### United States

Department of Agriculture Anim al and Plant Health Inspection Service Novem ber 2011 Analysis in Support of Certification that the

Rule will not have a Significant Economic Impact on a Substantial Number of Small Enti ties
Final Rule APHIS - 2010 - 0024 RIN 0579 - AD38 Importation of Pomegranate Fruit from Chile into the Continental United States under a Systems Approach

Policy & Program Development Policy Analysis & Developmenti



### Summary Pomegranates may

be imported in to the continental United States when fumigated with methy l bromide. This rule will allow the importation of fresh pomegranate fruit from Chile using a s ys tem s approach to pest risk mitigation
. Under this sy stems approach, the fruit will be grown in a pl ace of production that is registered with the Government of Chile and certified as having a low prevalence of Brevipalpus chilensis
. The fruit will undergo pre

- harvest sampling and post

- harvest inspection. Each consignment of fruit will be accompanied by a ph yt osanitary certificate with an additional declaration stating that the fruit had been found free of Brevipalpus chilensis based on field and packinghouse inspections. E ntities potentially

af fected by the rule are U.S. pomegranate fruit growers . They are classified within the industry , Other Non

- citrus Fruit Farming , for which the S mall B usiness A dministration small

- entity standard is annual sales of not more than $750,000. A nnual receipts for this industry

averaged about $112,000 in 2007 , well below the small

- entity standard
. While most U.S. pomegranate operations are small, they are not expected to be significantl y affected b y the rule. R elativel y small quantities of pomegranates are expected to be imported from Chile because of this rule , equivale nt to less than 4 percent of the estimated U.S. production of pomegranates consumed domestically in recent y ears. Moreover, Chilean pomegranates will be imported during the U.S. off

- season. The counter seasonality will preclude negative price impacts for U.S. producers . Off

- season availability

of pomegranates from Chile may help broaden demand for th is fruit, thereb y benefiting domestic producers over time. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.1



### Introduction Currently , pomegranate fruit is approved for importation from Chile into the continental United States when fumigated with methy l bromide
. This rule will allow the importation of fresh pomegranate fruit from Chile using a s ys tems approach to pest risk mitigation
. Under this sy stems approach, the fruit will be grown in a place of production that is registered with the Governm ent of Chile and certified as having a low prevalence of Brevipalpus chilensis
. The fruit will undergo pre

- harvest sampling and post

- harvest inspection. Each consignment of fruit will be accompanied b y a phytosanitary certificate with an additional decla ration stating that the fruit had been found free of Brevipalpus chilensis based on field and packinghouse inspections. The importation of pomegranates from Chile will benefit U.S. consumers and could potentially benefit U.S. producers as well. Pomegranat es have become increasingl y popular in recent ye ars, mainl y due to research on their health benefits. The number of food and drink products containing pomegranate increased seven

- fold between 1995 (258 products) and 2009 (1800 products) (Gloor 2009). Pom egranate juice has three times the amount of antioxidants as green tea or red wine; antioxidants reduce the effect of dangerous oxidants (Wohlfarter et al. 2010). Due to widel y publicized health benefits, U.S. demand for and production of pomegranates ar e expected to continue to increase. 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. Section 60 4 of the Act requires an agency to prepare a final regulatory flexibility anal ys is ( F RFA) that describes the expected impact of the rule on small entities. In place of the F RFA, the head of an agency may certify that a rule will not have a significant economic impacton a substantial number of small entities. This analy sis provides the factual basis for

certification of this rule. 

### U.S. Pomegranate Production and Trade The United States is one of the top five producers of pomegranates worldwide. According to the Natio nal Agricultural Statistics Service (NASS), there were 369 pomegranate farms with 9,535 planted acres in 2002; in 2007, there were 599 farms with 24,517 acres (table 1 ). Of the 24,517 total planted acres, 50.6 percent (12,415 acres) were of nonbearing age . Of the 599 farms, 48.6 percent (291 farms) had orchards of nonbearing age. California accounted for over 99 percent of the total pomegranate acreage in 2007, with 24,458 acres. Pomegranate trees begin producing fruit three years after planting and full yi elds are ty picall y realized during the sixth year ( Day et al. 2010). The number of planted acres of commercial pomegranates in 2009 was approximately 29,000 acres. In the next two to three ye ars, the number of bearing acres will increase greatly
.
Table 1 . Number of U.S. pomegranate farms and acres, 2002 and 2007

Total Bearing age acres Nonbearing age acres Farm s Acres Farm s Acres Farm s Acres 2002 369 9,535 312 4,044 109 5,49 1 2007 599 24,517 432 12,103 291 12,415 Source: Census of Agriculture, National Agricultural Statistics Service, USDA. U.S. pomegranate production is not reported separately by the Californ ia Department of Food and Agriculture and USDA, but rather is combined with other fruits under “miscellaneous fruit production.” However, yi eld estimates have been developed by the University

of California Cooperative Extension (table 2 ). Using the NASS data for 2007 (assuming that all 24,517 acresare now of bearing age) and an average yi eld of about 3.7 MT per acre, U.S. production is

estimated to be around 90,700 MT per ye ar and growing. Approximately 75 percent of the U.S. pomegranate crop is sold do mestically , while the remaining 25 percent is exported to Japan, Taiwan, Hong Kong, Australia, Singapore, Mexico, and certain Middle Eastern countries (Pomegranate Council 2007). After adjusting for exports, U.S. domestic supply is estimated to be around 68,000 MT. Table 2. Estimated Average Pomegranate Yields, 2004

– 2008 Year Boxes per Acre MT per Acre

2004 333 4.23 2005 300 3.81 2006 234 2.98 2007 286 3.64 2008 296 3.76 Five

- year average 290 3.68 Source: 2010 Pomegranate Costs and Returns, UC Cooperative Extension. Note: Pomegranate yields are measured in boxes per acre. Boxes w eigh 28 lbs. Converted from short tons. 

### Potential Impact on Small Entities
E ntities potentially

affected by

the rule are pomegranate fruit growers . They are class ified within the industry , Other Non

- citrus Fruit Farming (NAI CS 111339). Establishments in this industry are considered small by the S mall B usiness A dministration (SBA) standard if annual sales are not more than $750,000. It is reasonable to assume that most if not all U.S. growers of pomegranates are small entities, based on composite industry data. In 2007, there were 23,641 farms in the Other Non

citrus Fruit Farming category . Their produc tion had a total market value of about $2.6 billion. Thus, annual receipts for this industry averaged $111,700 , well below the SBA’s small

- entity standard
.The quantity of fresh pomegranates that will be imported from Chile because of this rule is estimated to be between 10 and 100 40

- foot shipping containers. A t y pical 40

- foot container can transport 26 MT of pomegranates, so the total quantity that will be imported from Chile is expected to range from 260 to 2,600 MT per y ear. If 2,600 MT of fresh pomegranates are imported, this amount will be equivalent to less than four percent of the estimated U.S. production that is consumed domestically (68,000 MT). Although these percentages are small, the increase in supply of pomegranates could contribute to a slight price decline for U.S. producers, if the fruit were impo rted during the same months that domestically produced pomegranates are sold. However, the Chilean fruit will be imported during the U.S. off

- season. Pomegranates grown in the United States, for example, are harvested between the months of August and Octo ber ( Day et al. 2010). After harvest, fresh pomegranates can be stored for up to three months in cold storage making them commerciall y available from October through December. Chile plans to export pomegranates to the continental United States during winter months in the Northern Hemisphere. Due to this counter seasonality , fresh pomegranates from Chile will provide consumers with increased availability of the fruit but not directly compete with U.S. production. For pomegranates, given its rapidly expan ding market, the off

- season fruit imports from Chile may

help broaden demand for pomegranates , thereby benefiting U.S. producers over time. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

### References

California Pomegranate Council, 2007. California Pomegranates. http://www.pomegranates.or g/home.shtml
. Census of Agriculture, 2007 http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp
. Day , Ken R., Karen M. Klonsky , and Richard L. De Moura. S ample Costs to Establish and Produce Pomegranates. San Joaquin Valley , 2010. University of California Cooperative Extension. Global Trade Atlas, http://www.gtis.com/gta/default.cfm Gloor, Sue. “The Po litics of the Pomegranate.” Bard Politik (2009). Bard Globalization and International Affairs. Bard College, 2009. http://bgia.bard.edu/articles.php?cid=5&id=2
. U.S. Small Business Administrat ion. U.S. Small Business Administration: Table of Small Business Size Standards Match to North American Industry Classification Sy stem http://www.sba.gov/idc/gr oups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf Wohlfarter, M., Giliomee, J.H. & Venter, E. 2010. A Survey of the arthropod pests associated with commercial pomegranates, Punica granatum (Lythraceae), in South Africa

. African Entomology

18(1 ): 192

- 199.