### United States

Department of Agriculture Animal and Plant Health Inspection Service October, 2014 **Analysis in Support of Certification that the** 

**Rule will not have a Significant Economic Impact on a Substantial Number of Small**  **Entities Proposed**  **Rule APHIS 2014**  **- 0086**  **RIN 0579**  **- AE07**  **Importation of Fresh Pepper from Ecuador into the United States** 

Policy & Program Development Policy Analysis & Developmenti



### Summar

**y** The proposed rule would amend the regulations to allow the import ation of fresh peppers from Ecuador into the United States when a s ys tems approach to pest risk mitigation is used to prevent the introduction of quarantine pests. The sy stems approach would integrate prescribed mitigation m easures that cumulatively achieve the appropriate level of phy tosanitary protection. Most recent production data show that pepper yi elds in Ecuador have grown from 12,522 pounds/ha in 1996 to 66,361 pounds/ha in 2006
. The amount of fresh peppers exported from Ecuador in 2006 and 2007 was 96.3 metric tons (MT) and 206.5 MT, respectivel y. Sea shipping containers that are 40

- feet in length hold approximately 20 U.S MT. If this product is imported from Ecuador, considering the total volume exported by this c ountry during these years, APHI S estimates imports of no more than 10 containers (200 MT) of fresh peppers from Ecuador into the United States annually
. This quantity is the equivalent of less than 0.02 percent of annual U.S. fresh pepper production. In the United States , the average value of bell pepper production per farm in 20 12 was approximately

$5 2 , 3 00, and the average value of chili pepper production per farm was approximately

$ 20 , 7 00. Both levels are well below the small

- entity standard of $750,000. Establishments classified within NAI CS 111219, including pepper farms, are considered small by the Small Business Administration (SBA) if annual sales are not more than $750,000

. Clearly , pepper growers are predominantly small entities accordin g to the SBA standard
. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities.ii



### Table of Conte **nts** Summary
................................ ................................ ................................ .............................. i Introduction
................................ ................................ ................................ ......................... 1 U.S. Pepper Production and Trade
................................ ................................ ...................... 1 Potential Impact on Small Entities
................................ ................................ ...................... 41



### Introduction Pepper is a warm

- season crop that is sensitive to cold weather. There are two ty pes of peppers: the large

- fruited, mild

- flavored bell varieties , preferred b y most gardeners; and the hot varieties, which may

be used green. The mild peppers include bell, banana, pimiento, and sweet cherry , while the hot peppers include cayenne, celestial, large cherry , serrano, tabasco, and jalapeno. 1 The non

- pungent or sweet forms are widely used and are grown throughout much of the globe. The hot varieties dominate spicy foods in L atin America and elsewh ere. 2 Currently , fresh peppers from Ecuador are not allowed to be imported into th e United States . The proposed rule would allow the importation of fresh pepper s into the United States under a s ys tems approach to pest risk mitigation. It is part of a co ntinuing program to allow the importation of foreign agricultural products that APHI S has determined are without significant risk of introducing pests or diseases into the United States. T his analy sis provides the basis, as required b y the Regulatory Flex ibility Act, for certification by

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

### U.S. Pepper **Production and Trade** Peppers are widel y grown and consumed in the United States. U.S. per capita use of peppers has grown steadily and substantiall y since the 1980s. In 2012, Americans consumed an average of nearl y 12 pounds of bell peppers and more than 7 pounds of chili peppers per person,

1 University of California, D. 2007. Vegetable Research and Information Center, Pepper ( Capsicum annuum). Division of Agriculture and Natural Resources, University of California., California. Last accessed October 23, 2007, http://vric.ucdavis.edu 2 Eshbaugh, W. H. 1993. History and exploitation of a serendipitous ne w crop discovery. Pages 132

- 139 : New Crops (Janick, J., Simon, J.E .) . Wiley, New York, U.S.A.2

up from 5.9 pounds o f bell peppers and 4.8 pounds of chili peppers per person in 1990. 3 Peppers are also a significant source of U.S. farm income. During 2008

– 2013, annual farm cash receipts averaged $636 million from bell peppers and $147 million from chili peppers. The United States produced a total of about 687,000 metric tons (MT) of bell peppers and 188,000 MT of chili peppers in 2013. Total U.S. bell pepper production reached 800,000 MT in 2011, before declining in 2012 and 2013. Since 2000, U.S. chili pepper production has ranged from 145,000 MT to 231,000 MT. While peppers are grown on a large number of farms across the United States, production volumes are concentrated in certain States. Commercial bell peppers are principally

produced in California and Fl orida, but significant quantities are also grown in Georgia, Michigan, New Jersey , North Carolina, and Ohio. Chili pepper production is most heavily

concentrated in California and New Mexico, followed by Arizona and Texas. California is by

far the largest pepper producer , with more than 359,000 MT of bell peppers and 117,000 MT of chili peppers (52 and 63 percent of U.S. production) in 20 13
. Florida’s production of 199,000 MT of bell peppers in 2013 was about 29 percent of the U.S. total. New Mexico’s production of 58,000 MT of chili peppers was about 31 percent of the U.S. total. Although U.S. fresh pepper production continues to expand, it has not kept pace with demand and imports account for an increasing share of the market. Th e United States is , in fact, the world’s largest importer of fresh peppers, importing about 29 percent and exporting about 4 percent of fresh peppers traded worldwide in 2011. 4

3 USDA, Economic Research Service, U.S. per capita use of selected, commercially produced, fr esh, and processing vegetables and dry pulse crops, 1970

- 2012 . 2012 is preliminary. 4 Food and Agriculture Organization of the United Nations.3

As a net importer, the United States imported an average of nearl y 800,000 MT of fresh peppers annu ally

from 2009 through 2013 (table 1). About 85 percent of fresh pepper imports are from Mexico, and another 11 percent comes from Canada. Other sources include the Dominican Republic and the Netherlands (a little more than 1 percent each), and Honduras, El Salvador, Costa Rica, Guatemala, and Israel, which collectively account for just over 1 percent. Annual exports averaged approximately 58,000 MT from 2009 through 2013. Primary foreign markets for U.S. fresh peppers are Canada and Mexico, with more th an 95 percent of the peppers exported to Canada in 2013. Table 1. U.S. fresh pepper production, imports, exports, and domestic consumption, 2009 through 2013, 1,000 metric tons Year Production Imports Exports Net Imports a Domestic Consumption

b

-- 1,000 MT
-- 2009 989 649 63 585 1,574 2010 933 763 53 711 1,643 2011 992 779 59 720 1,712 2012 1,014 896 56 840 1,855 2013 890 906 57 848 1,738 5
- ye ar Average 963 799 58 741 1,704 Source: Production from USDA, NASS, Vegetables Summary, 2011, 2012 and 2013. Imports and exports from Global Trade Information Services, Inc. Columns may not sum due to rounding. a Imports minus exports. b U.S. production (excluding processed utilization) plus net imports. Year

- to - year carry - over not included. Most recent production data show that pepper yi elds in Ecuador has grown from 12,522 pounds/ha in 1996 to 66,36 1 pounds/ha in 2006
. The amount of fresh peppers exported from E cuador in 2006 and 2007 was 96.3 metric tons (MT) and 206.5 MT, respectivel y 5

. S ea shipping contai ners that are 40 feet in length hold approximately 20 U.S MT. If this product is imported

5 USDA, APHIS, “I mp ortation of Fresh Pepper Fruit

– Capsicum annuum L., Capsicum baccatum L., Capsicum chinense Jacq., Capsicum frutescens L., and Capsicum p ubescens Ruiz & Pav.

– from Ecuador into the United States, March 25, 2014
.4

from Ecuador, considering the total volume exported by this country during these years, APHI S estimates imports of no more than 10 containers (200 MT) of fresh peppers from Ecuador into the United States annually
. This quantity is the equivalent of less than 0.02 percent of annual U.S. fresh pepper production. 

### Potential Impact on Small Entities According to 20 12 Census of Agriculture data, 11,568 farms produced bell peppers that ye ar, with the majorit y ( 11,315 ) harvesting peppers for sale on the fresh market. Similarly , 7,951 farms produced chili peppers, with the majority ( 7,587 ) harvesting for the fresh market. More than 7 8 percent of bell pepper producers and about 80 percent of chili pepper producers operated on less than 1 acre. Another 1 6 percent of bell pepper producers and about 14 percent of chili pepper producers operated on fewer than 5 acres. Less than 1 percent of all pepper producers had operations of 100 acres or more. 6 Establishments classified within NAI CS 111219, including pepper farms, are considered small by the Small Business Administration (SBA) if annual sales are not more than $750,000. The average value of bell pepper produ ction per farm in 20 12 was approximately $5 2 , 3 00, and the average value of chili pepper production per farm was approximately $ 20 , 7 00. Both l evels are well below the small

- entity standard of $750,000. Clearly , pepper growers are predominantly

small entit ies according to the SBA standard. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities.

6 USDA National Agricultural Statistics Service. http://quickstats.nass.usda.gov/
.