### United States

Department of Agriculture Animal and Plant Health Inspection Service August 2011 Analysis in Support of Certification that the

Rule will not have a Significant Economic Impact on a Substantial Number of Small Entiti es Interim Rule 2011 - 0075 Modify Zone Sizes for Michigan Bovine Tuberculosis S tatus

Policy & Program Development Policy Analysis & Developmenti

Summary Michigan currently

has a 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 interim rule will reclassify the status of 5 5 counties from MAA to AF; portions of Iosco and Ogemaw counties that are currentl y cl assified as MAA as well a s the portions of I osco and Ogemaw counties that are currentl y classified as MA will be advanced to AF, and the status of Presque Isle County will be advanced from MA to MAA. MA status imposes various requirements for TB testing of cattle

. Reclassification to AF removes all movement restrictions and reclassification from MA to MAA reduces requirements. The Regulatory

Flexibility

Act (RFA) of 1980 (Public L aw 96

- 354) requires agencies to evaluate the potential effects proposed and final rules on small busine sses, small organizations, and small government jurisdictions. Section 605 of the RFA allows an agency to certify that a rule will not have a significant impact on substantial number of small entities. Advancement of status for these counties will allow p roducers to move their cattle with fewer pre

- movement testing requirements, saving time and money

. Because few producers will be affected, these savings are expected to be relatively small. This action will not significantly change program operations and will have no significant effects on other Federal agencies, State governments or local governments. Michigan animal health authorities have a plan and the capability to maintain separate TB status within their State with separate requirements and border co ntrols. T he Administrator of the Animal and Plant Health Inspection Service (APHIS) has determined that this action will not have a significant economic impact on a substantial number of small entities.1



### Introduction This analy sis provides the basis, as required b y the Regulatory Flexibility

Act, for certification by

the APHIS A dministrator that the interim rule will not have a significant economic impact on a substantial number of small entities. B ovine tuberculosis (TB) is a contagious disease which can infect all warm blooded vertebrates. The Cooperative State

- Federal Tuberculosis Eradication Program, which beg an in 1917, has been administered b y APHIS of the U.S. Department of Agriculture, State animal health agencies, and U.S. livestock producers, and has nearl y eradicated bovine TB from the Nation's livestock population. The disease's presence in humans has been reduced as a result of the eradication program, advances in sanitation and hygiene, discovery of effective drugs, and pasteurization of milk. APHI S has established five status stages (or levels) for States and zones based upon the prevalence of bovine TB within cattle and bison. These five stages are: non

- accredited, accredited preparatory , modified accredited, modified accredited advanced, and accredited

- free. Michigan is regionalized into three zones (AF, MAA, MA) and the zone boundaries were last updated in an interim rule published in the Federal Register December 18, 2009

. Michigan has asked to adjust the boundaries of its zones under the National Bovine Tuberculosis Eradication Program. Fifty

- five counties in the Lower Peninsula as well as portions of I osco and Ogemaw counties that are currently classified as MAA as well as the portions of Iosco and Ogemaw counties that are currently clas sified as MA will be advanced to AF status, and Presque Isle Count y will be advanced to MAA status.2



### P otential Impact on Small Entities
T he cattle industry

play s an important role in Michigan’s econom y. There were 14,454 cattle and calf operations in Mich igan 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

- ye ar average cash receipts for cattle and calves and dairy p roducts (2000

- 2007) were $262 million and $952 million, respectively

. 2 The Small Business Administration (SBA) has established guidelines for determining which businesses are considered small. According to SBA size standards for beef cattle ranchin g 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 (NAI CS 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 are most dairy

operations. In200 7 more than 98 percent of cattle and calf farms generated less than $500,0 00 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 composit ion of Michigan ’s catt le inventory is shown in table 1

.

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/Fi nfidmuXls.htm 3 2007 Census of Agriculture. National Agriculture Statistics Service, USDA.3

Michigan currently

has three TB status zones: an AF, a MAA and a MA zone. This rule will reclassify

5 5 counties in the Lo wer Peninsula from MAA to AF, portions of two counties from MAA to AF, portions of the same two counties from MA to AF, and one county from MA to MAA. The elevatio n of an area to AF status removes all movement restrictions . However, movement restriction s in MAA zones have already been suspended under Federal Order. The elevation of an area to MAA or AF status from MA status removes TB testing requirements on cattl e owners. The MA restrictions include a negative TB test within 60 day s of the interstate
mov ement of cattle and bison from a herd without accredited status , except for cattle moving directly to slaughter

. The MA restrictions also include a whole herd te st 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 must have an annual whole herd test in order to compl y with movement restrictions and with the Pasteurized Milk Ordinance (PMO). 4 The elevation of an area to MAA status removes most of these requirements and the remaining restriction on cattle moving out of a MAA zone has been

4 U.S. Food and Drug Administration, Center for Food Safety and Applied Nutrition. **TABLE 1. Michigan Cattle Inventory, January 1, 2011** Type Number Percentage of Total Beef cows 99,000 8.6% Milk cows 361,000 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 190,000 17.3% Bulls 15,000 1.4% Calves 200,000 18.7% TOTAL 1,090,000 Source: National Agriculture Statistics Service, USDA.4

suspended under Federa l Order

. None of these testing requirements appl y t o cattle moving out of an AF zone. Cattle herd owners in the portion of two counties being upgraded from MA to AF status, and th ose in the one county being upgraded from MA to MAA status will see a reduc tion in TB testing requirements as a result of this rule, and will therefore benefit from reduced costs associated with that TB testing. Note that c attle herd owners in the 5 5 counties being upgraded to AF status from MAA status and in the portions of the two counties being upgraded to AF status from MAA status will not see an actual reduction in testing because a Federal Order previously

suspended testing requirements in MAA zones. There are about 1 20 cattle herds in the areas being elevated from MA stat us , with about 4,950 cattle . The cattle in these areas account for less than 0.5 percent of the cattle in Michigan. 5 TB testing within 60 days of interstate movement of cattle for feeding will no longer be necessary for non

- accredited herds in the Presq ue Isle County based on MAA status and in portions of I osco and Ogemaw counties based on AF status. Tuberculosis testing, including veterinary

fees, costs about $10 to $ 15 per head. While no cattle moved interstate from these areas in 2010, there were ab out 675 cattle that moved from these areas to other zones in Michigan. Michigan is enforcing regulations that impose restrictions on intrastate movement that are substantiall y the same as the federal restrictions. Based on the above range in testing cost s per animal, we expect annual cost savings associated with reduced testing of feeder cattle moving out of from portions of Iosco and Ogemaw counties , and Presque Isle County to total between $6,750 and $10,125. The more a herd owner in the affected areas engages in the

5 Michigan Department of Agriculture; personal communication

.5

interstate mov ement of feed er cattle, the greater will be the savings associated with the reduction in movement restrictions

. Owners of non

- accredited herds in Presque Isle County and portions o f Iosco and Ogemaw counties could also benefi t from reduced costs associated with annual TB testing. A negative whole herd test within 12 months of the interstate movement of intact cattle from a herd without accredited status is no longer needed. In addition, the annual whole herd test for dairies is not necessary

to meet movement restrictions or the PMO for herds in a MAA or an AF 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 2010 , beef and mixed beef in the a ffected areas of the three counties had an average of 35 head. With TB testing costs of $10 to $15 per head, annual whole herd testing costs average between $ 350 and $ 525 for a herd of this size. Dairy herds in the affected areas of the three counties had an average of 72 head. With TB testing costs of $10 to $15 per head, annual whole herd testing costs average between $720 and $ 1,080 per herd. These cost estimates per herd may be high because the cost of whole herd testing on a per

- animal basis is gen erall y 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. The State of Michigan has estimated that there are 117 dairy, beef and mixed herds in the affected areas of the above three counties. 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 te sting requirement could total between $50,000 and $75,000. Cattle herd owners in the areas being elevated from MA status will see a reduction in TB testing requirements as a result of this rule, and will therefore benefit from reduced costs6

associated with that TB testing. Total cost savings could be between $57,000 and $85,000. However, cattle herds in these counties account for less than 1 percent of cattle operations and less than 0.5 percent of the cattle in the State of Michigan. In addition, TB tes ting costs are small when compared to the value of the cattle tested, and the expected savings therefore are also relativel y small. On January 1, 2008 , beef cattle in Michigan had an average per animal value of $ 1,330. 6 The average value of dairy cattle is considerabl y higher , given the value of milk produced. The savings in TB test ing 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 of the average value of dairy cattle in the State

. 

### Conclusion Michigan currently

has three TB status zones: an AF, a MAA and a MA zone. This interim rule will reclassify the status of 5 5 counties from MAA to AF; portions of two counties will be advanced from MAA to AF, portion s of the same two c ounties will be advanced from MA to AF, and one county from MA to MAA. MA status imposes various requirements for TB testing of cattle

. Reclassification to AF removes all movement restrictions and reclassification from MA to MAA reduces some restrictions

. Cattle herd owners in the portion of two counties being upgra ded from MA to AF status, and those in the one county being upgraded from MA 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. Cattle herd owners in the 5 5 counties and portions of two counties that are being upgraded to AF status from MAA status will not see an actual reduction in testing because a Federal Order previously suspended testing

6 Meat Animals Pr oduction, Distribution and Income Final Estimates 2003

- 2007 . May 2009. NASS, USDA. Statistical Bulletin Number 1026. http://usda.mannlib.cornell.edu/usda/nass/SB995/sb1026.pdf7

requirements in MAA zones. Cattle herd owners in the areas being elevated from MA status will see a reduction in TB testing requirements and therefore benefit from cost savings. Th e total expected savings will be relativel y small, between $57,000 and $85,000 . T he affected cattle herds account for less than 0.5 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. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.