### Analysis in Support of Certification **that the Rule will not**

**have a Significant Economic Impact on a Substantial**

**Number of Small Entities**

**Final Rule**  **I mportation of**  **B irds, Poultry**  **, and P oultry**  **P roducts from**  **a**

**Region in the**  **European Union APHIS**  **- 2009**  **- 0094**  **RIN 0579 -** **AD45**

**U.S. Department of Agriculture Animal and Plant Health Inspection Service** 

**March 2012**2



### Summary This analy sis provides the basis, as required by the Regulatory

Flexibility

Act, for certification by

the APHIS Admi nistrator that this rule will not have a significant economic i mpact on a substantial number of small entities. The anal ys is examines impacts for U.S. small entities of a rule that will amend 9 CFR 94.6 by

adding a region comprised of the 25 Member States that constituted the European Union in 2006 (EU
- 25) to the list of regions considered to be free of Newcastle disease and highl y pathogenic avian influenza (HPAI). This region will be designated as a single region, the European Union Poultry

Trade Region (EU
- PTR), for which import restrictions for live birds and poultry , hatching eggs, poultry meat, and other poultry

products , including e ggs (other than hatching eggs) and egg products will be uniformly applied. If outbreaks of either disease were to
occur, this rule will facilitate the continuation of imports fro m regions within the EU
- PTR free of Newcastle disease and HPAI. We expect this rule to have negligible economic effects for U.S. entities, large or small, because of the relativel y small quantities of poultry and poultry

products likely

to be imported f rom the EU
- PTR. In addition, the poultry industry in the United States is highl y concentrated and verticall y integrated, with extensive use of contractual agreements for production, an industry structure that will tend to mitigate any economic effects of the rule for small entities. The United States is the world’s largest producer and second
- largest exporter of poultry meat; about 20 percent of U.S. poultry production was exported in 2010 . Imports from the EU
- PTR will face a highl y competitive U.S. market. The EU
- 25 region is a large producer of live poultry , poultry meat and other poultry products, but two
- thirds of the region’s trade in poultry and poultry

products is between Member3

States; 13 of the 25 Member States had a within
- region trade in poultry and poultry products of 70 percent or more. More than half of the Member States are net importers of live poultry and poultry products (13 are net importers of live poultry , 16 of poultry meat) and 17 of hatching eggs . Nine Member States are currentl y recognized by APHI S as free of Newcastle disease; however, quantities of poultry or poultry

products exported to the United States in recent years have been negligible
. U.S. imports of live poultry and hatching eggs from EU
- 25 Member States has been spora dic and at insignificant levels. To quantify

the effects of potential levels of poultry meat exports to the United States from the EU
- PTR , we model three scenarios based on the Member States’ combined average annual global exports of 3,116,400 MT (the sum of exports within and external to the EU
- 25 region, 200 7
- 200 9 ): (1) an amount proportional to the average percentage of France ’s global poultry meat exports sent to the United States (0. 045 percent); (2) an amount proportional to the highest single
- ye ar percentage of France ’s global poultry meat exports sent to the United States ( 0.098 percent); and (3) an amount equal to 0.5 percent of the total global poultry meat exports by the EU
- PTR countries. Amounts of poultry meat shipped to the United States und er the three scenarios would be 1,402 MT , 3,054 MT , and 15,582 MT. In all three scenarios, consumer welfare gains slightl y outweigh producer welfare losses. Even in the third scenario , in which we assume the EU
- PTR would export 15,582 MT to the United States, the decline in producer welfare would represent less than 0. 1 percent of revenue received from the sale of domestically produced poultry

meat . The price decline in this third scenario would also be less than 0. 1 percent. The pri ce and welfare effects are likel y to be even4

smaller than are indicated by the three scenarios, to the extent that poultry meat imports from the EU
- PTR displace poultry meat imports from other countries. The quantity

of poultry

and poultry

products expecte d to be imported from the EU
- PTR is not significant. We do not expect this rule to have any appreciable impact on U.S. poultry and egg producers , regardless of the size of their operation s . Therefore, this rule will not have a significant economic impact on a substantial number of small entities
.5



### Introduction This analy sis provides the basis, as required by the Regulatory

Flexibility

Act, for certification by

the APHIS Administrator that this rule will not have a significant economic impact on a substantial number of small entities. The anal ys is examines impacts for U.S. small entities of a rule that will amend 9 CFR 94.6 b y adding a region comprised of the 25 Member States that constituted the European Union in 2006 (EU
- 25) to the list of regions considered to be free of Newcastle disease and highly pathogenic avian influenza (HPAI). 1 This region will be designated as a single region, the European Union Poultry Trade Region (EU
- PTR), for which import restrictions for live birds and poultry , hatching eggs, poultry meat, and other poultry products , including eggs (other than hatching eggs), and egg products will be uniformly applied
. The rule is part of a continuing program to allow the importation of foreign agricultural products that APHI S has determined are without significant risk of introducing exotic animal diseases into the United States. APHI S received a request from the European Commi ssion (EC) to recognize the EU
- 25 as free of Newcastle disease and HPAI. The agency conducted a risk evaluation that concluded that the region is free of both Newcastle disease and HPAIand has an adequate veterinary infrastructure in place to prevent, co ntrol, and manage Newcastle disease or HPAI outbreaks should they

occur. EC animal health regulations are uniforml y applied and harmonized across all EU
- 25 Member States. These measures include surveillance, epidemiological investigations, diagnostic cap ability , and emergency response capacity , which APHIS recognizes as sufficient to identify poultry diseases rapidly , establish appropriate control zones, and implement all measures 1 The EU
- 25 Member States are Austria, Belgium, Cy prus, Czech Republic, Denmark, Estonia, Finland, France, Germany , Greece, Hungary , Ireland, Ital y, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, the Netherlands, and the United Kingdom.6

necessary to effectivel y l imit spread of the disease out of the affected zo ne. Nevertheless, APHI S will appl y the movement restrictions found in 9 CFR 92.3 to recognize the quarantine restrictions established by the EC in the EU
- PTR, with the additional requirement that no regulated articles from a restriction zone implemented b y the EC because of an outbreak of Newcastle disease o r HPAI in domestic poultry will be imported until 90 days following depopulation, cleaning, and disinfection of the last affected premises. If outbreaks of either diseas e were to occur, this rule will facilitate the continuation of imports from regions within the EU
- PTR free of Newcastle disease and HPAI. 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 60 4 of the Act requires an agency to prepare a final regulatory flexibility anal ys is (FRFA) that describes the expected impact of the rule on small entities and steps taken to minimize any

significant economic impact s of the rule on small entities. In place of the F RFA, the head of the agency may certify that a rule will not have a significant economic impact on a substantial number of small entities. This analy sis provides the factual basis for
certification of this rule. As background, we provide a brief overview of poultry production and trade by

the United States and the EU
- 25 Member States . This is followed with an estimate of price and welfare effects of the rule based on assumed levels of p oultry and poultry

product imports from the EU
- 25 . We then describe the expected impact on small entities.7



### U.S. Poultry **Industry Production**  The United States is the world's largest poultry producer, the second
- largest egg producer, and second
- largest exporter of poultry meat. U.S. poultry

meat production totals over 43 billion pounds annually; over four
- fifths is broiler meat, most of the remainder is turkey meat, and a small fraction is other chicken meat. Cash receipts from sales of poultry and egg s (broilers, farm chickens, eggs, turkey , du cks, and other poultry) were $35.5 billion in 2010 , abo ut 9 percent more than the previous year. 2 Of this total, 73 percent w as from the sale of broilers, 20 percent from eggs, 14 percent from turkey s and 3 perc ent from other poultry
. Broiler production is concentrated in a group of States stretching from Delaware, south along the Atlantic coast to Georgia, then westward through Alabama, Mississippi, and Arkansas. The top broiler
- producing State is Georgia, follo wed b y Arkansas, Alabama, North Carolina, Mississippi, and Texas. Operations in these States account for over 65 percent of broiler cash receipts. Most U.S. broiler production is conducted under contract with broiler processors. The grower normally

supp lies the grow
- out house with all the necessary heating, cooling, feeding, and watering s ys tems. The grower also supplies the labor needed in growing the birds. The broiler processor supplies the chicks, feed, and veterinary medicines. The processor sche dules transportation of the birds from the farm to the processing plant. In many cases, the processor also supplies the crews who place broilers into cages for transportation to the slaughter plant.

2 USDA/ERS, Farm Income: Cash Receipts, 2000
- 2010 (http://www.ers.usda.gov/data/farmincome/finfidmuxls.htm)
.8

The U.S. turkey

industry produces over one
- quarter of a billion birds annually , with the live weight of each bird averaging over 25 pounds. Production of turkey s is somewhat more scattered geographicall y than broiler production. The top five turkey
- produ cing States are Minnesota, North Carolina, Missouri, Arkansas, and Virginia. The United States is by far the world's largest turkey

producer, followed by

the European Union. Even though exports are a major component of the U.S. turkey industry , the Unite d States consumes more turkey per capita than any other country
. U.S. egg operations produce d over 90.4 billion eggs annually
. Over 85 percent of egg production is for human consumption (the table egg market). The remainder of production is for the hatc hing market. 3 These eggs are hatched to provide replacement birds for the egg
- laying flocks and broiler chicks for grow
- out operations. The top five egg
- producing States are Iowa, Ohio, Pennsylvania, Indiana, and California. 4 A measure of the industry ’s changing structure has been the decreasing number and increasing size of chicken hatcheries. In 1973, there were 989 facilities that hatched chickens in the United States. Those hatcheries had the combined capacity to incubate 436 million eggs at one tim e, for an average capacity of 440,849 eggs. 5 In2010 , there were 317 chicken hatcheries, with a combined incubator capacity of 898 million eggs and an average capacity of 2.83 million eggs. Similarl y, there were 203 turkey hatching facilities in 1973, wi th the capacity to incubate 45 million eggs at one time and an average c apacity of 221,675 eggs. In 2010 , there were 51

3 USDA/NASS, Chickens and Eggs: 2009 Summary, February 2010 (http://usda.mannlib.cornell.edu/usda/current/ChickEgg/ChickEgg
- 02
- 25
- 2010.pdf). 4 USDA/ERS, L ivestock, Dairy , and Poultry Outlook/ LDP
- M
- 190, April 21, 2010 (http://www.ers.usda.gov/Publications/LDP/2010/04Apr/LDPM190.pdf). 5 USDA/Statistical Reporting Service, Hatchery Production, Annual Revisions 1974 (http://usda .mannlib.cornell.edu/usda/nass/HatcProdSu//1970s/1975/HatcProdSu
- 03
- 18
- 1975.pdf)9

turkey hatcheries, with an incubator capacity of 38.3 million eggs and an average capacity of 750,980 eggs. 6 In terms of tonnage, poultry meat production and trade exceeds that of bee f or pork. For in stance, in 2010, the U.S. produced 42 billion pounds of poultry meat compared with 26 billion pounds of beef and 22 billion pounds of pork. Additionally, the U.S. also produced 6.5 billion dozen eggs. Poultry

m eat per capita consumption (98.2 pounds in 2010 ) exceeds per capi ta consumption of both beef (60 pounds) and pork (47 pounds). Furthermore, the U.S . exports
m ore poultry

meat (7 billion pounds) than beef and veal (2.2 billion pounds) and pork (4.5 billion pounds) combined. 7 As shown in table 1, both U.S. poultry meat production and consumption have fluctuated over recent ye ars . The most recent data show product ion and consumption averaged 18,630 MT and 15,445 MT, respectivel y, between 2003 and 2010 . U.S. imports increased from 16,076 to 64,334 MT , while exports incre ased from 2,651,068 to 3,190,879 MT.

6 USDA/NASS, Hatchery Production 2009 Summary , April 2010 (http://usda01.library .cornell.edu/usda/nass/HatcProdSu//2010s/2010/HatcProdSu
- 04
- 16
- 2010.pdf ). 7 USDA/ERS, L ivestock , Dairy and Poultry

Outlook/LDP
- M
- 190/April 21, 2010 (http://www.ers.usda.gov/publications/ldp/2010/04Apr/ldpm190tables.pdf).10

Table 1
-- U.S. Poultry

Meat : Supply , Utilization and Price, 2003
- 2010
Year Production in 1,000 Metric Tons Consumption

in 1,000 Metric Tons Wholesale

Price in $ per MT Exports in

Metric Tons Imports in

Metric Tons 2003 17,414 14,479 1,367 2,651,068 16,076 2004 17,761 1 5,248 1,634 2,534,689 21,306 2005 18,538 15,812 1,561 2,752,326 26,476 2006 18,680 15,934 1,420 2,784,256 38,209 2007 19,089 15,819 1,684 3,318,818 48,238 2008 19,574 15,718 1,757 3,929,986 54,533 2009 18,676 14,997 1,711 3,738,457 59,183 2010 19,309 15,555 1,828 3,817,429 64,334 8
- Year Average (2003
- 2010 ) 18,630 15,445 1,620 3,190,879 41,044 Sources: USDA/ERS, Livestock, Dairy, and Poultry Outlook, LDP
- M
- 190, April 21, 2010, for production, and wholesale price data; export and import data are from USDA FAS’s Global Agricultural Trade System (GATS), http://www.fas.usd a.gov/gats/default.aspx (01/14/2012 ). Consumption data is computed as production plus imports minus exports. **Trade** As can be seen from table 1, the United States was a net exporter throughout the period with average annual exports ( 3,190,879 MT) dwarfing imp orts ( 41,044 MT). Imports of poultry meat represent less than 0.3 percent of consumption. Similarly, U.S. exports of live poultry , hatching eggs , and eggs other than hatching eggs are b y far larger than imports of these products. As stated above, the United States is the world's second
- largest exporter of poultry meat. Annual poultry

meat exports totaled about 3.8 m illion MT in 2010 , which is about 20 percent of U.S. production. Demand for U.S. poultry meat products has fluctuated over the last several11

ye ars due to changing economic conditions and currency exchange rates in major importing countries. Expo rts are widely distributed. The largest importers of U.S. broiler products are Mexico, Hong Kong, Russia, Angola, China , Canada, and Taiwan. Together, th ese markets accounted for over 52 percent of U.S. poultry meat exports in 2010 , on a quantity basis. The United States imported about 64 , 3 34 MT of poultry meat in 2010 , the equivalent of less than four
- tenths of a percent of domestic production. Over 78 percent of imports in 2010 came from Canada and 21 percent from Chile. As in the case of poultry meat, U.S. exports of live poultry , fresh shelled eggs and hatching eggs are widel y distributed and significantly outweigh imports of these products. The U.S. exported 81 million and imported 13.5 million live poultry in 2010
. Imports were from Canada (9 9 .7 percent) and the United Kingdom and the Netherlands (0. 3 percent). Export destinations included Canada, China, Mexico, In donesia, Thailand, Peru, South Africa, Philippines, Bangladesh, and Malay sia
. These countries accounted for 75 percent of the tot al live poultry

exports. The U.S exported 60 million 8 and imported 95 million 9 table eggs in 2010
. Major dest inations of table eggs included, Hong Kong, Canada, Mexico, Bahamas, Bermuda, and Aruba . These countries together accounted for about 80 percent of U.S. egg exports. All of U.S. table egg imports were from Canada, China , New Zealand, Taiwan and Thailand
. The U.S. also expo rted 185 million and imported 19 million shell eggs for hatching in 2010
. 10 Major destinations included Canada , Mexic o, Jamaica, Trinidad and Tobago, Ukraine, United Kingdom, Brazil, Netherlands and Germany . These countries accounted for 72 percent of U.S.

8 Economic Research Service, USDA
. 9 Global Trade Atlas, 2011 (http://www.gtis.com/gta/secure/gateway .cfm) 10 Ib id
.12

total shell eggs for hatching exports. U.S. hatching egg imports came from Canada (over 90 percent), France, Hungary , Germany , the United Kingdom, and the Netherlands. 11 **EU -**  **25 Poultry Industry** The EU
- PTR region, in aggregate, is one of the largest producers of live poultry , poultry meat and other poultry

products. The region has the third largest poultry stock ( 1
. 38 b illion), and is the second largest producer of eggs in shell (105 billion), and third largest producer of poultry meat (10.23 million MT). Although over 90 percent of production is for domestic consumption by the EU
- 25 Member States, the region is the largest exporter of eggs in shell and the third largest exporter of poultry meat. Also, the region is the largest importer of poultry meat. 12 Two
- thirds of EU
- 25 trade in poultry and poultry

products is within the region, and 13 of the 25 countries had a within
- region trade of 70 percent or more. More than half of the Member States are net importers of live poultry and poultry products (13 are net importers of live poultry , 16 of poultry

meat, and 17 of hatching eggs). In poultry meat trade, 6 countries (the Netherlands, France, Germany , Belgium, the United Kingdom and Poland) account for about 80 of the export trade of the region. Most of the remaining trade is with other European countries, Russia and Middle Eastern countries. The larger Member St ates have a more diversified export trade than do the smaller ones
. 13 Currently , onl y a few EU
- 25 Member States export poultry or poultry

products to the United States and the quantities exported are small. The United States imported $31 million of live poultry and $175 million of poul try meat in 2010
. That year , no poultry meat and less than one percent of live poultry imports came from EU
- 25 Member States (the United Kingdom and

11 Ibid. 12 UN/FAO, Trade (FAOstat@fao.org) 13 Global Trade Atlas, Global Trade Information Services, Inc., country edition, May , 2010.13

the Netherlands). Over 99 percent of live poultry and 78 percent of poultry meat came from Canada , with 21 percent of poultry meat imports supplied by Chile. EU
- 25 Member States supplied about 8 percent of U.S. hatching egg imports in 2010. 14 Inmany cases, imports from the EU
- 25 Member States may not be competitively

priced, but rather supplying niche markets at prices two or three times higher than comparable domestic products. Although consumers will benefit from any inc rease in imports from the EU
- 25 in terms of greater choice, they

are expected to gain little from lower prices. With respect to live poultry imports, there also may

be long
- term benefits that arise from genetic diversification. **Potential Economic Impact of the Rule** Imports of live poultry

and hatching eggs are likely to remain sporadic even with the expansion of EU
- 25 potential sources. Imports of breeding stock and hatching eggs are often
one - time events from a specific source. That is, once a producer’s needs for breeding stock are met during a given period, the producer may not be in the market again for several years. Import data reflect this sporadic pattern. For example, during the ten
- ye ar period 2000 to 2010 , there were live poultry

imports from Spain (200 1), France (2004), and the Unite d Kingdom (between 2005 and 2010 ). The amount imported from each country varied year - by
- year. There was a similar pattern for hatching egg imports. Imports of poultry

meat from some EU
- 25 Member States have been somewhat more regular. In particular, France exported poultry meat to the United State s each year , 2000 to 2009 (but not in 2010 )
. Therefore, this anal ys is of potential economic effects of the rule relies on poultry meat trade data. We estimate the impact of po ultry meat imports from the EU
- PTR on U.S. production, consumption, and prices using a non
- spatial partial equilibrium model. The

14 U.S. Census Bureau, as reported b y Global Trade Information Services, Inc.14

data used were obtained from the USDA Foreign Agricultural Service, the Global Trade Atlas, and FAO STAT . The demand and supp ly elasticities used are
- 0. 5 6 and 0.65 , respectivel y . 15 We model three potential levels of poultry meat exports to the United States from the EU
- PTR , based on the Member States’ average annual global exports of 3,116 ,000 MT (the sum of exports within and external to the EU
- 25 region, 200 7
- 20 09 ): (1) an amount proportional to the average percentage of France ’s poultry meat exports that was sent to the United States (0. 045 percent); (2) an amount proportional to the highest one - year percentage of France ’s global poultry meat exports sent to the United States ( 0.098 percent); 16 and (3) an amount equal to 0.5 percent of global poultry

meat exports by

the EU
- PTR countries. Notwithstanding a history of imports from France , poultry products from the EU
- 25 Member States are generall y priced higher than domesticall y produced poultry meat, but for this analy sis we assume that poultry meat imports from the EU
- PTR would be competitively priced. Amounts of poultry meat shipped to the United States under the three scenarios would be 1,402 MT , 3,054 MT , and 15,582 MT
. Table 2 presents the changes resulting from the assumed U.S. poultry meat imports from the EU
- PTR . These include annual changes in U.S. consumption, production, wholesale price, consumer welfare, producer welfare, and net welfare. Our medium level of poultry meat imports of 3, 054 MT (assuming poultry meat imports proportional to the highest single
- ye ar imports from France ) would result in a decline of $0. 2 5 per metric ton in the wholesale price of poultry

15 Global Trade Atlas, Global Trade Information Service s, Inc., country edition, May

2010; John Sullivan, John Wainio, and Vernon Roningen. A Database for Trade Liberalization Studies, #AGES89
- 12, March 1989; and UN/FAO, FAO stat data (http://faostat.fao.org). 16 France’s poultry

industry is export
- oriented , ha s FSI S equivalence , and supplied poultry meat products to the United States in each ye ar during the period between 2000 and 2009. The hy pothetical import levels based on France’s exports may overstate potential shipments to the United States from the EU
- P TR.15

meat and a fall in U.S. production of 1,639 metric tons. Consumption would increase by 1, 415 metric tons. Producer welfare would decline b y about $ 3.915 million and consumer welfare would increase b y abo ut $ 3.925 million, yielding an annual net benefit of about $ 10,000
. Table 2: Estimated Impact on the U.S. Economy of Poultry

Meat Imports from EU
- PTR for Three Import Scenarios Assumed annual poultry

meat imports from the EU
- PTR 1,402 1 3,054 2 15,582 3 Change in U.S. consumption, MT 650 1,415 7,221 Change in U.S. production, MT
- 752
- 1,639
- 8,361 Change in wholesale price of poultry meat , dollars per MT - $0. 12
- $0. 25
- $ 1.29 Change in consumer welfare ($1,000) $ 1,802 $ 3,925 $ 20,030 Change in producer welfare ($1,000) - $ 1,797
- $ 3,915
- $ 19,971 Annual net benefit $ 4,475 $ 9,957 $ 58,910 Note: The baseline data used are seven
- year annual averages for production, consumption, pri ces, exports and imports, 2003
- 2009 . The demand and supply elasticities used are
- 0.56 and 0.65, respectively ( USDA/NASS, Chicken and Eggs: 2009 Summary, February 2010 (http://usda.mannlib.cornell.edu/usda/current/ChickEgg/ChickEgg
- 02
- 25
- 2010.pdf); UN/FAO, Trade (FAOstat@fao.org) ). 1 An amount proportional to the average percentage of the France’s global poultry exports sent to the United States (0.045 percent)
. 2 An amount proportional to the highest single
-year percentage of France’s global poultry meat exports sent to the United States (0.098 percent). 3 An amount equal to 0.5 percent of the total global poultry meat exports by the EU
- PTR countries
. In all three scenarios, consumer welfare gains slightl y outweigh producer welfare losses. Even in the third scenario , in which we assume EU
- PTR would export 15,582 MT to the United States, the decline in producer welfare represents less than 0. 1 percent of revenue received from the sale of domesticall y produced poultry meat . 17 The price decline in this third scenario is also less than 0. 1 percent. The price and wel fare effects are likel y to be even smaller than are

17 $20 million divided by

$21.8 billion equals 0.092 percent.16

indicated b y the three scenarios, to the extent that poultry meat imports from the EU
- PTR displace poultry

meat imports from other countries. **Potential Impact on Small Entities** As a part of the rulemaking process, APHIS evaluates whether regulations are likel y to have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has established guidelines for determining the number of firms considered small under the Regulatory Flexibility

Act. Entities that may be affected b y the rule include ones engaged in the production of breeding stock, hatchery operations , and producers of table
- egg layers. T here are four major firms that produce breeding stock of egg - ty pe chickens, three breeders of meat
- ty pe chickens, two breeders of turkey s, and one firm producing breeding stock of both egg
- ty

pe and meat
- ty

pe chickens. 18 All of these firms have multiple facilities headquartered in the United States and operating in domestic and international markets . They do not qualify

as small entities. Since the anal ys is is of potential effects of poultry meat imports from the EU
- PTR, we consider possible effects for broiler and turkey farms and other poultry

meat producers , as well as poultry processors. The SBA defines small poultry processing plants as those plants with no more than 500 emplo yees. 19 According to the 2007 Economic Census (most recent data on establishment sizes), there were 5 57 poultry processors with annual total sales of about $50 billion
. Of the above number of establishments, about 64 percent had fewer than 500 employees .

18 Mary E. Delany , Genetic Diversity and Conservation of Poultry , p.261, in W.M. Muir and S. E. Aggrey , Poultry

Genetics, Breeding and Biotechnology , August 2003; Susanne Gura, Livestock Genetics Companies: Concentration and Proprietary Strategies of an Emerging Power in the Global Economy

(hhtp://pastoralpeoples.org/docs/Livestock_genetics.pdf) 19 Small Business Administration, http://www.SBA.gov/size. Small poultry processing operations (NAI C S 311615) include establishments engaged in slaughtering poultry and small game and/or preparing processed poultry and small game meat.17

Small operations had total sales of $8.17 b illion ( 21 percent) , with average annual sales of $24 million , while large operations had sales of $29.5 b illion ( 78 percent) , with average annual sales of about $154 million
. Broiler operations (NAICS 112320), turkey operations (NAICS 112330), hatcheries (NAICS 112340), and other poultry operations (NAI CS 112390) m ay be affected indirectly

by the supply

of breeding stock from the EU
- PTR
. These operations are considered to be small if they have annual sales of $750,000 or less. 20 Commercial egg producers (NAI CS 112310) are considered small if they

have annual sales of not more than $12.5 million. According to the 2007 Census of Agriculture (most recent data on farm sizes), a total of 27,091 farms sold 8.9 billion broilers. 21 Of these farms, 15,747 operations (58 percent) that sold nearl y 1
. 0 b illion birds (11 percent) are considered small entities , with average sale s of about 64,128 birds and average annual gross receipts of about $ 155,665. The remaining 42 percent of the farms had total sale s of 7
. 9 b illion birds. The se larger entities averaged sales of 696, 845 birds and average annual gross receipts of about $1.7 million
. Thirty
- six percent of broiler operations ( 9,743 operations) sold fewer than 2,000 broilers and other meat
- ty pe chickens , on average, for average annual gross receipts of $294
. Insum, a m ajority of the farms that c ould be affected b y this rule are small according to SBA guidelines, while bearing in mind that vertically integrated production sy stems account for about 90 percent of poultry sales
. 22 The 2007 Census of Agriculture also contains data on certain sub
- categories of poultry operations , namel y, small family farms including limited resource farms, and farms having

20 U.S. Small Business Administration Table of Small Business Size Standards (http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf) . 21 http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_1_ US/st99_1_027_028.pdf 22 Contracts and vertical integration account for over 90 percent of broiler, turkey , and egg production. (http://www.ers.usda.gov/AmberWaves/June03/findings/USHogandPoultry .htm)18

operators who belong to socially disadvantaged groups. 23 Most farms that produc e poultry qualify as small family

farm s (gross farm sales of less than $ 250, 000), and many also qualify

as limited resource farms (gross farm sales of not more than $100,000 and low household income). Categories of sociall y disadvantaged operators are wom en , persons of Hispanic origin , American Indian or Alaska Native , Asian , African American , and Native Hawaiian or other Pacific groups . A poultry and egg producer may

qualify as a small family

farm and also be counted among those for which one or more of the operators belong to a socially disadvantaged group. Any economic impacts of the rule for operations categorized as small family farms including limited resource farms, or farms having operators who belong to socially disadvantaged groups would be insi gnificant , given the small quantity of poultry

meat expected to be import ed from the EU
- PTR compared to domestic production and current imports
. Table 3 shows that among the 148,911 farms that produced poultry and eggs in 2007 , 119,815 (over 80 percent) w ere small family farms. It is notable that the combined number of retirement farms ( 20,017 farms) and residential/lifestyle farms ( 54,500 farms) accounted for almost half of all poultry

and egg farms. Table 4 shows the number and percentage of poultry and egg farms that had operators belonging to sociall y disadvantaged groups in 2007. There were 27,950 poultry and egg farms (18.8 percent) for which the principal operator was a woman. In terms of ethnicity , 5,133 poultry and egg farms (3.4 percent) were operated by Hispanics and 4,655 poultry and egg farms (3.1 percent) had an operator who was American Indian or Alaskan Native. The percentage of poultry and egg farms operated b y African Americans was 1.2 percent.

23 For definitions and information, see: USDA ERS. Structure and Finances of U.S. Family Farms: Family Farm Report, 2007 edition , EIB
- 24.19

Although most poultry

and egg operations are small family farms and significant percentages of poultry

and egg operators belong to socially disadvantaged groups, economic effects of the rule for these farms are not expected to differ from the effects for poultry and egg producers gener ally . We do not expect the rule to have any appreciable impact on U.S. poultry and eggs producers regardless of the size of operation or operator classification. Based on the above i nformation and anal ys is , this rule will not have a significant economic i mpact on a substantial number of small entities , regardless of the size of the operation or whether the operators belong to sociall y disadvantaged groups. The quantity of poultry

and poultry products expected to be imported from the EU
- PTR is not signific ant.20 Table 3. Number and percentage of small famil y poultry and egg farms, 2007 Limited Resource Farms Retirement

Farms Residential/

life Style Farms Farming Occupation/Lower

Sales Farming

Occupation/ Higher Sales All

Small Family Poultry and Egg Farms All

Poultry and Egg Farms

Number 22,719 20,017 54,500 17,884 4,695 119,815 148,911

Percentage 15.3 13.4 36.6 12.0 3.2 80.5 100% Source: USDA NASS, 2007 Census of Agriculture. Note: A l imited
- resource farm is a small family farm that has gross sales of less than $100,000 (indexed after 2003), and a household income less than the poverty level for a family

of four with two children or less than half the county median income. A reti rement farm is a small family

farm whose operators report they are retired (excludes limited
- resource farms operated by retired farmers). A residential/lifestyle farm is a small family farm whose operators report a major occupation other than farming (excludes limited resource farms whose operators report a major occupation other than farming). A farming occupation/lower
- sales farm is a small family farm with sales less than $100,000 whose operators report farming as their major occupation (excludes limited
- res ource farms whose operators report farming as their major occupation). A farming occupation/higher
- sales farm is a small family farm with sales between $100,000 and $249,000 whose operators report farming as their major occupation.21 Table 4. Number and percentage of poultry and egg farms with operators belonging to sociall y disadvantaged group s , 2007
Farms where the Principal Operator is Female Farms

where an Operator reports Spanish, Hispanic, or Latino origin Farms

where an Operator reports race as American Indian or Alaska Native Farms

where an operator reports race as Asian Farms

where an operator reports race as Black or African American Farms

where an operator reports race as Native Hawaiian or Other Pacific Islander All

Poultry and Eg g Farms

Number 27,950 5,133 4,655 1,591 1,797 238 148,911 Percentage 18.8 3.4 3.1 1.1 1.2 0.2 100% Source: USDA NASS, 2007 Census of Agriculture. Note: For the ethnic/racial categories, farms reported for their top
- three categories. An operator may report as belonging to more than one ethic/racial category , and a farm may report having operators belonging to more than one category
.