Methodological Considerations for a Study of Pesticide Price Differentials in the United States and Canada

Pursuant to a congressional request, GAO reviewed the methodological issues related to carrying out a price comparison of agricultural pesticides in the United States and Canada. GAO noted that this letter does not advocate a methodology to carry out the U.S.-Canadian pesticide price comparison, nor does it recommend how to assess the causes of price differences. Rather, this letter highlights some issues and elements that experts agree are critical to this type of study.

GAO noted that: (1) agricultural economists and experts with knowledge of pesticide issues concur that the design of the study requires a clear articulation of the specific goals and that the methodological approach be consistent with these goals; (2) the purpose of the study largely determines: (a) technical issues, such as what crops to consider; (b) which classes of pesticides to include; (c) the regions in the two countries to analyze; (d) the method of summarizing price differences; and (e) the choice of exchange rate; (3) the permutations are infinite, but the sample of pesticides analyzed will frame the interpretation of the study's results; (4) experts also agree that a rigorous study of price differentials should contain measures of the reliability of the data, statistical tests evaluating the accuracy of the results, and an exploration of the sensitivity of the results to alternative methodologies; and (5) in addition, the price study should include explicit caveats and a discussion of limitations in the data or the analysis.