### United States

Department of Agriculture
Animal and Plant Health Inspection Service
July 2011 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 - 2010 - 0020 RIN 0579 -AD33 Importation of Tomatoes with Stems from the Republic of Korea into the United States

Policy & Program Development Policy Analysis & Developmenti



### Summary

This rule amend s the regulations to allow, under certain conditions, the importation into the continental United States of fresh tomatoes with stems from the Republic of Korea (South Korea). APHIS has concluded, based on a pest risk anal ys is, that a systems approach will mitigate the risk associated with importing this fruit

. South Korea expects to export one 40

- foot shipping container of fresh tomatoes with stems per year to the United States. A shipping container can hold about 25 metric tons (MT ) of tomatoes with stems. In 2009, the United States produced 1.47 million MT of tomatoes, U.S. imports reached 1.19 million MT, and U.S. exports were 0.17 million MT. Thus, the total U.S. supply of tomatoes for this period was approximately 2.49 million MT (production plus imports minus exports). This quantity greatl y dwarfs the relatively small amount that is expected to be imported from South Korea. U.S. tomato production and trade statistics are for all fresh tomatoes, including ones sold without stems. We do not have information on how the market for to matoes with stems may differ from the market for tomatoes generally . Notwithstanding any significant distinctions between the markets for tomatoes with and without stems, we do not foresee this rule resulting in significant effects for U.S. tomato producers, large or small. We also note that the average price of tomatoes exported from South Korea in 2009 was $2,447 per MT, compared to an average price of U.S. tomato imports of less than half that amount , $1,180 per MT

. This large price difference implie s that tomato imports from South Korea may

not be widel y competitive in the United States; South Korean exporters may intend to target U.S. specialty vegetable markets or certain ethnic consumer groups with special preference for Korean tomatoes with stems if they expect to earn prices comparable to South Korea’s average 2009 export price level. Farms producing tomatoes in open fields are classified within the North American Industry Classification System under “Other vegetable (except potato) and melon farming” (NAICS 111219). Farms producing tomatoes in greenhouses are classified under “Other food crops grown under cover” (NAICS 111419). For both industry classifications, a business is considered to be a small entity if its annual receipts are not more than $750,000.The average market value of crops sold b y farms classified within “Other vegetable

(except potato) and melon farming” in 2007 was $312,333. We infer that the majority of the 25,809 farms that produced tomatoes in open fields that year were small. The average market value of crops sold by

farms classified within “Food crops grown under cover” (NAICS 11141) in 2007 was $758,687. We infer that at least some of the 2,926 farms that produced tomatoes in greenhouses were small entities. While the majority

of tomato farms are small, the impact of importation of tomato es with stems from South Korea will be negligible. The rule will not have a significant economic impact on a substantial number of small entities.1



### Introduction

APHI S received a r equest from the national plant protection organization (NPPO) of the Republic of Korea (South Korea) to allow the importation of tomatoes with stems into the United States. This rule will allow importation of commercial shipments of tomatoes with stems produced under a s ys tems approach that will mitigate the risks posed by certain plant pests. Conditions for importation include requirements for pest exclusion at the production site, fruit fly trapping inside and outside the production site, and pest

- excluding packinghouse procedures. 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 ( F RFA) that describes the expected impact of the rule on small entities. In place of the F RFA, the head of an agency may certify that a rule will not have a significant economic impact

on a s ubstantial number of small entities. This analy sis provides the factual basis for certification of this rule.



### U.S. Tomato Production and Trade
The United States is a large producer and importer of fresh tomato es
. U.S. fresh tomato production levels an d farm value s from 2005 to 200 9, are shown in t able 1

. Over the five

- ye ar period, production averaged 1.55 million metric tons (MT), valued at $1.41 billion. Table 1 . U.S. fresh tomato production and value, 2005

- 2009

Source: USDA Economic Research Service: US Tomato Statistics

.
Table 2 shows the annual quantity of U.S. tomato imports , 200 6

- 20 1 0

. Average ye arl y imports over this period were 1. 18 million MT, that is, an amount equivalent to 68 percent of average production. Imports have become increasingl y important to the U.S. tomato market, and

Year Production

(metric tons) Value (billion dollars) 2005 1,725,150 1.58 2006 1,645,363 1.58 2007 1,525,297 1.17 2008 1,412,352 1.42 2009 1,468,053 1.31in 20 09 , they were equivalent to 81 percent of the U.S. 2009 domestic production. Nearl y all imports were from Mexico ( 90 percent) and Canada ( 9 percent).

Table 2 . U .S. t omato imports , f resh or chilled , 200 6

- 20 1 0, metric tons

Source: U.S. Census Bureau, as reported in the Global Trade Atlas.
Table 3 shows the value and price of U.S. tomato imports. The average value of tomato imports from 2006 to 2010 was $1. 42 billion, that is, an amount that exceeds the average value of U.S. production, and for the years 2007

- 2009, the value of imports exceeded the value of domestic production. The import value for 20 10 was $ 1. 8 billion, and the average price was $1, 173 per MT

.

Table 3

. The value of U.S. tomato imports, fresh or chilled, 20 10

Source: U.S. Census Bureau, as reported in the Global Trade Atlas.
In comparison to tomato imports, the quantity and value of tomatoes exported by the United States are relatively small. In 20 10 , U.S. tomato exports totaled 1 20,868 MT (equivalent to about 8 percent of the quantity of tomatoes imported), at a total value of about $2 00 million (equivalent to 11 percent of the value of tomatoes imported) (table 4). Nearly all exports are Source Quantity % Share 2006 2007 2008 2009 2010 2010 World 992,408 1,070,966 1,116,098 1,189,602 1,532,489 100 Mexico 844,359 949,695 987,685 1,046,869 1,380,111 90 Canada 135,176 111,697 119,376 130,310 142,590 9 All Other Countries 12,874 9,576 9,038 12,423 9,787 1

Source Value Unit Value
U.S. Dollars (Billion) Percent Share Dollars per

Metric Ton

2006 2007 2008 2009 2010 2010 2010
World 1.23 1.22 1.43 1.40 1.80 100 1,173 Mexico 0.92 0.96 1.14 1.13 1.49 83 1,078 Canada 0.28 0.24 0.27 0.25 0.29 16 2,060 All Other Countries 0.03 0.02 0.02 0.02 0.02 1 1,742destined for Canada and Mexico, the suppliers of nearl y all U.S. imports, but the unit value is

higher: $1, 63 0 per MT for U.S. tomato exports in 20 10 , compared to $1,1 73 per MT for U.S

. imports. Table 4 . U .S. quantity

and value of tomato exports , f resh or chilled , 200 8

- 20 10 , metric tons

Source: U.S. Census Bureau, as reported in the Global Trade Atlas.

Tomatoes are produced both in open fields and in greenhouses. In 2007, there were a total of 28,735 U.S. farms that produced tomatoes (25,809 in fields and 2,926 in greenhouse s ). Table 5 shows the States that had over 1,000 field tomato farms in 2007 and corresp onding acreages. While the number of operations is fairl y evenl y distributed among the States shown, California is clearl y dominant in terms of the area planted, with three

- fourths of the total U.S. tomato acreage in 2007. Table 6 presents comparable data for greenhouse tomato farms, and lists States with more than 100 greenhouse tomato farms. Once again, operations are widel y distributed, with Pennsylvania having the largest number. New York had the largest area devoted to greenhouse tomato production in 2007, with nearl y 13 percent of the total.

Table 5

. States with more than 1,000 field tomato farms and total tomato acreages, 2007 Number of Field Tomato Farms Percentage

Share of U.S. Total Acres in

Tomato Production Percentage

Share of U.S. Total California 1,782 6.9 335,133 75.8 Pennsylvania 1,737 6.7 3,458 0.8 North Carolina 1,429 5.5 3,726 0.8 New York 1,407 5.5 2,876 0.7 Ohio 1,351 5.2 7,368 1.7 Source Quantity % Share 2010 2009 Value Unit Value

2008 2009 2010 U.S. Dollars (Billion) Percent

Share Dollars per

Metric Ton
World 168,560 170, 365 120,868 100 0.20

-- 1,630 Canada 122,912 110,340 87,725 73 0.12 60 1,341 Mexico 43,746 57,722 29,007 24 0.07 37 2,484 All Other Countries 1,902 2,303 4,135 3 0.01 <1 1,783Michigan 1,155 4.5 5,490 1.2

Kentucky 1,142 4.4 899 0.2 All Other States 15,806 61.2 83,276 18.8 United States 25,809 100 442,225 100 Source: USDA NASS, 2007 Census of Agriculture, Table 30, Vegetables, Potatoes, and Melons Harvested for Sale.

Table 6

. States with more than 100 greenhouse tomato farms and total areas devoted to tomato production, 2007
Number of Greenhouse Tomato Farms Percentage

Share of U.S. Total Areas (square

feet) under Glass or Other Protection in Tomato Production Percentage

Share of U.S. Total
Pennsylvania 248 8.5 1,390,317 6.5 New York 145 5 .0 2,766,251 12. 9 Ohio 136 4.6 357,958 1.7 Michigan 127 4.3 471,665 2.2 North Carolina 127 4.3 471,353 2.2 Missouri 126 4.3 402,971 1.9 Washington 122 4.2 309,555 1.4 Maine 104 3.6 1,173,913 5.5 All Other States 1791 61.2 14182842 65.9 United States 2,926 100 43, 949,871 100 Source: USDA NASS, 2007 Census of Agriculture, Table 35, Nursery, Greenhouse, Floriculture, Sod, Mushrooms, Vegetable Seeds, and Propagative Materials Grown for Sale.


### Potential Impact on Small Entities

South Korea expects to export one 40

- fo ot shipping container of fresh tomatoes with stems per year to the United States. 1 A shipping container can hold about 25 MT of tomatoes with stems. 2 In 2009, the United States produced 1.47 million MT of tomatoes, U.S. imports reached 1.19 million MT, and U.S. exports were 0.17 million MT (tables 1, 2, and 4). Thus, the total U.S. supply

of tomatoes for this ye ar was approximately 2.49 million MT (production plus

1 USDA

- APHIS

- PPQ Importation of Fresh Tomato Fruit with Stmes (Solanum Iycopersicum L.) (Synonym: Lycopersicon esculentum P. Mill.) from the Republic of Korea into the United States: A Pathway - Initiated Risk Assessment 2 USDA

- APHIS

- PPQimports minus exports). In comparison, the quantity of tomatoes with stems expected to be imported from South Korea, 25 MT, is a negligible amount. U.S. tomato production and trade statistics are for all fresh tomatoes, including ones sold without stems. We do not have information on how the market for tomatoes with stems may differ from the market for tomatoes generally . Notwithstanding any significant distinctions between the markets for tomatoes with and without stems, we do not foresee this rule resulting in significant effects for U.S. tomato producers, large or small. We also note th at the average price of tomatoes exported from South Korea in 2009 was $2,447 per MT, compared to an average price of U.S. tomato imports of less than half that amount , $1,180 per MT

. 3 This large price difference implies that tomato imports from South Korea may

not be widel y competitive in the United States; South Korean exporters may intend to target U.S. specialty vegetable markets or certain ethnic consumer groups with preference for Korean tomatoes with stems if they expect to earn prices comparable to South Korea’s average 2009 export price level. Farms producing tomatoes in open fields are classified within the North American Industry Classification System under “Other vegetable (except potato) and melon farming” (NAICS 111219). 4 Farms producing tom atoes in greenhouses are classified under “Other food crops grown under cover” (NAICS 111419). 5 For both industry classifications, a business is considered to be a small entity if its annual receipts are not more than $750,000. 6 The average market value of crops sold b y farms classified within “Other vegetable (except potato) and melon farming” in 2007 was $312,333. 7 We infer that the majority of farms producing tomatoes in open fields are small. The average market value of crops sold by farms classifie d within “Food crops grown under cover” (NAICS 11141) in 2007 was $758,687. 8 We infer that at least some farms producing tomatoes in greenhouses are small entities.

3 U.S. Census Bureau, as reported in the Global Trade Atlas. 4 http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf 5 Ibid. 6 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 7 200 7 Census of Agriculture , Table 46. Selected Characteristics of Farms by North American Industry Classification System: 2007 , http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_1_US/st99_1_046_046.pdf 8 Ibid. The classification NAICS 11141 includes mushroom production (NAICS 111411).For field tomato operations, the prominence of small

- entity enterprises is substantiated by 2007 Census of Agriculture data on the size distribution of field tomato operations (table 7): 68 percent of farms grew less than one acre of tomatoes. For greenhouse

- grown tomato es , only the total number of farms (2,926 farms) and the area of prod uction ( about 44 million square feet) are reported

.

Table 7 . Size distribution of field tomato operations , 2007 Total Harvested Total Farms Percent of

Total Farms Acres Percent of acreage 0.1 to 0.9 acres 17,536 68% 4,721 1% 1.0 to 4.9 acres 6,251 2 4% 10,467 2% 5.0 to 14.9 acres 856 3% 6,276 1% 15.0 to 24.9 acres 182 1% 3,304 1% 25.0 to 49.9 acres 170 1% 5,904 1% 50.0 to 99.9 acres 133 1% 9,207 2% 100.0 to 249.9 acres 240 1% 38,738 9% 250.0 to 499.9 acres 221 1% 76,591 17% 500.0 to 749.9 acres 88 0% 53,361 12% 750.0 to 999.9 acres 35 0% 29,522 7% 1,000.0 acres or more 97 0% 204,135 46% United States 25,809 100% 442,225 100% Source: USDA NASS, 2007 Census of Agriculture, Table 34, Vegetables, Potatoes, and Melons Harvested for Sale.

The 200 7 Census of Agriculture also contains data on certain sub

- categories of tomato operations , namel y, small family farms and farms having operators who belong to sociall y disadvantaged groups. 9 S mall family farm s have gross farm cash income of less than $ 250 ,000

. Categories of sociall y disadvantaged groups are women , and persons of Hispanic origin , American Indian or Alaska Native , Asian , African American , and Native Hawaiian or other Pacific. A tomato grower may qualify as a small family

farm and also be c ounted among those for which one or more of the operators belong to a socially disadvantaged group. Table 8 shows that among the 25 , 809 farms that grew field tomatoes, 22,522 (87 percent) were small family

farms. The “residential/lifestyle ” farms comprise d the largest single category

9 For definitions and information, see : USDA ERS. Structure and Finances of U.S. Farms: Family Farm Report, 20 10 edition , EIB

- 66, July 2010

. http://www.ers.usda.gov/Publications/EIB66/EIB66.pdfof small family farms that produced field tomatoes

. Table 8 also shows that among the 2,926 farms that grew greenhouse tomatoes, 2,406 (82 percent) were small family farms. The “ farming occupation/lower sales ” farms were the largest single category of small family

farms that produced greenhouse tomatoes

.

Table 8 . Number and percentage of small famil y farms that produced field and greenhouse tomato es , 2007 Limited Resource Farms Retirement

Farms Residential/

Lifestyle Farms Farming

Occupation/ Lo wer Sales Farming

Occupation/ Higher Sales Total of

Small Family Farms Total

Tomato Farms Field Tomato Farms Number of

Farms 4,443 5,017 6,996 4,850 1,216 22,522 25,809 Percentage 17% 19% 27% 19% 5% 87% 100% Greenhouse Tomato Far ms Number of

Farms 421 276 587 736 386 2,406 2,926 Percentage 14% 9% 20% 25% 13% 82% 100% Source: USDA NASS, 2007 Census of Agriculture.

Table 9 shows the number and percentage of tomato farms that had operators belonging to socially

disadvantaged groups in 2007: 12 percent of field tomato farms had operators belonging to a socially

disadvantaged group based upon ethnicity , and 17 percent had a woman as the principal operator. Of 2,926 greenhouse tomato farms, 7 percent had operators belonging to a so cially

disadvantaged group based upon ethnicity and 20 percent had a woman as the principal operator.

Table 9 . Number and percentage of field and greenhouse tomato farms with operators belonging to a socially disadvantaged group, 2007

Farms where the princi

pal operator is female Farms

where an operator is of 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 Total of Farms

Belonging to Socially Disadvan

taged Groups (Ethnicity Based) All

Farms

Field Tomato Farms Number of

Farms 4,311. 958. 820. 600. 704

. 50. 3,132 25,809 Percentage 17% 4% 3% 2% 3% 0% 12% 100%Greenhouse Tomato Farms Number of

Farms 588 72 46 49 17 6 190 2,926 Percentage 20% 2% 2% 2% 1% 0% 7% 100% Source: USDA NASS, 2007 Census of Agriculture.

As observed for both field and greenh ouse tomato farms, most are small family farms and some have operators who belong to sociall y disadvantaged groups. Economic effects of the rule for these farms are not expected to differ from the effects for tomato farms generall y, that is, w e do not exp ect the rule to have any noticeable impact on U.S. tomato growers regardless of the size of operation or operator ’s classification. The Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a signifi cant economic impact on a subst antial number of small entities.

### References

Census of Agriculture, 2007, http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp
Global Trade Atlas. Retrieved (2010, July 1) , http://www.gtis.com/gta/default.cfm
U.S. Small Business Administration. U.S. Small Business Administration: Table of Small Business Size Standards Match to North American Industry Classification System http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf
USDA Economic Research Servic e: U.S. Tomato Statistics (92010), 2010, http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1210