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<h1 class="title"><a name="_Toc238895378"></a>Initial Regulatory Flexibility Analysis</h1>
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<h1 class="title">Proposed rule</h1>
<p><a name="_Toc238895381"></a>Importation of Ovine Meat from Uruguay (9 CFR part 94)</p>
<h1 class="title"> [APHIS-2008-0085]</h1>
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<h2 class="subtitle"><a name="_Toc238895382"></a>U.S. Department of Agriculture</h2>
<h2 class="subtitle"><a name="_Toc238895383"></a>Animal and Plant Health Inspection Service</h2>
<h2 class="subtitle"><a name="_Toc238895384"></a>February 2010</h2>
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<p>6</p>
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<p>Table of Contents
Introduction	1
Initial Regulatory Flexibility Analysis	1
Reasons Action is Being Considered	1
Objectives of and Legal Basis for the Rule	2
Potentially Affected Small Entities	2
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	4
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<h1><a name="_Toc255977069"></a>Introduction</h1>
<p>We are proposing to amend the regulations governing the importation of certain animals, meat, and other animal products by allowing, under certain conditions, the importation of fresh (chilled or frozen) ovine meat from Uruguay.  Based on the evidence in a risk assessment, we believe that fresh (chilled or frozen) ovine meat can be safely imported from Uruguay provided certain conditions are met.  This action would provide for the importation of ovine meat from Uruguay into the United States while continuing to protect the United States against the introduction of FMD.</p>
<h1><a name="_Toc238895387"></a><a name="_Toc238895454"></a><a name="_Toc255977070"></a>Initial Regulatory Flexibility Analysis</h1>
<p>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 603 of the Act requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis that describes expected impacts of a proposed rule on small entities.  </p>
<h2><a name="_Toc238895388"></a><a name="_Toc238895455"></a><a name="_Toc255977071"></a>Reasons Action is Being Considered</h2>
<p>Based on the evidence in a risk assessment, we believe that fresh (chilled or frozen) ovine meat can be safely imported from Uruguay provided certain conditions are met.  </p>
<h2><a name="_Toc238895389"></a><a name="_Toc238895456"></a><a name="_Toc255977072"></a>Objectives of and Legal Basis for the Rule</h2>
<p>Under the Animal Health Protection Act (7 U.S.C. 8301 <u>et</u> <u>seq</u>.), the Secretary of Agriculture may restrict the importation of any animal or article if the Secretary determines that the prohibition is necessary to prevent the introduction into or dissemination within the United States of any pest or disease of livestock.    </p>
<h2><a name="_Toc238895390"></a><a name="_Toc238895457"></a><a name="_Toc255977073"></a>Potentially Affected Small Entities</h2>
<p>The proposed action is not expected to have a significant economic impact due, in part, to the fact that the United States is a large net importer of ovine meat.  Imports of lamb and mutton have accounted for approximately half of U.S. supply over the last 5 years.  Most recently, imports have eclipsed domestic production as a percentage of total U.S. supply.  Additionally, total Uruguayan exports of ovine meat averaged only 13.6 percent of total U.S. imports over the past 5 years.  Although the expected level of imports from Uruguay is not known, they would compete with imports from Australia and New Zealand, the United States’ two largest suppliers of fresh (chilled or frozen) ovine meat.</p>
<p><b>Sheep and Goat Production in the United States</b></p>
<p>The U.S. sheep and wool industries have been marked by smaller inventories, declining production, shrinking revenues, and fewer operations over the last few decades.  In fact, the United States is a net importer of lamb and mutton and relies on imports to meet domestic consumption demands.  For example, in 2009, imports of lamb and mutton totaled 180 million pounds, and accounted for about 54 percent of the U.S. total consumption of 335 million pounds.  U.S. exports of lamb and mutton in 2007 totaled only 16 million pounds.  </p>
<p>Over the past decade, production of lamb and mutton in the United States has declined, while imports have increased.  Declining production has corresponded to a declining U.S. sheep population over the same period.  Consumption has remained relatively stable, with the higher level of imports offsetting lower domestic production (table 1).  The majority of U.S. imports of lamb and sheep meat originate in Australia, followed by New Zealand and Canada.  Most of this meat is imported as fresh/chilled and frozen bone in sheep cuts.[footnoteRef:1]   [1:  Lamb is defined as meat from a sheep that is less than 1 year old.  Mutton is defined as meat from a sheep 1 year old and older (American Sheep Industry Association, Inc.).  In this case, sheep cuts may refer to either mutton or lamb.] 
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<p><b>Table 1.–<i>U.S. lamb and mutton production, exports, imports, and consumption, 1998-2009</i></b></p>
<table><tbody><tr>	<td><p> </p>
</td>	<td><p>Production</p>
</td>	<td><p>Imports</p>
</td>	<td><p>Exports</p>
</td>	<td><p>Consumption</p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p>Million pounds</p>
</td></tr>
<tr>	<td><p>1998</p>
</td>	<td><p>251.0</p>
</td>	<td><p>112.3</p>
</td>	<td><p>5.8</p>
</td>	<td><p>357.5</p>
</td></tr>
<tr>	<td><p>1999</p>
</td>	<td><p>248.0</p>
</td>	<td><p>112.3</p>
</td>	<td><p>5.1</p>
</td>	<td><p>355.2</p>
</td></tr>
<tr>	<td><p>2000</p>
</td>	<td><p>234.0</p>
</td>	<td><p>129.5</p>
</td>	<td><p>5</p>
</td>	<td><p>358.5</p>
</td></tr>
<tr>	<td><p>2001</p>
</td>	<td><p>227.0</p>
</td>	<td><p>145.7</p>
</td>	<td><p>6.3</p>
</td>	<td><p>366.4</p>
</td></tr>
<tr>	<td><p>2002</p>
</td>	<td><p>221.9</p>
</td>	<td><p>159.9</p>
</td>	<td><p>6.8</p>
</td>	<td><p>375</p>
</td></tr>
<tr>	<td><p>2003</p>
</td>	<td><p>203.6</p>
</td>	<td><p>167.7</p>
</td>	<td><p>6.5</p>
</td>	<td><p>364.8</p>
</td></tr>
<tr>	<td><p>2004</p>
</td>	<td><p>199.2</p>
</td>	<td><p>180.9</p>
</td>	<td><p>8.1</p>
</td>	<td><p>372</p>
</td></tr>
<tr>	<td><p>2005</p>
</td>	<td><p>191.2</p>
</td>	<td><p>180.2</p>
</td>	<td><p>10.8</p>
</td>	<td><p>360.6</p>
</td></tr>
<tr>	<td><p>2006</p>
</td>	<td><p>190.3</p>
</td>	<td><p>190.4</p>
</td>	<td><p>18.5</p>
</td>	<td><p>362.2</p>
</td></tr>
<tr>	<td><p>2007</p>
</td>	<td><p>188.0</p>
</td>	<td><p>202.6</p>
</td>	<td><p>9.2</p>
</td>	<td><p>381.4</p>
</td></tr>
<tr>	<td><p>2008</p>
</td>	<td><p>180</p>
</td>	<td><p>190.7</p>
</td>	<td><p>11.8</p>
</td>	<td><p>358.9</p>
</td></tr>
<tr>	<td><p>2009</p>
</td>	<td><p>171</p>
</td>	<td><p>179.2</p>
</td>	<td><p>15.9</p>
</td>	<td><p>334.3</p>
</td></tr>
</tbody></table>
<p>Source: Livestock Marketing Information Center Database, USDA data compiled by LMIC; USDA/AFS, Global Agricultural Trade System, 2010.</p>
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<p><b>Table 2.–<i>U.S. lamb and sheep meat imports by country, 2004-2009</i></b></p>
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<table><tbody><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>2009</p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p>1,000 pounds</p>
</td></tr>
<tr>	<td><p>Australia</p>
</td>	<td><p>103,165</p>
</td>	<td><p>118,664</p>
</td>	<td><p>130,143</p>
</td>	<td><p>137,824</p>
</td>	<td><p>135,411</p>
</td>	<td><p>134,774</p>
</td></tr>
<tr>	<td><p>New Zealand</p>
</td>	<td><p>58,028</p>
</td>	<td><p>44,558</p>
</td>	<td><p>43,352</p>
</td>	<td><p>45,484</p>
</td>	<td><p>54,542</p>
</td>	<td><p>43,649</p>
</td></tr>
<tr>	<td><p>Canada</p>
</td>	<td><p>337</p>
</td>	<td><p>262</p>
</td>	<td><p>254</p>
</td>	<td><p>509</p>
</td>	<td><p>409</p>
</td>	<td><p>237</p>
</td></tr>
<tr>	<td><p>Others</p>
</td>	<td><p>245</p>
</td>	<td><p>331,</p>
</td>	<td><p>145</p>
</td>	<td><p>97</p>
</td>	<td><p>347</p>
</td>	<td><p>556</p>
</td></tr>
<tr>	<td><p>Total</p>
</td>	<td><p>161,775</p>
</td>	<td><p>163,814</p>
</td>	<td><p>173,894</p>
</td>	<td><p>183,914</p>
</td>	<td><p>190,711</p>
</td>	<td><p>179,216</p>
</td></tr>
</tbody></table>
<p>Source:  USDA/FAS, Global Agricultural Trade System, 2010.</p>
<p></p>
<p>The goat industry within the United States is growing, both in inventory and markets for goat products.[footnoteRef:2]  The changing demographics of the U.S. population are credited with increasing demand for goat products at the same time that increased hobby farming has resulted in more goat farms.  The small size of goats and their ability to forage on marginal rangeland has contributed to the popularity of this diminutive ruminant throughout the world.  Goats are also excellent providers of milk, thereby contributing both milk and meat to the household.  Because of the familiarity with goats that many cultures have, it is no surprise that as those cultures have become established within the United States, the demand for goat meat has increased.  We can expect the expansion of the U.S. goat industry as ethnic populations within the United States continue to grow. [2:  Much of the information in this section is taken directly from the APHIS report “The Goat Industry: Structure, Concentration, Demand and Growth.”  It is available online at: http://www.aphis.usda.gov/vs/ceah/cei/bi/emergingmarketcondition_files/goatreport090805.pdf.] 
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<p>According to the 2007 Census of Agriculture, there were approximately 2.5 million goats, up from 2.3 million in 2002.  However, most industry experts agree that the published goat population statistics for the United States tend to underestimate the true population.  Developing a more accurate estimate of the U.S. goat population is complicated by their many uses, direct sales of goats to consumers, and increasing demand that is prompting a rapid rate of market entry.  Imports of goat meat have remained relatively stable over the last 5 years, with a slight increase from 2003 to 2007 (table 2, above).  Most imported goat meat comes from Australia.</p>
<p><b>Potential Impacts</b></p>
<p>The proposed rule would affect sheep and goat producers, as well as feedlots and slaughter facilities.  Based on data from the 2007 Census of Agriculture and Small Business Administration (SBA) guidelines, we expect a majority of operations affected by the proposed regulation to be small entities.[footnoteRef:3]  Entities in the categories sheep farming (e.g., meat, milk, wool production) (North American Industry Classification System [NAICS] code 112410) and goat farming (e.g., milk, mohair production) (NAICS 112420) are considered small if their total annual sales do not exceed $750,000.  Data from the Census of Agriculture indicate that over 99 percent of sheep and goat operations are classified as small; of the 43,891 farms classified under the sheep and goat farming category (NAICS 1124), over 99 percent had annual sales of less than $500,000.[footnoteRef:4]  Entities in the category lamb 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 sheep farming (NAICS 112410).  Thus, we expect the majority of entities classified as lamb feedlots are small.[footnoteRef:5]  Entities classified as animal (except poultry) slaughtering (NAICS 311611) with not more than 500 employees are considered small by SBA standards.  The 2002 Economic Census reports 1,869 establishments in this category.[footnoteRef:6]  Of this number, 1,796 establishments (96 percent) had fewer than 500 employees.  Thus, the majority of slaughter establishments are considered small under SBA guidelines. [3:  The 2007 Census of Agriculture is available online at http://www.agcensus.usda.gov/Publications/2007/Full_Report/index.asp.  The SBA Table of Small Business Size Standards is also available online at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf.]  [4:  The Agriculture Census data combine industries classified within sheep farming (NAICS 112410) and goat farming (NAICS 112420) into a general sheep and goat farming category (NAICS 1124).]  [5:  Note there is no classification for goat feedlots.]  [6:  The 2002 Economic Census is available online at http://www.census.gov/econ/census02/.] 
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<p>Although the majority of the entities that may be impacted by the proposed rule to allow fresh ovine meat to be imported from Uruguay are small by SBA standards, they are not expected to be significantly affected.  The United States is a large net importer of ovine meat.  Imports of lamb and mutton have accounted for approximately half of U.S. supply over the last five years.  Most recently, imports have eclipsed domestic production as a percentage of total U.S. supply.  Additionally, total Uruguayan exports of ovine meat averaged only 13.6 percent of total U.S. imports over the past five years.  Although the expected level of imports from Uruguay is not known, they would compete with imports from Australia and New Zealand, the United States’ two largest suppliers of fresh (chilled or frozen) ovine meat.</p>
<p>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.</p>
<h2><a name="_Toc238895391"></a><a name="_Toc238895458"></a><a name="_Toc255977074"></a>Projected Reporting, Recordkeeping, and Other Compliance Requirements</h2>
<p>Reporting and recordkeeping requirements associated with the [proposed rule are discussed in the rule under the heading "Paperwork Reduction Act."</p>
<h2><a name="_Toc238895392"></a><a name="_Toc238895459"></a><a name="_Toc255977075"></a>Duplication, Overlap, or Conflict with Existing Rules and Regulations</h2>
<p>APHIS has not identified any duplication, overlap, or conflict of the proposed rule with other Federal rules.</p>
<h2><a name="_Toc238895393"></a><a name="_Toc238895460"></a><a name="_Toc255977076"></a>Alternatives to minimize Significant Economic Impacts of the Rule</h2>
<p>An alternative to the regulations would be to keep them unchanged, and thus to continue our prohibition on the importation of ovine meat from Uruguay.  However, based on the findings of our risk assessment, we believe that the provisions of the proposed rule adequately mitigate the risk that ovine meat from Uruguay may present of introducing FMD into the United States.  Accordingly, we rejected this alternative insofar as it would be inconsistent with the findings of the assessment, and would deny U.S. importers of ovine meat a potential source of revenue.    </p>
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