### United States

Department of Agriculture Anim al and Plant Health Inspection Service May 2014 **Initial Regulatory Flexibility Analysis**

**Proposed Rule**  **APHIS -**  **2014 -**  **0005 RIN 0579**  **- AD94**  **Importation of Fresh Citrus from China**  **into the Continental United States** 

Policy & Program Development Policy Analysis & Developmenti



### Summary The national plant protection organization of China, known as the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) of the People’s Republic of China, has requested USDA authorization for market access of commercial shipments of its fresh citrus into the United States. The proposed rule would amend the current regulations to allow the importation of Citrus sinensis (sweet orange), Citrus poonensis (ponkan), Citrus grandis cv.guanximiyou (pomelo), Citrus kinokuni (mandarin orange), an d Citrus unshiu (Satsuma mandarin) into the continental United States . A sy stems approach to pest risk mitigation would provide an appropriate level of ph yt osanitary protection against the pests of quarantine concern. Citrus i mports from China would compete with domestically produced fresh citrus and current U.S. imports. The quantity of orange s import ed from China is likely to be relativel y small

. The majority

of China’s fresh orange exports, mostly navel oranges, go mainl y to Russia and to neighboring countries in Asia. China’s fresh orange exports to North America, mainl y to Canada, are very

limited , rang ing from 100 to 300 metric tons ( MT ) per ye ar. The United States is a net exporter of fresh oranges

. An increase in orange imports of 3 00 MT per ye ar would be equivalent to about one - fourth of one percent of fresh orange imports from all sources in the 2012/13 season . As with oranges, t he bulk of China’s tangerine and mandarin variety exports are to Russia and to neighboring Asian countries

. T he United States is a net importer of tangerine and mandarin varieties, and U.S. consumption has been growing at a rate of about 9 percent per ye ar. Imports of fresh tangerine and mandarin varieties from China would help meet the growing dema nd for these citrus species , and the quantity could match the nearl y 4. 5 percent annualii

increase in imports ( about 6,30 0 MT) that has occurred over the past five years. We expect that imports of pomelo and ponkan from China would be relativel y minor, helping to serve the U.S. niche markets for these species. The extent to which imports from China would result in greater competition for U.S. producers would depend on relative prices, the varieties shipped, s easonality , the qualitative attributes of the imported citrus , and the extent to which the citrus imported from China would displace imports from other countries

. Im porters and distributors of fresh citrus from China would also benefit from the proposed r ule as it would provide them with new business opportunities. We have identified industries that could be affected by the proposed rule based on the North American Industry Classification Sy stem . Based on Small Business Administration size standards, sm all entities are prominent in those industries for which information on business size composition is available.iii



### Table of Contents Summary

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

................................ ................................ ................................ ......................... 1 U.S. Citrus Prod

uction and Trade

................................ ................................ ................... 1 China’s Citrus I ndustry

................................ ................................ ................................ ... 8 Reasons Action is Being Considered

................................ ................................ .................. 8 Objectives of and Legal Basis for the Rule

................................ ................................ ........ 9 Overview of the Action, Affected Entities, and Potential Effects

................................ .... 10 Conditions of Entry

................................ ................................ ................................ ....... 10 Potentially

Affected Small Entities

................................ ................................ ............... 11 Potential Effects

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

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

.......................... 18 Alternatives to minimize Significant Economic Im pacts of the Rule

............................... 191



### Introduction The proposed rule would amend the current regulations to allow the importation of Citrus sinensis (sweet orange), Citrus poonensis (ponkan), Citrus grandis cv.guanximiyou (pomelo), Citrus kinokuni (mandarin orange), and Citrus unshiu (Satsuma mandarin) into the continental United States under a specified sy stems approach

. The Regulat ory

Flexibility

Act requires agencies to evaluate the potential effects of their proposed and final rules on small businesses, small organizations and small governmental jurisdictions. This initial regulatory flexibility

analy sis examines the prevalence o f small businesses in industries that may be affected by

the proposed rule and consider s whether small

entity impacts are likel y to be significant, as required by section 603 of the Act. In th is introduction , we describe production, consumption and trade for the United States and China of the citrus varieties that would be allowed entry into the continental United States

. W e then discuss the prevalence of small businesses in industries that may be affected

. **U.S. Citrus Production and Trade** Citrus fruit, particularl y oranges, are among the most popular fresh fruits consumed in the United States and are a significant source of U.S. farm income. In 2012, oranges generated $2.2 billion in farm cash receipts. L emons generated $430 million, tangerines another $414 million, and grapefruit another $269 million. 1

1 USDA, Economic Research Service. Fruit and Tree Nuts, Table A

- 8: U.S. Cash Receipts 1980 to date.2 0 5,000 10,000 15,000 20,000

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0**- -** **1 ,** **0 0** **0 T** **o n** **s -** **- 1** **, 0** **0 0** **A c** **r e** **s -** **-**

**Season** 

### Figure 1. **U.S. Citrus -**  **bearing Acreage**  **and Production** Bearing Acreage Production Linear (Production)

U.S. citrus

- bearing acreage has declined b y 15 percent over the last two decades, most notably in Florida where 95 percent of the orange crop is used for juice (figure 1 ). This decline is due in larg e part to tree losses associated with weather

- related events, citrus canker eradication efforts, the spread of Huanglongbing ( also known as citrus greening ) and other diseases, and residential and business expansion. Consequently , U.S. orange production h as declined b y 23 percent over the last 20 seasons. The decline in Florida’s bearing acreage and production will continue to mainly impact the orange juice market

. U.S. fresh citrus is principally grown in California , where production has either remaine d stable ( fresh oranges) or is expanding ( fresh tangerine and mandarin varieties). Importers of fresh citrus from China would compete against these suppliers and current importers.3 0 100 200 300 400 500 600 700 800

2008-09 2009-10 2010-11 2011-12 2012-13**1 ,** **0 0** **0 M** **e t** **r i** **c T** **o n** **s**

**Season** 

### Figure 2. **United States**  **- Fresh**  **Or ange T**  **ra de Balance**  Exports Imports Fresh citrus imports account for about 7 percent of U.S. fresh fruit impor ts. The major suppliers of fresh citrus are Mexico (42 per c ent ), Chile (17 percent ), Spain (16 percent ), and South Africa (9 percent ). 2 **Fresh Oranges** The United States is a net exporter of fresh oranges , export ing an average of 8 percent and import ing an average of 3 percent of the fresh oranges traded worldwide , 2008/09 through 2012/13 . Over this five

- ye ar period, U.S. fresh orange exports averaged 657,800 metric tons (MT) and imports averaged 111,000 MT (figure 2 ) . The United States is the third largest exporter of fresh oranges , and its primary foreign markets are South Korea, Canada, Japan, Hong Kong, and China. Eight percent of the fresh oranges consumed in the United States are imported . Chile and South Africa, followed by Mexico and Austra lia, supply the largest shares of fresh orange imports by

the United States. 3

2 Huang, Sophia W., “Imports Contribute to Year

- Round Fresh Fruit Availability.” Economic Research Service. USDA 2013. http://www.ers.usda.gov/publications/ fts

- fruit

- and

- tree
- nuts
- outlook/fts

- 356

- 01.aspx 3 Global Trade Information Services, Inc.4 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

0 200 400 600 800 1,000**- -** **1 ,** **0 0** **0 t** **o n** **s -** **- -** **- 1** **, 0** **0 0** **A c** **r e** **s -** **-**

**Season** 

### Figure 3. **U.S. Or ange Bearing Acres**  **and Production: Seasons** 

**2000/01 through 2011/12**  Bearing acreage Production Linear (Bearing acreage) Linear (Production) While showing fluctuations y ear to y ear, U.S. fresh orange per capita consumption has steadily declined over the last 30 y ears and remained relativel y flat over the past decade . In 2012/13, U.S. per capita fresh orange consumption was 10.9 pounds , down from a high of 14.6 pounds in 1997/98

. 4 As with other developed countries, competition from easy

- peel citrus varieties and increased orange juice consumption have contributed to this per capita decline. U.S. crop acreage devoted to orange production declined b y 24 percent between 2000/01 and 2011/12, from 815,000 to 619,200 bearing acres (figure 3 ). 5 Over that same time period, production declined b y 26 percent, from 12.2 million to 9 million MT. 6

As described above, m ost of the industry ’s contraction has been in production for the processing sector. In Florida, where 95 percent of production is devoted to oranges for processing, the bearing acreage fell by 28 percent between 1 999/2000 and 2011/12, and orange production fell b y 34 percent. I n California, where 85 percent of U.S. production for the fresh

4 USDA/ Economic Research Service, preliminary estimate. 5 USDA, National Agricultural Statistics Service, Florida Agricultural Statistics Service , Florida Citrus Statistics 2011

- 20 12
. 6 Ibid.5 0 50 100 150 200

2008/09 2009/10 2010/11 2011/12 2012/13**1 ,** **0 0** **0 M** **e t** **r i** **c T** **o n** **s**

**Season** 

### Figure 4. **United States**  **- Fresh**  **Ta ngerine**  **Tr ade Balance**  Exports Imports market is harvested , the quantity produced has been relativel y stable, averaging around 2 million MT annually

even while the b earing acreage fell by 10 percent. On average, 27 percent of U.S. produced oranges are sold for fresh consumption , both domestically

and internationally . While only 4 percent of orange production in Florida is utilized fresh, the percentages for Califor nia and Texas are 83 and 86 percent, respectivel y. 7 **Fresh Tangerine and Mandarin Varieties** The United States is a net importer of tangerine and mandarin varieties (figure 4 ) . U
. S

. import s average d 7 percent of the world ’s fresh tangerine and mandarin variet y exports, and

accounted for an average of 26 percent of domestic fresh consumption over the 2008/09 through 2012/13 seasons. During 2011/12 , the United States imported 154,296 MT of tangerine and mandarin varieties (in cluding satsumas, clementines, and similar citrus hy brids) with approximately

3 9 percent, 31 percent, 13 percent, and 9 percent arriving from Chile, Spain, Peru , and Morocco, respectively

.

7 Fresh utilization refers to the proportion of total fruit sold as fresh citrus. The remainder is considered to be utilized on the processed market.6 0.0000 0.1000 0.2000 0.3000 0.4000 0.5000 0.6000

0 10 20 30 40 50 60**M i** **l l** **i o** **n M** **T B** **e a** **r i** **n g** **A c** **r e** **s** 

### Figure 5 **. T**

**angerine Bearing**  **Acres and Production** 

acres Production Linear (acres) Linear (Production) That same season , the United States exported approximately 42,175 MT of tangerine and mandarin varieties (including some s atsumas). Canada is the largest importer of U.S. fresh tangerine and mandarin varieties , accounting for 48 percent of U.S. exports. The second largest importer is Japan, accounting for approximatel y 2 5 percent. 8 U.S. bearing acre age for tangerines has increased by 29 percent since the 1999/2000 crop ye ar, from 41,000 acres to 53,000 acres in 2011/12 (figure 5 ). Over that same time period, production increased b y 63 percent from, 298,000 to 486,000 MT
. 9

About 92 percent of U.S. fresh tangerine and mandarin variet y production was consumed domestically

in 2012/13, including processed production

. 10 U.S. imports of tangerine and mandarin varieties supplement domestic production in satisfy ing increased domestic demand.

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

. 9 Source: USDA, National Agricultural Statistics Service, Citrus Fruits Summary , various years. 10 The proportion of U.S. fresh tangerine and mandarin variety production consumed domestically i s the ratio of utilized fresh production minus exports divide d by utilized fresh production . Data Source: Foreign Agricultural Service, Production, Supply, and Distribution Online.7

U.S. per capita consumption of fresh tangerine and mandarin varieties has increased, on average, 5.5 percent annuall y over the last 30 years. Over the last decade, per capita consumption of fresh tangerine and mandarin varietie s in the United States increased from 2.73 pounds in 2002/03, to 4.5 pounds per capita in 2012/13. 11 E asy - peel, seedless fresh citrus varieties are particularl y appealing to consumers. On average, 80 percent of tangerine and mandarin varieties produced in the United States are consumed fresh, domestically and internationally . Production intended for fresh market consumption is concentrated in California, Florida, and Arizona. California harvests approximately

75 percent of U.S. fresh production. The val ue of production increased 22 percent from 2011/12 ($349.1 million) to 2012/13 ($425.5 million), with most of the increase in the fresh sector. 12

**Fresh Pomelos** Pomelo (Citrus grandis cv.guanximiyou) is a citrus fruit similar to grapefruit but larger and mo re pear - shaped , with a thicker rind, coarser pulp, and a sweet, mild flavor. Pomelos are immensely

popular in Asia. Most information on pomelo production, trade balances, and consumption is aggregated with grapefruit data. The U.S. pomelo industry serves a largel y niche market with limited production. I t is grown primaril y in California’s San Joaquin Valley on approximately 1,500 acres. The number of growers is undisclosed. The total value of the crop is less than $10 million annually

.

11 USDA/Economic Research Service, preliminary estimate for 2012/13. 12 National Agricultural Statistics Service (NASS), USDA, “Citrus F ruits 2013 Summary,” September 2013

.8

**China’s Citrus Industry**  China is a major producer, consumer, and exporter of fresh citrus on the world market. Tangerine and mandarin varieties accounted for 77 percent of China’s total fresh citrus exports, followed b y pomelos (14 percent) and oranges (9 percent) duri ng the 2012/13 season. Most China’s fresh orange and tangerine and mandarin variet y exports are to Russia and to neighboring Asian countries. Russia and the Netherlands receive more than 70 percent of China’s fresh grapefruit and pomelo exports. China is not a major importer of fresh citrus, but import volumes have increased, on average, b y 10 percent a year over the last 5 seasons. The United States has been the leading source of fresh citrus for China, followed by South Africa, Australia, Thailand, and Taiwan. The rate of increase in China’s domestic consumption of fresh citrus continues to outpace the increase in worldwide consumption. Fresh citrus consumption in China has grown an average of 7 percent annually over the last five seasons, corresponding to the growth in production and imports, and the increase in the number of middle

- income and affluent consumers in China. Ninety

- six percent, 92 percent, and 90 percent of the supply of fresh grapefruit/pomelos, fresh tangerine and mandarin varieties, and fresh oranges, respectively , are consumed domesticall y. China’s fresh citrus consumption is expected to continue to increase as distribution sy stems are improved. 13 

### Reasons Action is Being Considered The national plant protection organiza tion (NPPO) of China, known as the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) of the People’s

13 Ibid.9

Republic of China, has requested USDA authoriz e access of commercial shipments of fresh citrus into the continental United States. In response to this request, the APHI S has prepared a pest risk assessment 14 and a risk management document (RMD). 15 The pest risk assessment concluded that e ntry of fresh packed citrus fruit from China into the United States would present a risk of introd uc ing 22 quarantine plant pests ( including 14 arthropods, of which 3 are mites , 10 are flies , and 1 is a moth ) unless the risk is managed. APHI S has determined that the current prohibition on imports of citrus from China is unnecessary because the pest risks posed to U.S. agriculture can be successfully mitigated using a sy stems approach. The RMD details a sy stems approach that would provide an appropriate level of ph yt osanitary

protection against the pests of quarantine concern. 

### Objectives of and Leg **al Basis for the Rule** The objective of the proposed rule is to allow the importation of fresh citrus fruit, specificall y Citrus sinensis (sweet orange), Citrus poonensis (ponkan), Citrus grandis cv.guanximiyou (pomelo), Citrus kinokuni (mandarin orange), a nd Citrus unshiu (Satsuma mandarin) , into the continental United States from China. The proposed rule would amend the current regulations found in Title 7 § 319.56 of the Code of Federal Regulations that grant regulatory

authorit y for setting ph yt osanitary requirements for the importation of fruits and vegetables into the United States.

14 USDA. 2014. Importation of Citrus spp. from China into the continental United States, A Qualitative, Pathway

Initiated Pest Risk Assessment. Animal and Plant Health Inspection Service, Center for Plant Health Science and Technology, Plant Epidemiology and Risk A nalysis Laboratory, Raleigh, NC. 15 USDA. 2014. Importation of Fresh Citrus ( Citrus grandis cv. Guanximiyou, Citrus kinokuni , Citrus poonensis, Citrus sinensis and Citrus unshiu ) fruit from China into t he continental United States , Risk Management Document
. Animal and Plant Health Inspection Service, Plant Health Programs , Regulatory, Permits and Manuals , Riverdale, MD

.10

The legal basis for this action is the Plant Protection Act (7 U.S.C. 7701

- 7772), which authorizes the Secretary

of Agriculture to prohibit or restrict the importation of any plant product if the Secretary

determines that the prohibition or restriction is necessary to prevent the introduction of a plant pest or noxious weed into the United States. The proposed rule is part of a continuing program to allow the importation of foreign agricultural products that APHI S has determined are without significant ris k of introducing pests or diseases into the United States , if appropriate mitigation measures are applied

. 

### Overview of the Action **, A**  **ffected Entities**  **, and Potential**  **E ffects**  **Conditions of Entry** This proposed rule would allow for the importation of five spe cies of fresh citrus from China into the continental United States under conditions that would protect against the introduction of citrus pests. Based on the RMD, importation of the fresh citrus will be subject to the following conditions: Registration o f places of production and packinghouses, sourcing of pest
- free propagative material, inspection for quarantine pests at set intervals by the national plant protection organization (NPPO) of China, bagging of fruit, post

- harvest processing and sampling, an d importation in commercial consignments. Additionally , the rule would require places of production to trap for several species of Bactrocera (fruit flies), and would require the fruit to be either cold treated or irradiated as a treatment for fruit flies . Consignments would have to be accompanied by a ph yt osanitary

certificate issued by

the NPPO of China that declares that the conditions for importation have been met and that the consignments have been inspected and found free of quarantine pests. Final ly , the NPPO of China would have to provide a bilateral workplan to APHI S that details the activities that the NPPO of China will carry out to meet these11

requirements. This sy stems approach to pest mitigation would provide an appropriate level of phy tosan itary protection against pests of quarantine concern. 16 We note that the provisions in the proposed rule incorporate two different treatment strategies for fruit flies: Cold treatment or irradiation. I nitially , the proposed rule would have required cold treatment. This is not because it is the only known tre atment option

— irradiation at a dose of at least 150 gray is known to be similarly efficacious

—

but rather, because APHI S assumed that irradiation would not be pursued because of the adverse effects it can have on the appearance and shelf

- life of the fruit. However, in the course of ongoing dialogue with AQSIQ and other stakeholders, APHI S decided that there could be certain producers who would prefer irradiation to cold treatment, and that there does not exist a risk

- based rationale for precluding such irra diation treatment. Therefore, we revised the provisions of the proposed rule to allow for either treatment option. **Potentially Affected Small Entities** The U.S. citrus industry

produces species and varieties that are the same as or comparable to th ose t hat would be allowed to be imported from China , including oranges, tangerine and mandarin varieties ( such as satsumas, clementines, and similar citrus hy brids) and pomelos. Therefore, entities that may be affected by

the proposed rule would be primarily U .S. producers of fresh oranges, tangerines, and pomelos. Other stakeholders that may be affected include

16 FAO, “International Standards for Phytosanitary Measures (ISPMs) No. 14, The use of integrated measures in a systems approach for pest risk management 2002,” http://www.acfs.go.th/sp s/downloads/16210_ISPM_14_E.pdf Updates (January 8, 2014) https://www.ippc.int/publications/use

- integrated

- measures - systems
- approach

- pest
- risk

management , other ISPMs relevant to the proposed rule are: No. 1 (Principles of plant quarantines as related to international trade), No. 2 (Guidelines for pest risk analysis), No. 5 (Glossary of Phytosanitary Terms), No. 8 (Determination of pest status in an area), No. 12 (Guidelines for phytosanitary certificates), No. 20 (Guidelines for a phytosanitary import regulatory system), and No. 28 (Phytosanitary treatments for regulated pests).12

auxiliary industries which support the production and distribution of fresh citrus in the United States, and importers of fresh citrus

. More specific all y, e ntities potentially affected by

the proposed rule are classified within the following industries, according to the North American Industry Classification Sy stem (NAICS) : Orange Groves (NAICS 1113 1 0 ), Citrus Groves (except orange groves) (NAICS 111320), ( Postharvest Crop Activities (except cotton ginning) (NAICS 115114), Fresh Fruit and Vegetable Merchant Wholesalers (NAICS 424480), Pesticide and Other Agricultural Chemical Manufacturing (NAICS 3 25 320 ), Farm Product Warehousing and Storage (NAICS 493130), Nursery and Tree Production (NAI CS 111421), Fruit and Vegetable Markets (NAICS 445230), Packing and Crating (NAICS 488991), General Freight Trucking, local (NAI CS 484110), and Wood Container and Pallet Manufacturing (NAI CS 321920 ). According to 20 12 Census of Agriculture data, there were a total of 9,437 operations producing oranges in the United States in that y ear . 17 In that y ear, were 6,141 farms produc ed oranges as their primary

product and were thus classified as Orange Groves according to the NAI CS. 18 More than 72 percent of orange producers had fewer than 25 acres , and 2 percent had 500 or more acres
. However, the farms with fewer than 25 acres account ed for only less than 6 percent of the total acreage devoted to orange production, while those with 500 or more acres

17 The number of orange farms in the United States, as reported by th e 20 12 Census of Agriculture , includes operations that produced oranges for processed utilization ; in Florida, the majority of oranges are processed

. USDA NASS. 2012 Census of Agriculture, Table 39. Specified Fruit and Nut by Acres: 2012 and 2007. http://www.agcensus.usda.gov/Publications/2012/Full_Report/Volume_1,_Chapter_1_US/st99_1_039_039.pdf

18 USDA NASS. 20012 Census of Agriculture, T able 51
. Selected Characteristics of Farms by North American Industry Classification System: 20 12, http://www.agcensus.usda.gov/Publications/2012/Full_Report/Volume_1,_Chapter_1_US/st99_1_051_052.pdf

. This is also the source for establishments classified within Citrus Groves (except orange groves) and Nursery and Tree Production.13

accounted for over 58 percent . The national average acreage for orange producers was 71 acres in 20 12; for orange producers with fewer than 25 acres , the average was 5.3 acres per farm. Establishments classified as Orange Groves are considered small by the Small Business Administration (SBA) if annual sales are not more than $750,000. The average market value of crops sold by

orange grower that y ear was approximately $ 318 ,000, well below the small

- entity standard of $750,000 and clearl y orange growers are predominantl y small entities according to the SBA standard of $750,000. According to 20 12 Census of Agriculture data, there were a total of 1,395 operations producing tangerine and mandarin varieties in the Unite d States in 20 12 **.** 19 In that year , a total of 2,839 farms produc ed citrus other than oranges as their primary product and were thus classified as Citrus Groves (except orange groves) according to the NAI CS. Establishments classified within NAI CS Citrus Gro ves (except orange groves) are considered small by the SBA standard of annual sales not more than $750,000. The average market value of crops sold by non - orange citrus groves in 2012 was about $22 5 ,000, well below the small

- entity standard of $750,000. Clearly , citrus growers are predominantl y small entities according to the SBA standard of $750,000. Establishments classified within Postharvest Crop Activities (except cotton ginning) (NAICS 11511 4), are considered small by SBA standards if annual 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 establishmen ts
.

19 The number of citru s farms in the United States, as reported by the 20 12 C ensus of Agriculture , includes operations that produced citrus for process ing as well as fresh utilization

.14

This industry

comprises establishments primarily engaged in performing services on crops subsequent to their harvest to prepar e them for market or further processing, such as crop cleaning, sun dry ing, shelling, fumigating, curing, sorting, grading, packing, and cooling. The available information on packinghouse establishments engaged in postharvest crop activities indicates these entities to be predominantl y small. In Florida, there were at least 142 packinghouses registered in 2007. 20 While the classification of these establishments by sales volume is not available, it is estimated that approximately

42 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 for the top 35 to 45 shippers of each season ( 95 percent of Florida fresh citrus shipments )

. 21 , 22 During the 2012

- 13 citrus season , annual sales for at least 21 of the top 42 shippers (5 0 percent) were below the SBA size standard of $7 million. I t is estimated that at least 85 percent of Florida’s citrus packers, including small gift packers, are small according to the SBA size stan dard. In 2010, there were 74 packinghouses in California. 23 A pproximately 60 percent of these packinghouses market the final product through cooperatives as Sunkist Growers, Inc., the Central California Orange Growers Cooperative, and DNE World Fruit Sale s. 24 The remaining

20 Florida Department of Agriculture and Consumer Services, Division of Fruit & Vegetable Ins pection. <http://www.doacs.state.fl.us/fruits> 21 “Fresh Shippers Report: 2012

- 13 Season Through July 31, 2013,” Citrus Administrative Committee, August 22, 2013. <http://www.citrusadministrativecommittee.org/> 22 Ibid. 23 California Citrus Mutual Report to the CDFA Board

- June 30, 2010. Bob Blakely, Director of Industry Relations. < http://www.californiacitrusmutual.com/pdf/CDFA_Board_Report_6302010.pdf > Date accessed: September 9, 2011. 24 United States International Trade Commission (USITC), “Conditions o f Competition for Certain Oranges and15

packinghouses market their final product independently . We do not know the number of small

entity packinghouses that may

be affected by

this rule, and welcome public comment on their number and size, and how they may be affected. Establ ishments classified within Fresh Fruit and Vegetable Merchant Wholesalers (NAICS 424480) are considered small by SBA standards if they

employ not more than 100 persons . 25 In 20 12 , there were 4,854 fresh fruit and vegetable merchant wholesalers in the United States with a total of 10 1,854 paid employ ees. Out of the 4,854 vegetable merchant wholesalers, about 95.7 percent of the establishments in this category employ ed fewer than 100 people. 26 It is l ikely that domestic fruit merchant wholesalers that may be affected b y the rule are predominantly , if not entirely , small entities. Establishments classified within Pesticide and Other Agricultural Chemical Manufacturing (NAICS 3 25 320 ) are considered small by SBA if they

employ no more than 500 employ ees. In 2 012 , there were 2 1 0 p esticide and other agricultural chemical manufacturers in the United States with a total of 10, 0 75 paid employ ees. O f the 210 pesticide and other agricultural chemical manufacturer s , about 86.7 percent of the establishments in this category employ ed fewer than 100 people. 27 Establishments classified within) are considered small by SBA standards if annual sales are not more than $25.5 million. While data from the 2012 Economic Census is not y et available for Farm Product Warehousing and Storage (NAICS 493130 ), the 2007 Economic Census

Lemons in the U.S. Fresh Market, Inv 332

- 469,” Publication 3863, Washington, D.C., July 2006. 25 U.S. Small Business Administration, Table of Small Business Size Standards http://www.sba.gov/content/table

sm all

- busi ness - size

- standards 26 U.S. Economic Census,2012 County and Business Patterns (CBP) data. http://www.census.gov/econ/cbp/index.html 27 Ibid.16

reports that there were 713 establishments with about 48 percent of these establishments reporting a sales reven ue of less than $25.5 million

. 28 Fruit and Vegetable Markets (NAICS 445230) are considered small by SBA standards if annual sales are not more than $7.0 million. According to the 2007 economic census , there were 3,314 fruit and vegetable market establishments in this category , and more than 92 percent had annual sales of less than $5 million. 29 Nursery

and Tree Production (NAICS 111421) are considered to be small by SBA standards if annual sales are not more than $750 , 000. I n 20 12 , there were 3 2 , 048 with average sales revenue of about $2 21 , 000
. Virtually all Nursery

and Tree Production are small entities. 30 Establishments in Packing and Crating (NAICS 488991) are considered to be small by SBA if annual sales are not more than $25.5 million. In 20 12 , there were 1,432 packing and crating establishments in the United States with a total of 21,475 employ ees. O f the 1,435 packing and crating establishments , approximately 93 percent reported revenues of less than $25 million

. 31 Establishments in General Freight Trucking, local (NAICS 484110) are considered to be small by SBA if their annual sales are not more than $25.5 million

. In 2012, there were 28,595 local general freight trucking establishments in the United Sta tes with a total of 211,878

28 U.S. Census Bureau, 2007 County Business Patterns and 2007 Economic Census. 2007 Annual Tabulations , http://www.census.gov/econ/susb/data/susb2007.html 29 U.S. Census Bureau, 2007 County Business Patterns and 2007 Economic Census. 2007 Annual Tabulations , http://www.census.gov/econ/susb/data/susb2007.html 30 U.S 2007 Agriculture Census table 37. http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_1_US/ 31 U.S. Economic Census,2012 County and Business Patterns (CBP) data. http://www.census.gov/econ/cbp/index.html17

employ ees. Of the 28,595 establishments, approximately 95 percent reported revenues of less than $25 million

. 32 Establishments in Wood Container and Pallet Manufacturing (NAICS 321920) are considered to be small if they employ n o more than 500 employ ees . In 20 12 , there were 2,666 wood container and pallet manufacturers in the United States with a total of 49 , 155 paid employ ees. O f the 2,666 wood container and pallet manufacturers , 99.9 percent of the establishments in thi s categ ory employ ed fewer than 5 00 people. 33 **Potential Effects** The ty pes and volume s of citrus imported from China would be influenced by trends in citrus production, consumption and trade in China and the United States. Imports would compete with domestic ally produced fresh citrus and current U.S. imports

. I mports from China would need to appeal to U.S. consumers who make purchasing decisions based on a range of factors including variet y, appearance, flavor, freshness, product origin, production methods, as
we ll as price. The quantity

of oranges imported from China is likely to be relativel y small. The majority of China’s fresh orange exports, mostly navel oranges, go mainly to Russia and to neighboring countries in Asia. China’s fresh orange exports to Nort h America, mainl y to Canada, are very

limited, ranging from 100 to 300 metric tons (MT) per ye ar. The United States is a net exporter of fresh oranges

. An increase in orange imports of 300 MT per y ear would be

32 U.S. Economic Census,2012 County and Business Patterns (CBP) data. http://www.census.gov/econ/cbp/index.html 33 U.S. Economic Census,2012 County and Business Patterns (CBP) data. http://www.census.gov/econ/cbp/ index.html18

equivalent to about one

- fourth of one percen t of fresh orange imports from all sources in the 2012/13 season. As with oranges, the bulk of China’s tangerine and mandarin variety exports are to Russia and to neighboring Asian countries. Even though demand for fresh oranges has remained relat ivel y f

lat in recent years, U.S. consumption of tanger ine and mandarin varieties has been growing at a rate of about 9 percent per ye ar and the United States is now a net importer of those varieties . Imports of fresh tangerine and mandarin varieties from China w ould help meet the growing demand for these citrus species, and the quantity could match the nearl y 4.5 percent annual increase in imports (about 6,300 MT) that has occurred over the past five y ears. We expect that imports of pomelo and ponkan from China would be relativel y minor, helping to serve the U.S. niche markets for these species. The extent to which imports from China would result in greater competition for U.S. producers would depend on relative prices, the varieties shipped, the qualitati ve attributes of the imported citrus, and the extent to which the citrus imported from China would displace imports from other countries. Importers and distributors of China fresh citrus may also benefit from the proposed rule as it would provide them wit h new business opportunities. 

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

### Duplication, Overlap **, or**  **Conflict with Existing Rules and Regulations**  APHI S has not identified any duplication, overlap, or conflict of the proposed rule with other Federal rules.19



### Alternatives to **minimize Significant Economic Impacts of the**  **Rule** Based on o ur review of available information, APH IS does not expect the proposed rule to have a significant economic impact on small entities. We have prepared this initial regulatory flexibility anal ys is because our understanding of possible economic effects of th e rule on small entities is incomplete. In the absence of apparent significant economic impacts, we have not identified alternatives that would minimize such impacts.