpole Chemical
Fort Valley, Georgia
Valley Chemical
Greenville, Mississippi
Cotton State
Pine Bluff, Arkansas
Apollo Industries
Pine Bluff, Arkansas
Common forms: EC
Mixed with: Methyl parathion
Shipped in: From Manufacturer: (see Riverside
information)
South Africa has a 5 MM Ib. plant apparently pro-
ducing at or near capacity. East Germany is pro-
ducing a toxaphene-like substance of a low quality.
E. German capacity and sales are not known.
Hercules is involved in a joint venture in Nicaragua.
Hercules deals primarily with formulators and govern-
ments for all their overseas' sales. Small quantities
are formulated in the U.S. on contract for sale in
national markets where formulators are not operat-
ing.
82
-------
FIRM:
PRODUCT.
PLANT LOCATION.
OTHER PRODUCTS PRODUCED:
EMPLOYMENT:
CAPACITY:
EXPANSION PLANS:
INTEGRATION:
PRODUCTION:
VALUE OF PRODUCTION, MFG.
PERCENT OF TOTAL MANU-
FACTURER SALES.
U.S. MARKET SIZE:
PERCENT OF U.S. MARKET:
EXPORTS.
VALUE OF EXPORTS:
WORLD MARKET SIZE:
Velsicol Chemical Company
Chicago, Illinois
Endrin
Memphis, Tennessee
Several other products are produced; however,
Endrin is produced in a separate unit within the
plant.
20-25
Not known; are believed to be operating well below
capacity because of a decline in U.S. market.
No announced plans for expansion in U.S. or over-
seas.
Backward: Buy most inputs as raw materials and
process forward. Do have own captive
source of chlorine and cyclo-pentadiene.
Forward: Formulate at the Memphis plant.
6 MM Ibs.
1974-est.: $14.2 MM
1975 -$16.65 MM
21.5% (based on 1974 sales)
1.0 MM Ibs. (less in 1975)
Approximately 100%
5 MM Ibs.
Approximately $14.5 MM in 1975 (price range for
technical materials: $2.40-3.25 per Ib. in 1975 - in
foreign markets).
20-25 MM Ibs. (majority of other production be-
lieved to be by Dutch Shell).
PERCENT OF WORLD MARKET: 25-30%
83
-------
DISTRIBUTION SYSTEM, U.S.: Own Formulation - Percent of Product Produced:
> 50%
Plant Location: Memphis, Tennessee
Common Forms: EC
Mixed with: Methyl parathion (for cotton market
generally mixed with methyl parathion; for small
grain markets, generally sold alone).
Shipped in:
From Manufacturer: 30 and 55 gal. drums
From Formulator: 5, 30 and 55 gal. drums
Other Formulators: — Percent of Product Pro-
duced: 50%
— Number of Formulators:
10-12 major insecticide.
However 63 companies have
Endrin labels registered.
Names and locations of some major formulators:
Walpole Chemical
Fort Valley, Georgia
Helena Chemical
Memphis, Tennessee
Farm Supply Co-op
Greenwood, Mississippi
Cleveland Chemical
Cleveland, Mississippi
Triangle
Montgomery, Alabama
Common Forms: EC
Mixed with: Methyl parathion
Shipped in: From formulator: 5, 30 and 55 gal.
containers.
84
-------
DISTRIBUTION SYSTEM,
FOREIGN: Most export is in technical form; only a very small
amount is already formulated. In Latin America,
60% is formulated by Velsicol controlled firms
(Brazil and Mexico) or by firms contracted to
Velsicol. Velsicol then acts as distributor for this
60%. Approximately 15% (of the 60%) is then sold
by Velsicol in the capacity of a dealer. The remain-
ing 85% is moved by other dealers. The other 40%
of Endrin originating with Velsicol sold in Latin
America is formulated and moved through other
non-affiliated firms. There is minimal government
purchasing in Latin America. Velsicol is gaining
volume and market share in Latin America.
In Africa and the Near East, much of marketing is
through governments. Loss or gain of a single con-
tract can significantly affect annual sales.
85
-------
FIRM:
PRODUCT:
PLANT LOCATION:
OTHER PRODUCTS PRODUCED:
EMPLOYMENT:
CAPACITY.
EXPANSION PLANS.
INTEGRATION:
PRODUCTION:
VALUE OF PRODUCTION, MFG.
PERCENT OF TOTAL MANU-
FACTURER SALES:
U.S. MARKET SIZE:
PERCENT OF U.S. MARKET:
EXPORTS:
VALUE OF EXPORTS:
WORLD MARKET SIZE:
PERCENT OF WORLD MARKET:
DISTRIBUTION SYSTEM, U.S.:
Vicksburg Chemical Company
Vicksburg, Mississippi
Toxaphene
Vicksburg, Mississippi (Plant is two years old)
Ammonium nitrate, chlorine, nitric acid, nitrogen
tetroxide, potassium nitrate.
12-15 for toxaphene
10-13MMlbs.
None announced
Backward: Produce chlorine which is approxi-
mately 33% of toxaphene manufacture
material costs. (Camphene is approxi-
mately 50% of material costs.)
Forward: None
9 MM Ibs.
1975-$3.42 MM
8-10%
50-65 MM Ibs. (1972-1975)
8-10%
~ 4 MM Ibs.
$1.52 MM
~ 50 MM Ibs. (non-U.S.)
8-10%
Own Formulation — Percent of Product Produced: 0
Other Formulators: Percent of Product Produced:
100%
Number of Formulators: N.A.
86
-------
DISTRIBUTION SYSTEM, U.S.:
(cont.) Common Forms: EC
Mixed with: Methyl parathion
Shipped in: From Manufacturer: Bulk
DISTRIBUTION SYSTEM,
FOREIGN: Market almost exclusively in South America.
Presently market through formulators in appro-
priate countries.
Presently in South America, West German com-
petition is stiff.
87
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APPENDIX B
PATENT EXPIRATIONS (1975-1986)
89
-------
PATENT EXPIRATIONS
Product
Banvel
Dicamba
Baygon (Propoxur)
Benomyl (Benlate)
Carbaryl (Sevin)
Cyprex (Dodine)
Daconil (Bravo)
(Chlorothalonil)
Def
Diazinon
Diazinon
Dicofol (Kelthane)
Difolatan (Captafol)
Captan — expired
Disolfotan (Di-Syston)
Dyfonate
Eptam
Guthion (Azinphosmethyl)
Dur-Ter
Producer
Velsicol
Chemagro
DuPont
Union Carbide
Cyanamid
Diamond
Chemagro
Geigy
Geigy
R&H
Chevron
Chemagro
Stauffer
Stauffer
Chemagro
Patent*
Date
1961
1963
1959
1959
1.1966
2.1967
1.1958
2.1960
1956
1957
1965
1956
1961
1959
1956
1.1963
2.1964
3.1966
4.1966
5.1968
6.1969
Patent
Expiration
1978
1980
1976
1976
1983
1984
1975
1977
1973
1974
1982
1973
1978
1976
1973
1980
1981
1983
1983
1985
1986
91
-------
PATENT EXPIRATIONS (Continued)
Product
Lasso (Alachlor)
Maneb
Randox (CDAA)
Ruelene
Sutan (Butylate)
2,36-TBA (Benzac)
Tetradifon (Tedion)
Vernam (Vernolate)
Omite
Chlorobenzilate
(Acaraben)
Aatrex (Atrazine)
Treflan
Methomyl (Lannate)
Naled (Dibrom)
Naptalam (Alanap)
Nitrofen (TOK)
Paraquat (Gramoxone)
Plictran(Dowco213)
Princep (Simazine)
Propazine (Milogard,
Gesonil)
Ramrod (Propachlor)
Producer
Monsanto
DuPont, R&M
Pennwalt
Monsanto
Dow
Stauffer
DuPont, Amchem
FMC
Thompson-Hayward
Stauffer
Uniroyal
Geigy
Geigy
Blanco
DuPont
Chevron
Uniroyal
Rohm & Haas
ICI
Dow
Geigy
Geigy
Monsanto
Patent*
Date
May 6, 1969
1961
1958
1960
1959
1958
1957
1959
1966
1969
1956
1959
1960
1961
1956
1963
1961
1966
1959
1959
Dec. 9, 1958
its, such as new use patents, may be
Patent
Expiration
1986
1978
1975
1977
1976
1975
1974
1976
1983
1986
1973
1976
1977
1978
1983
1980
1978
1983
1976
1976
Dec. 9, 1975
more recent.
92
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SUPPLEMENT
ECONOMIC ANALYSIS OF
INTERIM FINAL EFFLUENT GUIDELINES
FOR THE PESTICIDES AND
AGRICULTURAL CHEMICAL INDUSTRY —
GROUP II
Economic Analysis Using
Plant-by-Plant Estimation
of
BPCTCA Treatment Costs
Contract No. 68-01-1541
Task Order No. 39
OFFICE OF WATER PLANNING AND STANDARDS
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
DECEMBER 1976
93
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S-1.0 EXECUTIVE SUMMARY
S-1.1 BACKGROUND
During the course of the economic impact analysis performed by ADL, it became apparent
that the generalized BPCTCA cost estimates in the EPA Effluent Guidelines Development
Document were not fully suitable for the purpose of analyzing economic impact. While the cost
estimates are reasonably accurate for the size and type of treatment systems included in the
Development Document cost models, their use presents two major problems:
1. The cost estimates are for model plants of a certain production rate and wastewater
flow rate. Even if all the plants within the industry actually employed treatment
steps identical to those used in the cost model, widely varying plant-to-plant
production rates and wastewater flow rates would result in a very wide range of
costs actually being incurred by individual plants.
2. The cost model used in the Development Document implicitly assumes that none of
the suggested BPCTCA treatment steps is in place and therefore that the full
capital investment and operating cost will be incurred by all plants employing
BPCTCA technology. In actuality, many plants will require only a fraction of the
suggested BPCTCA treatment steps.
If the costs shown in the Development Document are used in an economic impact analysis,
the conclusion reached is that there is a likelihood of significant impact from the BPCTCA
standards on the small manufacturers of inexpensive pesticides. This is the conclusion reached in
the ADL economic impact assessment of September 1976.
Recognizing that the problems previously listed might result in an erroneous conclusion,
EPA commissioned another contractor1 to perform a separate plant-by-plant estimate of the
BPCTCA costs that would be incurred by the pesticide manufacturers covered by the effluent
guidelines, Since these estimates were made available after the completion of our draft report,
they are now included as a supplement.
S-1.2 ESTIMATED TOTAL COST OF COMPLIANCE FOR MANUFACTURERS
AFFECTED BY THE BPCTCA STANDARDS
ESE identified 12 manufacturers who would be affected by the proposed BPCTCA stan-
dards. For each manufacturer so affected, ESE estimated the cost of meeting the standards. In
Table S-1.2 we have adjusted the coats presented by ESE to the 1975 level and have included a
capital recovery factor in the estimated annual costs.
S-1.3 ESTIMATED IMPACT OF THE BPCTCA COST OF COMPLIANCE
ESE identified 12 plants that would require treatment upgrading to meet the BPCTCA
standards. They did not provide production and product mix information for the plants. How-
ever, using in-house information, we were able to estimate the maximum annual revenues for
seven of the affected plants. We found that only one of the seven met our criteria for insignificant
economic impact, and we found that three plants had treatment cost-to-sales ratios of 2% to 5%
and three plants had treatment cost-to-sales ratios of 15% to 30%. For the five plants for which we
1. Environmental Science and Engineering, Inc. (ESE), Gainesville, Florida.
95
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TABLE S-1.2
ESTIMATED COST OF COMPLIANCE
BASED ON ESTIMATES OF ADDITIONAL TREATMENT REQUIRED
Total Number1'2
of Plants
32
10
24
6
3,400
56
Estimated Number of3
Plants that Will Incur
Treatment Costs
4
1
1
1
0s
5
12
Estimated4
Total Capital
Cost
($ Million)
15.2
2.0
8.1
0.3
0.0
7.7
33.2
Estimated4'5
Annual
Cost
($ Million)
4.5
0.7
1.9
0.2
0.0
2.9
10.2
Subcategory A
Subcategory B
Subcategory C
o\ Subcategory D
Subcategory E
Multicategory Plants
Total
1. Estimate excludes 15 single product plants because the subcategory of the product produced at the plant was unknown.
2. Numbers from EPA.
3. Based on number of direct dischargers estimated by the technical contractor. No facilities engaged solely in the formulation of pesticide products have
been identified as direct dischargers.
4. Based on individual plant estimates supplied by the technical contractor. Costs adjusted to 1975 Dollars (ENR 2270).
5. Annual cost includes a capital recovery factor of 0.163 (10 years and 10% interest rate).
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were unable to estimate revenues, we calculated what the revenues would have to be for
treatment cost to selling price ratios of 2%, 5%, and 10%. Based on our comparison of the revenues
required to achieve each ratio and typical revenues for pesticide manufacturers, we believe that
the treatment cost-to-selling price ratios for four of the five additional plants are greater than 5%.
Thus, we estimate that there will likely be serious economic impacts on three to five of the
12 plants affected by the BPCTCA standards and a possibility of potential economic impact to an
additional four plants. The exact nature of the economic impact to the affected plants can only be
determined by further in-depth study of these plants. We, therefore, conclude that the informa-
tion from ESE discussed in this supplement does not affect the conclusion in our September 1976
report; i.e., that some of the pesticide manufacturers will incur significant economic impact from
the BPCTCA standards.
97
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S-2.0 ESTIMATED COST OF COMPLIANCE FOR
MANUFACTURERS AFFECTED BY
THE BPCTCA STANDARDS
As previously stated, the plant-by-plant cost estimates were performed for EPA by another
contractor; therefore we are not intimately familiar with the manner or information they used in
preparing the cost estimates. However, we do understand that the estimates were developed by:
1. Contacting the individual plants that are point-source dischargers to determine the
wastewater treatment that is already in place and the type of treatment measures
that will be required to ensure compliance with the BPCTCA standards; and
2. Using established cost-estimating procedures to determine the cost of the required
treatment measures specific to the individual plants.
In this way, the work done by ESE overcomes some of the inherent limitations of a
generalized cost model. It also provides a fairly accurate picture of the costs likely to be incurred
by specific plants and the industry as a whole. Although of more use than the original Devel-
opment Document cost model, the plant-by-plant estimates are still of limited value for direct
evaluation of economic impact, because the costs are not tied to production levels and product
mix. Thus, it is not possible with the ESE data to obtain unit BPCTCA treatment costs in terms
of dollars per unit production rate.
The BPCTCA cost estimates prepared by ESE are presented in Table S-2.0A. It should be
noted that the number of applicable point-source surface dischargers listed by ESE is 23, while,
according to the August Development Document, the number of plants affected by the guidelines
is 40. Reportedly the reason for this apparent discrepancy was that some of the plants have since
closed, have been reclassified under other guidelines, or otherwise have been removed from the
"applicable" list.
The estimated cost to the industry as a whole to make the necessary upgrading can be
estimated using the information of Table 2.0A, and by making the necessary minor adjustments
such as putting costs on a uniform time basis. We have estimated cost to the industry as a whole
to meet the BPCTCA standards in Table S-2.0B.
99
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Plant
(Coded)
M22
M7
M8
M9
TABLE S-2.0A
BPCTCACOST ESTIMATES FOR APPLICABLE POINT-SOURCE DISCHARGERS
WITHIN THE PESTICIDES AND AGRICULTURAL PRODUCTS INDUSTRY1
Existing
Treatment
Incineration
API Separator
Hydrolysis
Activated Carbon
Holding Pond
Equalization
Activated Sludge
OP-Hydrolysis
Equalization
Aerated Lagoon
Gravity Separation
Neutralization
Potential
Treatment
Neutralization
Aerated Lagoon
Gravity Separation
Evaporation-Crystallization
Equalization-Filtration
Activated Carbon
Ion Exchange
Precipitation
Neutralization
NH3-N Removal
Hydrolysis
Dual-Media Filtration
HO, ON Hydrolysis
Dual-Media Filtration
Capital
Costs
1,400,000
(Aug. 72)
ESE Estimate
3,500,000
(July 77)
ESE Estimate
1,000,000
(July 76)
Plant Estimate
117,000
(Aug. 72)
ESE Estimate
320,000
(Aug. 72)
ESE Estimate
171,000
(Aug. 72)
ESE Estimate
400,000
(Aug. 72)
ESE Estimate
Direct3
Operating
Costs
129,000
(Aug. 72)
ESE Estimate
900,000
(July 77)
ESE Estimate
310,000
(July 76)
Plant Estimate
66,150
(Aug. 72)
ESE Estimate
19,200
(Aug. 72)
ESE Estimate
108,300
(Aug. 72)
ESE Estimate
24,000
(Aug. 72)
ESE Estimate
1. Source: Cost estimates performed by Environmental Science and Engineering, and transmitted by EPA
to ADL in two parts on 9/22/76 and 9/29/76.
2. "M" designates multi-product plants.
3. Does not include capital-related items.
100
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TABLE S-2.0A (Continued)
Existing
Rant Treatment
A2 Gravity Separation
Sand Filtration
Cartridge
Filtration
Neutralization
Potential
Treatment
Resin Adsorption
Reductive Degradation
@ 300 gpm
Equalization
Activated Sludge
Capital
Costs
954,000
(Apr. 75)
MRI Report
1,470,000
(Aug. 72)
ESE Estimate
Direct3
Operating
Costs
437,200
(Apr. 75)
MRI Report
1 34,000
(Aug. 72)
ESE Estimate
A3 Equalization
Gravity Separation
Neutralization
None
None
None
A6 Activated Carbon
Neutralization
Equalization
Activated Sludge
3,244,000
(Aug. 72)
ESE Estimate
682,000
(Aug. 72)
ESE Estimate
A8 Hydrolysis
Activated Carbon
Neutralization
None
None
None
A9
A12
A18
A19
82
C4
C8
In-plant Controls
Gravity Separation
None
None
None
Holding Land
Disposal
Hydrolysis
Neutralization
Gravity Separation
Neutralization
Gravity Separation
Not a Direct
Discharger
Equalization
Activated Sludge
API Separator
Equalization
Activated Sludge
Activated Carbon
Incinerator
Not a Direct
Discharger
3,320,000
(Aug. 72)
ESE Estimate
3,536,000
(Aug. 72)
ESE Estimate
Not a Direct
Discharger
302,000
(Aug. 72)
ESE Estimate
431,800
(Aug. 72)
ESE Estimate
Neutralization
Gravity Separation
Activated Sludge
Activated Carbon
Neutralization
Gravity Separation
Activated Sludge
Neutralization
Not a Direct
Discharger
None
Hydrolysis
Equalization
Activated SI udge
Not a Direct
Discharger
None
6,192,600
(Aug. 72)
ESE Estimate
Not a Direct
Discharger
None
436,000
(Aug. 72)
ESE Estimate
101
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TABLE S-2.0A (Continued)
Plant
Existing
Treatment
Potential
Treatment
Capital
Costs
Direct3
Operating
Costs
Unidentified product category
Reclassified as municipal discharger
C2
As of August 1976 all process wastewater goes to deep well disposal
M5
O
to
Neutralization
Skimming
Aerated Lagoon
Activated Carbon
None
$55,000
(Apr. 76)
(Plant Estimate)
Unidentified product category Due to labor strike and lack of market this plant has ceased production
C1
This-plant's product, atrazine, has been excluded from these guidelines
M1
Neutralization
Gravity Separation
Activated Sludge
None
None
None
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TABLE S-2.0A (Continued)
Plant
Existing
Treatment
Potential
Treatment
Capital
Costs
Direct3
Operating
Costs
D3
M12
B5
Unidentified product category
Unidentified product category
Neutralization
Gravity Separation
Chlorination
Neutralization
Equalization
Nutrient Addition
Aerated-Lagoon
Aerated Lagoon
Neutralization
Gravity Separation
Aerated Lagoon
Aerated Lagoon
Contract Disposal
Equalization
Neutralization
Neutralization
Sand Filtration
Activated Carbon
Holding Pond
Hydrolysis
$194,000
(Aug. 72)
ESE Estimate
$82,400
(Aug. 72)
ESE Estimate
None
None
None
None
None
None
Not a manufacturer — removed from direct discharger list
None None
None
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TABLE S-2.0A (Continued)
Plant
B1
Unidentified product category
D1
C6
Existing
Treatment
(4) Holding Ponds
Potential
Treatment
Hydrolysis
Equalization
Activated Sludge
Capital
Costs
$1,495,000
(Aug. 72)
ESE Estimate
Direct3
Operating
Costs
$247,900
(Aug. 72)
ESE Estimate
- Currently achieving zero discharge via 20 mgal evaporation pond
Product (Organo-Tin) has been excluded from these guidelines
M10
Deep Well
Gravity Separation
Skimming
500 acre-holding pond
None
None
None
None
None
None
Unidentified product category Activated Sludge
None
None
None
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TABLE S-2.0B
ESTIMATED COST OF COMPLIANCE
BASED ON ESTIMATES OF ADDITIONAL TREATMENT REQUIRED
Total Number1'2
of Plants
32
10
24
6
3,400
56
Estimated Number of3
Plants that Will Incur
Treatment Costs
4
1
1
1
0s
5
12
Estimated4
Total Capital
Cost
($ Million)
15.2
2.0
8.1
0.3
0.0
7.7
33.2
Estimated4'5
Annual
Cost
($ Million)
4.5
0.7
1.9
0.2
0.0
2.9
10.2
Subcategory A
Subcategory B
Subcategory C
Subcategory D
Subcategory E
Multicategory Plants
Total
1. Estimate excludes 15 single product plants because the Subcategory of the product produced at the plant was unknown.
2. Numbers from EPA.
3. Based on number of direct dischargers estimated by the technical contractor. No facilities engaged solely in the formulation of pesticide products have
been identified as direct dischargers.
4. Based on individual plant estimates supplied by the technical contractor. Costs adjusted to 1975 Dollars (ENR 2270).
5. Annual cost includes a capital recovery factor of 0.163 (10 years and 10% interest rate).
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S-3.0 ESTIMATED IMPACT OF
THE BPCTCA COST OF COMPLIANCE
It is immediately apparent from an examination of Table S-2.0A that none of the point-
source dischargers will have to install all of the model plant treatment steps to meet the BPCTCA
standards. A number of plants will require some upgrading to meet the BPCTCA standards.
The costs that the manufacturers would incur (shown in Table S-2.0B), are much less than
those that would be estimated if the generalized results of the Development Document had been
used. However, this total does not answer the question as to whether or not any of the pesticide
manufacturers would incur a significant economic impact because of the BPCTCA regulations.
In our September 1976 report, we concluded — based on the costs in the Development
Document — that there was a likelihood that some manufacturers would be significantly im-
pacted by the costs associated with the effluent guidelines. In Table S-3.0, we show the BPCTCA
treatment costs and estimates of individual plant revenues. As mentioned previously, ESE did
not provide production and product mix figures for the 12 plants that it found required treatment
upgrading. However, using in-house information, we were able to estimate the annual revenues
for seven of the plants. The plants for which this estimate could be made were A2, A«, A18, Alg, B,,
M6, and Me. For these seven plants we were then able to estimate the ratio of annual treatment
cost to annual sales. Only one plant met our criteria for insignificant economic impact. Three
plants had treatment costs-to-sales ratios of 2% to 5%. Three plants had treatment costs-to-sales
ratios of 15% to 30%.
For 5 of the 12 plants we were unable to estimate the annual revenues. Therefore, we
calculated the annual sales required to produce treatment costs-to-sales ratios of less than 2%, 5%
and 10%, respectively. As may be seen in the right-hand section of Table S-3.0, the annual
revenues required to produce a treatment cost-to-selling price ratio of less than 2% range from
$7.5 to 95 million. We estimate that plant D, could have annual revenues as high as $7.5 million,
but that revenues from pesticides of $23.5 to $95 million for the other four plants are highly
unlikely. It is probable that the treatment costs-to-selling price ratios for these four plants are in
excess of 5% based on comparison with the estimated revenues of the other seven plants.
From the information available to us at this time, we estimate that there are likely to be
serious economic impacts on 3 to 5 of the 12 plants and potential economic impact to four
additional plants. Whether the impacts will be sufficient to cause severe economic dislocations,
such as plant closures, conversion to the manufacture of other organic chemicals, reduction in
personnel, and the like, can only be determined by a further in-depth study of these plants. It will
be necessary to know the degree to which the pesticide produced at a given plant is not subject to
substitution, the price inelasticity of demand for the pesticide, the cost of other treatment options
for the plant, etc., in order to estimate the economic impact on specific plants. However, at the
present time, we believe that the conclusion in our September 1976 report is still valid, i.e., some
of the pesticide manufacturers will incur significant economic impact if the BPCTCA standards
are implemented.
107
-------
o
oo
TABLE S-3.0
BPCTCA TREATMENT COSTS COMPARED AGAINST ESTIMATED AND
REQUIRED PLANT REVENUES
l\
Estimated Maximum1'3
Plant Annual Revenue
($1000/yr)
A2 13,740
A6 5,350
A, 8 5,200
A! 9 7,200
B, 17,000
C8 NA
D3 NA
M2 NA
M5 2,1004
M7 NA
M8 NA
M9 50,0004
Total Annual2'3
Treatment Cost Minimum Ratio of Treatment Cost
for BPCTCA to Estimated Revenue
($10007yr)
490 3.6%
1,590 29.7%
1,110 21.3%
1,320 18.3%
640 3.8%
1,900 NA
150 NA
470 NA
55 2.6%
1,470 NA
680 NA
300 0.6%
At Rants for which No
Estimate of Revenues are
Available, the Annual Sales
($1000) Required for the
Treatment Cost to Selling Price Ratio
to be Less Than
2%
5%
10%
95,000
7,500
23,500
73,500
34,000
38,000
3,000
9,400
29,400
13,600
19,000
1,500
4,700
14,700
6,800
o
3
Notes: 1. Estimate is based on the product of reported plant capacity and pesticide selling price; revenues will usually be much less, as few plants oper-
ate at full capacity.
2. Total annual cost includes capital recovery (10% for 10 years) equal to 16.3% of initial capital investment.
3. Estimated revenues and total annual costs are in 1975 dollars.
4. Revenues from all products of plant are not available, therefore the ratio of treatment cost to revenue may be lower.
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