### United States

Department of Agriculture Anim al and Plant Health Inspection Service June 2013 **Final Regulatory Flexibility Analysis**

**Final Rule**  **APHIS -**  **2011 -**  **0060 RIN 0579**  **- 0401**  **Importation of Fresh Citrus Fruit from Uruguay,**  **i ncluding Citrus Hybrids and**  **Fortunella spp.,**  **i nto the Continental United**  **States**

Policy & Program Development Policy Analysis & Developmenti



### Summary
APHI S is amending the fruits and vegetables regulations to allow the importation of several varieties of fresh citrus fruit, as well as Citrus hy brids and the Citrus

- related genus Fortunella , from Uruguay into the continental United States under specified conditions of entry to protect against the introduction of quarantine pests. The United States commercially produces fresh citrus varieties comparable to the varieties Uruguay may export to the United States: oranges, lemons and specialty mandarin varieties of Citrus reticulata , such as tangerines and Satsuma mandarins. U.S. entities that may be impacted by

imports of fresh citrus from Uruguay
are producers and packers of fresh oranges, lemons, tangerines, and mandarin varieties. F resh oranges, including Navel, Valencia, Templ e and other varieties, are produced in California (87 percent), Florida (11 percent), and Texas (2 percent). L emons are produced in California (90 percent) and Arizona (10 percent). Tangerines and mandarins (including tangelos and tangors) are produced i n California (71 percent), Florida (28 percent), and Arizona (1 percent). Louisiana commerciall y produces a variet y of Satsuma that is mostly sold locall y. Effects of the final rule on U.S. entities will depend on the quantity of fresh citrus imported fr om Uruguay

into the continental United States, and the demand for the fruit relative to the demand for the same or similar citrus varieties produced domestically or imported from other countries. We expect the entry of fresh citrus from Uruguay to lead to an increase in the U.S. supply ; the net increase will be determined by the quantit y of citrus varieties imported from Uruguay and the extent to which those imports displace domestic production and imports from elsewhere. A n in crease in supply

will put dow nward pressure on producer prices of affected fresh citrus varieties , generating a loss in producer surplus. Concurrent consumer welfare gain s due toii

lower prices will exceed the producer surplus loss es for a positive net benefit. However, these effects will be small. T otal exports of fresh citrus from Uruguay to world markets are equivalent to less than 3 percent of U.S. production of fresh oranges, lemons, tangerines and mandarins. Only a fraction of Uruguay ’s fresh citrus exp orts is likely to be diverted from established international markets , given the advantages of maintaining and expanding existing market linkages

. The majority

of U.S. citrus producers and packinghouses are small entities. The sy stems approach under which fresh citrus will be imported from Uruguay will safeguard these businesses against the introduction of injurious plant pests.iii

**Table of Contents** Importation of Fresh Citrus Fruit from Uruguay , including Citrus Hy brids and Fortunella spp., into the Continental United States

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

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

................................ ................................ ................................ ......................... 1 Need for and Obj ectives of the Rule

................................ ................................ ................... 1 Significant Issues raised by Public Comment in response to the Initial Regulatory Flexibility

Anal ys is

................................ ................................ ................................ ......................... 2 Comments filed by

the Small Business Administration in response to the Proposed Rule 5 Potentially

Affected Small Entities

................................ ................................ ..................... 5 **U.S. Citrus Production and Trade**

................................ ............................. 6 **Uruguay Citrus Production and Trade**

................................ ................. 13 **Prevalence of U.S. Small Entities**

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

................... 20 Steps taken by

APHI S to minimize Significant Economic Impacts on Small Entities

.... 201



### Introduction Uruguay requested USDA authorization of market access for commercial shipments of its fresh citrus into the continental United States. In response to this request, APHI S prepared a pest risk assessment and a risk management anal ys is, and published a proposed rule on February 6, 2013 (78 FR 8435

- 8441, Docket No. APHIS

- 2011

- 0060) to allow the importation of commercial shipments of fresh citrus from Uruguay

. This final rule will allow the importation of several varieties of fresh citrus fruit, as well as Citrus hy brids and the Citrus

- related genus Fortunella , from Uruguay

into the continental United States under specified conditions of entry to protect against the introduction of quarantine pests. Section 319.56

- 1 of Title 7 of the Code of Federal Regulations (CFR) grant s the regulatory

authorit y for imposing ph yt osanitary requirements on the importation of fruits and vegetables from foreign suppliers. The purpose of this final regulatory flexibility anal ys is is to evaluate the potential effects of the final r ule on smal l businesses, small organizations and small governmental jurisdictions as required b y s ection 604 of the Regulatory Flexibility

Act

. 

### Need for and Objectives of the Rule The national plant protection organization (NPPO) of Uruguay requested of USDA author ization to allow the importation into the continental United States of several varieties of fresh citrus fruit, as well as Citrus hy brids and the Citrus

- related genus Fortunella . APHI S published a proposed measure to allow fresh citrus from Uruguay based on the findings of an assessment of the plant pest risks

. 1 APHI S determined that the current prohibition was

1 USDA APHIS PPQ CPHST, “Importation of Fresh Citrus Fruit, including Sweet Orange ( Citrus sinensis (L .) Osb.), Lemon ( C. limon (L.) Burm .), Mandarin ( C. reticulata Blanco, C. clementina Hort. ex Tan., C. de liciosa Ten.,2

unnecessary given that a ny risks posed to U.S. agriculture b y entr y of these commodities could be successfully

mitigated by a s ys tems approach designed to prevent a number of pests, including fruit flies, from following the pathway

. APHI S is committed, under the International Plant Protection Convention (I PPC) , to consider allowing the importation of plants and plant products subject to the least restrictive measures consistent with ensuring phy tosanitary securit y. The sy stems approach includes provisions for registration of production areas and packinghouses, orchard sanitation, fruit fly trapping, treatment and inspection, an d a phy tosanitary certificate with an additional declaration certify ing the commercial shipment is free from all quarantine pests and has been produced in accordance with the sy stems approach. The objective of the final rule is to amend the current regulations under 7 CFR 319.56 to allow the importation of fresh citrus fruit from Uruguay , including citrus hy brids and Fortunella spp., into the continental United States. This section of the CFR grants regulatory authority for setting ph yt osanitary

requirements for the importation of fruits and vegetables into the United States. 

### Significant Issues **raised by**  **Public Comment in response to**  **the Initial Regulatory Flexibility Analysis**
Public c omments referencing the initial regulatory flexibly anal ys is (the economic anal ys is) received during the comment period for the proposed rule are addressed in this section

. One commenter disagreed with our statement in the economic anal ys is that “any product displacement that may

occur because of the proposed rule wo uld be largel y borne b y other foreign suppliers of fresh citrus.” The commenter stated that because foreign suppliers will not

C. unshiu (Mak.) Marc.), Citrus Hy brids, and the Citrus

- Related Genus Fortunella (F. japonica Thunb. , F. margarita (Lour.) Swing.), from Uruguay into the Continental United States,” February 2011.3

abandon their market share when Uruguay an citrus fruit is imported into the United States, citrus supply will exceed demand, pri ces will fall, and domestic producers will suffer greater economic losses due to higher production cost requirements. We acknowledge the statement in the economic analy sis for the proposed rule may have overstated the extent of possible reductions in market share (product displacement) for current foreign suppliers of fresh citrus to the United States

. U.S. producers may also lose some portion of their market shares . All things equal, product displacement that may occur as a result of fresh citrus imports from Uruguay can be expected to be borne in proportion to domestic and foreign suppliers’ existing market shares. However, consumer preferences are influenced b y factors other than price, such as product origin and quality perceptions. The size and pattern of product displacement will be determined in part b y non - price attributes. Product displacement, if any , will vary by citrus variet y and will be moderated by expanding U.S. demand. During the same period, per capita consumption of fresh orange, mandarin, and lemon varieties increased b y an average of 0.21 percent, 3.42 percent, and 5.25 percent, respectively

. T he entry of fresh citrus from a new source may displace citrus production in the United States, as well as fresh citrus imports from for eign sources like Mexico, Chile, Spain, and others. However, a sizeable displacement of fresh citrus from any source with an existing market share is unlikely given the increase in domestic consumption. Given these considerations , we do not anticipate a significant economic impact associated with fresh citrus from Uruguay

. Under the Plant Protection Act (7 U.S.C. 7701 et. seq.), we have the authority to prohibit or restrict the importation of plants and plant products only when necessary

to prevent the in troduction into or dissemination of plant pests or noxious weeds within the United States. We4

do not have the authorit y to restrict imports solely on the grounds of potential negative economic effects on domestic entities that could result from increased imports. Nevertheless , we find it unlikely that the rule will have a significant economic impact on U.S. fresh citrus market s, given Uruguay ’s recent history

of citrus production and exports

. Total citrus production in Uruguay in 2011 was 270, 367 metric tons, which is less than 3 percent of U.S. production. Uruguay ’s total fresh orange and lemon exports in 2011 were 66 , 007 and 13,8 85 metric tons, respectivel y, which is less than 3
. 2 percent of U.S. production and 1 percent of total world exports of those same fresh varieties. Uruguay

exported 3 7 , 542 metric tons of fresh mandarin varieties in 2011, which is approximately

8 percent of U.S. production and less than 1 percent of total world exports of fresh tangerine varieties. Only a fraction of Uruguay ’s fresh citrus exports are likel y to be diverted from established markets to the United States , particularly in the near term , given the advantages of maintaining and expanding its existing market linkages

. The commenter also stated that USDA has argued in p revious import proposals that domestic production would be unaffected because the majority of domestic tonnage is harvested in the fall, winter, and spring months and would be unaffected b y so - called “counter

- seasonal” imports. The commenter stated that th is argument is invalid due to the y ear - round marketing of citrus harvested domestically . The economic anal ysis made available with the proposed rule does not claim that counter
- seasonal effects will reduce the impact on U.S. producers , nor does this
econom ic analy sis. Another commenter disagreed with our determination that the rule is “not significant” with regard to its economic effects on domestic growers of citrus. The commenter acknowledged that our use of the term “significant” is based on Executive O rder 12866, which defines a significant regulatory action as one having an annual effect on the econom y of $1005

million or more, but asked us to not to view the significance of potential economic impacts of the proposed rule using that definition. The com menter explained that the term “significant” is understood differently

by producers in the U. S. citrus industry

. We are making no changes in response to the comment. Executive Order 12866 gives the Office of Management and Budget the authority to revie w regulations from Federal agencies and determine their economic significance based on the use of that term within the order. 

### Comments filed **by the Small Business Administration in response to the**  **Proposed Rule** There were no comments filed by the Small Bu siness Administration in response to the initial regulatory

flexibility

analy sis. 

### Potentially **Affected Small Entities**  The United States commerciall y produces fresh citrus varieties comparable to the varieties Uruguay

may export to the United States: oranges, lemons and specialt y mandarin varieties of Citrus reticulata , such as tangerines and Satsuma mandarins. F resh oran ges, including Navel, Valencia, Temple and other varieties, are produced in California (87 percent), Florida (11 percent), and Texas (2 percent). L emons are produced in California (9 0 percent) and Arizona ( 10 percent). Tangerines and mandarins (including tangelos and tangors) are produced in California (71 percent), Florida (28 percent), and Arizona (1 percent). Louisiana commerciall y produces a variet y of Satsuma that is mostly sold locall y. Effects of the final rule on U.S. entities will depend on the quantity of fresh citrus imported from Uruguay

into the continental United States, and the demand for the fruit relative to the demand for the same or similar citrus varieties produced domestically or imported from other countries. We expect the entry of fresh citrus from Uruguay to lead to an increase in the6

U.S. supply ; the net increase will be determined by the quantity

of citrus varieties imported from Uruguay and the extent to which those imports displace domestic production and imports from elsewher e. An increase in supply

will put downward pressure on producer prices of affected fresh citrus varieties, generating a loss in producer surplus. Concurrent consumer welfare gains due to lower prices will exceed the producer surplus losses for a positive net benefit. However, these effects will be small. T otal exports of fresh citrus from Uruguay to world markets are equivalent to less than 3 percent of U.S. production of fresh oranges, lemons, tangerines and mandarins. Only a fraction of Uruguay ’s fres h citrus exports is likely to be diverted from established international markets. We present here data on U.S. fresh orange, lemon, tangerine and mandarin production , trade, and consumption before describing potentially affected small entities.
**U.S. Citrus**  **Production and Trade** Fresh Oranges The United States is traditionally a net exporter of fresh oranges. U.S. fresh orange production, net imports, and domestic supply , 2005

- 06 to 2011

- 12, are shown in table 1. In the 201 1

- 12 season, 2 the United States imported 248.7 million pounds of fresh oranges, primarily from Chile ( 42 percent), South Africa (3 3 percent), Mexico (12.8 percent), and Australia ( 9.5 percent). During the same season , the United States exported approximately 1, 530.8 m illion pounds of fresh oranges. South Korea was the largest importer of U.S. fresh oranges , 3

2 Season is year ending July 31 st

. 3 Surpassing Canada as the leading importer of fresh oranges.7

accounting for approximately 26 percent of U.S. exports, followed by Canada ( 20 percent), Japan (15 percent), Hong Kong (1 2 percent), and China (7 percent)

. 4 Ta ble 1. U.S. Fresh Orange Production, Net Imports, and Domestic Supply , Seasons 2005

- 06 through 20 11

- 12 Season Production a Imports Exports Net Imports b Domestic Supply

c

------------ million pounds

------------ 2005

- 06 4,104.0 158.2 1,198.1 (1,039.8) 3,064.2 2006

- 07 2,754.0 256.5 757.8 (501.3) 2,252.7 2007

- 08 4,208.0 169.6 1,350.9 (1,181.3) 3,026.7 2008

- 09 3,674.0 198.1 1,086.7 (888.6) 2,785.4 2009

- 10 4,242.9 233.4 1,476.8 (1,243.4) 2,999.5 2010

- 11 4,540.8 224.0 1,654.0 (1,430.0) 3,110.8 2011

- 12 d 4,634.9 248.7 1,530.8 (1,282.1) 3,352.9 Source: USDA Economic Research Service. a Excludes processed fruit. b Net imports equals imports minus exports c U.S. production (excluding processed utilization) plus net imports. d Preliminary estimate. About 67 percent of U.S. fresh orange production was consumed domestically in the 2011

- 12 season
. 5 While fresh utilization of oranges accounts for onl y 4 percent of total orange production in Florida, fresh utilization of California and Texas production accounts, on average, for 84 and 8 9 percent, respectivel y, of total production each season. 6 U.S. grower revenue from fresh orange production in 2011

- 12 was approximately $ 860.9 million. 7 Im ports average approximately 7 percent of domestic supply each season. U.S. per capita consumption of fresh oranges and temples for the last decade is illustrated in f igure 1. The available data show fluctuat ions year to year. Fresh orange consumption has remained

4 U.S. Census Bureau, as reported by Global Trade Information Services, Inc. 5 The proportion of U.S. fresh orange production consumed domestically is the ratio of utilized fresh production less e xports divided by utilized fresh production

. Data Source: USDA ERS Briefing Room, Fruit and Tree Nut Yearbook , 2010. 6 Fresh utilization refers to the proportion of total fruit sold and/or consumed as fresh citrus. The remainder is considered to be utilized on the processed market. 7 National Agricultural Statistics Service (NASS), USDA, “Citrus Fruits 201 2 Summary,” Sep tem ber 201 2
.8

relatively flat over the last decade in developed countries largely due to competition from easy - peel citrus varieties, such as tangerines and other fresh fruits , and increased orange juice consumption

.

Figure 1
. U.S. per capita consumption of fresh oranges and temples for seasons 2002

- 03 through 2011

- 12. Source: USDA/Economic Research Service. Data last updated Feb. 1, 2012. *2011

- 12 preliminary estimates

. According to 2007 Census of Agriculture data, there were a total of 12,116 orange produc ers in the United States in 2007, of which 11,573 were located within the continental United States. 8 The remaining 543 orange produc ers were located in Hawaii. The majority of entities producing orange varieties are in Florida and California , with 5,561 and 5,254 operations, respectivel y. Texas and Arizona had 458 and 163 entities, respectivel y, that produced orange varieties.

8 The number of orange farms in the United States, as reported by the 2007 Census of Agriculture , includes operations that produced oranges for processed utilization ; in Florida, the majority of oranges are processed

.

11.9 10.80 11.42 10.25 7.46 9.93 9.06 9.67 9.94 10.71

0 2 4 6 8 10 12 14**p o** **u n** **d s** **p e** **r c** **a p** **i t** **a**

**Crop Year**



## Fr **esh Or ang**  **es & T**

**emples U.S. Per Capita Consumption** 9

Fresh Tangerines and Mandarins The United States is a net importer of fresh mandarins (including Satsumas and tangerines), Clementines and other citrus h ybrids . U.S. fresh tangerine production, net imports, and domestic supply

are shown in table 2 . In 201 1 , the United States imported 2 99
. 5 million pounds of mandarins (incl uding Satsumas and tangerines), Clementines, and other citrus h ybrids with approximately

3 7 percent, 31 percent, 1 2 percent, and 10 percent arriving from Chile , Spain , Peru , and Morocco , respectivel y. That same y ear, the United States exported approximate ly 80.7 million pounds of mandarins (including Satsumas and tangerines). Canada is the largest importer of U.S. fresh mandarins, accounting for 4 7 percent of U.S. exports. The second largest importer of U.S. mandarin varieties is Japan, accounting for ap proximately 35 percent. 9

9 U.S. Census Bureau, as reported by Global Trade Information Services, Inc.10

Table 2 . U.S. Fresh Tangerine Production, Net Imports, and Domestic Supply , Seasons 2005

- 06 through 2011

- 12. Season Production a Imports Exports Net Imports Domestic Supply

b

------------ million pounds

------------ 2005

- 06 621.0 226.5 46.3 180.2 803.5 2006

- 07 540.2 266.8 35.3 231.5 771.7 2007

- 08 793.7 213.0 70.5 142.5 936.3 2008

- 09 745.8 288.9 65.0 223.9 969.7 2009

- 10 959.8 282.8 17.1 265.7 1,225.5 2010

- 11 1,068.2 329.0 113.6 215.4 1,283.6 2011

- 12 d 1,070.5 299.5 80.7 218.8 1,289.4 Data Source: USDA ERS Briefing Room, Fruit and Tree Nut Yearbook , 2010. a Excludes processed fruit. b Net imports equals imports minus exports. c U.S. production (excluding processed utilization) plus net imports. d Preliminary estimate.
About 92 percent of U.S. fresh mandarin production was consumed domestically in 201 1
. 10 The United States relies on imports of tangerines and mandarins to supplement domestic production in satisfy ing domestic demand. U.S. mandarin and tangerine production is primarily sold as fresh fruit with fresh utilization accounting, on average, for 7 6 percent of the total production . U.S. grower revenue from fresh tangerine production in 20 11

- 12 was approximately $ 336.2 million. 11 Imports average approximately 25 percent of domestic supply each season. U.S. per capita consumption of fresh tangerines and tangelos over the last decade is illustrated in f

igure 2. Over the last decade, per capita consumption of fresh tangerines and tangelos in the United States grew at an annual rate of 3.31 percent. The easy - peel, seedless varieties of fresh mandarin, s uch as tangerines and clementines, are particularly appeal ing to consumers.

10 The proportion of U.S. fresh mandarin production consumed domestically i s the ratio of utilized fresh production less exports divided by utilized fresh production . Data Source: Foreign Agricultural Service, Production, Supply, and Distribution Online. 11 National Agricultural Statistics Service (NASS), USDA, “Citrus Fruits 201 2 Summary,” September 201 2
.11

Figure 2 . U.S. per capita consumption of fresh tangerines and tangelos for seasons 2002

- 03 through 2011

- 12
. Source: USDA/Economic Research Service. Data last updated Feb. 1, 2012. *2011

- 12 preliminary estimates

. According to 2007 Census of Agriculture data, there were a total of 1,976 tangerine operations in the United States in 2007, of which 1,676 were located within the continental United States. 12 The remaining 300 tangerine operations were located in Hawaii **.** The majorit y of entities producing tangerine varieties are in Florida and California with 839 and 706 operations, respectivel y. Texas and Arizona had 59 and 36 entities, respectivel y, that produced tangerine varieties. Fresh Lemons The United States is a net exporter of fresh lemons. U.S. fresh lemon production, net imports, and domestic supply are shown in table 3 . In the 2011

- 12 season, the United States imported 126.6 million pounds of fresh lemons, with nearly 60 percent supplied by

Mexico and

12 The number of tangerine farms in the United States, as reported by the 2007 C ensus of Agriculture , includes operations that produced tangerines for process ing

.

2.72 2.77 2.50 2.69 2.57 3.08 3.17 3.97 4.13 3.41

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50**p o** **u n** **d s** **p e** **r c** **a p** **i t** **a**

**Crop Year**



## Fr **esh T ang**  **erine & T**

**ang elo**  **U.S. Per Capita Consumption**12

35 percent from Chile. That same season, the United States exported approximately 201.5 million pounds of fresh lemons. Japan and C anada are the largest importers of U.S. fresh lemons, accounting for approximately 40.3 and 32.5 percent of U.S. exports, respectivel y. 13 Table 3 . U.S. Fresh Lemon Production, Net I mports, and Domestic Supply, Seasons 2005

- 06 through 2011

- 12. Season Pr oduction a Imports Exports Net Imports b Domestic Supply

c

------------ million pounds

------------ 2005

- 06 1,372.1 82.7 220.4 (137.7) 1,234.4 2006

- 07 980.0 122.4 258.5 (136.1) 843.9 2007

- 08 789.0 146.4 338.5 (192.1) 596.9 2008

- 09 1064.0 91.9 199.9 (108.0) 956.0 2009

- 10 968.0 92.4 199.0 (106.6) 861.3 2010

- 11 1,202.0 94.8 220.1 (125.2) 1076.8 2011

- 12 1,310.0 126.6 201.5 (74.9) 1,235.1 Data Source: USDA ERS Briefing Room, Fruit and Tree Nut Yearbook , 2010. a Excludes processed fruit. b Net imports equals imports minus exports c U.S. production (excluding processed utilization) plus net imports. About 8 5 percent of U.S. fresh lemon production was consumed domestically in 201 1
. 14 U.S. imports of fresh lemons serve to supplement domestic production to meet domestic demand. Depending on the season, f resh utilization of U.S. lemon production can account for , on average, between one - half and three

- fourths of total production , with the remaining fruit being processed

. U.S. grower revenue from total lemon production in 20 11

- 1 2 was approximately $ 448
. 7 million. 15 Imports average approximately 10 percent of domestic supply each season. U.S. per capita consumption of fresh lemons for the last decade is illustrated in f igure 3. Over the last decade, per capita consumption of fresh lemons in the United States fluctuated y ear to

13 U.S. Census Bureau, as reported by Global Trade Information Services, Inc. 14 The proportion of U.S. fresh lem on production consumed domestically is the ratio of utilize d fresh production less exports divided utilized fresh production

. Data Source: USDA ERS Briefing Room, Fruit and Tree Nut Yearbook , 2010. 15 National Agricultural Statistics Service (NASS), USDA, “Citrus Fruits 201 2 Summary,” September 201 2
.13

ye ar while growing at an average annual rate of 5.83 percent, with a 2005

- 06 peak season of 4.15 pounds per capita.

Figure 3 . U.S. per capita consumption of fresh lemons for seasons 2002

- 03 through 2011

- 12. Source: USDA/Economic Research Service. Data last updated Feb. 1, 2012 *2011

- 12 preliminary estimates

. According to 2007 Census of Agriculture data, there were a total of 2,607 lemon operations in the United States in 2007, of which 2,201 were located within the continental United States. 16 The remaining 406 lemon operations were loc ated in Hawaii. The major lemon producing states are California and Arizona with 1,880 and 172 operations, respectivel y. **Uruguay Citrus Production and Trade** Uruguay is an emergent producer and exporter of fresh citrus on the world market , ranking in the t op 20 countries of fresh citrus exports . Of its fresh citrus produc tion , Uruguay primarily exports oranges, mandarins, lemons, and some grapefruit. Among its top export

16 The number of lemon farms in the United States, as reported by the 2007 Census of Agriculture , includes operations that produced lem ons for process ing

.

3.33 3.12 2.95 4.15

2.81 1.97 3.12 2.79 3.46 3.94

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50**p o** **u n** **d s** **p e** **r c** **a p** **i t** **a**

**Crop Year**



## Fr **esh Lemons U.S. Per Capita Consumption** 14

markets are Netherlands, United Kingdom, Spain, Brazil, Russia, I taly , Saudi Arabia, Portugal, and Canada. Uruguay ’s Union of Fruit and Vegetable Growers and Exporters (UPEFRUY) international department has indicated an intention to export mandarins (primarily of the clementine variety) as well as some oranges to the continental United St ates by late 2013 , with publication of the final rule. Oranges from Uruguay Uruguay is a net exporter of fresh oranges. U ruguay fresh orange production, net imports, and domestic supply from 2005 to 2011, are shown in table 4 . In 201 0, Uruguay imported 1.2 million pounds of fresh oranges while exporting approximately 162.7 million pounds. 17 The Netherlands was the largest importer of fresh oranges from Uruguay , accounting for approximately 36 percent of exports, followed by Spain ( 27 percent), Brazil (9 percent), Ital y ( 6 percent), and United Kingdom (5 percent)

. 18 About 45 percent of fresh orange production was consumed domesticall y in 2010
. 19 Table 4. Uruguay

Fresh Orange Production, Net Imports, and Domestic Supply , 2005 through 2011. Year Production a Imports Exports Net Imports b Domestic Supply

c

------------ million pounds

------------ 2005 389.1 0.0 213.3 (213.3) 175.8 2006 304.9 0.6 173.5 (172.9) 132.0 2007 410.7 1.3 183.8 (182.5) 228.2 2008 284.2 0.1 156.1 (156.0) 128.2 2009 286.8 1.2 162.7 (161.4) 125.4 2010 340.0 1.2 186.3 (185.1) 154.9 2011 d 298.0 145.5 Source: FAOST AT a Includes processed fruit and limes. b Net imports equals imports minus exports

17 Data source: FAOSTAT 18 Central Bank, as reported by Global Trade Information Services, Inc. Ranking of export markets for fresh citrus varies each year. 19 The proportion of fresh orange production consumed domestically is the ratio of dom estic supply less imports divided by production.15 c Production plus net imports. d Data incomplete. Source of export data from Central Bank via Global Trade Atlas. Tangerines from Uruguay Uruguay is a net exporter of fresh mandarin varieties . U ruguay fresh mandarin production, net imports, and domestic supply from 2005 to 2011, are shown in table 5
. In 201 0, Uruguay imported 400,000 pounds of fresh mandarin varieties while exporting approximately 107.6 million pounds. 20 The United Kingdom was the largest importer of fresh mandarin varieties from Uruguay , accounting for approximately 28 percent of exp orts, followed by Netherlands ( 26 percent), Brazil ( 8 percent), and Canada (5 percent) , and Russia (4 percent)

. 21 About 60 percent of fresh mandarin production was consumed domestically in 2010
. 22 Table 5. Uruguay

Fresh Mandarin Production, Net Imports, and Domestic Supply , 2005 through 2011. Year Production a Imports Exports Net Imports b Domestic Supply

c

------------ million pounds

------------ 2005 208.1 0.0 99.0 (99.0) 109.1 2006 194.5 0.3 89.7 (89.4) 105.1 2007 259.4 0.0 102.7 (102.7) 156.7 2008 195.0 0.1 85.7 (85.6) 109.4 2009 204.5 0.7 92.8 (92.2) 112.4 2010 267.8 0.4 107.6 (107.2) 160.5 2011 d 205.9 82.8 Source: FAOST AT a Includes processed fruit and limes. b Net imports equals imports minus exports c Production plus net imports. d Data incomplete. Source of export data from Central Bank via Global Trade Atlas. Lemons from Uruguay Uruguay is a net exporter of fresh lemons . U ruguay fresh lemon production, net imports, and domestic supply from 2005 to 2011, are shown in table 6 . In 201 0, Uruguay imported

20 Data source: FAOSTAT 21 Central Bank, as reported by Global Trad e Information Services, Inc. Ranking of export markets for fresh citrus varies each year. 22 The proportion of ma ndarin production consumed domestically is the ratio of dom estic supply less im ports divided production.16

800,000 pounds of fresh lemons while exporting approximately 33.8 million pounds. 23 The Netherlands was the largest importer of fresh lemons from Uruguay , accounting for approximately 23 percent of exports, followed by Saudi Arabia ( 15 percent), Spain (15 percent), United Kingdom (11 percent), and It al y ( 8 percent). 24 About 59 percent of fresh mandarin production was consumed domestically in 2010
. 25 Table 6. Uruguay

Fresh Lemon Production, Net Imports, and Domestic Supply , 2005 th rough 2011. Year Production a Imports Exports Net Imports b Domestic Supply

c

------------ million pounds

------------ 2005 101.4 0.4 35.1 (34.6) 66.8 2006 94.5 0.3 31.6 (31.3) 63.2 2007 83.1 0.3 30.4 (30.0) 53.0 2008 72.8 0.5 32.6 (32.1) 40.7 2009 92.6 0.7 30.6 (29.9) 62.7 2010 83.0 0.8 33.8 (33.0) 50.0 2011 d 84.2 30.6 Source: FAOST AT a Includes processed fruit and limes. b Net imports equals imports minus exports c Production plus net imports. d Data incomplete. Source of export data from Central Bank via Global Trade Atlas. We anticipate that exports directed to the U.S. domestic market will be a small fraction of Uruguay ’s total exports of these fresh citrus fruits based on availabilit y and currentl y establishe d export markets in Europe and Russia. Given the small quantity expected to be imported from Uruguay , it is very

unlikely that there will be a significant impact on the U.S. markets for fresh oranges, lemons, tangerines and mandarin varieties. Given the sizable amounts of fresh lemons and mandarins, for example, imported by the United States, we anticipate that any product displacement that may

occur as a result of fresh citrus imports from Uruguay can be expected to

23 Data source: FAOSTAT 24 Central Bank, as reported by Global Trade Information Services, Inc. Ranking of export markets for fresh citrus varies each year. 25 The proportion of lem on production consumed domestically is the ratio of domestic supply less im ports divided by production.17

be borne in proportion to domestic and foreign suppliers’ existing market shares. Additionall y, consumer preferences are influenced b y factors other than price, such as product origin and quality perceptions. The amount and pattern of product displacement will be determined in part by non - pr ice attributes. Product displacement, if any , will vary by citrus variet y and will be moderated b y expanding U.S. demand. In the long run, expansion of Uruguay an production could lead to increased ex ports to the United States

. However, foreign and domestic suppliers alike are price sensitive. We anticipate exports from Uruguay

to the United States will increase market suppl y b y less than 3 percent in the near term , given Uruguay’s production capacity and its currentl y established export markets. On ly a fraction of Uruguay ’s fresh citrus exports are likel y to be diverted from established markets to the United States, particularl y in the near term. Given the small quantity expected to be imported from Uruguay , it is very unlikel y that there will be a significant impact on the U.S. markets for these varieties.
**Prevalence of U.S.**  **Small Entities** The final rule may

affect domestic producers of fresh citrus, as well as firms responsible for packing and shipping these commodities to domestic and foreign markets. Citrus producers that may be affected are expected to be small, based on 2007 Census of Agriculture data and Small Business Administration (SBA) small

- entity standards for entities classified within the farm categories of Orange Groves (NAICS 1 11310) and Citrus (except Orange) Groves (NAI CS 111320). SBA classifies producers in these categories with total annual sales of not more than $750,000 as small entities. APHI S does not have information on the size distribution of U.S. citrus producers, but according to 2007 Census of Agriculture , there were a total of 98,281 Fruit and Tree Nut farms18

(NAICS 1113) in the United States in 2007. 26 Of this number, nearl y 94 percent had annual sales in 2007 of less than $500,000, which is well below the SBA’s small

- entity threshold of $750,000. 27 According to the 2007 Census of Agriculture Summary and State Data report, that y ear there were a tota l of 15,658 citrus farms in the United States. We describe the prevalence of small farms among citrus producers using the example of U.S. lemon production. In 2007, there were 2,607 lemon farms (79 percent in California and Arizona, and the remaining in Florida, Hawaii, Louisiana, and Texas). 28 There is little evidence to suggest that many of these producers operate on a large scale. For example, there were 49 lemon farms in Florida, according to the 2002 Census of Agriculture

. 29 During that same ye ar, F lorida reported the total value of Florida lemons at approximately

$2.1 million, with bearing acreage estimated at 800 acres, y ielding average revenues per farm of less than $43,000. 30 (The Florida Agricultural Statistic Service discontinued lemon estimate s after the 2002

- 03 season; however, the 2007 Census of Agriculture Summary and State Data report indicates a 22 percent increase in lemon farms from 2002 to 2007, when lemon farms numbered 60 .) While cash receipts by

size for lemon farms were not reported in the 2007 Census of Agriculture , it is reasonable to assume that most of the 2,607 domestic lemon farms qualify as small entities. This conclusion holds as well for the producers of the other citrus species and varieties.

26 Thi s number includes farms producing citrus and those specifically producing lemons. 27 Source: SBA and 2007 Census of Agriculture

. 28 National Agricultural Statistics Service (NASS), United States Department of Agriculture (USDA), “United States: Summary and State Data, Volume 1” 2007 Census of Agriculture , Issued February 2009. 29 National Agricultural Statistics Service (NASS), United States Department of Agriculture (USDA), “United States: Summary and State Data, Volume 1” 2002 Census of Agriculture , Issued June 2004. 30 Florida Agricultural Statistic Service (FASS), National Agricultural Statistics Service (NASS), United States Departm ent of Agriculture (USDA), “Citrus Summary 2006

- 07,” February 2008.19

In the case of packinghouses, establishments engaged in Postharvest Crop Activities (NAICS 115114) are also predominantly small. The SBA small

- entit y standard for packinghouses is $6.5 million or less in annual receipts. InFlorida, there were at least 142 packinghouses registered in 2007. 31 While the classification of these establishments by sales volume is not available, it is estimated that approximately 35 of the 142 registered packinghouses are large commercial citrus packinghouses with the remainder being small establishments known as gift packers in Florida. The Fresh Shippers Report, issued by Florida’s Citrus Administrative Committee, details quantities of fresh citrus shipments of the top 35 to 50 shippers of eac h season. 32 At least 95 percent of Florida fresh citrus shipments are packed b y the top 35 to 50 packinghouses in the State. 33 During the 201 1

- 1 2 citrus season, annual sales for at least 30 of the top 44 shippers ( 68 percent) were below the SBA size stand ard of $6.5 million. It is estimated that at least 85 percent of Florida’s citrus packers, including small gift packers, are small according to the SBA size standard. In 2010, there were 74 packinghouses in California. 34 Approximately 60 percent of these packinghouses market the final product through such cooperatives as Sunkist Growers, Inc., the Central California Orange Growers Cooperative, and DNE World Fruit Sales. 35 The remaining packinghouses market their final product independently . We do not hav e a definitive number of

31 Florida Department of Agriculture and Consumer Services, Division of Fruit & Vegetable Inspection. <http://www.doacs.state.fl.us/fruits> 32 “Fresh Shippers Report: 201 1

- 1 2 Season Through July 31, 201 2 ,” Citrus Administrative Committee, August 1 0 , 201 2 . <http://www.citrusadministrativecommittee.org/> 33 Ibid. 34 California Citrus Mutual Report to the CDFA Board

- June 30, 2010. Bob Blakely, Director of Industry Relations. <http://www.califo rniacitrusmutual.com/pdf/CDFA_Board_Report_6302010.pdf > Date accessed: September 9, 2011. 35 United States International Trade Commission (USITC), “Conditions of Competition for Certain Oranges and Lemons in the U.S. Fresh Market, Inv 332

- 469,” Publicati on 3863, Washington, D.C., July 2006.20

small

- entity

packinghouses that may

be affected by

this rule, and did not receive public comment on their number and size. We did receive undocumented comment that the California summer orange harvest ha d been reduced b y 50 percent due to imports in recent y ears , which then resulted in idle packing houses and lost jobs for the workers associated with the packinghouses. 

### Projected Reporting, Recordkeeping, and **Other Compliance**  **Requirement s**  Reporting and recordkeeping requirements a ssociated with the final rule are discussed in the rule under the heading "Paperwork Reduction Act." 

### Steps taken by APHIS to minimize Significant Economic **Impact s**  **on Small Entities** Based on our review of available information, including the potential mark et share for Uruguay fresh citrus on the domestic market, APH IS does not expect the 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. We are allow ing the importation of several varieties of citrus fruit from Uruguay into the continental United States when produced, handled, and shipped under a s ys tems approach to mitigate risks posed b y plant pests

. The sy stems approach include s requirements for the importation of commercial consignments ; the submission by the Uruguay an national plant protection organization of a workplan to APHI S that details the activities that the Uruguay an national plant protection organization will carr y out , subject to approval by APHI S , to meet the requirements ; orchard sanitation and packinghouse procedures designed to exclude the quarantine pests ; and treatment requirements

. The fruit will be required to be accompanied b y a phy tosanitary certificate issued by

the national plant protection organization of Uruguay with an21

additional declaration confirming that the fruit is free from all quarantine pests and was produced in accordance with the sy stems approach. This action will allow for the importation of several varieties of fresh citrus fruit, including Citrus hy brids and the Citrus

- related genus Fortunella , from Uruguay

while continuing to provide protection against the introduction of inj urious plant pests into the United States.