### Final Regulatory Flexibility Analysis

Final Rule Importation of Litchi and Longan from Vietnam into the

Continental United States APHIS 2010 - 0116

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

February 2012i



### Summary

The Anim al and Plant Health Inspection Service (APHIS) is amending the fruits and vegetable s regulations to allow the importation of litchi and longan fruit from Vietnam into the
continental United States (excluding Florida) , in response to a request from t he nati onal plant protection organization of Vietnam

. In the United States, these two fruits are commercially produced in Florida and to a lesser extent in Hawaii. Production in California is still largely in the development al stage. Annual U.S. production vol umes in 2008 were about 535 metric tons (MT) for litchi and 776 MT for longan

. V irtually all U.S. f arms that grow litchi and longan are believed to be small entities based on the Small Business Administration (SBA) standard of annual receipts of not more than $750,000

. Our review of available information suggests that the rule may have a negative economic impact on longan growers and, to a lesser extent, on litchi growers, particularly when the fruit is sold in Asian and Hispanic markets where the demand f or produce tends to be more price

sensitive . The annual quantities of litchi and longan that Vietnam expects to export to the United States, namely, 600 MT and 1,200 MT, respectively, would be equivalent to about 17 percent
and 69 percent , respectively, o f average annual U.S. import s for these two fruits , 2007

- 2010

. N egative impacts for U.S. producers will be moderated to the extent that imports from Vietnam displace imports from other foreign sources. Widely r ang ing prices for litchi and longan among
U. S. markets and consumers’ varying purchasing criteria with regard to price and quality may indicate opportunities for domestic growers to alleviate negative effects of increased foreign competition through alternative marketing arrangements or marketing ch annel s
.ii



### Table of Contents Summary

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

................................ ................................ ................................ ................................ ..... 3
Production and Tra de of Litchi and Longan

................................ ................................ ................... 2

U.S. Production

................................ ................................ ................................ ............... 2

Florida

................................ ................................ ................................ ......................... 3
Hawaii

................................ ................................ ................................ ......................... 5
California

................................ ................................ ................................ .................... 6

World Production and Trade

................................ ................................ ........................... 6 Vietnam Production and Export s
................................ ................................ ................ 7 Imports of Litchi and Longan by the United States

................................ .................... 9 Need for and Objectives of the Rule

................................ ................................ ............................. 10 Significant Issues Raised by Public Comment in Response to the Initial Regulatory Flexibility Analysis

................................ ................................ ................................ ................................ ......... 11 Comments Filed by the Chief Counsel for Advocacy of the Sma ll Business Administration in Response to the Proposed Rule

................................ ................................ ................................ ..... 12 Potentially Affected Small Entities

................................ ................................ ............................... 12 Projected Reporting, Recordk eeping, and Other Compliance Requirements

............................... 13 Duplication, Overlap, or Conflict with Existing Rules and Regulations

................................ ...... 13 Steps Taken by APHIS to Minimize Significant Economic Impacts on Small Entities

............... 13iii



### Introduction
The Animal and Plant Health Inspection Service (APHIS) is amending the fruits and vegetables regulations to allow the importation of litc hi and longan fruit from Vietnam into the
continental United States , excluding Florida

. Section 604 of the Regulatory Flexibility Act requires agencies to prepare a final regulatory flexibility analysis (FRFA) that describes expected impacts of a final ru le on small entities , unless the head of the agency certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small
entities. The unavailability of certain statistical data and industry information, es pecially with respect to Florida ’s production and sale of litchi and longan , prevent s consideration of
certification . We have , therefore , prepared this F RFA

. W e consider the potential effects on small entities of allow ing the commercial importation of fresh litchi ( Litchi chinensis Sonn.) and longan ( Dimocarpus longan Lour.) fruit
from Vietnam in to the continental United States , except Florida. To mitigate phytosanitary risks, litchi and longan fruit from Vietnam will be subject to a systems approach s pecified in a new § 319.56

- 60

. 1 Before addressing the F RFA elements , we provide in the following section an overview of production and trade of the two fruits, focusing on U.S. and Vietnam production and expected
U.S. i mports from Vietnam

. We discuss lit chi and longan production in Florida, Hawaii, and California, the three States where litchi and longan are grown, as background for assess ing possible small

- entity effects of the rule.

1 Pest risks associated with the importation of litchi and longan from Vietnam are detailed in a pest risk assessment prepared by APHIS.2



### Production and Trade of Litchi and Longan
Litchi and longan are subtrop ical fruits of the Sapindaceae family and are native to
southern China. Litchi, also known as lichi, lichee, laichi, leechee or lychee, usually has a showy
color of strawberry red, but can sometimes appear rose, pinkish or amber. Its harvesting season
is limited mainly to May and June in the N orthern H emisphere . Longan, also known as lungan or dragon’s eye, is a fruit similar to litchi, but smaller, smoother, yellowish in color , and with
little aroma. Because of these characteristics, longan has been re ferred to as the "little brother of litchi", or li

- chihnu, "slave of litchi.” 2 Compared to litchi’s relatively short season , longan is available year

- round as a result of a n off

- season flower induction method of cultivation

. U.S. Production In the United States, only s outh ern Florida and Hawaii, and to a very limited extent , California, are capable of producing these increasingly popular exotic tropical fruits

. The United States produced approximately 535 metric tons (MT) of litchi and 776 MT of longan in 2008 , 3
which accounted for less than 0. 05 percent of world production of these two fruits

. Within the
United States i n 2008, Florida held the largest combined production acreages of litchi and longan ( about 1 , 600 acres ) , followed by Hawaii ( 6 00 acres ) an d California ( estimated to be from 20 to
60 acres).

2 United Nations, Economic and Social Commission for Asia and the Pacific, 2008, “Enhancing export competitiveness of Asian fruits

. ” http://www.unapcaem.org/publication/F

- fruits.PDF 3 Compiled from various sources: 2008 Ha waiian tropical special fruits statistic, University of Florida IFAS Extension publications including Crane, Jonathan, August 2008 “Crop profile of lychee and longan in Florida” http://www.ipmcenters.org/cropprofiles/docs/FLlycheeLongan.pdf ; Mossler, Mark, June 2009, Florida Crop/Pest management Profile: Lychee and Longan” http://edis.ifas.ufl.edu/pdffiles/PI/PI0500 0.pdf , and USDA

- NASS September 2009 “Hawaii Tropical Specialty Fruits.” http://www.nass.usda.gov/Statistics_by_State/Hawaii/Publications/Fruits_and _Nuts/tropfrt.pdf3

Florida In Florida, litchi and longan production apparently increased rapidly in the 1990 s , although t here are no published data on numbers of farms, acreage, production volumes, or market values. Based on publications and personal communications , we su r mi s e that planting
acreage between 1990 and 2004 increased from about 200 acres to about 1,200 acres for litchi , and from about 7 0 acres to about 400 acres for longan. 4
About 90 percent of Florida’s litc hi and longan is produced in Miami

- Da d e Count y, and the remaining in Lee and Palm Beach c ounties

. 5 P roduction volumes in recent years are estimated to be about 450 MT of litchi and 900 MT of longan. 6 A shift away from litchi production and toward increas ed longan production has been prompted by two factors : (1) less consistent annual yield s for litchi than for longan, and (2) litchi’s relatively short season (mid

May through early July) , compared to year
- round availability of longan achieved through an of f

season flower induction technique

. About 80 percent of longan produced in Florida is believed to be sold outside of Florida and may have exceeded 700 MT in 2011.
B ased on average seasonal price s for litchi of $3 per pound and for longan of $2 per
poun d, Florida’s market values for the two fruits in 2008 were estimated to be about $ 3 million and $2 .8 million , respectively

. 7

4 Crane, Jonathan August 2008 “Crop profile of lychee and longan in Florida” http://www.ipmcenters.org/cropprofiles/docs/FLlycheeLongan.pdf 5 Florida Agricu ltur e, f

or litchi http://www.tfgsf.com/?page_id=12 , for longan http://www.tfgsf.com/?page_id=18 6 Crane, Jonathan August 2008 “Crop profile of lychee and longan in Florida” http://www.ipmcenters.org/cropprofiles/docs/FLlycheeLongan.pdf , Mossler, Mark June 2009, Florida Crop/Pest management Profile: Lychee and Longan” http://edis.ifas.ufl.edu/pdffiles/PI/PI05000.pdf , Evans, Edward A. August 2008 “Importation of Tropical Fruits from Thailand” http://edis. ifas.ufl.edu/pdffiles/FE/FE71900.pdf

. Personal communication with former and current presidents of South Florida Tropical Growers, Dewey Steele and Louise King 7 Evans, Edward A. and Sikavas Nalampang. University of Florida IFAS Extension “Importation of Tropical Fruits from Thailand” http://edis.ifas.ufl.edu/pdffiles/FE/FE71900.pdf Evans, Edward et al. University of Florida IFAS Extension “Is It Still Profitable to Grow Lychee in Florida?” http://edis.ifas.ufl.edu/pdffiles/FE/FE49600.pdf4

While census data are not specific for litchi and longan farms, it is thought that Florida
has a bout 100 commercial tropical fruit growers
. 8
, 9 Table 1 s ummarizes information on agricultural production in the three Florida counties where litchi and longan are produc ed

. Table 1 . Overall agricultural sales in t he three Florida counties where litchi and longan are produced, 2007

County Number of

Farms Total Market

Value of Products Sold ($ million) County Rank

i n Florida Average Per

Farm Sales Market

Value: Fruits, tree nuts, and berries ($ million) County

Rank in Flo rida Miami

- Dade 2,498 $661 2 $264,652 (D) 15 Lee 944 $116 21 $122,945 $29 16 Palm Beach 1 , 263 $932 1 $737,712 $13 23 Source: USDA NASS , 2007 Census of Agriculture

. Florida State and County Data Volume 1, http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_2_County_Level/Florida/flv1.p df Note: (D) Cannot be disclosed. Any tabulated item that iden tifies data reported by a respondent or allows a respondent’s data to be accurately estimated or derived was suppressed and coded

. According to terminal market price information compiled by USDA ’s Agricultural Marketing Service, prices of litchi and longa n that originate in Florida have fluctuated widely in recent years . For example , the highest and lowest 2010 prices per pound of litchi and longan
from Florida , based on 15 major cities, rang e d from $ 1.25 to $ 4 for litchi , and from $ 0.80 to $ 5 for longan. 10 Most of the fruit is sold outside Florida at price

- sensitive Asian and Hispanic food

stores

.

8 Public comment by Dewey Steele on APHIS

- 2006

- 0040

- 0001 “Importation of fruit from Thailand” http://www.regulations.gov/contentStreamer?objectId=09000064801cc280&disposition=attachment&contentType= xml 9 Florida tropical fruit growers, suppliers, distributors, shippers http://www.florida

agriculture.com/business/commerce/tropical/ 10 USDA Agricultural Marketing Service (AMS) Fruit and vegetable market news portal. http://www.marketnews.usda.gov/portal/fv5

Hawaii Except for 2010, when there was a severe drought , t he production of longan and litchi in
Hawaii ha s been steadily increasing, due to the ir growing popul arity and producers’ access to
local farmers ’ markets

. Most litchi grown in Hawaii is sold and consumed within the State

. 11
Markets for Hawaiian longan in the continental United States and in Canada , especially along the West Coast, are well

- established a nd interstate sales have expand ed from 60 MT in 2007 to 108
MT in 2010. C ustomers pay premium prices for fresh , high

- quality Hawaiian longan and for its dependable supply

. USDA NASS in cooperation with the Hawaiian Department of Agriculture reported in
2008 that there were 150 litchi farms and 70 longan farms in Hawaii . Most are located on the
I sland of Hawaii and a few others are on Kauai Island

. The reported acreage of litchi in 200 8
total ed 330 acres, of which 190 acres (58 percent) were harvested. The longan acreage total ed 260 acres, of which 170 acres (65 percent) were harvested. P roduction of both fruits is expected to grow as their harvested acreage s increase. Utilized production in 2008 totaled about 100 MT
of litchi valued at $6 33 ,000 , and 140 MT of longan valued at $992,000

. 12 A 2009 report shows
that sales have steadily increased , from $ 247 , 000 in 2004 to $6 33,000 in 2008 for litchi , and from $413,000 in 2004 to $992,000 in 2008 for longan

. Longan is the second most important tropical spe cialty fruit after rambutan , and litchi is the fourth most important tropical specialty

11 Personal communications: Ken Love. president of Hawaii Tropical Fruit Growers; Richard Johnson, former president of Hawaii Tropical Fruit Growers; and Peter Follet, Research Entomolog ist, USDA ARS. 12 Utilized production reported by NASS may be understated by as much as one

- fo u rth due to some growers not participating in the NASS surveys.6

fruit after mango

. The total value of sales of tropical specialty fruit in Hawaii equaled $ 4 million
in 2008

. 13
California
L itchi and longan are considered to be prom ising new crops in California but are still in a developmental phase ; University of California Extension research ers are conducting research programs in San Diego, Santa Barbara and Ventura counties . At present, there is no commercial production of litchi in California and only one known commercial longan orchard . However, many backyard litchi and longan growers can be found in S an Diego County. 14
World Production and Trade By far , China is the largest producer of both litchi and longan in the world. Ch ina’s litchi planted area (1.3 million acres) and production (900,000 MT) account ed for 80 percent and 70 percent, respectively , of world total s in 2008. Similarly , its longan planted area ( 1 million acres) and production (937,500 MT) account ed for 70 per cent and 60 percent, respectively , of world
total s
. 15 According to a Food and Agriculture Organization (FAO) 2002 rep ort , o ther major litchi producers at that time were India (430,000 MT), Taiwan Province of China (110,000 MT), Thailand (85,000 MT) and Vi etnam (40,000 MT). 16 Although litchi has a long history in southern China, it is a relatively new crop in most other countries. As witnessed in the United

13 USDA NASS, September 2009 “Hawaii tropical specialty fruits” http://www.nass.usda.gov/Statistics_by_State/Hawaii/Publications/Fruits_and_Nuts/tropfrt.pdf 14 Personal correspondence with Gary Bender, Farm Adviser, University of California Coop erative Extension and Dawn Nielsen, Deputy Agricultural Commissioner, Department of Agriculture, County of San Diego. 15 USDA

- Foreign Agricultural Service (FAS) GAIN report, May 28, 2008 “China, Peoples Republic of, Agricultural Situation, Tropical Fruit in China,” http://www.fas.usda.gov/gainfiles/200805/146294773.pdf 16 FAO, March 2002, “Lychee Production in the Asia

- Pacific Region” ftp://ftp.fao.org/docrep/fao/005/ac684e/ac684e00.pdf . Most recent FAO data available.7

States, litchi is considered a difficult crop to grow for consistent yields. F urthermore, it is hig hly perishable and has a very short shelf life without refrigeration. 17 As for other major longan producers, the FAO report ed that Thailand produced 238 , 000
MT in 199 8 ; Taiwan Province of China , 130,500 MT in 1997 and 53,385 MT in 1998 ; Vietnam , 365,000 M T in 1999 ; and Australia , 1,000 MT in 2000

. 18
Thailand i s the largest exporter of longan in the world. In 2007, Thailand produced
495 ,000 MT of longan ( twice its production in 1998) and exported 32 percent (158 ,000 MT) as fresh longan, earning about $61 million. 19 One published paper explains the difficulties
associated with the production and marketing of Thai longan: “ Even though it is the leading fruit crop export of Thailand , there has been an oversupply problem of longan in the market resulting
in a significant decline in price. A short harvesting season and its highly perishable nature create a large, concentrated produce flow to the market with oversupply at the front and significant
waste at the end. This reduces farm prices and farmer income. ” 20
Vietnam Production and Exports
The e xport season for Vietnamese litchi to the United States is expected to be May and June, while longan could be exported year

- round. According to data provided by Vietnam ’s national plant protection organization ( NPPO ) , production of litchi grown for export peaked in 2006 at above 200,000 MT, but has been declining since then , and is expected to be about 50,000
MT in 2011. Vietnam’s production of longan s for export , on the other hand, has show n

17 Ibid. 18 FAO, Prof. Wong Kai Choo, December 2000, “Longan Production in Asia” ftp:/ /ftp.fao.org/docrep/fao/003/x6908e/x6908e00.pdf . Most recent FAO data available. 19 Evans, Edward A., University of Florida IFAS Extension, August 2008, “Importation of Tropical Fruits from Thailand” http://edis.ifas.ufl.edu/pdffiles/FE/FE71900.pdf 20 Chanrittisen, Thirawan , Asian Jounal of Food and Agro Industry, 2010, “Exploring feasibility for production of longan fruit wine as a small scale enterprise in Thailand ” http://www.ajofai.info/Abstract/Exploring%20feasibility%20for%20production%20of%20longan%20fruit%20 wine %20as%20a%20small%20scale%20enterprise%20in%20thailand.pdf8

substantial growth, from about 80,000 MT in 2001 to close to 200,000 MT in 2010. 21 Figure 1
sh ows the Vietnamese production of litchi and longan in areas serving exports.

Figure 1 . Vietnamese production volumes o f litchi and longan, 2001

- 2010

Source: Post

- import Vegetable Product Quarantine Centre, Ministry of Agriculture and Rural Development, Vietnam

. The Vietnamese NPPO estimates that about 70

- 75 percent of litchi production is
consumed domestically ; the rest is exported to China, Hong Kong, Canada, ASEAN countries, European countries, Russia , and other former Soviet Republics. 22 Information on Vietnam ’s longan exports is not available; however, it is believed Vietnam is increasing its exports to European countries , including the U nited K ingdom and France , and to Canada , in addition to southern China and neighboring countries such as Singapore and Hong Kong. 23 A new
irradiation facility is opening in Binh Duong P rovince that will facilitate the export of l itchi and longan to the United States.

21 Post

- import Vegetable Product Quarantine Centre, Ministry of Agricultural and Rural Development, Vietnam 22 Ibid. 23 FAO, December 2004, “Fruits of Vietnam” http://www.fao.org/docrep/008/ad523e/ad523e00.htm , various news articles.9

Imports of L itchi and L ongan by the United States
U.S. litchi imports fell from 5 , 222 MT in 2007 , to 3,244 MT in 2010

. We do not know
the reason for this decline nor the U.S. market ’s capacity for growth in the nea r term . Many industry participants believe it will expand , based on increasing Asian and Hispanic populations

. Table 2 shows the annual amount s of litc hi imported, 2007

- 2010, by source country. China has
been co nsistently the largest exporter of litchi to the United States , followed by Taiwan and
Mexico. Vietnam is expecting to export 600 MT of litchi to the United States , a quantity equivalent to about 17 percent of average litchi imports , 2007

- 2010 (3,562 MT)

. 24 All things equal, an increase in the quantity supplied of this magnitude is likely to cause downward pressure on prices.
Table 2

. U.S. imports of fresh litchi , 2007

- 2010, by country (metric tons) Country 2007 2008 2009 2010 Average (2007

- 2010) Chile

- - 23

- 6 China 3,208 1,740 1,775 2,194 2,229 Israel 105 42 39 19 51 Mexico 422 493 321 474 428 Taiwan 1,485 589 759 556 847 Viet Nam 2

- - - 1 Total 5,222 2,864 2,917 3,243 3,562 Source: APHIS PPQ

. Table 3 shows the annual amount s of longan imported , 2007

- 2010, by source country. China was the largest exporter of longan to the United States in 2007; however , Thailand has
claimed that spot for the last three years. Vietnam is expecting to export 1,200 MT of longan to the United States , equivalent to
about 69 percent of average longan impor t s, 2007

- 2010 (1,748 MT)

. Even more so than in the

24 One metric ton is equivalent to one air container.10

case of litchi imports from Vietnam, th e additional longan imports ( together with any increased supply from Florida ) will likely have a significant impact on the U.S. longan market and prices

. Table 3

. U.S. imports of fresh longan , 2007

- 2010, by country (metric tons) Country 2007 2008 2009 2010 Average (2007

- 2010) China 1,272 865 179 160 619 Guatemala

- - 0 .2

- 0.2 T aiwan

- - - 37 9 Thailand 159 1,689 1,579 986 1,103 Viet Nam 22 44

- - 17 Total 1,453 2,598 1,75 8 1,183 1,748 Source: APHIS

- PPQ

.


### Need for and Objectives of the Rule

APHIS is responding to a request from Vietnam’s NPPO that t he regulations in “Subpart

Fruits and Vegetables” ( 7 CFR 319.56

- 1 through 319.56

- 59 ) be amended to allow the importation of fresh litchi and longan fruit from Vietnam into the continental United States , excluding Florida . APHIS has determined that this request should be granted giv en that pest
risks will be sufficiently mitigated using a prescribed systems approach. The objective of the rule is to a llow the importation of litchi and longan from Vietnam , on condition that these fruits will be grown in a production area that is regi stered with and monitored by Vietnam’s NPPO , irradiat ed at a specified level in Vietnam at an APHIS certified facility , and accompan ied by a phytosanitary certificate issued by Vietnam’s NPPO with an additional declaration stating that the consignment was inspected in Vietnam and found free of Phyt o phtho ra litchii

. Regulations setting phytosanitary requirements for the importation of fruits and vegetables into the United States and approved phytosanitary treatments are stated in 7 CFR
319.56 and 305 , respe ctively

. The Plant Protection Act (Public Law 106

- 224, June 20, 2000) is11

the statutory basis for parts 305 and 319. It authorizes the Secretary of Agriculture to implement regulations designed to prevent the introduction and spread of plant pests and dis eases. 

### Significant Issues R aised by Public Comment in R esponse to the Initial Regulatory Flexibility Analysis
APHIS received two public comments during the 60

- day comment period ending December 27, 2011. They were from an organization of State plant agen cies and an association of tropical fruit growers. One commenter raised a concern that the expected increase in litchi and longan imports could significantly harm the nascent U.S. litchi/longan industry due to lower production costs of foreign growers. T he commenter also requested that inspection s by U.S. Customs and Border Protection (CBP) include the search for evidence of pesticides or pesticide
residue levels in the imported litchi and longan that are not authorized by the United States

. APHIS does n ot have authority to restrict imports solely because of potential economic effects on domestic producers . APHIS also does not have authority to require that level s of pesticide residues in imported food commodities not exceed tolerances established by the Environmental Protection Agency

. Questions concerning unauthorized pesticide residue levels in imported litchi or longan can be addressed to t he Commercial Targeting and Analysis Center (CTAC), a new CBP facility established by the Department of Homeland Security in 2009. CTAC serves as the multi

- agency center for targeting commercial imports that pose a threat to the health and safety of Americans. 25

25 Federal agencies with authority governing the safety of products imported into the United Sta tes acknowledge the need to share information about the safety of those products. The mission of CTAC is to provide a vehicle to facilitate the sharing of information and leverage the collective resources of the participating government agencies for the p revention, preemption, deterrence, and investigation for violation of importation laws that affect United States interest in the import safety environment. CBP, Import Safety Commercial Targeting and Analysis Center (CTAC) http://www.cbp.gov/xp/cgov/trade/priority_trade/import_safety/ctac/12



### Comments F iled by the Chief Counsel for Advocacy of the Sm all Business Administration in Response to the Proposed R ule No comments were filed by the Chief Counsel of the Small Business Administration in response to the proposed rule. 

### Potentially Affected Smal l Entities We have provided information on litchi and longan growers in Florida, Hawaii, and
Californi a. Entities potentially affected by the rule are classified within the following industries , according to the North American Industry Classification System : Other Non Citrus Fruit Farming (NAICS 111339), Postharvest Crop Activities (except cotton ginning) (NAICS
11511 4 ), and Fresh Fruit and Vegetable Merchant Wholesalers (NAICS 424480). Establishments classified within Other Non Citrus Fruit Farming are considered small by the Small Business Administration ( SBA ) if annual sales are not more than $750,000. We do not
have the size distribution of litchi and longan producers , but according to the Census of Agriculture there were 23,641 farms classified within Other Non Citrus Fruit Farming in 2007. 26 The market value of crops sold by these farms that year was about $111,000, well below the
small

- entity standard. We believe that all commercial litchi and longan producers in Florida, Hawaii, and California are small entities

. Establishments classified with in Postharvest Crop Activities (except cotton ginning) a re considered small by SBA standards if ann ual sales are not more than $7 million

. The percentage of establishments that meet this standard is not known; neither the Census of Agriculture nor the Economic Census reports revenue for these establishments. Establishments classified with in

26 USDA NASS. 2007 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.pdf13

Fresh Fruit and Vegetable Merchant Wholesalers (NAICS 424480) are considered small by SBA standards if they employ not more than 100 persons

. According to the 2002 Survey of Business Owners, 97 percent of the establishment s in this category employed fewer than 100 people. 

### Projected Reporting, Recordkeeping, and Other Compliance Requirement s
The rule will not result in U.S. entities being subject to reporting, recordkeeping or other compliance requirements beyond those alrea dy required for the importation of irradiated fruit

. Phytosanitary certification and fulfillment of related import conditions will be the responsibility of the exporting party. 

### Duplication, Overlap , or Conflict with Existing Rules and Regulations
APHIS ha s not identified any duplication, overlap, or conflict of the rule with other
Federal rules. 

### Steps Taken by APHIS to M inimize Significant Economic Impacts on Small Entities
APHIS does not have an alternative to the rule’s systems approach for allowing the importation of fresh litchi and longan fruit from Vietnam.
Our review of available information suggests that the rule may have a negative e conomic impact on longan growers and , to a lesser extent , on litchi growers

. The annual quantities of
litchi and l ongan that Vietnam expects to export to the United States, namely, 600 MT and 1,200
MT would be equivalent to about 17 percent and 69 percent, respectively, of average annual U.S. imports for these two fruits, 2007

- 2010

. Negative impacts for U.S. producer s will be moderated to the extent that imports from Vietnam displace imports from other foreign sources.14

Widely ranging prices for litchi and longan among U.S. markets may indicate opportunities for domestic growers to alleviate negative effects of increas ed foreign competition through improved marketing arrangements

. Demand for produce in t raditional outlets for litchi and longan, such as Asian and Hispanic markets , tends to be more price

- sensitive. On the other hand, American consumers in certain other market segments are paying premiums at s pecialty food stores, grocery chains , specialty supermarkets , gourmet restaurants, local farmers ’ markets,
and through direct sales by producers , for products that provide certain product attributes, such
as freshnes s, quality, traceability , and sustainability

. U.S. producers may be able to lessen the effects of increased foreign competition by developing marketing arrangements that allow access to more profitable retail outlets for their litchi and longan. We note that virtually all litchi and longan growers in the United States are small entities , and litchi and longan trees generally require more time and effort for cultivation
than non

- specialty fruit trees. These conditions make the develop ment of cold chain d istribution and marketing plans by litchi and longan producers to channel their fruit into these growing
niche markets all the more difficult

. Public agencies at the local, State, and Federal levels , including u niversity agricultural e xtension office s , ma y be able to provide guidance or other assistance for improving marketing opportunities

. Specialty tropical fruits, such as litchi and longan, are popular among Asian and Hispanic
ethnic groups but relatively unknown among other ethnic groups

. As seen wit h other specialty
fruit s , such as mango, Asian pear , Fuji apple , and k iwifruit, increased imports of litchi and longan and their wider availabilit y may help stimulate the demand for these fruits among U.S.
consumers in the long er run
. Such prospect s will benefi t domestic growers by mak ing expanded U.S. production more economically feasible

.