## United States

Department of Agriculture Anim al and Plant Health Inspection Service May 2013 **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 201**  **3 -**  **003 7**  **RIN 0579 -**  **AD78 Importation of**  **Potatoes from**  **Mexico**

Policy & Program Development Policy Analysis & Development

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## Summary This analy sis examines the expected economic impact for U.S small entities of a propo sed rule that would allow the importation of p otato tubers ( Solanum tuberosum L.

) for consumption from M exico into the United States

. The Small Business Administration’ s small

- entity standard for U.S. farms that produce potato tubers is annual receipts of not more than $750,000. I n 2007 , the average market value of sales by the 15,014 U.S. farms that produced potatoes was about $222, 000 , well below the small

entity standard. In recent years, the United States has shifted from being a net importer to being a net exporter of fresh or chilled table potatoes

. U.S average annual net suppl y from 2008 to 2010 (marketed production plus imports minus exports) was about 16.6 million metric tons (MT). Mexico’s average annual exports for the sam e years totaled about 1,50 0 MT . E ven if all of Mexico ’s exports were diverted to the United States, they w ould be equivalent to less than

one - hundredth of one percent of U.S net suppl y . Although most potato farms are small, based on the quantities of tab le potatoes traded by the two countries and U.S production, t his proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities.

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## Introduction
APHI S received a request from Mexico to authorize the importation of p otato tubers ( Solanum tuberosum L.

) for consumption into the United States. Currently , the regulations in 7 CFR 319.56 do not authorize the importation of potato es from Mexico . This action proposes to allow the importation of potato es (not seed) under a sy stems approach. In response to M exico’s request, APHIS produced a pest risk anal ys is and risk management document. Th e latter identifies the risk mitigation measures expected to prevent the introduction of plant pests in the commercial potato shipments. These measures include commercial c onsignments only , production b y a gr ower who is registered in a certification program, packing in a registered packinghouse, washing , cleaning, and treatment with a sprout inhibitor, external and internal inspections after packing , and certification that consignments of potato meet phy

tosani tary requirements. The Regulatory

Flexibility

Act requires agencies to evaluate the potential effects of their proposed and final rules on small business, small organizations and small governmental jurisdictions. Section 603 of the Act requires an agency to prepare an initial regulatory flexibility anal ys is (IRFA) that describes the expected impact of the rule on small entities and a description of an y significant alternatives to the proposed rule which accomplish the stated objectives of applicable statu tes and which minimize any significant economic impact of the proposed rule on small entities. In place of the IR FA, the head of the agency may certify that a proposed rule will not have a significant economic impact on substantial number of small entitie s. This analy sis provides the basis for this certification.

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## U.S **Potato Production and**  **Trade** Potatoes are the leading vegetable crop in the United States. They are g r own y ear - round, with the fall crop compris ing roughl y 90 percent of production. Unli ke most produce crops, potatoes are well

- suited for long

- term storage in climate

- contro lled rooms or containers. U.S table potato production as well as net supply (market production plus imports minus exports) over the three

- ye ar period, 2008 to 2010 , averaged about 1 6.6 million metric tons (MT) (table1). Table 1. U.S potato production , imports , and exports, 200 8

- 201 0 , metric tons

Pr oduc ti on Impor ts Ex por ts Net Suppl y 2008 16, 780, 595 486, 239 279, 545 16, 987, 289 2009 17, 005, 534 360, 430 309, 436 17, 056, 527 2010 15, 875, 896 346, 035 368, 657 15, 853, 274 3- yea r av er age 16, 554, 008 397, 568 319, 213 16, 632, 364 Sourc e: N ASS Agr ic ul tural S tati sti cs. Net s uppl y: marke te d pr oduc ti on plus impor ts m in us exp or ts.


### The United States trade in table potatoes in recent y ears has shifted the country from being a net importer to being a net exporter

. From 2008 to 2012 , o n average , the United States exported about 36 3 , 000 MT of fresh or chilled table potatoes (table 2). In 201 2 , the q uantity of potatoes exported by

the United States totaled nearly 42 9 , 000 MT and import s totaled about 281, 000 MT , yi elding net export s of about 14 8 , 000 MT

. Canada, the principal destination, received about 60 percent of U.S. potato exports, followed by Mexico, South Korea, Taiwan, and Malay sia

.

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Table 2. U.S fresh or chilled potato (except seed) exports and net exports , 200 8

- 2012 , metric tons
2008 2009 2010 2011 2012 Aver age Wo rl d 279, 545 309, 436 368, 657 428, 416 428, 917 362, 994 Canada 166, 355 203, 360 224, 661 275, 101 230, 130 219, 922 Me xic o 49, 921 56, 105 76, 133 65, 208 75, 247 64, 523 Kore a S outh 11, 848 8, 275 18, 535 16, 654 17, 816 14, 626 Tai wa n 10, 424 8, 432 7, 761 9, 082 17, 677 10, 675 Ma la ysi a 7, 924 4, 111 9, 620 12, 596 17, 181 10, 286 Re st o f the Worl d 7, 924 29, 153 31, 946 49, 774 70, 864 37, 932 Ex ports mi nus im por ts (2 06, 694) (5 0, 993) 22, 622 15, 807 147, 731 (1 4, 305) Sourc e: U. S. Ce nsus Bu re au , as re por te d by Gl obal Trad e Inf ormati on Se rv ic es , Inc
.


### Canada is the main supplier of potatoes to the United States (table 3). The U.S. im ports decreased from about 486, 000 MT in 2008 to about 281, 000 MT in 201 2

. Table 3. U.S fresh or chilled potato (except seed) imports , 200 8

- 2012, metric tons 2008 2009 2010 2011 2012 Aver age Worl d 486, 239 360, 430 346, 035 412, 609 281, 185 377, 299 Canada 486, 198 360, 313 346, 035 412, 598 281, 174 377, 264 Source : Gl oba l Trade A tl as Metri c To ns



## Potential Impact on Small Entities
Potato production is classified within the North American Industry C lassification Sy stem code 111211 , for which th e Small Business Administration’s small

- entity standard is annual revenue of not more than $750,000. 1 

### The latest data on the number of farms that produce potatoes are found in the 2007 Census of Agriculture, which reports that the average market

1 Sm all Business Administration Table of Small Business Size Standards http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf

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value of potatoes sold per farm was about $222, 000 . Clearly , most if not all potato producers are small entities. Table 4 shows that between 2002 and 2007, the number of farms that harvested potatoes increased from 9,408 to 15 , 014, but the total area planted in potatoes decreased from about 1,266,0 00 to 1, 132,000 acres

. In 2007, about 31 percent of the harvested acres were in Idaho. Table 4. U.S

. potato : Number of farms and area harvested in leading States, 2007 and 2002 2007 2002 2007 2002
U. S 15, 014 9, 408 1, 131, 963 1, 266, 087 Pennsylvania 1, 258 984 9, 690 11, 094 North Carol ina 1, 123 504 14, 760 19, 500 New Yo rk 860 530 18, 911 22, 094 Idaho 703 818 350, 905 364, 229 Wi sc onsi n 608 399 63, 933 80, 332 Mi ch in gan 600 395 42, 267 45, 840 Vir gi ni a 596 302 5, 408 5, 774 Other State s 9, 266 5, 476 626, 089 717, 224
Sour ce : NASS, Ce nsus of Ag ri cu lt ure , 2007 an d 2002. Numbe r o

f far ms Ac res



### M exico ’s annual exports of potatoes (not seed) from 2008 to 2010 averaged about 1, 50 0 MT, and were valued at about $ 724 ,000. Mexico’s annual imports of potatoes (not seed) for this same period averaged about 79,000 MT , valued at about $ 35.5 million, with es sentially all importe d from the United States . Even if all of Mexico’s table potato exports were diverted to the United States, they

wo ul d be equivalent to less than one

- half of one percent of U.S imports, and less than one

- hundredth of one percent of U.S net supply

. The APHI S Administrator has determined that this action will not have a significant economic impact on a substantial number of small entities.