Economic analysis estimates cost of PMT as high as $52 mil.

Staff Writer

ANNAPOLIS, Md. — (Nov. 15, 2014) An O’Malley administration plan to reduce the amount of phosphorus leaking into the Chesapeake Bay could cost Eastern Shore farmers between $22 million and $52 million over the next several years, according to a new report.
In the report released Nov. 7, a Salisbury University economist conceived three possible scenarios to implement use of the Phosphorus Management Tool in the state’s nutrient management regulations.
The tool has been criticized for the past year by farmers and farm groups who say it would have an immense negative impact of many farms, especially the Eastern Shore’s poultry industry.
In April, the state legislature approved a measure requiring the Maryland Department of Agriculture to commission an economic analysis of the program.
In the first scenario, new regulations would be phased in over a two-year schedule starting in 2016 with about $2.9 million per year in subsidies for farmers juggling the new restrictions. It comes with a $51.6 million price tag for the industry based on simulation results.
The second scenario would add an additional two-year period to allow the state to set up infrastructure to move and store manure. It offers a similar amount of subsidies but a $30.2 million price tag.
The third scenario comes with a $22.5 million price tag and would be phased in over six years with nearly $40 million in subsidies for farmers. All three scenarios were based on the assumption the state must transport 228,000 tons of chicken litter with each load traveling an average distance of 50 miles, creating a $28-per-ton transportation cost.
Excessive amounts of phosphorus and nitrogen have been blamed, among many other factors, for the declining health of the Bay. The nutrients can cause algae blooms and suck oxygen from the water, creating harmful if not lethal environments for fish, crabs and other marine life. The report by Memo Diriker at the university’s Business Economic and Community Outreach Network does not say to what degree using the phosphorus tool would improve the Bay’s health, however.
“There is no metric available that says for every amount of phosphorous removed it causes [a measurable benefit],” he said.
The report focuses on the Eastern Shore due to the high levels of phosphorous in the soil.
While presenting his report, Diriker referred several times to its “limitations,” which he said were due to many factors such as the lack of trust between the issue’s stakeholders, including the agricultural community, its regulators and environmental groups.
“The Bay community’s focus is on the clean Bay, and the agricultural community’s focus is on surviving in a very [competitive] agricultural sector,” he said.
The ranges from cost to other factors are also wider than Diriker said he would have liked because the parties disagree on the numbers. The report, which was initially due in August, was delayed several times, state officials said, to allow Diriker to manage the unexpectedly large amount of information in the report.
“Most everything is based on a series of assumptions,” he said. “When you have advisers on both sides who have different assumptions, it becomes quite difficult.”
Response from the agricultural community has been almost universally negative. Farmers commonly complain about the state’s sensitive regulatory environment and what they say are unreasonable and unfair expectations to solve the Bay’s issues while other sources of pollution, including commercial and residential development, continue with less perceived resistance.
New York, Pennsylvania, Delaware, West Virginia and Virginia are all part of the Bay watershed, but only Maryland farmers would be subject to the new restrictions.
Andrew McLean, one of two poultry industry representatives on the Maryland Agricultural Commission, said last week he figured the regulations would cost the average corn farmer $231 per acre in Somerset, Wicomico and Worcester counties.
“That is significant,” he said to the commission. “Now what we’re waiting for is the other shoe to drop. … This group needs to seriously consider going to the governor’s office with our concerns.”
Another commission member who said he serves on the Maryland Farm Bureau’s board said the group voted this month to send a letter to the governor protesting the proposed regulation.
The proposal has also become wrapped up in Larry Hogan’s surprise general election victory on Nov. 4 over Lt. Gov. Anthony Brown for governor’s seat. Hogan, a Republican businessman from Anne Arundel County, said before the election he disagreed with the regulation.
“The question I get is, ‘What’s next?’ and I don’t have a clue,” state agricultural department Secretary Buddy Hance said to the commission. “If something’s going to happen, it’s going to happen pretty quick.”