Analysis in Support of Certification that the Rule will not have a Significant 

Economic Impact on a Substantial Number of Small Entities

Interim Rule: Tuberculosis; Amend 9 CFR 77 by Moving Six Counties in 

Michigan (Antrim, Charlevoix, Cheboygan, Crawford, Emmet, and Otsego) from

Modified Accredited Status to Modified Accredited Advanced Status

Docket No. APHIS-2009-0046

July 2009

Policy Analysis & Development

Policy & Program Development

Animal & Plant Health Inspection Service

U.S. Department of Agriculture
2

Michigan currently has split State status for bovine tuberculosis (TB), with an 

Accredited Free (AF) zone, a Modified Accredited Advanced (MAA) zone, and a 

Modified Accredited (MA) zone. This rule will reclassify six counties in the State 

(Antrim, Charlevoix, Cheboygan, Crawford, Emmet, and Otsego) from MA status to MAA

status. MA status imposes various requirements for TB testing of cattle. Reclassification 

to MAA status reduces or removes some of those testing requirements. The Regulatory

Flexibility Act (RFA) of 1980 (Public Law 96-354) requires agencies to evaluate the 

potential effects of proposed and final rules on small businesses, small organizations, and 

small governmental jurisdictions. Section 605 of the RFA allows an agency to certify

that a rule will not have a significant economic impact on a substantial number of small 

entities. Following is the factual basis for such certification in this case. 

Description and Estimate of Small Entities Affected by the Interim Rule

Entities that will be directly affected by the rule are owners of cattle in six 

Michigan counties. Reclassification of these counties from MA to MAA status reduces

some TB testing requirements. Operations in these counties will benefit from reduced 

costs associated with TB testing. 

The cattle industry plays an important role in Michigan’s economy. There were 

14,454 cattle and calf operations in Michigan in 2007 with a total inventory of 1.05

million head.1 State-wide cash receipts from cattle and calves and dairy products totaled 

$343 million and $1.5 billion, respectively, in 2007. Eight-year average cash receipts for 

cattle and calves and dairy products (2000-2007) were $262 million and $952 million, 

respectively.

2

 

 

1

2007 Census of Agriculture. National Agriculture Statistics Service, USDA.

2 USDA/ERS Cash Receipts, by Commodity Groups and Selected Commodities, United States and States, 2000-2007.

http://www.ers.usda.gov/Data/farmincome/FinfidmuXls.htm
3

The Small Business Administration (SBA) has established guidelines for 

determining which businesses are considered small. According to SBA size standards for 

beef cattle ranching and farming (NAICS 112111) and for dairy cattle and milk 

production (NAICS 112120), operations with not more than $750,000 in annual sales are 

considered small entities. For cattle feedlots (NAICS 112112), operations with not more 

than $2.5 million in annual sales are considered small entities. The vast majority of beef 

operations in Michigan are considered small, as well as most dairy operations. In 2007

more than 98 percent of cattle and calf farms generated less than $500,000 in cash 

receipts and less than 1 percent generated $1 million or more. About 67 percent of dairy

farms generated less than $500,000 in cash receipts and about 15 percent generated $1 

million or more. More than 99 percent of cattle feedlots were considered small in 2007.3 

The composition of Michigan’s cattle inventory is shown in table 1.

TABLE 1. Michigan Cattle Inventory, January 1, 2009

Type Number Percentage of Total

Beef cows 92,000 8.6%

Milk cows 353,000 33.0%

Heifers

Beef cow replacements 27,000 2.5%

Milk cow replacements 148,000 13.8%

Other heifers 50,000 4.7%

Total heifers 225,000 21.0%

Steers 185,000 17.3%

Bulls 15,000 1.4%

Calves 200,000 18.7%

TOTAL 1,070,000

Source: National Agriculture Statistics Service, USDA.

Expected Effects of the Rule

Michigan currently has three TB status zones: an AF, a MAA and a MA zone. 

This rule will reclassify six counties from MA to MAA. The elevation of an area to 

 

3

2007 Census of Agriculture. National Agriculture Statistics Service, USDA.
4

MAA status from MA status removes certain TB testing requirements on cattle owners. 

The MA restrictions include a negative TB test within 60 days of the interstate movement 

of cattle and bison from a herd without accredited status, except for cattle moving 

directly to slaughter. The restrictions also include a whole herd test within one year for 

intact cattle moving interstate from a herd without accredited status, unless the cattle are 

moving to an approved feedlot or directly to slaughter. In addition, dairy herds in a MA 

zone are required to have an annual whole herd test in order to comply with the 

Pasteurized Milk Ordinance (PMO).4 With one exception, the preceding testing 

requirements do not apply to cattle moving out of a MAA zone. Intact cattle from a herd 

without accredited status moving interstate, not directly to slaughter, are still required to 

have a negative TB test within 60 days of interstate movement.

Cattle herd owners in the six counties being upgraded to MAA status will see a 

reduction in TB testing requirements as a result of this rule, and will therefore benefit 

from reduced costs associated with that TB testing. In 2008, there were 538 beef, dairy, 

or mixed cattle herds in the six affected counties, with about 18,400 cattle. About 620 

cattle are in 14 accredited herds. There were also 32 cattle feedlots in those counties with 

about 700 cattle. The cattle in these counties account for about 2 percent of the cattle in 

Michigan.

5

 

A negative TB test within 60 days of interstate movement of cattle for feeding 

will no longer be necessary for non-accredited herds in the six counties covered by this 

rule based on MAA status. Tuberculosis testing, including veterinary fees, costs about 

 

4 U.S. Food and Drug Administration, Center for Food Safety and Applied Nutrition.

5

2007 Michigan Agricultural Statistics, USDA/NASS, Michigan Department of Agriculture; Michigan TB annual 

report, 2008.
5

$10 to $15 per head.6 The State of Michigan estimates that about 8,650 cattle moved 

interstate for feeding from the six counties were subject to this rule in 2008. Based on the 

above range in testing costs per animal, we expect annual cost savings associated with 

reduced testing of feeder cattle moving interstate from these six counties to total between 

$86,500 and $129,750. The more a herd owner in the affected counties engages in the 

interstate movement of feeding cattle, the greater will be the savings associated with the 

reduction in movement restrictions. 

Owners of non-accredited herds in the MAA zone engaged in interstate 

movement of breeding cattle also will benefit from reduced costs associated with TB 

testing. A negative whole herd test within 12 months of the interstate movement of intact 

cattle from a herd without accredited status will no longer be needed for herds in the 

MAA zone. In addition, the annual whole herd test for dairies required under the PMO 

for herds in a MA zone is not required for herds in a MAA zone. 

A whole herd test requires the testing of all animals in a herd that are 12 months 

of age or older at the time of the test. In 2008, beef and mixed beef in the six counties 

covered in this rule had an average of 25 head. Dairy herds had an average of 183 head. 

With TB testing costs of $10 to $15 per head, annual whole herd testing costs average

between $250 and $375 per beef and mixed herd and between $1,830 and $2,745 per 

dairy herd. These cost estimates per herd may be high because the cost of whole herd 

testing on a per-animal basis is generally less than the cost of testing animals 

individually, and it assumes that all animals in the average herd are at least 12 months of 

age. 

 

6 USDA/APHIS/VS, personal communication.
6

The State of Michigan has estimated that there are 493 non-accredited beef and 

mixed herds in the six counties covered in this rule. Based on the above estimates of the 

average cost of a whole herd test, and assuming that all of the non-accredited beef and 

mixed herds move cattle interstate, the annual cost savings associated with the removal of 

this whole herd testing requirement could total between $123,250 (493 herds, multiplied 

by $250 per herd) and $184,875 (493 herds, multiplied by $375 per herd).

The State of Michigan has estimated that there are 31 commercial dairies 

operating in the six counties. These dairies will no longer be required to perform an 

annual whole herd test under the PMO. Based on the above estimates of the average cost 

of a whole herd test, the annual cost savings for dairy herds of the removal of the whole 

herd testing requirement could total between $56,730 (31 herds multiplied by $1,830 per 

herd) and $85,095 (31 herds, multiplied by $2,475 per herd). 

Cattle herd owners in the six counties covered in this rule will see a reduction in 

TB testing requirements as a result of this rule, and will therefore benefit from reduced 

costs associated with that TB testing. However, the six counties covered in this rule 

account for less than 4 percent of cattle operations and less than 2 percent of the cattle in 

the State of Michigan. In addition, TB testing costs are small when compared to the 

value of the cattle tested, and the expected savings therefore are also relatively small. On 

January 1, 2008, beef cattle in Michigan had an average per animal value of $1,330.

7

 The 

average value of dairy cattle is considerably higher, given the value of milk produced. 

The savings in TB testing costs represent no more than about 1.1 percent of the average 

per-head value of beef cattle in Michigan ($15 / $1,330) and an even smaller percentage 

 

7 Meat Animals Production, Distribution and Income Final Estimates 2003-2007. May 2009. NASS, USDA.

Statistical Bulletin Number 1026. http://usda.mannlib.cornell.edu/usda/nass/SB995/sb1026.pdf
7

of the average value of dairy cattle in the State. This rule will not have a significant 

economic impact on a substantial number of small entities. 

Conclusion

Michigan currently has three TB status zones: an AF, a MAA and a MA zone. 

This rule will reclassify six counties from MA to MAA. The elevation of an area to 

MAA status from MA status removes certain interstate movement and whole herd TB 

testing requirements. Cattle owners will benefit from time savings and reduced costs 

associated with TB testing. The annual cost savings to all producers could be between 

$266,000 and $400,000. However, the six counties covered in this rule account for less 

than 4 percent of cattle operations and less than 2 percent of the cattle in the State of 

Michigan. In addition, TB testing costs are about one percent or less of the value of the 

cattle tested. Thus, the expected savings will be relatively small. This rule will not have

a significant economic impact on a substantial number of small entities.