### United States

Department of Agriculture Anim al and Plant Health Inspection Service January 2014 **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 2013 -**  **0037 RIN 0579**  **- AD78**  **Importation of Potatoes from Mexico**

Policy & Program Development Policy Analysis & Developmenti



### Summary This analy sis examines the expected economic impact for U.S small entities of a f inal rule that will allow the importation of potato tubers ( Solanum tuberosum L.

) for consumption from M exico into the United States. The Small Business Administration’s small

- entity standard for U.S. farms that produce potato tubers is annual receipts of not more than $750,000. I n 2007, the average market value of sales b y the 15,014 U.S. farms that produced potatoes was about $222,000, well below the small

- entity standard. In recent years, the United States has shifted from being a net importer to being a net exporter of fresh or chilled table potatoes. U.S average annual domestic supply from 2008 to 2010 (marketed production plus imports minus exports) was about 16.6 millio n metric tons (MT). Mexico’s average annual exports for the same y ears totaled about 1,500 MT. Even if all of Mexico’s exports were diverted to the United States, they would be equivalent to less than
one - hundredth of one percent of U.S domestic supply . A lthough most potato farms are small, based on the quantities of table potatoes traded b y the two countries and U.S production, this f inal rule, if promulgated, will not have a significant economic impact on a substantial number of small entities.ii



### Table **of Contents** Summary

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

................................ ................................ ................................ ......................... 1 Potential I mpact on Small Entities

................................ ................................ ...................... 2 Response to Public Comments

................................ ................................ ............................ 31



### Introduction This analy sis provides the basis, as required by the Regulatory Flexibility Act, for certification by

the APHIS Administrator that the rule will not have a significant economic impact on a substantial number of small entities. APHI S received a request from Mexico to authorize the importation of potato tubers ( Solanum tuberosum L. ) for consumption into the United States. Prior to this final rule , the regulations in 7 CFR 319.56 d id not authorize the importation of potatoes from Mexico. This action allow s the importation of potatoes (not seed) under a s ys tems approach. In response to Mexico’s request, APHIS issued a proposed rule to authorize the importation of potatoes from Mexico, subject to mitigation measures to prevent the introduction of plant pests in the commercial potato shipments. These measures include comm ercial consignments onl y, production by a grower who is registered in a certification program, packing in a registered packinghouse, washing, cleaning, and treatment with a sprout inhibitor, external and internal inspections after packing, and certificatio n that consignments of potato meet phy tosanitary requirements. Based on the comments received, APHIS is issuing a final rule to authorize the importation of potatoes from Mexico

. The Regulatory

Flexibility

Act requires agencies to evaluate the potential effects of their proposed and final rules on small business, small organizations and small governmental jurisdictions. Section 60 4 of the Act requires an agency to prepare a final regulatory flexibility anal ys is ( F RFA) that describes the expected impact of the rule on small entities and a description of the steps the agency

has taken to minimize any significant economic impacts on small entities consistent with the stated objectives of applicable statutes. In place of the F RFA, the head of the2

agency may certify

that a f inal rule will not have a significant economic impa ct on substantial number of small entities. This analy sis provides the basis for this certification.


### Potential Impact on Small Entities Potato production is classified within the North Am erican Industry Classification Sy stem code 111211, for which the Small Business Administration’s small

- entity standard is annual revenue of not more than $750,000. 1 The latest data on the number of farms that produce potatoes are found in the 2007 Census of Agriculture, which reports that the average market value of potatoes sold per farm was about $222,000. Clearly , most potato producers are small entities. Table 1 shows that between 2002 and 2007, the number of farms that harvested potatoes increased from 9,408 to 15,014, but the total area planted in potatoes decreased from about 1,266,000 to 1,132,000 acres. In 2007, about 31 percent of the harvested acres were in Idaho. Table 1 . U.S. potato: Number of farms and area harvested in leading States, 2 007 and 2002 2007 2002 2007 2002 U. S 15, 014 9, 408 1, 131, 963 1, 266, 087 Pennsylvania 1, 258 984 9, 690 11, 094 Nor th Carol ina 1, 123 504 14, 760 19, 500 New York 860 530 18, 911 22, 094 Ida ho 703 818 350, 905 364, 229 Wi sc onsi n 608 399 63, 933 80, 332 Mi chi ngan 600 395 42, 267 45, 840 Vir gi nia 596 302 5, 408 5, 774 Othe r State s 9, 266 5, 476 626, 089 717, 224 Source : NASS, Ce nsus of A gri cu lt ur e, 2007 an d 2 002. Numbe r o

f farms Ac res

1 Sm all Business Administration Table of Small Business Size Standards http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf3

Mexico’s annual exports of potatoes (not seed) from 2008 to 2010 averaged about 1,500 MT, and were valued at about $724,000. Mexico’s annual imports of potatoes (not seed) for this same period averaged about 79,000 MT, valued at about $35.5 million, with e ssentially all imported from the United States. Even if all of Mexico’s table potato exports were diverted to the United States, they

would be equivalent to less than one

- half of one percent of U.S imports, and less than one

- hundredth of one percent of U.S domestic supply

. T he APHI S Administrator has determined that this action will not have a significant economic impact on a substantial number of small entities. 

### Response to **Public Comments** No significant issues were raised in response to the certification. However, comment s received stated the following: T he economic analy sis does not address consumer benefit s ; there is no economic need for the rule; the risk of pests will increase ; there will be slight decrease in the price of potatoes; U.S potato exports to Mexico may increase; and most potato producers are not small entities. In response to those comments we observe that this rule is not a significant action and therefore does not require an analy sis of expected economic benefits for consumers . We have evaluate d potential impacts on small entities , as required b y the Regulatory Flexibility A ct. With regard to economic need, the Plant Perfection Act (PPA) (7 U.S.C. 7701 et seq) states that we may

restrict or prohibit the im portation of a commodity into the United States only if we determine that such restriction or prohibition is necessary to prevent the introduction of dissemination of a plant pest or noxious weed within the United States

. The PPA does not authorize us to t ake non - pest impacts into consideration in making import decisions.4

We disagree with the commenter’s concern that the rule may cause an increased risk to domestic farmers. APHIS has determined that under the prescribed s ys tems approach the stated mitigati ons will adequately reduce the risk of quarantine pests entering the United States. We agree that there could be a slight decrease in price because of an additional supply of potatoes , providing a net benefit to the econom y . However the decrease will be in significant. Even if all of Mexico’s table potato exports were diverted to the United States, they would be equivalent to less than one

- half of one percent of U.S imports, and less than one

- hundredth of one percent of U.S net supply . This amount is not suf ficient to cause significant price changes. This rule concerns potato imports from Mexico

. A ny projection of effects of the rule on U.S potato exports would be speculative

. Lastl y, the presence of a few major players does not preclude most potato producers from being small entities. The latest data on the number of farms that produce potatoes from the 2007 Census of Agriculture indicate that the average market value of potato es sold per farm was about $222,000, well below the Small Business Administration’s small

- entity standard of annual revenue not more than $750,000.