I am sending this out as an example of some of the agricultural research we are doing. If you read nothing else of this article, please read all the highlighted text. Then note the comment at the end of this article.

The Costs of Mycotoxin Management to the USA:

Management of Aflatoxins in the United States

by Jane Robens

Agricultural Research Service, United States Department of Agriculture, Beltsville, MD

Mycotoxin losses and costs of mycotoxin management are overlapping areas of concern. Costs of mycotoxin management include research production practices, testing, and research necessary to try to prevent the toxins from appearing in food and feed products of affected commodities. Mycotoxin losses result from (A) lowered animal production and any human toxicity attributable to the presence of the toxin, (B) the presence of the toxin in the affected commodity which lowers its market value, as well as (C) secondary effects on agriculture production and agricultural communities.

Figure 1: Grain sampling is part of the cost of testing commodities for mycotoxins

(note that in shipping, these rail car loads are covered only by canvas)

Losses from mycotoxins in the US are associated with regulatory losses, as opposed to lowered production, illness, and/or deaths from the effects of the toxins. This is particularly the case for human food, but increasingly it has become the case for animal feeds, as strict feed quality control programs become the norm for large-scale animal production units. The Stoloff papers from the 1980s infer that there is no aflatoxin-related toxicity or carcinogenicity in humans in the US. (BS!) Paul Sundberg of the National Pork Producers Council (June 2001, personal communication) stated that swine producers do not recognize on-going losses from aflatoxin, although they may occur in localized production areas in severely affected crop years. That there are only a very small number of cases of actual recognized toxicity to animals in the US is the direct result of our food safety regulatory system.

Mycotoxin management costs are incurred by both producers and the federal and state governments to prevent mycotoxins from becoming a human and animal health threat. The Food and Drug Administration (FDA) has functioning mycotoxin regulatory programs for aflatoxin, fumonisins, and vomitoxin.

Aflatoxin is the mycotoxin generating the greatest losses and the highest management costs due to its extremely high toxicity on a unit basis, and its long history of stringent regulation. The peanut, corn, cottonseed, and tree nut industries all recognize losses associated with meeting regulatory levels. The costs are inversely related to the regulatory level that must be met, and lower concentration allowances will increase the costs of crop management. In the United States, the FDA has used a 20 ppb tolerance almost since the initiation of their mycotoxin regulatory program, but industries that sell to EU countries face regulatory allowances of much lower ppb concentrations. (meaning we ship our best crops overseas and keep the crap at home – Europe won’t buy shitty products, but we Sheeples in the USA apparently will)

There have been few attempts to estimate with accuracy the mycotoxin related losses faced by various commodity groups in the US. The Council on Agricultural Science and Technology (CAST) report, Mycotoxins: Economics and Health Risks, published in 1989, outlined the information regarding losses known at that time. A chapter by the FDA’s Peter Vardon, to be included in a new CAST report, analyzes the potential economic cost of mycotoxins in the US. Vardon estimated an annual range of losses from $0.5 million to over $1.5 billion from aflatoxin (corn and peanuts), fumonisin (corn), and deoxynivalenol (wheat). Uncertainties were built into the cost model based on commodity outputs, prices, and contamination levels based on surveillance samples and compliance with FDA regulatory limits. Vardon assumed that the livestock loss was directly proportional to the percentage of feed that was contaminated above FDA standards, and he calculated small livestock losses from aflatoxin and DON. Costs of testing for the toxins, either to commodity producers or to the public through the FDA budget; costs of growing less valuable alternative crops; costs of handling affected crops; etc. were not included.

Research Costs

The investment in research programs by the Federal government, primarily to prevent mycotoxins in crops, can be considered a major cost of mycotoxin management. The USDA’s Agricultural Research Service (ARS) has a mycotoxin research program, $17.7 million for approximately 60 scientists in fiscal year 2000, primarily focused on prevention of the fungus and toxin production in the crop. This level of support is the total appropriated amount; it includes the mycotoxin research share of administrative salaries, as well as the scientists and technicians and various support personnel, increasingly expensive energy costs, costs of services and building maintenance, etc. The USDA’s Cooperative State Research Education and Extension Service (CSREES) reports $4.7 million for mycotoxin research, along with $5.1 million from states at their land grant institutions, and an additional $2.1 million from other Federal agencies at these institutions (William Wagner, CSREES, June 2001, personal communication).

The FDA also carries out research at the Center for Food Safety and Applied Nutrition, primarily on methodology development, effects of processing, and toxicology on mycotoxins. They assess this activity for 14 to 15 scientists at $1.5 million, however the FDA calculation includes only the scientists’ salaries and some immediate laboratory costs and does not include the agency administrative costs and infrastructure as does the ARS amount (John Newland, Center for Food Safety and Applied Nutrition, FDA, June 2001, personal communication).

Testing and Insurance

Analysis of product samples is needed to assure that product offered to the market meets regulatory and market requirements. These considerable costs are incurred both by industry and by various government regulatory and action agencies. Industry costs, in particular, go up significantly during years when contamination of the crops is high. Average total value of commercial aflatoxin test kits on the market is approximately $10 million per year annually, about 2 million tests for an average year. Sales increase rapidly in outbreak years (Robert Elder, USDA-ARS, May 2001, personal communication). In addition to the test kit costs, the range of charges for testing by official agencies and cooperative services is from $10 to $20 per sample not including collection of the sample. For aflatoxin alone, testing will cost $30 to $50 million per year.

For example, testing costs associated with corn production and marketing comes from the Grain Inspection Packers and Stockyards Administration (FGIS), which conducts aflatoxin and DON testing for exported grains. For aflatoxin, FGIS analyses approximately 30,000 samples per year, which generates approximately $290,000 in revenues. State and private laboratories with official sanction from FGIS, analyze approximately 27,000 samples per year, which generates approximately $540,000 in revenues. For DON, FGIS analyzes approximately 6000 samples per year, which generates approximately $100,000 in revenues, while official agencies analyze an additional 18,000 samples generating about $360,000 in revenues annually (John Giler, FGIS, May 2001, personal communication).

Testing corn for aflatoxin in southeast Texas is a considerable expense at $20 to $30 per test and one test per truckload of 30,000 to 60,000 pounds of commodity (see Fig. 1, above). This equates to a testing cost of $2-3 per acre (Jeff Nunley, South Texas Cotton and Grain Association, May 2001, personal communication). Also in southeast Texas, every 100 tons of cottonseed requires a test for aflatoxin, at about $125 total costs (including sampling and transportation to the laboratory) per sample. Sample preparation for cottonseed costs more than for corn, which does not require dehulling or delinting. There is also a difference in the size of the sample that is generally used (Peter Cotty, USDA- ARS, June 2001, personal communication).

The cost of litigation may also be significant for cottonseed producers. The identity of cottonseed is generally maintained through the market chain. If contamination above 0.5 ppb is detected in milk, the product may be traced to the dairies where the cattle are being fed contaminated cottonseed. The sellers, producers, and any other party who can be identified are likely to be sued. Feedlots for fattening beef cattle are wary of feeding cottonseed containing >20 ppb aflatoxin even though it may be legal up to 150 ppb (Jeff Nunley, South Texas Cotton and Grain Association, May 2001, personal communication).

Insurance premiums, and compliance with the recommendations of the insurance company for those producers who chose it, is another major cost of managing mycotoxins. A private crop insurance company in Des Moines, IA, recommends that their insured producers sample a high percentage of their loads for the first two weeks of each season. Even if only a very small percentage of loads are found positive for the mycotoxin, they recommend that sampling continue on a random basis. This company states that testing costs for producers are $5 to $7 per test if carried out on a regular basis and $9 to $12 per test if done sporadically (David Frank, American Feed Industry Insurance Association, Des Moines, IA, June 2001, personal communication).

Commodity Loss Estimates from the Industry

Peanuts. Marshall Lamb at the ARS National Peanut Research Laboratory in Dawson, GA, has prepared a recent paper addressing losses from aflatoxin (in publication). This paper surveys and analyzes actual losses in peanuts during the 1993-1996 crop years. Lamb estimated the net cost of aflatoxin to the farmer, the peanut buying point, and the sheller segments of the Southeast peanut industry to be about $25 million per year. Peanuts are subject to a Federal marketing order that proscribes very strict and complicated procedures for testing, segregating, and handling peanuts to prevent peanuts that do not meet FDA requirements for aflatoxin from becoming a part of the human food supply. The costs of aflatoxin result from both decreased value of the crop as calculated from the quota support price, and from costs incurred in handing contaminated peanuts, including blanching, re-milling, equipment, testing, and insurance. Lamb’s calculation does not include costs of production practices, particularly irrigation, that may be used to help prevent aflatoxin in the crop.

Cotton. Cottonseed is a by-product of cotton fiber production, and thus cotton breeding and agronomic practices have not traditionally considered the need to prevent contamination of the seed. Aflatoxin contaminates cottonseed in Texas and in Arizona with sufficient frequency that it is a continuing concern of state regulatory officials in these states. The major market for cottonseed, either whole seed or meal, is feed for dairy cattle; and in the late 1970s, aflatoxin from contaminated cottonseed fed to dairy cattle was detected in milk by state regulatory officials and the FDA. Dairy cattle excrete a much higher percentage of ingested aflatoxin in milk (metabolized to aflatoxin M₁) than is ever deposited in muscle meat. In addition, the amounts of any residue allowed in milk are low and at the sensitivity of the method, in this case < 1 ppb. Cottonseed is still fed to dairy cattle but it is tested and recognized contamination of milk is rare.

Estimates for a single year do not provide a true picture of the extent of aflatoxin contamination because of its variability. Thus, the Arizona Cotton Research and Protection Council combined their estimates from 1977 to 1999. During this 22-year period, Arizona had an average annual cottonseed production of 397,000 tons, with an average annual value of $42,205,000 for a total value of $928,510,000. Discounts on cottonseed with aflatoxin levels above 20 ppb vary from $20 to $50 per ton with the majority falling in the $30 to $35 range. Based on these figures, the most conservative estimate of revenue lost due to aflatoxin contamination over the 22 year period is $96,074,000 or slightly over 10 percent (see Table 1).

In addition to direct revenue losses due to aflatoxin discounts, regulatory restrictions prevent contaminated cottonseed from leaving the state (except under a restrictive permitting system), severely affecting marketing options for the Arizona growers. Elimination treatment (ammoniation) costs plus interim shipping and/or storage fees would result in cost benefit of $20 per ton or more if aflatoxin-free cottonseed could be shipped directly from gins to prime customers such as dairies.

Reports of direct crop revenue losses due to mycotoxins

* Includes actual production losses.

** Does not include abandoned acreage

In south Texas, Jeff Nunley estimated that testing costs alone could be as high as $150,000 for each of two major cottonseed processors that use cottonseed originating from south Texas. Cottonseed that contains high aflatoxin levels is segregated and processed separately leading to additional costs at the processor level. These increased costs are ultimately reflected in lower values for cottonseed at the producer level. During the 1999 crop year, only about 30 percent of the cottonseed tested at the major cottonseed processing mills in south Texas had acceptable levels of aflatoxin (see Table 1). While not all processors formally discounted their price for aflatoxin-contaminated cottonseed, discounts of $20 per ton for contaminated seed were common with some discounts being larger. Based on an average $20 per ton discount, the loss of value to south Texas cotton producers for the 1999 crop from aflatoxin-contaminated seed would be slightly over $7,000,000. With a harvested acreage estimated at 960,000 acres, this loss equates to approximately $7.30 per harvested acre. In south Texas, contaminated cottonseed may be processed at an oil seed mill for crushing so that some value is recouped on the contaminated crop, or it may be sent to Indigo, California for ammoniation, or finally contaminated meal may be used for mushroom fertilizer.

Corn. Corn is contaminated with aflatoxin only sporadically, (Bull!) primarily when droughts occur, in the Corn Belt states of Iowa, Illinois, Indiana, etc. Severe losses from aflatoxin in Midwest corn occurred in 1983 and again in 1988. Corn is contaminated every year at one or more locations in the southern states, that is Georgia, Louisiana, Mississippi, Georgia, and North Carolina across to Texas. In 1998 corn losses in Mississippi, Louisiana, and Texas were extremely harsh and painful. Corn is grown to a very limited degree in Arizona but would be planted more frequently in many areas if it were not for aflatoxin contamination, eliminating it as a potential rotation crop. Also in the south Texas Corpus Christi area, corn could be a valuable rotation crop for the primary cash crop of cotton; but in order to avoid aflatoxin contamination 300,000 acres are planted to sorghum each year rather than to corn (Jeff Nunley, South Texas Cotton and Grain Association, May 2001, personal communication).

In Mississippi, in 1998, a severe drought resulted in high aflatoxin contamination. These losses were in irrigated as well as dryland corn, and were particularly onerous for farmers who had just planted corn for the first time. Twenty per cent of the 50 million bushel crop had aflatoxin levels of 20 to 150 ppb and was sold at a discounted price. Another 4% was abandoned because it contained over 150 ppb. However, initially, approximately 50% of the crop was contaminated to the extent that many samples over legal limits. Half of that amount was eventually sold for feed by farmers. Little of Mississippi corn is used directly for human consumption. Probe samples taken from truckloads for aflatoxin analysis of corn are generally smaller than optimal, and more likely to be near five pounds than near 50 pounds. This is considered necessary to maintain the commercial flow of commodity (Erick Larson, Mississippi Agricultural and Forestry Experiment Station, May 2001, personal communication).

Tree nuts. Tree nuts such as almonds, walnuts, and pistachios may be contaminated with aflatoxin, though at lower levels than for cottonseed and corn. However the problem is very significant to the producers because (A) the crop has a high unit value, and (B) because much of the crop is sold to the European markets that enforce limits significantly lower than in the U.S.

In walnuts in the 2000-1 crop year, aflatoxin was found in 4% of the samples tested by the industry. Since the crop size for the year 2000 was 236,000 tons, the walnut industry lost an estimated 18,880,000 pounds of walnut kernels to aflatoxin for the year’s harvest. There was short tonnage (production) and higher market prices for the 2000-1 crop year, and the cost of product lost is estimated at $2.05 per pound of product. Thus the total direct dollar market value lost to the walnut industry was $38,704,000.

Exported almonds had a value of $696.8 million in 1999. It is difficult to estimate the cost of aflatoxin to the almond industry; however, there is a strong correlation in almonds between insect damaged kernels and aflatoxin. Almond producers utilize several sophisticated sorting techniques to sort the good from the inedible kernels, and handlers remove and dispose of their inedible almonds to non-human consumption channels. In the six crop years from 1995-96 to 2000-01, almond production ranged from 366,000,000 to 830,000,000 pounds. If 3% of each year’s production is considered inedible (aflatoxin contaminated) then the value of this 3% of the total crop was thus lost. That is, 10,980,000 to 24,900,000 pounds of almonds per year was considered inedible and its value was lost. Thus, based on a wholesale value of $1.50 to $3.00 per pound for uncontaminated, edible almonds, the lost market value to the producer for contaminated almonds ranged from $23,265,000 to $47,310,000 in this six-year time period. There are additional costs of transportation, sorting, and analytical tests for contaminated almonds that are not included in the above loss figures.

Barley. Contamination with deoxynivalenol (DON), or vomitoxin, produced by Fusarium head blight infection with F. graminearum, has caused serious losses to the barley producers in the Tri-State affected area of Minnesota, North Dakota, and South Dakota. The loss is primarily due to vomitoxin and DON contamination, while that in wheat is due to both lowered production and toxin production. Wheat flowers outside of the boot, and thus is inherently more susceptible to being infected with the fungal spores.

Malters and brewers use a 0.5 ppm level of DON as a cut-off, but how it is used varies by company. DON-containing grain is discounted 5 to 10 cents per bushel for each 0.1 ppm that the grain exceeds 0.5 ppm. Anheuser-Busch is the most stringent and anything in excess of 0.5 ppm vomitoxin in the barley grain or in malt which they may buy from other malters is unacceptable. Some malters, however, will accept grain with 2 to 3 ppm vomitoxin since in some cases the process of malting will lower levels of vomitoxin. However, if the malting is carried out too long, the fungus will regrow and the levels will increase again.

Serious contamination with DON has occurred in the Tri-State area each year since 1993. Prior to that, contamination was only sporadic. Barley growers believe that this was due to a change in long term weather patterns with the area now having higher rainfall and relative humidity. The acceptance rate for barley in the Tri-State has not been greater than 35 percent since 1983. When barley is not acceptable for malting it is used for animal feed, which brings a lesser rate of return. Growers need approximately $160 per acre to break even and malting barley usually yields about $160 per acre while barley for animal feed yields only $100 per acre. The unavailability of barley as a reliable rotation crop is another loss to growers with the preferred rotation 3-year in this area being: 1st year, wheat; 2nd year, feed grain; 3rd year, oil seed; and back to wheat. In addition, there is the loss of the economic infrastructure that had grown up around handling and marketing the crop particularly in eastern North Dakota.

The Tri-State barley producers have calculated a total loss of $406 million for the 6 years from 1993 through 1998. The total barley acreage has now declined over half from 1993 because the growers do not want to take the high risk of growing malting barley. In 1993 there was 4,250,000 acres of barley while in 2000 there was 1,950 acres of barley (see Table 1).

Wheat. Losses from Fusarium Head Blight (FHB), also known as Scab, in wheat include both lowered grain yield and the presence of DON. In 1993, farm gate losses in the Red River Valley of North Dakota, South Dakota, and Minnesota were $200 to $400 million for this fungal infection and mycotoxin. In 1996 there was a $300 million loss to farmers alone raising soft wheat, and also in that year there were significant replacement costs to millers. Replacement costs include transportation of wheat from another area to meet contracted deliveries, as well as the higher price that must be paid for this wheat because of decreased availability. The industry estimates they have sustained total losses of $1 billion from wheat scab (see Table 1) (Jim Baer, North American Millers Washington DC, June 2001, personal communication).

A North Dakota State University economist, William Nganji, has estimated losses based on grain yields and price (dollars per bushel) that might have been expected under normal conditions, in the absence of wheat head scab. Precipitation and temperature data were used to estimate “normal” production. The loss of production is calculated as the difference between actual and normal production, and then adjusted for acreage abandoned as a result of scab. Total direct and secondary economic losses from FHB in North Dakota for wheat and barley, and in Minnesota for wheat, were estimated at $545 million from 1998-2000. As significant as the direct loss is the finding that there is a significant secondary economic impact. For each dollar of lost net revenues for the producer, an additional $2.10, approximately, is lost in secondary economic activity, including households, retail trade, finance, insurance and real estate, and personal business and professional services.

OK, so huge economic losses are incurred because of these mycotoxins. Folks, if it is this big a deal to our nation’s farming economy, shouldn’t you start believing this is a real potential health risk to you?