### United States

Department of Agriculture Animal and Plant Health Inspection Service July 2012 **Analysis in Support of Certification that the** 

**Rule will not have a Significant Economic Impact on a Substantial Number of Small**  **Entities**
**Final Rule**  **APHIS 2009 -**  **0084 RIN 0579**  **- AD56**  **Importation of Litchi from Australia**

Policy & Program Development Policy Analysis & Developmenti



### Summary This final rule will allow importation of commercial shipments of fresh litchi fruit from Australia into the continental United States , except Florida. Distribution into Florida wi ll not be allowed due to the risk associated with the litchi rust mite. Li tchi is grown in Florida, Hawaii, and California, and U.S. production is estimated to be about 500 metric tons (MT) per ye ar. M ost if not all litchi farms are small entities. T he United States imports litchi from countries such as Taiwan, China, Israel, and Mexico. Australia expects to export about 400 MT of litchis to the United States annually . This amount is equivalent to less than 3 percent of the quantity of litchis that was imported by the United States in 2004, the latest year for which we have data. Most likely , the quantity of litchis expected to be imported from Australia is of even lesser significance when compared to current litchi imports by

the United States, given the expanding demand for this fruit. Domestic litchi producers are unlikel y to be affected by this rule. An y litchi price declines that might resul t from this rule would be insignificant, all the more so since at least some litchi imports from Australia are likely to displace imports from other countries. Moreover, given that agricultural season s in the Southern Hemisphere are generall y the opposite of those in the Northern Hemisphere, the imports from Australia will not directl y compete with U.S. litchi production. Based on this information, the APHI S Administrator certifies that the final rule will not have a significant economic impact on a substantial number of small entities.ii



### Table of Contents Summary
................................ ................................ ................................ .............................. i Introduction

................................ ................................ ................................ ......................... 1 Potential Impact on Small Entities

................................ ................................ ...................... 1 References

................................ ................................ ................................ ........................... 51



### Introduction This final rule will allow the importation of commercial shipments of fresh litchi fruit from Australia into the continental United States , except Florida. As a condition of entry , the litchi fruit will have to be treated with irradiation. Litchi from Australia will not be allowed into Florida due to the risk associated with the litchi rust mite. World production of litchi is estimated to be 2. 2 million metric tons (MT), with China accounting for over 50 percent (1. 2 million MT ) , and one

- third produced by India (0. 7 million MT ) (Didier n.d.)

. The United States produces approximately 500 MT per year , which represents less than 0. 03 percent of world productio n . U.S. l itchi production is concentrated in the States of Florida , Hawaii, and California. Florida has the largest area under production ( 1,200 acres) , followed by Hawaii ( 300 acres) and California ( 60 acres) (Evans et al. 200 4 )

. Currently , Australia produces 3,500 MT of litchis (Menzel n.d.)

. Australia expects to export approximately

20 forty - foot containers of litchis per year to the United States, which is equivalent to about 400 MT. In 2004, the United States imported a total of 14,854 MT of litc his , mainly from China, Taiwan, and Mexico. Australia’s proposed export quantity represents about 2.7 percent of U.S. imports in 2004. 

### Potential Impact on Small Entities For the purpose of this analy sis and following the Small Business Administration (SBA ) guidelines, the entities potentially affected by

the rule are classified within the following industries: Other Non Citrus Fruit Farming (NAI CS 111339), Postharvest Crop Activities (except cotton ginning) (NAI CS 11511 4 ), and Fresh Fruit and Vegetable Mer chant Wholesalers (NAICS 424480). Establishments classified within Other Non Citrus Fruit Farming are2

considered small b y SBA standards if annual sales are not more than $750,000. APHI S does not have the size distribution of litchi producers , but accordi ng to the Census of Agriculture there
were 23,641 farms classified within Other Non Citrus Fruit Farming in 2007. 1 The market value of crops sold b y these farms that year was about $111,000, well below the small

- entity standard. We infer that most if not all U.S. litchi farms are small. Establishments classified with in Postharvest Crop Activities (except cotton ginning) are considered small by SBA standards if
annual sales are not more than $7 million . The percentage of establishments that meet this standard is not known; neither the Census of Agriculture nor the Economic Census reports revenue for these establishments. Establishments classified with in Fresh Fruit and Vegetable Merchant Wholesalers are considered small by SBA standards if they

employ not more than 100 persons . According to the 2002 Survey of Business Owners, 97 percent of the establishments in this category

employed fewer than 100 people. From 1998 to 2004, the most recent information available, U.S. imports of litchi increased from about 1,000 MT to approximately 15,000 MT
. During the same time frame, the price of litchis declined from $5.07/lb to $1.05/lb. This increase in imports can be attributed to improvements of post harvest activities that increased the shelf life of the fruit, facilitating trade regulations , and expanding demand as a result of growing Asian and Hispanic populations in the United States (Evans et al. 200 4 ). Australia expects to export 20 forty - foot containers (400 MT) of litchis per year to the United State s. This quantity represents less than 3 percent of U.S. litchi imports in 2004. Most

1 USDA NASS. 2007 Census of Agriculture, Table 46. Selected Characteristics of Farms by North American Industry Classification System: 2007 , http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_1_US/st99_1_046_046.pdf3

likely , this quantity

of litchis is of even lesser significance when compared to current litchi imports by

the United States, given the expanding demand for this fruit. A gricultural seasons in the Southern Hemisphere are generally the opposite of those in the Northern Hemisphere, and litchi imports from Australia likely will not directly

compete with U.S. litchi production. The litchis that are grown in Florida, Californ ia, and Hawaii are produced primarily for local markets. It is unlikely that an additional 400 MT of imports will have a significant impact on price s received b y domestic producers. An y litchi price declines that may result from this rule would be insignificant, all the more so since at least some litchi imports from Australia can reasonably be expected to displace imports from other countries. T wo concerns were raised by the public in regard to the anal ys is support ing certif ication that the proposed rule would not have a significant economic impact on a substantial number of small entities

. The first comment stated that the data used in the analy sis was out dated. While the information that was used is not current, both that anal ys is and this one are based on the most recent data available

. It is likely that the quantity of litchi imported by the United States is now larger than was reported in 2004 , and the economic impact of allowing litchi imports from Australia will be therefore even smaller than described. The second concern raised was that while the quantity

of litchi expected to be imported from Australia is small , it will contribute to the declining price trend for domestic growers when combined with imports from oth er countries, such as Thailand, Vietnam, and South Africa. APHI S considers import requests on a
case - by

- case basis. We have evaluated the expected impact of litchi imports from Australia , given the best available information on production and trade of litchi by the United States. Based on this information, the Administrator of the Animal and Plant Health Inspection Service4

has determined that this action will not have a significant econo mic impact on a substantial number of small entities.5



### References Census of Agriculture, 2007, http:// www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp Didier, Christian. (n.d.) The Lychee. U.N. Economic Commission for Europe, http://www.unece.org/fileadmin/DAM/trade/agr/meetings/capacity building/2006_mojmirovce

- SK/TheLychee.pdf Evans, E.A., Degner, R.L., Crane, J.H., Rafie, A.R., & Balerdi, C.F. ( 2004). Is It Still Profitable to Grow Lychee in Florida? Electronic data information source of F ood and R esource Economics D epartment, F lorida C ooperative E

xtension S

ervice, I nstitute of F

ood and A gricultural S

ciences, U

niversity of F

lorida . Retrieved (2010, June 15) from http://edis.ifas.ufl.edu/fe496 Evans, E.A., & Degner, R.L
. (2005). Recent Developments in World Production and Trade of Lychee (litchi chinensis): Implications for Florida Growers. Proceedings of the Florida State Horticultural Society , 118 . Retrieved from http://www.fshs.org/Proceedings/Password%20Protected/2005%20v.%20118/1 18/247

- 249.pdf Menzel, Christopher

. (n.d.) Lychee Production in Australia. FAO Corporate Document Repository , http://www.fao.org/docrep/005/ac684e/ac684e05.htm#fn4 U.S. Small Business Administration

. Table of Small Business Size Standard s Match to No rth American Industry

Classification Sy stem http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf