<html xmlns="http://www.w3.org/1999/xhtml">
<head>
<meta name="cp:revision" content="2">
<meta name="meta:word-count" content="1266">
<meta name="extended-properties:Application" content="Microsoft Office Word">
<meta name="meta:last-author" content="raiadicicco">
<meta name="dc:creator" content="klstone">
<meta name="extended-properties:Company" content="USDA APHIS">
<meta name="meta:print-date" content="2009-04-27T18:50:00Z">
<meta name="xmpTPg:NPages" content="5">
<meta name="dcterms:created" content="2010-02-01T15:09:00Z">
<meta name="dcterms:modified" content="2010-02-01T15:09:00Z">
<meta name="meta:character-count" content="7222">
<meta name="extended-properties:Template" content="Normal.dotm">
<meta name="X-TIKA:Parsed-By" content="org.apache.tika.parser.DefaultParser">
<meta name="X-TIKA:Parsed-By" content="org.apache.tika.parser.microsoft.OfficeParser">
<meta name="dc:title" content="Animal and Plant Health Inspection Service (PPD-PAD)">
<meta name="extended-properties:TotalTime" content="600000000">
<meta name="Content-Length" content="60416">
<meta name="meta:page-count" content="5">
<meta name="Content-Type" content="application/msword">
<title>Animal and Plant Health Inspection Service (PPD-PAD)</title>
</head>
<body><p>Animal and Plant Health Inspection Service</p>
<p>Economic Analysis and Certification Statement
</p>
<p>Proposed Rule:  Recognition of the Brazilian State of Santa Catarina as free of foot-and-mouth disease, rinderpest, swine vesicular disease, classical swine fever, and African swine fever to allow importation of live ruminants, live swine, and their products from Santa Catarina</p>
<p>Docket No.: 09-034-1</p>
<p>July 1, 2009</p>
<p>This analysis provides a factual basis for certification by the Administrator of the Animal and Plant Health Inspection Service, as required by section 605 of the Regulatory Flexibility Act (RFA) that the proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities.</p>
<p>APHIS currently recognizes the Brazilian State of Santa Catarina as an area where foot-and-mouth disease (FMD), rinderpest, swine vesicular disease (SVD), classical swine fever (CSF), and African swine fever (ASF) exist.  However, APHIS is proposing to amend the regulations in 9 CFR part 94 to add Santa Catarina to the list of regions considered free of FMD, rinderpest, SVD, CSF, and ASF.  A risk analysis conducted by APHIS concludes that Santa Catarina is free of these diseases.  Based on this conclusion, the proposed change would allow the importation of live ruminants, ruminant semen, ruminant meat, ruminant products, live swine, swine semen, pork meat, and pork products from Santa Catarina.</p>
<p>The proposed rule is not expected to have a significant economic impact on a substantial number of small entities due to the fact that it is not expected to result in beef or other ruminant meat exports to the United States of any appreciable quantity, and trade effects for pork products are likely to be insignificant.  As noted in the risk evaluation for this rule, Santa Catarina contains less than three percent of Brazil’s cattle, most of which are dairy animals.  Brazil’s sheep and goat populations are also concentrated in parts of the country other than Santa Catarina, and their products are nearly entirely destined for the domestic market.  
</p>
<p> 
Santa Catarina accounts for approximately one-fourth of Brazil’s pork production and one-third of Brazil’s pork exports.  As projected by ABIPECS, the Brazilian Pork Industry and Exporter Association, the rule is expected to result in average pork exports from Santa Catarina to the United States of 10,000 metric tons (MT) per year over five years.  This level of U.S. pork imports by the United States would be equivalent to about two percent of Brazil’s annual pork exports (510,000 MT), three percent of annual U.S. pork imports (309,000 MT), and one-tenth of one percent of annual U.S. pork production (10,281,000 MT), based on data averaged over the years 2007 and 2008.  As underscored by the last statistic in particular, we do not expect economic impacts of the proposed rule to be significant.</p>
<p><b>Pork Production in the United States</b></p>
<p>Consolidation in the pork industry has resulted in a shift in the size and number of operations.  Compared to historical production, more pigs are being produced by fewer operations.  Additionally, this industry has been marked by increased concentration (vertical integration) in that many slaughter firms own the pigs from the time they are born until slaughter, relying on contracting arrangements with growers to manage the daily care of the animals throughout the different production phases.  Most hogs are produced in some type of confinement facility, which allows for year-round production.  Approximately 53 percent of all production sites are classified as total confinement.
</p>
<p>The United States is a net exporter of pork (table 1) and has been the second largest exporter of pork, trailing the European Union, in recent years.  In 2008, the United States surpassed the European Union as the largest pork exporter.  Other major exporters include Canada and Brazil. Historically, Japan, Mexico and Canada are the primary markets for U.S. pork exports (table 2), accounting for 63 percent of average exports from 2004 to 2008.  However, U.S. pork export markets may be shifting.  In 2008, Hong Kong and Russia together received 20 percent of U.S. pork exports, accounting for a larger share than Canada, whereas the five-year average market shares for Hong Kong and Russia were five percent and seven percent, respectively.  The marked increase in exports to these countries is likely due to beneficial trade agreements and market forces.</p>
<table><tbody><tr>	<td><p><u>Table 1– U.S. pork production, exports, and imports, 2004-2008</u></p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p>Production</p>
</td>	<td><p>Exports</p>
</td>	<td><p>Imports</p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p>1,000 Metric Tons</p>
</td></tr>
<tr>	<td><p>2004</p>
</td>	<td><p>9,311.80</p>
</td>	<td><p>989.07</p>
</td>	<td><p>498.71</p>
</td></tr>
<tr>	<td><p>2005</p>
</td>	<td><p>9,391.18</p>
</td>	<td><p>1,209.33</p>
</td>	<td><p>464.41</p>
</td></tr>
<tr>	<td><p>2006</p>
</td>	<td><p>9,558.96</p>
</td>	<td><p>1,358.55</p>
</td>	<td><p>448.91</p>
</td></tr>
<tr>	<td><p>2007</p>
</td>	<td><p>9,962.02</p>
</td>	<td><p>1,424.82</p>
</td>	<td><p>439.28</p>
</td></tr>
<tr>	<td><p>2008</p>
</td>	<td><p>10,599.05</p>
</td>	<td><p>2,117.51</p>
</td>	<td><p>377.32</p>
</td></tr>
<tr>	<td><p>Source: Livestock Marketing Information Center Database, USDA data compiled by LMIC, converted to metric tons.</p>
</td></tr>
</tbody></table>
<table><tbody><tr>	<td><p><u>Table 2– U.S. pork exports by country, 2004-2008</u></p>
</td>	<td><p><u></u></p>
</td>	<td><p><u></u></p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p>2004</p>
</td>	<td><p>2005</p>
</td>	<td><p>2006</p>
</td>	<td><p>2007</p>
</td>	<td><p>2008</p>
</td>	<td><p>Average</p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p>1,000 Metric Tons, Carcass Weight Equivalent</p>
</td></tr>
<tr>	<td><p>Japan</p>
</td>	<td><p>417.7</p>
</td>	<td><p>474.4</p>
</td>	<td><p>460.6</p>
</td>	<td><p>486.6</p>
</td>	<td><p>600.4</p>
</td>	<td><p>488.0</p>
</td></tr>
<tr>	<td><p>Mexico</p>
</td>	<td><p>241.6</p>
</td>	<td><p>244.1</p>
</td>	<td><p>276.2</p>
</td>	<td><p>204.8</p>
</td>	<td><p>305.7</p>
</td>	<td><p>254.5</p>
</td></tr>
<tr>	<td><p>Canada</p>
</td>	<td><p>106.3</p>
</td>	<td><p>137.1</p>
</td>	<td><p>147.4</p>
</td>	<td><p>166.7</p>
</td>	<td><p>191.6</p>
</td>	<td><p>149.8</p>
</td></tr>
<tr>	<td><p>Russia</p>
</td>	<td><p>30.4</p>
</td>	<td><p>42.7</p>
</td>	<td><p>94.7</p>
</td>	<td><p>110.8</p>
</td>	<td><p>195.1</p>
</td>	<td><p>94.7</p>
</td></tr>
<tr>	<td><p>Hong Kong</p>
</td>	<td><p>14.6</p>
</td>	<td><p>10.6</p>
</td>	<td><p>22.6</p>
</td>	<td><p>57.6</p>
</td>	<td><p>222.2</p>
</td>	<td><p>65.5</p>
</td></tr>
<tr>	<td><p>Source: ERS CWE calculations using data from U.S. Department of Commerce, Bureau of the Census, converted to metric tons.</p>
</td></tr>
</tbody></table>
<p><b>Potential Impacts</b></p>
<p>Imports of pork from Santa Catarina are expected to be 50,000 MT over a five-year period, assuming imports of 10,000 MT on a yearly basis.  This annual level of imports would be equivalent to approximately two percent of average U.S. imports over the period 2004 to 2008.  Additionally, imports from Santa Catarina would compete with imports of pork from Canada and Denmark, the United States’ two largest suppliers of pork.</p>
<p>The proposed rule would have potential implications for swine producers and slaughter facilities.  Based on data from the 2007 Census of Agriculture and Small Business Administration (SBA) guidelines, we expect a majority of those affected by the proposed regulation to be small entities.
  Entities in the category hog and pig farming (NAICS 112210) are considered small if their total annual sales do not exceed $750,000.  Data from the Census of Agriculture indicate that 82 percent of hog and pig operations are classified as small; of the 74,789 farms classified under the hog and pig farming category, 61,101 operations had annual sales of less than $500,000.  Entities in the category hog feedlots are considered small if they have total annual sales of not more than $750,000.  These operations are classified under the same code as hog and pig farming (NAICS 112210).  Thus, we expect the majority of entities classified as hog feedlots are small.  Entities classified as animal (except poultry) slaughtering (NAICS 311611) with not more than 500 employees are considered small by SBA standards.  The 2007 Economic Census reports 1,597 establishments in this category.
  Of this number, 1,466 establishments (92 percent) had fewer than 100 employees.  In similar data from the 2002 Economic Census, 96 percent of 1,869 establishments had fewer than 500 employees.
  Thus, the majority of slaughter establishments are considered small under SBA guidelines.</p>
<p><b>Summary</b></p>
<p>The rule is not expected to result in beef or other ruminant meat exports to the United States of any appreciable quantity, and trade effects for pork products are likely to be insignificant.  The United States is a net exporter of pork.  Pork imports from the State of Santa Catarina in Brazil are expected to be equivalent to approximately three percent of average U.S. fresh pork imports.  These imports would compete with imports from Canada and Denmark, currently the United States’ largest suppliers of pork.  Taking into consideration probably partial displacement of pork imported from these countries by projected pork imports from Santa Catarina, the net increase in imports is expected to be less than three percent.</p>
<p>The majority of swine producer and slaughter facilities are considered small under SBA guidelines.  However, given the United States’ position as one of the largest pork exporters in the world, the market impacts resulting from the small amount of imports expected to come from Santa Catarina are likely to be minimal.
</p>
<p>Based on the factors presented above, APHIS certifies that the proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities.</p>
<p>� APHIS-VS-CEAH-NAHMS.  October 2007.  Part I: Reference of Swine Health and Management Practices in the United States, 2006, National Health Monitoring System.  #N475.1007.  Fort Collins, CO.
</p>
<p>� The 2007 Census of Agriculture is available online at � HYPERLINK "http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp" ��http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp�.  The SBA Table of Small Business Size Standards is also available online at � HYPERLINK "http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf" ��http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf�.
</p>
<p>� The 2007 Economic Census is available online at � HYPERLINK "http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ECN&_tabId=ECN1&_submenuId=datasets_4&_lang=en&_ts=264361774447" ��http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ECN&_tabId=ECN1&_submenuId=datasets_4&_lang=en&_ts=264361774447�.  Note the detailed statistics by employment size for the Manufacturing sector have not been released for the 2007 Economic Census.
</p>
<p>� 2002 Economic Census is available online at � HYPERLINK "http://www.census.gov/econ/census02/" ��http://www.census.gov/econ/census02/�.
</p>
<p>
</p>
<div class="footer"><p class="footer">PAGE  </p>
<p class="footer">1</p>
</div>
</body></html>