Up For Grabs!

EPA’s recent agreement with Dow AgroSciences has pesticide manufacturers eyeing potential new customers, while wondering who’s next on the Agency’s "hit list?"

A reality of business is one company’s misfortune is often another’s opportunity. Nowhere is that more apparent than in the EPA’s recent action against Dow AgroSciences that resulted in severe restrictions of the company’s popular Dursban product line.

In the wake of the EPA’s controversial announcement, which led the evening news in many parts of the country last month, millions of dollars in chemical business is now potentially up for grabs, and manufacturers are wasting no time jockeying for position to fill the possible void left by the Dursban agreement.

"In the short-term it’s going to be a little chaotic as pest management professionals adjust their product mix," observes Brad Chalk, vice-president of sales and marketing for Zoecon Professional Products, a leading chemical supplier based in Schaumburg, Ill.

"It’s still a little early to tell because the dust hasn’t totally settled," adds John Bolanos, vice president of Professional Products & Services for Van Waters & Rogers, Austin, Texas. Based on PCO calls to the company’s 69 branch offices, however, response to the announcement has ranged from modest movement away from the Dursban product line to ongoing support for an industry workhorse. "We’re getting a variety of questions from our customers," Bolanos says, as PCOs "reevaluate" their commitment to the product. "We’re trying to be responsible and help people make good, wise decisions, and not react in knee jerk fashion."

Pat Callahan, executive vice-president of SPECKOZ, which represents nine independent distributors throughout the United States, said his members aren’t witnessing any dramatic shift in business away from the Dursban product line. "PCOs are certainly taking notice," he observes, "but I’m not noticing any mass panic. I think a lot of PCOs are taking a hard look at it, but for the mostpart there’s been little change. They’re still viable products and PCOs should continue to use them with confidence."

WINNERS & LOSERS. Given the current volatility of the insecticide market, there’s no question there’s a lot at stake for the industry’s leading chemical suppliers, both in the general pest control and termite markets.

Who, ultimately, will be the big winners in this high-stakes game for the PCO’s pesticide business? "Our assessment is the pyrethroid producers probably will be the major beneficiary just because the economics are the closest to the Dursban economics," says Bolanos. Some of the newer chemistries — like imidacloprid and fipronil — also will benefit, although not as dramatically due to the premium pricing associated with this technol-ogy.

Regardless of what company grabs the bulk of Dursban’s market share in the long term, virtually all of the industry’s leading chemical suppliers stand to benefit, Bolanos says.

"When you consider how prolific and how dominant a product that Dursban has been to the industry, and with so many of the uses not going to be allowed, it’s a significant enough volume that all the different alternatives are going to benefit." Just how much, he says, "remains to be seen."

WHAT’S NEXT? While it retained most of its agricultural uses for Dursban insecticide, the big loser in the industry’s decades-long battle with EPA is obviously Dow AgroSciences, which over time will phase out nearly all indoor and outdoor residential uses of its flagship product, a technology that established the company’s early reputation in the pest control industry.

"The industry is losing a good tool with a good track record," says Gordon Morrison, national sales and marketing manager for The Clorox Company. "I sympathize with Dow, but it’s the tip of the iceberg."

Mike McDermott, vice president, Professional Products, Aventis Environmental Science, says "it’s a shame" the EPA acted against Dursban. "We know what Dow AgroSciences went through because we went through the same thing, although on a much smaller scale, with bendiocarb (brand name Ficam). It’s unfortunate, but not unexpected."

"This decision gives the EPA’s Food Quality Protection Act credibility in the eyes of supporters, and provides them with momentum to scrutinize other synthetic pesticides on the market," adds David Murphy, general manager of EcoSMART Technologies, Nashville, Tenn.

On the heels of the "voluntary" removal of Ficam insecticide in 1999, the recent EPA/Dow AgroSciences announcement places the future of the remaining organophosphate and carbamate insecticides in doubt, raising additional concerns among PCOs who have used these products safely and effectively for more than 25 years. "The other OPs are next on the list," warns Morrison. "It will never end."

Yet manufacturers providing organophosphate products to the pest control industry remain undeterred. Ken Gordon, public relations manager for Novartis Crop Protection, says his company plans to do whatever is necessary to keep diazinon on the market. "Short-term we’re going through the EPA risk assessment process for diazinon," he says. "Long-term, we believe we have a very good data package for diazinon and we plan to continue to vigorously support the product. We continue to believe diazinon is a safe, viable product. More than 40 years of safe use is proof that when used according to label directions diazinon poses no risk of concern to PCOs or the public."

A MEASURED RESPONSE. While Dow AgroSciences’ misfortune represents a market opportunity for the industry’s major players, their enthusiasm about growing their market share at the expense of a longtime competitor is tempered by an understanding that the chemical industry is under siege by both the EPA and the environmental community.

Brad Chalk of Zoecon Professional Products speaks for many in the industry when he says, "We’re naturally very disappointed in the EPA’s decision. As a manufacturer of IGRs and other IPM-oriented products, it’s not going to have a huge impact on our business, but we’re disappointed in the EPA’s actions. Chlorpyrifos is a compound that is very effective and can be used without risk if applied properly, but it seems like its excellent safety record has been ignored in favor of political expediency."

"I am quite disturbed about the process followed in the recent regulatory against chlorpyrifos," said Dr. Wayne Carlson, vice president of regulatory affairs and product stewardship for Bayer Corporation. "The scientific data supporting the product and its uses were very extensive, including actual human data. Sound science supported continued use of the product, which was further supported by over three decades of use history."

"We believe EPA has gone beyond what the intent of Congress was when they passed the Food Quality Protection Act," adds Dr. Ed Ready, manager of environmental affairs and government relations for Zeneca Professional Products. "We believe the EPA has taken an approach that is inconsistent with what Congress intended and it could result in the unnecessary loss of valuable products in both crop and non-crop areas of the business, and that’s a concern for the industry.

"I think everyone in the industry – manufacturers, distributors, end-users – should be very concerned with the way EPA is proceeding as it relates to pesticides," Ready says. "If the EPA uses the same approach in evaluating other active ingredients they did with the organophosphates, everyone is at some risk. That’s what really concerns pesticide manufacturers."

Sidebar: RESPONDING TO CUSTOMER CONCERNS

With the widespread national media coverage that followed the joint announcement from EPA and Dow AgroSciences about chlorpyrifos last month, it was inevitable that customers — and in some cases local reporters — would raise questions about the safety of Dursban products. When interacting with consumers or the media on this sensitive topic, the National Pest Management Association (NPMA) recommends PCOs stick to the facts and focus on the following key talking points:

• On June 8th, pesticide manufacturers and the U.S. Environmental Protection Agency announced an agreement that restricts the use of a common pesticide in and around the home — chlorpyrifos — commonly called Dursban.

• The agreement will effectively eliminate homeowner products containing chlorpyrifos from the marketplace. It also has restricted professional use of the pesticide in and around the home. These restrictions will phase in over a period of time on certain uses of the product. For example, as pest management professionals, we can continue to use products containing chlorpyrifos until supplies run out.

• It is important to note that the EPA did not issue a product recall. To do so, the EPA would have to determine that chlorpyrifos poses an imminent threat to human health. This is not the case. EPA’s action is based upon a change in the federal pesticide law that imposed a tougher standard.

• Essentially, the EPA has significantly increased the safety factor beyond what already exists for chlorpyrifos to further protect human health. In particular, the EPA believes that an additional safety factor will help ensure the pro-tection of children’s health.

• Where we have used chlorpyrifos in treating pest problems in and around your home, you can rest assured that it has been properly applied as specifically prescribed by the label that accompanies the product. We stand behind our treatment of your home and the safety measures we take in applying pest management products.

• All products used by pest management professionals are registered for use by federal and state governments and are applied according to mandatory label directions. In other words, products available to us have been registered by the EPA and have undergone rigorous testing and analysis before they can be used in the marketplace.

• We will use alternative products as promptly as possible. Should we use products that contain chlorpyrifos, we will do so in accordance with the agreement. Should you desire that products containing chlorpyrifos not be used as part of our pest management program, we will honor your request.

Sidebar: LEAST-TOXIC" PRODUCTS SEIZE A MARKET OPPORTUNITY

Perhaps the product category with the most to gain long-term from the EPA’s recent action against chlorpyrifos are those commonly referred to as "least toxic" to people and pets (i.e., borates, plant oils, etc.).

These so-called "green" products are well positioned to take advantage of the public’s growing concern about pesticide use in and around the home, particularly as it relates to children and pets. Therefore, it should come as no surprise that the key players in this growing market segment responded very quickly to the recent EPA announce-ment.

Shortly after the EPA held a press conference announcing its restrictions on Dursban insecticide, the most widely used household pesticide in the United States, Nisus Corporation placed a story on the PR Newswire titled, "Company Offers Safe Alterna-tives to EPA-Banned Pesti-cide."

Following distribution of the two-page press release, Nisus was "inundated with requests for interviews," says Kevin Kirk-land, president of the privately held company. "We knew the announce-ment was forthcoming and that eventually it would happen, but we didn’t expect such an overwhelming response. We were pleasantly sur-prised."

The coverage not only raised the profile of Nisus among American consumers, but thousands of pest management professionals as well. "Our borate-based products have been on the market all along, but nobody paid too much attention to them," Kirkland says. "This 100-year-old technology has taken an about face, however, and is now at the forefront of pest management, and we couldn’t be more pleased."

Not to be outdone, EcoSMART Tech-nologies, a nine-year-old firm specializing in insecticides containing naturally derived plant oils, also posted several articles on the PR newswire, including one titled, "Stinging Report From EPA On Pesticides." The press releases promoted the company’s business mission of developing pesticides that can be used with confidence in sensitive environments, as well as its commitment to least-toxic pest control.

"EcoSMART was founded with the primary objective of developing viable alternatives to conventional pesticides in anticipation of consumers’ growing concerns about pesticide toxicity," says David Murphy, general manager of the Nashville-based firm. "Obviously the Dow/EPA announcement is the type of thing we have been expecting to happen for some time."

Harry Whaley, president of Woodstream Corp., yet another "player" in this relatively new market, shares a similar mission. "We believe that more and more people are concerned about the degree of usage of some of the more traditional pesticides and have a desire to see alternatives used when appropriate and as appropriate," he says. "We think the trend is certainly in our favor and the use of alternatives will grow in conjunction with that growing concern on the part of consumers. Does that mean traditional pesticides are going to go away, particularly in the hands of profes-sionals? Absolutely not."

Nonetheless, he says, "we certainly want to make sure that people know – both professionals and consumers – that there are alternatives available out there and they should certainly consider those alternatives and put them to work where they can be effective."

A BALANCING ACT. Despite the market opportunities resulting from the EPA’s recent actions, companies offering "least-toxic" alternatives to traditional pesticides can’t appear too giddy about the plight of their much larger competitors for fear of alienating a professional customer base that often views the Environmental Protection Agency as downright repres-sive when it comes to pesticide issues.

Woodstream Corporation, for in-stance, was taken to task by some PCOs and product suppliers for quoting a representative of the environmental community in their press release, as was Nisus Corporation. While the quotes angered some members of pest control industry, Whaley says that was not the company’s intent. "The way we look at our customers, whether they’re retailers or whether they’re pro-fessionals, we really want to comple-ment what they’re doing. We’re not trying to create problems for them and their business."