### Initial Regulatory Flexibility Analysis (IRFA) Proposed 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

May 2011i



### Summary This proposed rule is in response to a request from the national plant protection organization (NPPO) of Vietnam to export fresh litchi and longan to the continental United States. Inthe 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 volumes in 2008 were about 535 metric tons (MT) for litchi and 776 MT for longan
. V irtuall y 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 proposed rule may have a negative economic impact on longan growers and, to a lesser extent, on litchi growers, particularl y when the fruit is sold in Asian and Hispanic markets where the demand for 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 18 p ercent and more than 100 percent , respectively , of U.S. import level s for these two fruits in 2010. N egative impacts for U.S. producers would be moderated to the extent that imports from Vietnam displace imports from other foreign sources. For the propose d rule, APHI S does not have an alternative to the proposed sy stems approach for allowing the importation of fresh litchi and longan fruit from Vietnam
. Widely
rang ing prices for litchi and longan among U.S. markets and consumers’ varying purchasing criteria in regard to price, quality and sustainability may

indicate opportunities for domestic growers to alleviate negative effects of increased foreign competition through alternative marketing arrangements or marketing channel s .ii



### Table of Contents Summary
................................ ................................ ................................ .............................. i Introduction
................................ ................................ ................................ ......................... 1 Production and Trade of Litchi and Longan
................................ ................................ ....... 2 U.S. Production
................................ ................................ ................................ ............... 3 Florida
................................ ................................ ................................ ......................... 3 Hawaii
................................ ................................ ................................ ......................... 5 California
................................ ................................ ................................ .................... 6 World Production and Trade
................................ ................................ ........................... 7 Vietnam Production and Exports
................................ ................................ ................ 8 Imports of Li tchi and Longan by the United States
................................ .................... 9 Initial Regulatory

Flexibility

Anal ys is
................................ ................................ .............. 11 Reasons for Action
................................ ................................ ................................ ........ 11 Objectives and Legal Basis for Rule
................................ ................................ ............. 11 Potentially

Affected Small Entities
................................ ................................ ............... 12 Projected Reporting, Recordkeeping, and Other Compliance Requirements
............... 13 Duplication, Overlap, or Conflict with Existing Rules and Regulations
...................... 13 Alternatives to minimize Significant Economic Impacts of the Rule
........................... 131



### Introduction In this document, we consider the potential effects on small entities, as required by the Regulatory

Flexibility

Act (RFA), of a proposed rule that would allow the commercial importation of fresh litchi ( Litchi chinensis Sonn.) and longan ( Dimocarpus longan Lo ur.) fruit from Vietnam into the c ontinental United States except Florida. T o mitigate phy tosanitary risks , litchi and longan fruit from Vietnam would be subject to a sy stems approach specified in a new § 319.56
- 51. 1 Section 603 of the RFA requires an agency to prepare and make available for public comment an initial regulatory flexibility

analy sis (IRFA) describing the expected impact of a proposed rule on small entitie s, 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, especiall y with respe ct to Florida ’s production and sale of litchi and longan , prevent s consideration of certification at this time . We have , therefore , prepared this IRFA , and welcome public comment
. Section 603(b) of the Act specifies that an IRFA shall contain:

 A description of the reasons for action b y the agency;

 A statement of the objectives of, and legal basis for , the proposed rule;

 A description of and, where feasible, an estimate of the number of small entities to which the proposed rule will potentially affect ;

 A description of the projected reporting, recordkeeping and other compliance requirements of the proposed rule;

1 Pest risks associated with the importation of litchi and longan from Vietnam are outlined in a pest risk assessment prepared by APHIS
.2  An identification, to the extent practicable, of all relevant Federal rules which may duplicate, overlap or conflict with the propose d rule; and

 A description of any significant alternatives to the proposed rule which accomplish es the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities. Before addressing these IRFA 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 litchi 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. 

### Production and Trade of Litchi and Longan Litchi and lo ngan are subtropical fruits of the Sapindaceae family and are native to southern China. Li tchi, also known as lichi, lichee, laichi, leechee or l ych ee, usually has a showy color of strawberry

red, but can sometimes appear rose, pinkish or amber. Its harv esting 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 referred to as the "little brother of litchi", or li

- chihnu, "slave of litchi.” 2 Compared to litchi’s relatively short season , longan is available ye ar - round as a result of an off
- season flower induction method of cultivation
.

2 United Nations, Economic and Social Commission for Asia and the Pacific, 2008, “Enhancing competitiveness of Asian fruits
. ” http://www.unapcaem.org/publication/F

- fruits.PDF3

U.S. Product ion In the United States, only s outh ern Florida and Hawaii, and to a very limited extent , California, are capable of producing these increasingl y 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 ) and California ( estimated to be from 20 to 60 acres). Florida In Florida, litchi and longan production apparently increased rapidl y in the 1990’s , although there are no published data on numbers of farms, acreage s , production volumes, or market values. Based on publications and personal communications , we sur mi s e that planting acreages between 1990 and 2004 increased from about 200 acres to about 800 to 1,200 acres for litchi , and from about 7 0 acres to about 400 acres for longan. 4 Abo ut 90 percent of Florida’s litchi and longan is produced in Miami

- Dad e County, and the remaining in Lee and Palm Beach c ounties
. 5 P roduction volumes in recent years are estimated to be about 1 million pounds of litchi and 2 million pounds of longan. 6 A shift away

3 Com piled from various sources: 2008 Hawaiian tropical special fruits statistic, University of Florida IFAS Extension publications including Crane, Jonathan, August 2008 “Crop profile of lyc hee 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 , and USDA

-NASS September 2009 “Hawaii Tropical Specialty Fruits.” http://www.nass.usda.gov/Statistics_by_State/Hawaii/Publications/Fruits_and_Nuts/tropfrt.pdf 4 Crane, Jonathan August 2008 “Crop profile of lychee and longan in Florida” http://www.ipmcenters.org/cropprofiles/docs/FLlycheeLongan.pdf 5 Florida Agriculture, .for litchi http://www.florida

- agriculture.com/marketing/lychee_popup.htm , f or longan http://www.florida

- agriculture.com/marketing/images/maps_images/longan.jpg 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.4

from litchi production and toward increased longan production has been prompted by two factors : (1) less consistent annual yield s for litchi than for longan, and (2) litchi’s relativel y short season (mid

- May

through earl y July) , compared to ye ar - round availability of longan achieved through an off

- season flower induction technique
. B ased on average seasonal price s for litchi of $3 per pound and for longan of $2 per pound, Florida’s market values for the two fruits in 2008 were estimated to be about $ 3 million and $2 .8 million , respectively
. 7 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
.

August 2008 “Importation of Tropical Fruits from Thailand” http://edis.ifas.ufl.edu/pdffiles/FE/F E71900.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 Thail and” 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.pdf 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/tropical/suppliers.htm5

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

County Number of

Farm s Total Market

Value of Products Sold ($ million) County Rank

in Florida Average Per

Farm Sales Market

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

Rank in Florida Miami

- Dade 2,498 $661 2 $264,652 (D) 15 Lee 944 $116 21 $122,945 $29 16 Palm Beach 1263 $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 disclo sed. Any tabulated item that identifies 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 (AMS), prices of litchi and longan 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 l itchi , 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
. Hawaii Except for 2010, when there was a severe drought , the production of longan and litchi in Hawaii ha s been steadil y increasing, due to the ir growing popularity and producers’ access to local farmers ’ markets
. Most litchi grown in Hawaii is sold and consumed within the State
. 11 Markets for the Hawaiian longan in the continental United States and in Canada , espe ciall y along

10 USDA Agricultural Marketing Service (AMS) Fruit and vegetable market ne ws portal. http://www.marketne ws.usda.gov/portal/fv 11 Personal communications: Ken Love. president of Hawaii Tropical Fruit Growers; Richard Johnson, former president of Hawaii Tropical Fruit Growers; and Peter Follet, Research Entomologist, USDA ARS.6

the West Coast, are well

- established and 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 suppl y . 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. Utilize d production in 2008 totaled 230 ,000 pounds of litchi valued at $6 33 ,000 , and 310,000 pounds of longan valued at $992,000

. 12 A 2009 report shows that the value s of 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

. Lo ngan is the second most important tropical specialty fruit after rambutan , and litchi is the fourth most important tropical specialty fruit after mango
. The total value of sales of tropical specialty fr uit in Hawaii equaled $ 4 million in 2008
. 13 California L itchi and longan are considered to be promising 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

12 Utilized production reported by NASS may be understated by as much as one

- fo urth due to some growers not participating in the NASS surveys. 13 USDA NASS, September 2009 “Hawaii tropical specialty fruits” http://www.nass.usda.gov/Statistics_by_State/Hawaii/Publications/Fruits_and_Nuts/tropfrt.pdf7

production of litchi , in California and onl y 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. China’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. S imilarly , its longan planted area ( 1 million acres) and production (937,500 MT) account ed for 70 percent and 60 percent, respectivel y , 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 Vietnam (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 States, litchi is considered a difficult crop to grow for consistent yi elds. F urthermore, it is highl y 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 , 0 00 MT in 199 8 ; Taiwan Province of China , 130,500 MT in 1997 and 53,385 MT in 1998 ; Vietnam , 365,000 MT in 1999 ; and Australia , 1,000 MT in 2000
. 18 Thailand i s the largest exporter of longan in the world. In2007, Thailand produced 495 ,000 MT of longan (twice its production in 1998), and exported 32 percent (158 ,000 MT) as

14 Personal correspondence with Gary Bender, Farm Adviser, University of California Cooperative 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. 17 Ibid. 18 FAO, Prof. Wong Kai Choo, December 2000, “Longan Production in Asia” ftp://ftp.fao.org/doc rep/fao/003/x6908e/x6908e00.pdf . Most recent FAO data available.8

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 frui t 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 highl y perishable nature create a large, concentrated produce flow to the market with ov ersupply 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 ) , d omestic 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 abo ut 50,000 MT in 2011. Vietnam’s production of longan s for export , on the other hand, has shown 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 that were produced in areas serving exports.

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%20 longan%20fruit%20wine %20as%20a%20small%20scale%20enterprise%20in%20thailand.pdf 21 Post
- im port Vegetable Product Quarantine Centre, Ministry of Agricultural and Rural Development, VietnamFigure 1 . Vietnamese production volumes of litchi and longan, 20

Source: Post
- im

port Vegetable Product Quarantine Centre, Ministry of Agriculture and Rural Development, Vietnam
.The Vietnamese NPPO estimates consumed domesticall y ; the rest is exported to European countries, Russia , and longan exports is not available; however, European countries , including the U southern China and neighboring countries such as Singapore and Hong Kong. irradiation facility is opening in Binh Duong and longan to the United States. Imports of L itchi and L ongan b y the United States U.S. litchi imports fell from the reason for this decline nor the

22 Ibid. 23 FAO, December 2004, “Fruits of Vietnam” articles. 9

. Vietnamese production volumes of litchi and longan, 20 01
- 2010

im port Vegetable Product Quarantine Centre, Ministry of Agriculture and Rural Development, The Vietnamese NPPO estimates that about 70

- 75 percent of litchi production is

; the rest is exported to China, Hong Kong, Canada, ASEAN countries, and other former Soviet Republics. 22 In formation on Vietnam however, it is believed Vietnam is increasing its exports to including the United Kingdom and France , and to Canada , in addition to southern China and neighboring countries such as Singapore and Hong Kong. 23

is opening in Binh Duong P rovince that would facilitate the export of litchi longan to the United States.

ongan b y the United States from 5 , 222 MT in 2007 , to 3,244 MT in 2010
. We do not know reason for this decline nor the U.S. market ’s capacity for growth in the near term

FAO, December 2004, “Fruits of Vietnam” http://www/fao.org/docrep/008/ad523e/ad523e00.htm

im port Vegetable Product Quarantine Centre, Ministry of Agriculture and Rural Development, production is China, Hong Kong, Canada, ASEAN countries,

In formation on Vietnam ’s increasing its exports to

in addition to A new facilitate the export of litchi

We do not know in the near term
. Many

http://www/fao.org/docrep/008/ad523e/ad523e00.htm, various ne ws10

industry participants believe it will expand , based on increasing Asian and Hispanic populations
. Table 2 shows the annual amount s of litc hi impo rted, 2007
- 2010, by source country . China has been consistentl y 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 18 percent of litchi imports in 2010
. 24 All things equal, an increase in the quantity supplied of this magnitude is likel y to cause downward pressure on prices. Table 2
. U.S. imports of fresh litchi , 2007
- 2010, by country (metric tons) Country 2007 2008 20 09 2010 Chile

- - 23
- China 3,208 1,740 1,775 2,194 Israel 105 42 39 19 Mexico 422 493 321 474 Taiwan 1,485 589 759 556 Viet Nam 2
- - - Total 5,222 2,864 2,917 3,243 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 ye ars. Hawaii has been suppl yi ng an increasing amount of longan to the mainland , now around 100 MT annually . Output of Florida longan is expected to increase , with production in 2011 expected to be close to 2 million pounds (900 M T). About 80 percent of longan produced in Florida is believed to be sold outside of Florida and may exceed 700 MT in 2011. Vietnam is expecting to export 1,200 MT of longan to the United States , equivalent to 68 percent of longan imports in 20 09 and greater than the total quantity imported in 2010
. Even more so than in the case of litchi imports from Vietnam, th e additional longan imports (together

24 One metric ton is equivalent to one air container.11

with any increased supply from Florida) w ould 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 China 1,272 865 179 160 Guatemala

- - 0 .2
- Taiwan - - - 37 Thailand 159 1,689 1,579 986 Viet Nam 22 44
- - Total 1,4533 2,598 1,759 1,183 Source: APHIS
- PPQ
. 

### Initial Regulatory Flexibility Analysis APHI S has prepared this initial regulatory flexibility

analy sis in order that the public may have the opportunity to review and offer comments on expected small

- entity effects of this proposed rule . W e welcome information and comment s that can help us to better understand potential impacts for small entities . We address here items as required b y Section 603(b) of the Regulatory

Flexibility Act. Reasons for Action APHI S is responding to a request from Vietnam’s NPPO that the regulations in “Subpart

Fruits and Vegetables” (7 CFR 319.56

- 1 through 319.56

- 50) be amended to allow the importation of fresh litchi and longan fruit from Vietnam into the continental United States. APHI S has determined that this request should be granted given that pest risks would be mitigated using a prescribed sy stems approach. Objectives and Legal Basis for Rule The objective of the proposed rule is to allow the importation of litchi and longan from Vietnam , on condition that these fruits would be grown in a production area that is registered with and monitored by Vietnam’s NPPO , irradiat ed at a specified level in Vietnam at an APHIS12

certified facility , and accompan ied by a phyt osanitary certificate issued by Vietnam’s NPPO with an additional declaration stating that the consignment was inspected in Vietnam and found free of Peronophythora litchii
. Regulations setting phyt osanitary 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 , respectively
. The Plant Protection Act (Public Law 106

- 224, June 20, 2000) is the statutory

basis for parts 305 and 319. Itauthorizes the Secretary of Agriculture to implement regulations designed to prevent the introduction and spread of plant pests and diseases. Potentially Affected Smal l Entities We have provided information on litchi and longan growers in Florida, Hawaii, and California. Entities potentially affected by

the proposed rule are classified within the following industries , according to the North American Industry Classification Sy stem : 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 N on Citrus Fruit Farming in 2007. 25 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
.

25 USDA NASS. 2007 Census of Agriculture, Table 46. Selected Charact eristics 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

Establishments classified with in Postharvest Crop Activities (except cotton ginning) are considered small b y 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 establishments. Establishments classified with in 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 establishments in this category employed fewer than 100 people. Projected Reporting, Recordkeeping, and Other Compliance Requirement s The proposed rule would not result in U.S . entities being subject to reporting, recordkeeping or other compliance requirements beyond those already required for the importation of irradiated fruit
. Phy tosanitary certification and fulfillment of related import conditions would be the responsibili ty of the exporting party. 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. Alternatives to minimize Significant Economic Imp acts of the Rule For the proposed rule, APHI S does not have an alternative to the proposed sy stems approach for allowing the importation of fresh litchi and longan fruit from Vietnam. Our review of available information suggests that the proposed 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 longan that Vietnam expects to export to the United States, namely , 600 MT and 1,200 MT would be equivalent to , respectively , about 18 percent and more than 100 percent of U.S. import levels for these two fruits in 2010. Negative impacts for U.S. producers14

would be moderated to the extent that imports from Vietnam displace imports from other foreign
sources. Widely ranging prices for litchi and longan among U.S. markets may indicate opportunities for domestic growers to alleviate negative effects of increased foreign competition through improved marketing arrangements
. Demand for produce in traditional 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 which provide certain product attributes, such as freshness, 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 distribution and marketing plans by

litchi and longan producers to bring their fruit into these growing niche markets all the more difficult
. Public agencies at the local, State, and Federal levels , including
university agricultural e xtension office s , may 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 with other specialty fruit s , such as mango, Asian pear , Fuji apple , and Kiwi fruit, increased imports of litchi and longan and their wider availability may help stimulate the demand for these fruits among U.S.15

consumers in the long er run . Such prospect s w ould be beneficial to domestic growers, as it would make expanded U.S. production operations more economically feasible
. We invite public comment concerning potential effects of the proposed rule on U.S. small entities
.