05/07/05 New rule looms to shoo bugs out of pallets (Celia Lamb)

The federal Department of Homeland Security has a new enemy -- wooden pallets that might carry tree-killing bugs.

Starting Sept. 16, federal inspectors will begin turning away imported solid-wood packaging materials that have not been heat-treated or fumigated with a chemical called methyl bromide. The new rule is part of an international effort to prevent the spread of insect pests.

But food manufacturers that ship goods on wooden pallets, bins and crates worry it also will harm the spread of their products.

"It has the potential to really cause some disruption," said Rob Neenan, director of regulatory affairs for the California League of Food Processors in Sacramento. Dozens of nations are on board

The International Plant Protection Convention issued the wood-treatment guidelines in 2002, and 40 countries have signed the agreement.

Sacramento-area shipping companies contacted by the Business Journal said they have already geared up for the new regulations because of European trading rules. The European Union has required treatment and marking of U.S. wood products since October 2001, and it substituted the international rules in March.

"Everything we buy is heat-treated and we stamp everything that goes out the door," said Sean McLaughlin, owner of Capitol Crating Inc. of Sacramento.

Though more expensive, using only heat-treated wood is also more convenient, said Zana DeBenedetti, co-owner of Ontrack Logistics Inc. which does business as Craters & Freighters in West Sacramento.

"It's too much of a problem if we have to keep it separated," she said.

The international guideline affects only solid-wood packaging that's at least one-quarter-inch thick, not plywood or particle board. The wood has to be treated and stamped by a certified inspector.

"It used to be in the old days you would go down to Home Depot, pick up some lumber and nail something together," McLaughlin said. "Those days are gone."

Countries that have already started restricting solid-wood imports include Australia, Chile, India and South Korea. Mexico, Brazil and others will begin restrictions in September, along with the United States.

China already has some solid-wood import restrictions in place and has said it will conform to the international guideline in January.

Canada and the United States have exempted each other.

"Once all these countries gear up for enforcement and really start looking at shipments, I think there are going to be some logistics headaches," said Neenan of the food-processors league. If a fork-lift driver grabs the wrong pallet or if packaging isn't stamped properly, the load could get rejected at its destination, he added. Woe to the tomato-squasher

The new rule is potentially problematic for tomato-processing companies, which ship bulk tomato paste in 300-gallon bags enclosed in wooden bins.

Each bin has a solid wood base and plywood sides that can be folded down so the bin can cheaply be shipped back to the processor when the bag is empty.

Some bins made of untreated wood will be stuck in foreign countries after September, so the firms must arrange to get them treated abroad before shipping them back to the United States.

Some food processors also may have to fumigate bins that have already been packed with processed tomatoes from the last harvest.

"Up until now we haven't had to worry about heat treatment," said Andy Bowers, purchasing manager for Johnston Trading Inc., a Woodland maker of tomato-paste bins. The bins cost about $105 each.

Making them out of heat-treated lumber will add $4 to $5 on to the price of each box, he said. But heat-treated wood is easy to get from vendors supplying lumber from Oregon and Canada, he added.

"It's costing us extra money," said Rob Salinas, a packaging engineer with The Morning Star Co., a tomato processor based in Woodland. The processing tomato industry has about 1 million bins in circulation, Salinas said. Transporting and treating the wooden bases will cost about $1.50 to $2.50 per box, or a total of $1.5 million to $2.5 million for the whole industry, he estimated.

Morning Star sells tomato paste to customers in Mexico, South Korea, the Philippines and other countries.

"We're trying to get as many boxes back from our international customers as possible so they don't have to put up with this," he said. "It's kind of a silly set of hurdles to get through."

The new rules could hit any industry using lumber as "dunnage" to support loads in ocean-going containers. The Port of Sacramento doesn't expect any problems.

"Any dunnage lumber coming into the port is already either kiln-dried or fumigated," said port trade director Steve Mathis.

Heating and fumigating wood destroys pests like the pine shoot beetle and the Asian longhorned beetle, which has damaged more than 10,000 trees in New York, New Jersey and Illinois, according to the U.S. Department of Agriculture.