United States

Department of Agriculture

Animal and Plant Health Inspection Service
July 2014 Analysis in Support of Certification that the Rule will not have a Significant Economic Impact on a Substantial Number of Small Entities

Proposed Rule APHIS 2014
- 0 0 28 RIN 0579
- AD97

Importation of Fresh Pepper Fruit from Peru into the United States

Policy & Program Development
Policy Analysis & Developmenti



### Summary

The proposed rule would amend the regulations to allow the importation of fresh peppers

from Peru into the c ontinental United States and the Territories when a systems approach to pest
risk mitigation is used to prevent the introduction of quarantine pests . T he systems approach

would integrat e prescribed mitigation measures that cumulatively achiev e the appropriate level

of phytosanitary protection

.

Per u produce d a n average of about 9,600 metric tons (MT) of fresh peppers annually
from 2005 through 2011 . Over that same time period, fresh pepper exports from Peru ranged
from 226 MT to 567 MT, accounting for between 2.6 and 7.0 percent of annual producti on

.
Based on Peru’s pepper production area and yields, APHIS estimate s in the pest risk
assessment for this proposed rule that no more than 22 containers (440 MT) of fresh peppers
would be imported from Peru into the United States annually. This quantit y is the equivalent of
less than 0.03 percent of annual U.S. fresh pepper consumption.

U.S. pepper producers and current foreign suppliers would face increased competition

from the Peruvian ex ports. However, economic effects of the proposed rule would b e minimal,
given the very small quantity of pepper expected to be imported from Peru . Although U.S.
pepper farms are predominantly small, the proposed rule, if promulgated, will not have a
significant economic impact on a substantial number of small entit ies.ii



### Table of Contents

Summary

................................ ................................ ................................ ................................ .......... i
Introduction

................................ ................................ ................................ ................................ ..... 1 U.S. Pepper Production and Trade

................................ ................................ ................................ .. 2 Peru’s Pepper Production and Expected Import Volumes by the United States

............................ 41



### Introduction

Pepper is a warm

- season crop that is sensitive to cold weather. There are two types of
peppers: the large

- fruited, mild

- flavored bell varieties
, preferred by most gardeners; and the hot
varieties, which may be used green. The mild peppers include bell, banana, pimiento, and sweet
cherry, while the hot peppers include cayenne, celestial, large cherry, serrano, tabasco, and
jalapeno. 1 The non

- pungen t or sweet forms are widely used and are grown throughout much of
the globe. The hot varieties dominate spicy foods in Latin America and elsewhere. 2

Currently, fresh peppers from Peru are not allowed to be imported into the United States,
due to the pres ence in Peru of several quarantine pests. The proposed rule would allow the
importation of fresh pepper fruit into the c ontinental United States and the Territories under a
systems approach to pest risk mitigation

. It is part of a continuing program to a llow the
importation of foreign agricultural products that APHIS has determined are without significant
risk of introducing pests or diseases into the United States. T his analysis provides the basis, as
required by the Regulatory Flexibility Act, for cert ification by the APHIS Administrator that the
proposed rule, if promulgated, will not have a significant economic impact on a substantial

number of small entities.

1 University of California, D. 2007. Vegetable Research and Information Center, Pepper (Capsicum annuum). Division of Agriculture and Natural Resources, University of California., California. Last accessed October 23, 2007, http ://vric.ucdavis.edu
2 Eshbaugh, W. H. 1993. History and exploitation of a serendipitous new crop discovery. Pages 132

- 139 New Crops (Janick, J., Simon, J.E. ). Wiley, New York, U.S.A.2



### U.S. Pepper Production and Trade

Peppers are widely grown and consumed in the United States. U.S. per capita use of
peppers has grown steadily and substantially since the 1980s. In 2012, Americans consumed an
average of nearly 12 pounds of bell peppers and more than 7 pounds of chili p eppers per person,
up from 5.9 pounds of bell peppers and 4.8 pounds of chili peppers per person in 1990. 3 Peppers
are also a significant source of U.S. farm income. Annual f arm cash receipts averaged $636
million from bell peppers and $147 million from chili peppers , 2008 through 2013.

The United States produced a total of about 687,000 metric tons ( MT ) of bell peppers and

188,000 MT of chili peppers in 2013. Total U.S. bell pepper production reached 800,000 MT in

2011, before declin ing in 2012 and 201 3. Since 2000, U.S. chili pepper production has ranged

from 145,000 MT to 231,000 MT. While peppers are grown on a large number of farms across

the United States , production volumes are concentrated in certain States

. C ommercial bell

pepper s are princip ally produced in California and Florida, but significant quantities are also

grown in Georgia, Michigan, New Jersey, North Carolina, and Ohio. Chili pepper production is
most heavily concentrated in California and New Mexico
, followed by Arizona and Texas

.
California is by far the largest pepper producer
, with more than 359,000 MT of bell

peppers and 117,000 MT of chili peppers ( 52 and 63 percent of U.S. production ) in 20 13

. Florida’s production of 199,000 MT of bell peppers in 2013 was about 29 percent o f the U.S.

total

. New Mexico’s production of 58,000 MT of chili pepper s was about 31 percent of the U.S.

total.

3 USDA, Economic Research Service, U.S. per capita use of selected, commercially produced, fresh, and processing vegetables and dry pulse crops, 1970

- 2012 . 2012 is preliminary.3 According to 20 12 Census of Agriculture data, 11,568 farms produced bell peppers that

year, with the majority ( 11,315 ) harvesting peppers for sale on the fresh market. Similarly, 7,951
farms produced chili peppers, with the majority ( 7,587 ) harvesting for the fresh market. More

than 7 8 percent of bell pepper producers and about 80 percent of chili pepper producers operated

on less than 1 acre. Another 1 6 percent of bell pepper producers and about 14 percent of chili
pepper producers operated on fewer than 5 acres. Less than 1 percent of all pepper producers
had operations of 100 or more acres. 4

Establishments cla ssified within NAICS 111219, including pepper farms, are considered
small by the Small Business Administration (SBA) if annual sales are not more than $750,000.

The average value of bell pepper production per farm in 20 12 was approximately $5 2
, 3 00, and

the average value of chili pepper production per farm was approximately $ 20
, 7 00. Both sales

levels are well below the small

- entity standard of $750,000. Clearly, pepper growers are

predominantly small entities according to the SBA standard.
Although U.S. fresh pepper production continues to expand , it has not kept pace with

demand and imports account for a n increasing share of the market. Th e United States is , in fact,
the world’s largest importer of fresh peppers
, import ing about 29 percent and export ing about 4

percent of fresh peppers traded worldwide in 201 1

. 5

As a net importer, t he United States imported an average of nearly 800,000 MT of fresh

peppers annually from 2009 through 2013 ( t able 1 )

. About 85 percent of fresh pepper imports

are from Mexico, and another 11 percent come s from Canada. Other sources include the
Dominican Republic and the Netherlands ( a little more than 1 percent each ) , and Honduras, El

Salvador, Costa Rica, Guatemala, and Israel, which collectively account for just over 1 percent.

4 USDA National Agricultural Statistics Service. http://quickstats.nass.usda.gov/

. 5 Food and Agr iculture Organization of the United Nations.4 Annual exports averaged approximately 58,000 MT from 2009 through 2013. Primary

foreign markets for U.S. fresh peppers are Canada and Mexico, with more than 95 percent of the
peppers exported to Canada in 2013.

Table 1

. U.S. fresh pepper production, imports, exports , and domestic consumption, 2009 through 2013, 1,000 metric tons

Year Production Imports Exports Net Imports a Domestic Consumption b

-- 1,000 MT

-- 2009 989 649 63 585 1,574 2010 933 763 53 711 1,643 2011 992 779 59 720 1,712 2012 1,014 896 56 840 1,855 2013 890 906 57 848 1,738 5

- year Average 963 799 58 741 1,704 Source: Production from USDA, NASS, Vegetables Summary, 2011, 2012 and 2013. Imports and e xports from Global Trade Information Services, Inc. Columns may not sum due to rounding.

a Imports minus exports.
b U.S. production (excluding processed utilization) plus net imports. Year

- to

- year carry

- over not included.



### Peru’s Pepper P roduction and Expected Im port Volumes by the United States

Peru produced an average of about 9,600 MT of fresh peppers annually between 2005

and 2011, mainly in the regions of Lambayeque, Piura, Lima, Ica, Arequipa, Moquegua, and

Tacna , under a wide range of climatic conditions

. 6 Over that same time period
, fresh pepper

export s from Peru ranged from 226 MT to 567 MT, account ing for between 2.6 and 7.0 percent

6 The regions have elevations ranging from 0 to 3,750 meters (0 to 12,300 feet) and temperatures ranging from 41°F to 91.4°F. SENASA. 2009. Phytosanitary information about Pepper (Capsicum annuum) cultivation in Peru. National Plant Health Service, Plant Health Division, Servicio Nacional de Sanidad Agraria (SENASA), Lima, Peru. 27 pp.5

of annual production

. 7 The area in Peru in which peppers are produced for export encompasses

about 9,880 acres.

Based on Peru’s pepper production ar ea and yield s , APHIS estimate s in the p est risk

assessment for this proposed rule that no more than 22 containers (440 MT) of fresh peppers
would be imported from Peru into the United States annually

. 8 This quantity is the equivalent of
less than 0.03 percent of annual U.S. fresh pepper consumption.
U.S. pepper producers and current foreign suppliers would face increased competition
from the Peruvian exports. However, economic effects of the proposed rule would be minimal,
given the very small quantity of pepper expected to be imported from Peru. Although U.S.
pepper farms are predominantly small, the proposed rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.

7 Food and Agriculture Organization of the United Nations.
8 USDA, APHIS, Center for Plant Health Science and Technology. “Impo rtation of Fresh Pepper Fruit

– Capsicum annuum L., Capsicum baccatum L., Capsicum chinense Jacq., Capsicum frutescens L., and Capsicum pubescens Ruiz & Pav.

– from Peru into the Continental United States and Territories: A Pathway

- Initiated Risk Assessmen t.” June 26, 2012.