Environmental Regulation, Market Power and Price Discrimination in the Agricultural Chemical Industry

farmers are spending $5 to $10 per acre on pest control (Smith and Goodwin), compared
to $15 or $40 per acre for corn producers in Iowa or Indiana or, for that matter, the
Canadian province of Ontario. In early October of 2004, the Government of Canada also
issued a memorandum to the provinces indicating its interest in harmonizing regulations
because of complaints by Canadian farmers that some important pesticides were cheaper
in the United States than in Canada.

Interestingly, these federal initiatives have been introduced even though the U.S.
EPA and Canada’s PMRA, together with Mexico, established a NAFTA Technical
Working Group to address the issue of pesticide regulation harmonization in 1998. One
focus of the working group’s current five year agenda, established in November of 2003,
is the development of NAFTA labels for pesticides. However, there is no evidence of
any substantive progress on the issue. In addition, apparently, a NAFTA label would
only be issued at the request of the manufacturer and therefore would not address North
American agricultural producers’ concerns about price discrimination.

4. The Price Effects of Agricultural Chemical Market Segmentation: The Evidence

Some evidence of price differences in the Canadian and U.S. agricultural
chemical markets has been provided in previous studies. This study focuses on more
recent evidence for Alberta and Montana obtained from two simultaneously administered
“point in time” surveys of prices for 13 agricultural chemicals from retail agricultural
chemical dealerships close to the Canada-U.S. border. A random survey of retail
agricultural chemical dealership was administered in Northern Montana and a non-
random survey of similar dealerships was administered in Southern Alberta. The

10

<<   7   8   9   10   11   12   13   >>

More intriguing information