### United States

Department of Agriculture Animal and Plant Health Inspection Service February 2015 **Initial Regulatory Flexibility Analysis** 

**Proposed Rule**  **APHIS 2014 -**  **0099 RIN 0579**  **- AE06**  **Importation of T**  **omato P**  **lantlets in Approved Growing Media from Mexico** 

Policy & Program Development Policy Analysis & Developmenti



### Summary The proposed rule would allow the importation of tomato plantlets in approved growing media from Mexico into the continental United States. Currentl y, onl y tomato plantlets from Canada can be imported into the United States. The tomato plantlets from Mexico would be allowed to be imported only to APHIS
- approved facilities under compliance agreement, and would be used onl y for fruit production, not for the selling of the imported plantlets themselves. Data are not available on the production or trade for tomato plantlets. However, U.S. greenhouse (protected
- culture) tomato production and import levels provide evidence of the expandin g derived demand for tomato plantlets. In 2011, protected
- culture tomatoes made up 40 percent of the U.S. tomato supply , up from less than 10 percent in 2004; they now dominate the retail industry
. The value of protected
- culture tomato imports by the Uni ted States grew by two thirds between 2009 and 2013, in response to expanding consumer demand, from $795 million to $1.33 billion. P rotected
- culture tomato producers are classified in the North American Industry Classification Sy stem within Other Vegetable (except Potato) and Melon Farming (NAICS 111219), for which the Small Business Administration small
- entity standard is annual receipts of not more than $750,000. The average market value of agricultural products sold by operations in this industry

in 201 2 was about $314,000. While we are unable to determine the number of businesses that would be affected b y the proposed rule, we can assume that most of them are small entities. The proposed rule would enable U.S. producers of protected culture tomatoes t o draw upon Mexican plantlet suppliers in addition to Canadian and domestic suppliers. The NPPO of Mexico has stated that, if this rule were finalized, they would expect the exportation ofii

approximately

4 million plantlets annually to the United States. Itis unknown to what extent these tomato plantlets imported from Mexico will displace tomato plantlet imports from Canada, and we therefore cannot project the net increase in imports. I f there were no import displacement, we think that the tomato plantle t imports from Mexico could result in an increase in U.S. protected
- culture tomato production of between 5 and 10 percent. However, we understand that the U.S. protected
- culture tomato industry is in favor of having an additional source of tomato plantlet imports besides those from Canada.iii

**Table of Contents** Summary
................................ ................................ ................................ .............................. i Introduction
................................ ................................ ................................ ......................... 1 Reasons Action i s Being Considered
................................ ................................ .................. 3 Potentially

Affected Small Entities
................................ ................................ ..................... 3 Projected Reporting, Recordkeeping, and Other Compliance Requirements
..................... 4 Duplication, Overlap, or Conflict with Existing Rules and Regulations
............................ 4 Alternatives to minimize Significant Economic Impacts of the Rule
................................ . 41



### Introduction The Regulatory

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 describes expected impacts of this proposed rule on small entities, as required b y section 603 of the Act. The proposed rule would allow the importation of tomato plantlets in approved growing media from Mexico into the continental United States. The imported plantlets in growing media would be required to have been produced and transported under a sy stems approach to pest risk mitigation , as specified in a bilateral operational workplan. The imported plantlets would be allowed to be imported only to APHIS
- approved facilities under compliance agreement, and would be used onl y for fruit production. No increase of these plants such as by cuttings, grafting, o r seeds would be authorized, and distribution of the imported tomato plantlets beyond the confines of the importing facility would be prohibited. While U.S. greenhouse producers of organic tomatoes have expressed interest in gaining access to organic tomato plantlets from Mexico, the proposed action is not restricted to organic p lants. Data are not available on the production or trade for tomato plantlets. However, U.S. greenhouse tomato p roduction and import levels provide evidence of the expanding derived demand fo r tomato plantlets. The North American greenhouse (more generall y termed protected

- culture ) tomato industry began in earnest in the late 1990s. By 2005, U.S., Mexican, and Canadian growers were produc ing nearly

equal amounts of protected
- culture tomatoes for the U.S. market. Since then, production has increase d in all three countries, but Mexico has emerged as the dominant supplier2

to the United States , with 62 percent of the market in 20 11. 1 The value of protected
- culture tomato imports by

the United States grew b y two - thirds between 2009 and 2013, in response to rapidly expanding consumer demand, from $795 million to $1.33 billion. 2 In 2011, protected
- culture tomatoes made up 40 percent of the U.S. tomato supply , up from less than 10 pe rcent in 2004; they now dominate the retail industry
. 3 U.S. produc tion of protected
- culture tomatoes totaled 1.17 billion pounds in 2013
. 4 Allowing tomato plantlets in growing media to be imported from Mexico would provide U.S. greenhouse producers with additional plantlet sources. Currentl y, tomato plantlets in growing media (and bare
- rooted plants) are onl y permitted entry into the United States from Canada. The proposed rule would enable U.S. producers of protected
- culture tomato es to draw upon Mexican plantlet suppliers in addition to Canadian and domestic operations. The quantity of tomato plantlets expected to be initially imported from Mexico is about four million per year . We do not know the extent to which these plantlets will displace tomato plantlet imports from Canada and therefore cannot project the net increase in imports. If there were no import displacement, the tomato plantlet imports from Mexico could result in an increase in U.S. protected
- culture tomato production of between 5 and 10 percent
. 5 However, a principal industry

objective is to establish an alternative to C anadian imports ; the net impact of the proposed rule on U.S. protected
- culture tomato production is not expected to be this large.

1 USDA ERS, Amber Waves, February 2013. 2 Department of Commerce, compiled by U.S. International Trade Commission, special request. 3 USDA ERS, Amber Waves, February 2013. 4 USDA ERS, Vegetables and Pulses Outlook, September 2014, http://www.ers.usda.gov/media/1680444/vgs
- 354.pdf 5 Four million tomato plantlets * 16 to 30 pounds of tomatoes per plant ( http://aggie
horticulture.tamu.edu/greenhouse/hydroponics/economics.html ) = 64 million to 120 million pounds of protected
- culture tomatoes; 64 million/1.17 billion = 5.5 percent, and 120 million/ 1.17 billion = 10.3 percent.3



### Reasons Action is Being Considered APHI S has determined that the current prohibition on imports of tomato plantlets in appr oved growing media from Mexico is unnecessary because the pest risks can be successfull y mitigated. Currentl y, tomato plantlets in growing media are not admissible into the United States except from Canada. The imported plantlets in approved growing media would be required to have been produced and transported under a s ys tems approach to pest risk mitigation, and could only be imported to APHIS
- approved facilities in the continental United States under compliance agreement for fruit production
. 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 risk of introducing pests or diseases into the United States, if appropriate mitigation measure s are applied. 

### Objectives of and Legal Basis for the Rule The o bjective of the rule is to allow tomato plantlets in approved growing media from Mexico to be imported into the continental United States under certain conditions. 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 importatio n 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. 

### Potentially Affected Small Entities The U.S. greenhouses that would h ave access to tomato plantlets in growing media from Mexico are the businesses that would be directl y affected b y the proposed rule. They are classified in the North American Industry Classification Sy stem within Other Vegetable (except4

Potato) and Melon Farming (NAICS 111219). The Small Business Administration small
- entity standard for this industry is annual receipts of not more than $750,000. According to the 2012 Census of Agriculture, that year the average market value of agricultural products sold b y operations classified within NAI CS 111219 was about $314,000. 6 While we are unable to determine the number of businesses that would be affected b y the proposed rule, we can assume that most of them are small entities. 

### Projected Reporting, Record **keeping, and Other Compliance Requirements**  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 **Regulati ons**  APHI S has not identified any duplication, overlap, or conflict of the proposed rule with other Federal rules. 

### Alternatives to minimize Significant Economic Impacts of **the Rule** Based on our review of available information, APHI S does no t expect effects of the proposed rule for small entities would be significant
. As noted earlier in this document, while about four million plantlets would be exported annually from Mexico to the United States if this rule is finalized, we know that a principal obj ective of the U.S. protected
- culture tomato industry

6 2012 Census of Agriculture, http://www.agcensus.usda.gov/Publications/2012/Full_Report/Volume_1,_Chapter_1_US/st99_1_051_05 2.pdf5

is to establish an alternative to Canadian imports. However, we do not know the extent to which these plantlets would displace tomato plantlet imports from Canada. We also lack information about the s ize and structure of the U.S. tomato plantlet industry and the number of tomato plantlet producers that qualify as small entities , and have, accordingl y, prepared an initial regulatory

flexibility

analy sis. Based on the information we do have, and the apparent absence of significant economic impacts, we have not identified alternatives that would minimize such impacts. We welcome informed public comment in order to better determine the extent to which U.S. s mall entities may

be affected b y this proposed rule.