## United States

Department of Agriculture Animal and Plant Health Inspection Service August 2013 **Analysis in Support of Certification that the** 

**Rule will not have a Significant Economic Impact on a Substantial Number of Small**  **Entities Final**  **Rule APHIS**  **- 2012**  **- 0002**  **RIN 0579 -**  **AD63 Avocado from Continental Spain** 

Policy & Program Development Policy Analysis & Development

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## Summary APHI S is going to allow imports from continental Spain of fresh avocado under a sy stems approach to pest risk mitigation. Over the three
- ye ar period, 200 9
- 201 1 , annual U.S. avocado production averaged about 222,498 metric tons (MT). In comparison, U.S. net imports (imports minus exports) averaged about 3 97,350 MT per year over this same period, resulting in U.S. supply

(production plus net imports) that averaged about 619 , 848 MT per year. Annual avocado imports from continental Spain are expected to total about 260 MT , that is, an amount equivalent to 0.1 2 percent of U.S. production, 0.0 6 percent of U.S. net imports, and 0.0 4 percent of U.S. supply , based on the 200 9
- 201 1 average annual quantities. U.S. avocado producers and avocado importers are predominantl y small entities. Given the small quantity

of avocado expected to be imported from continental Spain, no U.S. entity, large or small, is expected to be significantly affected by

the proposed rule. The APHI S Administrator has determined that this action, if promulgated, will not have a significant economic impact on a substantial number of small entities.

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## Table of Contents Summary
................................ ................................ ................................ .............................. i Introduction
................................ ................................ ................................ ......................... 1 Potential Impact on Small Entities
................................ ................................ ...................... 2

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## Introduction This analysis provides the basis, as required by the Regulatory

Flexibility

Act, for certification by

the APHIS Administrator that the rule will not have a significant economic impact on a substantial number of small entities
. In response to a request from the Spanish national plant protection organization, APHI S is going to allow the importation into the United States of fresh avocado from continental Spain under a s ys tems approach intended to prevent the introduction of quarantine pests. This anal ys is provides the basis, as required by the Regulatory

Flexibility

Act, for certification by

the APHIS Administrator that the final rule will not have a significant economic impact on a substantial number of small entities. In 20 11 , the United States was the world’s fifth largest avocado producer and accounted for about 6 percent of the global production. The four leading avocado producing countries, with the ir production share inside the parenthesis, were: Mexico ( 30 percent) , Chil e (7 percent) , Dominican Republic ( 6 percent) , and Indonesia (6 percent) each, respectively (table 1). U.S. commercial production of avocado occurs in three States: California accounts for about 90 percent, followed by Florida with about 9 percent, and Hawaii with less than 1 percent. California grows mainl y Hass avocado (characterized by purplish
- black skin) in San Diego, Riverside, Ventura, and Santa Barbara counties. Florida
- produced avocados are larger, green
skinned varieties grown mainly in Miam i
- Dade County . California’s avocado acreage (bearing and non
- bearing) is more than 7 times that of Florida, but has declined since 2005 by about 20 percent, while Florida’s avocado acreage has increased b y about 14 percent. During this time, U.S. bearing acreage has remained steady at just over 68,700 acres. In 2010, U.S. utilized

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production of avocado totaled about 135,500 metric tons (MT), only one - half of the 271,000 MT produced in 2009, and indicative of the significant variability in yield from year to year (table 2). In the last decade, U.S. per capita consumption of avocado has risen significantly, from 1 kilogram in 2000 to 1.86 kilograms in 2010, representing an annual growth rate of about 6.4 percent. 1 

### Although the United States is a major producer of avocado, it is also the largest import market (since 2002) and has been a net importer since the late 1980s. During this time, the gap between U.S. imports and U.S. exports has widened substantially . Th e average annual value of U.S. avocado imports, 200 9
- 201 1 , was nearl y $622 million, compared to average annual exports valued at less than $16 million (table 2). Spanish avocado producers expect to export to the United States about 260 MT of fresh
avocado annuall y, an amount equivalent to 0.15 percent of U.S. production, 0.07 percent of U.S. net imports (imports minus exports), and 0.05 percent of U.S. supply (production plus net imports), based on 200 9
- 201 1 average annual U.S. production and trade quantities (table 3). 

## Potential Impact on Small Entities Entities that may be directly affected by the final rule are U.S. importers and producers of avocado. Avocado importers are classified in the North American Industry Classification Sy stem under Fresh Fr

uit and Vegetable Merchant Wholesalers (NAICS 424480) . Avocado producers are classified under Other Noncitrus Fruit Farming (NAI CS 111339)
. 2 

### The Small Business Administration ( SBA) has established guidelines for determining which establishments are to be considered small. A firm primarily engaged in fresh fruit and vegetable wholesaling is

1 USDA, Economic Research Service. 2 This industry comprises establishments primarily engaged in growing noncitrus fruits (except apples, grapes, berries, and fruit and nut combinations.

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considered small if it employ s not more than 100 persons . A firm primarily engaged in n on c itrus f ruit farming is considered small if it has annual sales of not more than $750,000
. In 2007, nearl y 95 percent of fruit and vegetable wholesale establishments (4,207 of 4,437 businesses) that operated the entire ye ar were small by the SB A’s small
- entity

threshold of not more than 100 employees
. 3 

### That same year, nearly 93 percent of farms that sold fruits, tree nuts, or berries (104,424 of 112,690 operations) had annual sales of less than $500,000, well below the SBA’s small
- entity threshold of $750,000. 4 

### The subset of these farms that comprise the industry

Other Non
- citrus Fruit Farming numbered 23,641, and can be assumed to be also primarily composed of small entities. 5 

### Of these Other Non
- citrus Fruit Farming establishments, there were 8,245 avocado farms in 2007, also presumed to be principal ly small operations. While most entities that may be affected b y the final rule are small, any effects would be in significant because of the small quantity of avocado expected to be imported from continental Spain
. Under these circumstances, the APHIS A dministrator has determined that this action will not have a significant economic impact on a substantial number of small entities
.

3 U.S. Census Bureau, 2007 Economic Census
. Wholesale Trade: Subject Series

—Establishment & Firm Size: Summary Statistics by Employment size of establishments for the United States.
. 4 USDA NASS, Census of Agriculture, Volume 1, Table 59. Summary by Market Value of Agricultural Products Sold: 2007. 5 USDA NASS, Census of Agriculture, Volume 1, Table 46
. Selected Characteristics of Farms by North American Industry Classification System: 2007.

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Table 1. World’s Top 5 Avocado Producers, 2002
- 2011 (thousand metric tons) Countries **2002 2003**  **2004 2005**  **2006 2007**  **2008 2009**  **2010 2011**  Average (2002

– 11) 10 year

Share (%) **Me xico**  901 905 987 1,022 1,134 1,143 1,125 1,231 1,107 1,269 **(** 1,082 ) 30 **Chile** 140 140 160 160 205 260 331 328 330 369 **(** 24 1 **)** 7 **Indonesia** 238 256 222 228 240 202 225 258 224 276 **(** 237 **)** 7 **Dominic. Republic**  148 274 219 114 216 184 187 184 289 295 **(** 211 **)** 6 **USA** 181 212 163 283 247 193 116 269 158 239 **(** 206 **) 6**  Others 1,406 1,45 0 1,51 1 1,649 1,591 1,671 1,662 1, 789 1,912 2,04 0 **(** 1,6 68 **)** 4 6 World Total 3,014 3,237 3,262 3,456 3,633 3,653 3,646 4,059 4,020 4,488 **(** 3,64 7 **)** 100 Source: FAOSTAT 201 3
. Numbers are rounded so they may not always mat ch.
Table 2. Annual U.S. Production and U.S. and Spanish Avo cado Trade , 2009
- 2011 (quantities in metric tons) 200 9 20 1 0 201 1 Quantity Value Quantity Value Quantity Value U.S. utilized avocado p roduction 270,799 $429,586,000 1 58,150 $ 3 7 6 ,10 3 , 808 238,544 $492,100,00 U.S. avocado e xports 2,455 $4,515,437 18,502 $31,340,087 7,341 $25,043,810 U.S. avocado imp orts 431,734 $711,176,603 345,010 $574,698,302 415,306 $912,998,844 **U.S. net imports 429,279**  **$706,661,166 326,508**  **$543,358,215 407,965**  **$887,955,034** Spain’s avocado e xports 53,053 $119,044,669 54,422 $117,026,309 70,888 $172,648,154 Spain’s avocado im ports 30,275 $63,981,049 32,822 $62,630,100 29,848 $62,014,060 Spain’s net exports 22,778 $55,063,620 21,600 $54,396,209 41,040 $110,634,094 Source: USDA NASS; U.S. Census Bureau, as reported by Global Trade Information Services, Inc.

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Tab le 3. Average Annual Volume of U.S. Avocado Production and of expected U.S. & Spanish Trade, 200 9
- 201 1 US Avocado Production and Spain’s

Avocado Trade 3
- Y ear Average Quantity ( metric tons ) Com parative Size with respect to the volume (260 metric tons/year) of expected US avocado im

ports from Spain U.S. utilized p roduction in avocados 222,498 0.1 2 percent U.S. avocado e xports 9, 433 2. 76 percent U.S. avocado i mp orts 3 97,350 0.07 percent U.S. net i mp orts of

avocados 3 87,917 0.0 7 percent U.S. avocado supply 619,848 0.0 4 percent Spain’s exports of avocados 5 9,454 0.4 2 percent Spain’s imports of avocados 30,982 0.8 4 percent Spain’s net exports of avocados 2 8,473 0. 91 percent Sources: USDA NASS; U.S Census Bureau, as reported by Global Trade Information Services, Inc.; Spanish Government, SGAISV. 

### The APHI S Administrator has determined that this action will not have a significant economic impact on a substantial number of small entities.