i

United States 

Department of 

Agriculture

Animal and 

Plant Health 

Inspection 

Service

March 2011

Initial Regulatory Flexibility Analysis

Interim Rule 

APHIS-2011-0004

RIN 0579-AD58

Plum Pox Virus Compensation Rates 

Policy & Program Development

Policy Analysis & Development
i

Summary

On December 27, 2010, APHIS established a quarantine for Plum Pox Virus 

(PPV) in New York State that includes areas in Niagara, Orleans, and Wayne Counties. 

Compensation of growers of PPV host species in the quarantined areas for the emergency

destruction of their trees is central to the regulatory goal of preventing the spread of PPV

and eradicating it from the United States. 

Current compensation rates were prepared in 2000 during the initial PPV outbreak 

in Pennsylvania. Earnings by stone fruit farmers and nurseries have since changed due to 

inflation and changes in management practices. This revision of the PPV compensation 

rates will help ensure compliance with the quarantine and provide incentive for 500-

meter buffers around positive PPV sites, as recommended by USDA PPV experts and in 

contrast to the 50-meter buffers that have been used by many of the growers. 

The revised compensation rates are based on the same methodology as was used

to determine the current rates. USDA compensates up to 85 percent of the difference in 

value between destroyed and replanted orchards. The compensation rate depends on the 

year in an orchard’s life cycle that destruction of the trees occurs. Assuming a three-year 

fallow period following the destruction of an orchard, the revised compensation payments

range from $3,302 to $18,519 per acre, when the farmer sells to processors or 

wholesalers; and $3,302 to $29,743 per acre, when the farmer sells directly to consumers 

(such as at farmers’ markets). 

Owners of fruit tree nurseries and non-fruit-bearing tree nurseries who meet the 

eligibility requirements will be compensated by USDA for up to 85 percent of the net 

revenues lost from their crops. The lost net revenues for non-fruit-bearing tree nurseries 
ii

will be calculated using an average price of $10.80 per tree or shrub. The lost net 

revenues for fruit tree nurseries will be calculated using an average price per tree at $5.22 

for plum and apricot trees and $3.69 for peach and nectarine trees for both first and 

second year crops.

To date, a total of 11 peach growers and 12 nursery owners in New York have been 

compensated for destroying PPV infected and exposed trees and nursery stock. Most if not all of 

the affected farms and nurseries are probably small entities, based on the Small Business 

Administration standard of annual receipts of not more than $750,000 and national sales data. 

These businesses will directly benefit from the higher compensation rates, and eradication of the 

disease will be more effectively achieved.
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Table of Contents

Summary.............................................................................................................................. i

Background......................................................................................................................... 1

Compensation of Growers.............................................................................................. 4

Rate Determination ..................................................................................................... 4

Compensation for Non-Direct Marketers ................................................................... 6

Compensation for Direct Marketers............................................................................ 8

Compensation of Fruit Tree Nurseries and Nonfruit Bearing Ornamental Nurseries.... 9

Fruit Tree Nurseries.................................................................................................. 10

Nonfruit Bearing Ornamental Nurseries................................................................... 11

Initial Regulatory Flexibility Analysis.............................................................................. 12

Reason Action is Being Considered ............................................................................. 12

Objectives of and Legal Basis for the Rule .................................................................. 12

Potentially Affected Small Entities............................................................................... 13

Projected Reporting, Recordkeeping, and Other Compliance Requirements............... 13

Duplication, Overlap, or Conflict with Existing Rules and Regulations...................... 14

Alternatives to minimize Significant Economic Impacts of the Rule........................... 14
1

Background

APHIS is amending the plum pox regulations to provide for the payment of 

compensation to eligible owners of non-fruit-bearing ornamental tree nurseries and to increase 

the amount of compensation that may be paid to eligible owners of commercial stone fruit 

orchards and fruit tree nurseries whose tree are required to be destroyed in order to prevent the 

spread of plum pox. . This initial regulatory flexibility analysis examines expected impacts of 

the interim rule for small entities. We begin with a discussion of the disease and the economic 

rationale for the revision of compensation rates, followed by an explanation of the methodology

and assumptions used to calculate the revised rates. 

The detection of PPV in a peach orchard in Adams County, Pennsylvania, in 

October of 1999 was the first discovery of the virus in the United States. Subsequent 

discoveries occurred in 2006, in New York and Michigan. In Europe, where plum pox 

has been present for numerous years, PPV is considered to be the most serious disease 

affecting Prunus species, including peach, nectarine, apricot, plum, cherry, and almond. 

It severely reduces fruit yield and quality, producing fruit that is blemished and 

unmarketable. The severity of the disease depends on the strain of the virus and the 

susceptibility of Prunus cultivars. PPV-D, the strain present in New York, affects peach, 

apricot, nectarine, and plum.1 There is no cure or treatment for the disease once a tree 

becomes infected.

PPV is transmitted by many species of aphid over short distances within an 

orchard or to nearby orchards. Long-distance spread can occur by the movement of 

 

1

Fuchs, M, R, Cox and K, Cox. Plum Pox Disease of Stone Fruit. Cornell University Fact Sheet. 

http://www.nysipm.cornell.edu/factsheets/treefruit/diseases/pp/pp.pdf
2

infected nursery stock and propagative material. Unlike other plant diseases, the 

symptoms of plum pox may not be apparent for 5 to 6 years, and infected trees may not 

be significantly damaged for several more years. The fruit is not a vector for the disease 

and therefore is not a regulated article; growers within quarantined areas have no 

restrictions on the movement and use of their fruit. Because the manner in which PPV 

spreads is not predictable, the eradication strategy calls for the destruction of 

asymptomatic trees, as being exposed trees, in the vicinity of infected trees. 

Through surveying and removal of infected and exposed trees, PPV was 

successfully eradicated from Pennsylvania and that Federal quarantine ended on 

October 29, 2009. Affected growers were compensated based on the number of acres

from which trees were removed and the age of the orchard at removal. Growers 

aggressively removed entire blocks of infected and exposed trees, including trees within

500 meters of infected trees. In total, 52 growers received compensation for the removal 

of 1,846 acres of trees in the Pennsylvania PPV outbreak. Compensations payments by

USDA between 2000 and 2005 totaled approximately $22,564,000.

2

 

Since 2006, a total of 85.31 acres of infected and exposed tress have been 

removed in upper New York State (table 1). In total, 37 peach trees have tested positive 

for PPV. To date, a total of 11 peach growers and 12 nursery owners in New York have 

been compensated for destroying PPV infected and exposed trees and nursery stock. 

These producers were compensated under the current compensation tables. 

Compensation payments by USDA between 2006 and 2010, totaled $1,345,000.

3

 In

 

2 USDA APHIS, Plant Protection and Quartantine. 

3 USDA APHIS, Plant Protection and Quartantine.
3

addition, New York State has compensated producers an additional $297,000.

4

 The 

average age of destroyed trees, which is important for compensation calculations, was 9

years. 

New York growers have not removed trees as aggressively as occurred in 

Pennsylvania. The standard removal practice in New York has been to destroy trees 

within a 50-meter buffer from an infected tree, although some growers have gone above 

and beyond this standard and removed entire orchards. Low compensations rates are one 

reason experts believe that many growers have been resistant to removing trees beyond

the 50-meter buffer. USDA and scientific studies support the removal of trees within 500 

meters of an infected tree. 

Table 1. Acres of Infected and Exposed Trees Removed in New York, 2006-2010

Year Acres

2006 3.40

2007 22.51

2008 16.24

2009 29.00

2010 14.16

Total 85.31

Source: New York State Department of Agriculture and Markets.

Sections of Niagara, Orleans, and Wayne Counties in New York are under the

Federal and State PPV quarantine. According to the 2007 Census of Agriculture, there 

are 204 growers with 1,230 acres of PPV host species located within these three counties

(tables 2 and 3). The number of nurseries impacted by the quarantine is 53.

5

 

4 New York State Department of Agriculture and Markets.

5 New York Department of Agriculture and Markets.
4

Table 2. Number of New York Farms Producing PPV Host Species, for Counties 

with Quarantined Areas

Commodity New York 

State

Quarantined 

Counties

Niagara 

County

Orleans 

County

Wayne 

County

Apricots 71 20 8 5 7

Nectarines 98 29 6 5 18

Peaches 439 155 35 32 88

Total 608 204 49 42 113

Source: USDA NASS, 2007 Census of Agriculture.

Table 3. Number of Acres used to produce PPV Host Species, for Counties with 

Quarantined Areas

Commodity

New York 

State

Quarantined 

Counties

Niagara 

County

Orleans 

County

Wayne 

County

Apricots 98 >26 23 3 (D)

Nectarines 117 >17 (D) (D) 17

Peaches 2,157 1,187 548 153 486

Total 2,372 >1,230 571 156 503

(D) Withheld to avoid disclosing data for individual operations.

Source: USDA NASS, 2007 Census of Agriculture. 

Compensation of Growers

Rate Determination

The same methodology is used to calculate the revised PPV compensation rates as 

was used to determine the current rates (7 CFR 301.74-5). The rate of compensation paid 

by USDA is up to 85 percent of the difference in value between destroyed and replanted 

orchards. The State of New York has the option of using State funds to compensate 

growers for the remaining difference in value. In no case will USDA and State 

compensation exceed 100 percent of the difference in value. 

As at present, eligible growers will be compensated on a per-acre basis at a rate 

based on the age of the trees destroyed and a three-to-five-year prohibition on planting of 
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host trees (fallow period). A three-year fallow period is most commonly used, but the 

fallow period can increase by one or two additional years depending on the proximity of 

the land to recent PPV finds. The compensation rate paid by USDA is based on a 

discounted cash flow model used to calculate the loss of value of the destroyed orchard. 

Orchards that are under a year in age will be compensated for the costs incurred in land 

preparation and planting, plus additional land maintenance costs for additional years 

fallow. The loss in value of orchards one to 25 years in age is calculated as the difference 

between the net present value (NPV) of the original (destroyed) orchard over the 

remaining portion of a 25-year life cycle minus the NPV of the replanted orchard for its 

entire productive life of 25 years plus the fallow period. Experts were consulted for 

variable production values. USDA welcomes comments pertaining to the variable 

production values, prices, and yield values used in the calculations. The NPV formula is 

as follows: 

 =



() +



() +



() + ⋯ +



()

Y = net income

r = discount rate

n = number of years in the discount period

The discount rate used in the NPV calculation is 12.5 percent, which is the riskadjusted rate estimated to be the most appropriate in this situation. The revenues and 

costs were calculated over a period equal to the expected productive life of a replanted 

orchard, which is 25 years, with marketable harvests beginning in Year 4.

To determine per-acre net income, the yield per acre was multiplied by the price 

per bushel, and then production costs were subtracted. The estimation of net income for 
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commercial growers is based on the 2004-2007 average New York peach price from the 

USDA National Agricultural Statistics Service (NASS) and the 2004-2006 yield average 

obtained from the New York State Horticultural Society (table 4). Variable production 

cost estimates were obtained from extension economists and are shown in table 5.

Table 4. New York State Price and Yield Averages for Commercial Peach 

Growers (Non-Direct Marketers), 2004-2007

Peaches Price Yield 

Year

US dollars per 

bushel6

Bushels per 

acre, at 156 

trees per acre7

2007 18.85 ---

2006 19.60 288.6

2005 22.50 164.5

2004 23.00 230.8

Average 20.99 228.0

Table 5. Variable Production Cost Estimates, New York State, PPV Host Species

Type of Cost Year Incurred Cost

Land Preparation Year 0 $1,425 per acre

Planting Year 1 $1,303 per acre

Orchard Maintenance During Pre-productive 

Year Year 2 $222 per acre

Orchard Maintenance During Productive 

Years Years 3-25 $899 per acre

Harvest Cost Years 4-25 $1.36 per bushel 

Compensation for Non-Direct Marketers

Using the information and methodology set forth in the preceding paragraphs,

revised commercial grower compensation rates range from $3,302 to $18,519 per acre for 

non-direct marketed orchards with a three-year fallow period (table 6). 

 

6 USDA NASS Agricultural Statistics.

7 New York State Horticultural Society.
7

Table 6. New York Plum Pox Compensation Rates for Commercial Growers (Non-Direct Marketers)

Age of 

Orchard

85% Federal 

Share based 

on a 3- Year 

Fallow Period

Maximum 

Additional 

Compensation 

for a 4th 

Fallow Year

Maximum 

Additional 

Compensation 

for a 5th Fallow 

Year

0 $3,302 $954 $842

1 $6,959 $1,072 $953 

2 $10,090 $1,072 $953 

3 $12,737 $1,072 $953 

4 $16,263 $1,072 $953 

5 $17,929 $1,072 $953 

6 $18,423 $1,072 $953 

7 $18,519 $1,072 $953 

8 $18,167 $1,072 $953 

9 $17,771 $1,072 $953 

10 $17,325 $1,072 $953 

11 $16,823 $1,072 $953 

12 $16,259 $1,072 $953 

13 $15,625 $1,072 $953 

14 $14,911 $1,072 $953 

15 $14,107 $1,072 $953 

16 $13,204 $1,072 $953 

17 $12,279 $1,072 $953 

18 $11,331 $1,072 $953 

19 $10,356 $1,072 $953 

20 $9,352 $1,072 $953 

21 $8,314 $1,072 $953 

22 $7,330 $1,072 $953 

23 $6,408 $1,072 $953 

24 $5,554 $1,072 $953 

25 $4,777 $1,072 $953 
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Compensation for Direct Marketers

Direct marketers sell all the produce they grow directly to consumers at farmers’ 

markets. Although direct marketers and commercial growers share certain characteristics 

such as similar variable production costs, direct marketers are able to command higher 

prices by growing varieties demanded locally and selling directly to consumers thereby 

saving middleman’s margins/commissions and other related costs. For directly marketed 

peaches, we estimate a price of $31.95 per bushel. For growers to qualify for 

compensation as direct marketers, documentation is needed to prove that all produce was 

directly marketed to consumers, such as at farmers’ markets.

To calculate the compensation rate for direct marketers, the same methodology, 

yield, and variable production costs were used. The average price received per bushel 

was increased from $20.99 to $31.95 per bushel. Prices for fruit marketed directly to 

consumers can vary depending on quality and variety of the fruit, supply from other 

growers, season, demand from local consumers and visitors, and other factors. There is 

no single price that all direct marketers earn throughout the season. USDA welcomes 

comments pertaining to the average price received per bushel by direct marketers. 

Revised direct-marketer compensation rates range from $3,302 to $29,743 per acre with a 

three-year fallow period (table 7).
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Table 7. New York Plum Pox Compensation Rates for Direct Marketers

age of 

orchard

85% Federal 

Share based 

on 3 year 

fallow period

Maximum 

additional 

compensation 

for 4th fallow 

year

Maximum 

additional 

compensation 

for 5th fallow 

year

0 $3,302 $954 $842

1 $11,639 $1,936 $1,721 

2 $16,327 $1,936 $1,721 

3 $20,725 $1,936 $1,721 

4 $26,222 $1,936 $1,721 

5 $28,820 $1,936 $1,721 

6 $29,592 $1,936 $1,721 

7 $29,743 $1,936 $1,721 

8 $29,196 $1,936 $1,721 

9 $28,581 $1,936 $1,721 

10 $27,889 $1,936 $1,721 

11 $27,110 $1,936 $1,721 

12 $26,234 $1,936 $1,721 

13 $25,248 $1,936 $1,721 

14 $24,140 $1,936 $1,721 

15 $22,892 $1,936 $1,721 

16 $21,489 $1,936 $1,721 

17 $20,054 $1,936 $1,721 

18 $18,582 $1,936 $1,721 

19 $17,070 $1,936 $1,721 

20 $15,513 $1,936 $1,721 

21 $13,905 $1,936 $1,721 

22 $12,382 $1,936 $1,721 

23 $10,955 $1,936 $1,721 

24 $9,638 $1,936 $1,721 

25 $8,442 $1,936 $1,721 

Compensation of Fruit Tree Nurseries and Nonfruit Bearing 

Ornamental Nurseries 

The movement of nursery stock and propagative plant material of susceptible 

Prunus species from the quarantined areas represents the greatest threat of long-distance 
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spread of PPV. Therefore, the movement from the quarantined areas of PPV-susceptible 

nursery stock and propagative plant material is prohibited. 

Fruit Tree Nurseries

Owners of fruit tree nurseries who meet the eligibility requirements will be 

compensated by USDA for up to 85 percent of the net revenue lost from their first- and 

second-year crops. To calculate the net revenue lost for the first-year crop, the number of 

trees that were expected to be sold is multiplied by the average price per tree, and 

digging, grading, and storage costs are then subtracted:

First-year net revenue loss = (number of trees that were expected to be sold) x 

(average price per tree) – (digging, grading and storage costs) 

Where:

1. The number of trees that were expected to be sold is equal to the number of trees 

in the field minus 2 percent culls and 3 percent unsold.

2. The average price per tree is $5.22 for plum and apricot trees and $3.69 for peach 

and nectarine trees.

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3. Digging, grading, and storage costs equal $0.10 per tree.

The second-year net revenue lost is calculated by multiplying the number of trees that 

were expected to be sold by the average price per tree, and excludes digging, grading, and 

storage costs. 

Second-year net revenue loss = (number of trees that were expected to be sold) x 

(average price per tree)

Where:

1. The number of trees that were expected to be sold is equal to the number of 

budded trees in the field minus 20 percent death rate and 2 percent culls.

 

8

http://www.rma.usda.gov/tools/eplpps/2011/CTBK2011.pdf. Base Price Tables Fruit and Nut Trees.
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2. The average price per tree is $5.22 for plum and apricot trees and $3.69 for peach 

and nectarine trees.

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Note: The average price of $5.22 per plum and apricot tree is equal to the 2011 

and Succeeding Years Nursery Crop Insurance Program base price for a field-grown 18-

inch fruit or nut tree of $6.00 multiplied by the adjustment factor 0.87. The adjustment 

factor used is the average of the adjustment factors for field-grown Prunus ‘Superior’

(0.74) and Prunus armeniaca (1.0) The average price of $3.69 per peach and nectarine 

tree is equal to the 2011 and Succeeding Years Nursery Crop Insurance Program base 

price for a field-grown 18-inch fruit or nut tree of $6.00 multiplied by the adjustment 

factor 0.615. The adjustment factor used is the average of the adjustment factors for 

field-grown Prunus persica (0.64) and Prunus persica ver. nucipersica (0.59).

Nonfruit Bearing Ornamental Nurseries 

Nonfruit bearing ornamental nurseries produce trees and shrubs for landscaping 

purposes. Affected owners of nonfruit bearing ornamental nurseries will be compensated 

based on the number of trees destroyed. The amount they will be compensated is $10.80

per tree.

10

 This amount is based on the average base prices for two- and five-gallon 

container-grown deciduous trees and shrubs from the 2011 and Succeeding Years 

Nursery Crop Insurance Program. 

 

9

Ibid.

10 http://www.rma.usda.gov/tools/eplpps/2011/CTBK2011.pdf Base Price Tables Deciduous Trees, Deciduous 

Shrubs.
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Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act requires agencies to evaluate the potential effects 

of their proposed and final rules on small businesses, small organizations and small 

governmental jurisdictions. Section 603 of the Act requires agencies to prepare and make 

available for public comment an initial regulatory flexibility analysis that describes 

expected impacts of a proposed rule on small entities. An analysis of expected smallentity impacts follows for this interim rule.

Reason Action is Being Considered

On December 27, 2010, APHIS established a PPV quarantine in New York State that 

includes areas in Niagara, Orleans, and Wayne Counties. Compensation of growers of PPV host 

species in these quarantined areas for the emergency destruction of their trees is integral to the 

regulatory goal of preventing the spread of PPV and eradicating it from the United States. 

The current compensation rates were prepared in 2000 during the initial PPV outbreak in 

Pennsylvania. Earnings by stone fruit farmers and nurseries have since changed due to inflation 

and changes in management practices. This revision of the PPV compensation rates will help

ensure compliance with the quarantine and provide incentive for 500-meter buffers around 

positive PPV sites, as recommended by USDA PPV experts and in contrast to the 50-meter 

buffers that have been used in New York by many of the growers. 

Objectives of and Legal Basis for the Rule

Revision of compensation rates to more accurately reflect revenue losses by 

farmers and nurseries will help ensure compliance with the quarantine requirements in 

general and the recommended 500-meter buffer area in particular. Conscientious

regulatory compliance will facilitate timely destruction of infected and exposed trees. 
13

Without revision of compensation rates, there is a greater risk that growers may not 

destroy asymptomatic trees that are exposed to the disease. The legal basis for the rule is 

the Plant Protection Act (7 U.S.C. 7701 et seq.). 

Potentially Affected Small Entities

According to the Small Business Administration (SBA) size standards and based 

on the North American Industry Classification System, stone fruit growers (NAICS 1113 

“fruit and tree nut farming”) and nursery owners (NAICS 1114 “greenhouse, nursery, and 

floriculture production”) with gross receipts of $750,000 or less are categorized as small 

businesses.

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 Specific sales information for the entities affected is not available, although 

we expect that most if not all affected entities are small businesses, based on nationwide 

data for these industries. In 2007, average sales by businesses engaged in fruit or tree nut 

farming was about $187,000, and average sales by businesses engaged in greenhouse, 

nursery, or floriculture production was about $309,000.

12

 For both industries in 2007,

average annual receipts by enterprises were well below the small-entity standard. We 

welcome public comment that may provide information on the size of affected entities 

within the regulated areas. 

Projected Reporting, Recordkeeping, and Other Compliance 

Requirements

Revision of compensation rates, per se, will not result in additional reporting, 

recordkeeping, or other compliance requirements. 

 

11 Small Business Administration. Size Standards Table. http://www.sba.gov/content/table-small-business-sizestandards

12 2007 Census of Agriculture, Volume 1, Chapter 1, Table 62. Summary by North American Industry 

Classification System: 2007, 

http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_1_US/st99_1_062_062.pdf.
14

Duplication, Overlap, or Conflict with Existing Rules and 

Regulations

APHIS has not identified any duplication, overlap, or conflict of the interim rule 

with other Federal rules.

Alternatives to minimize Significant Economic Impacts of the

Rule

Based on our review of available information, APHIS does not expect the interim rule to 

have a significant economic impact on small entities. In the absence of significant economic 

impacts, we have not identified alternatives that would minimize such impacts.