### United States

Department of Agriculture Anim al and Plant Health Inspection Service June 201 4 **Final Regulatory Flexibility Analysis** 

**Final Rule**  **APHIS 2013 -**  **0045 RIN 0579**  **- AD82**  **Importation of Fresh Bananas from the Philippines into Hawaii and**  **t he United**  **States Territories**

Policy & Program Development Policy Analysis & Developmenti



### Summary This analy sis examines impacts for U.S. small entities of a rule that w ill allow fresh banana imports from the Philippines into Hawaii and the U.S. Territories

. Commercial production of bananas in the United States takes place in Hawaii, where most if not all of the banana farms are small entities. Currently , abo ut 4 .1 million metric tons (MT) of bananas are imported into the United States (including the state of Hawaii) every y ear. In 2011, Hawaii’s banana harvest totaled about 7,900 MT compared to U.S. imports of about 4.1 million MT. We do not have information at this point on the quantity of bananas that the Philippines expects to ship to the State of Hawaii or to the U.S. territories, or the quantity and origin of bananas alread y imported into these destinations. However, Hawaii as well as the U.S. territori es , alread y import bananas from other places since the volume of banana consumption is greater than their production. Ingeneral, the quantity of U.S. imports from Philippines is expected to be relativel y insignificant, equivalent to about 0.05 percent of U.S. imports from other countries

. What percent would go to Hawaii depends on the demand from the consumers in the state of Hawaii and in the other US territories. Consumers in Hawaii and the U.S. territories would benefit from the additional source of f resh bananas which are of similar quality as the domestic ones

. Therefore, APHIS does not expect the final rule to have a significant economic impact on small entities.ii



### Table of Contents Summary

................................ ................................ ............ **Error! Bookmark not defined.** Introduction

................................ ................................ ................................ ......................... 1 Need for and Objectives of the Rule

................................ ................................ ................... 1 Potentially

Affected Small Entities

................................ .... **Error! Bookmark not defined.** Projected Reporting, Recordkeeping, and Other Compliance Requirements

..................... 3 Steps taken by

APHI S to minimize Significant Economic Impacts on Small Entities

...... 31



### Introduction The Regulatory

Flexibility

Act requires agencies to evaluate the potential effects of their final and final rules on small businesses, small organizations and small governmental jurisdictions. This final regulatory flexibility

analy sis describes expected impacts of this rule on small entities, as required by section 604 of the Act. The anal ys is examines impacts of a rule that will allow fresh banana imports from the Philippines into Hawaii and U.S. territories on U.S. small entities . The rule will amend 7 CFR 319.5, and is part of a continuing program to a llow the importation of foreign agricultural products that APHI S has determined are without significant risk of introducing exotic plant pests into the United States. 

### Need for and Objectives of the Rule This final rule is to amend the regulations to allow the importation of commercial shipments of hard, green bananas from the Philippines into Hawaii and the United States Territories under a s ys tems approach. The Plant Protection Act of 2000 gives the Secretary of Agriculture the legal authority to regulate the importation of plants and plant products to prevent the introduction of plant pests or noxious weeds into the United States. The Philippine Bureau of Plant Industry (BPI) submitted a market access request for bananas to be approved for import into the U.S. which will allow the importation of hard, green bananas from the Philippines to Hawaii and the United States Territories . APHI S and the BPI have identified measures that will prevent the introduction of plant pests in Hawaii and the other U.S. territ ories . Generally , APHIS allows the importation of fresh fruits and vegetables when sound science and an analy sis of the risks shows that it is appropriate to do so. This final rule follows a previous Final Rule published February 7, 2013, which allows the importation of hard,2

green bananas into the continental United States under a s ys tems approach. Consumers in the State of Hawaii and the U.S. territories will benefit from the additional source of fresh bananas without increasing the pest risk to domestic producers in Hawaii and the U.S. territories. 

### Potentially Affected Smal **l Entities** U.S. commercial production of bananas takes place in the S tate of Hawaii. In 2011, that State’s banana harvest totaled about 7,900 MT, harvested on 240 farms. 1 A banana far m is considered to be small according to the Small Business Administration ’s standard for Other noncitrus Fruit Farming (North American Industry Classification Sy stem category 111339) if its annual receipts are not more than $750,000. Average annual recei pts for the Hawaiian producers in 2011 was about $ 47 , 125 , indicating that most if not all of these farms are small entities. We do not currentl y have enough information to fully assess the impact of this final rule. The quantity

of bananas expected to be imported from the Philippines specifically into Hawaii is unknown. However, it is likely to be a limited quantity

. Prior to a recent rulemaking to allow banana imports from the Philippines into the continental United States, the Philippines expected th at it would ship only

about 100 containers, or about 1,814 MT per year if granted access to the U.S. as a whole, including Hawaii and the U.S. Territories. Compared to the volume of current imports, this is a relativel y insignificant quantity , equivalen t to only

about 0.05 percent of the 4.1 million MT in bananas imported into the United States in 2011. The United States is a minor producer but a major importer of bananas. The international banana market is highly regional, and the United States import s bananas from

1 Haw aii Farm Facts, May 2010. http://www.nass.usda.gov/Statistics_by_State/Hawaii/Publications/Fruits_and_Nuts/annbanFF.pdf3

Central America, South America and the Caribbean. 2 In 2011, the United States imported 4.1 million MT of fresh bananas, with Guatemala, Ecuador, and Costa Rica, respectively , the top three sources. 3 Similarly , banana exports by the Philipp ines are principall y t o Asian markets, with Japan, Iran, China, and Korea its major customers. It is unlikel y that a significant portion of the small quantity of bananas expected to be imported from the Philippines to the United States as a whole would b e directed specifically to Hawaii. The pull of the Hawaiian market for banana imports is considerably smaller than that of the larger continental U.S

. market, and current Hawaiian banana production provides considerable banana supply to the Hawaiian marke t , however it is not enough to satisfy the demand for banana consumption in Hawaii and as a result there is a gap which can onl y be filled by imports . An y impact of the rule on U.S. banana producers in Hawaii and U.S. territories is likely to be small. To the extent that new imports of bananas from the Philippines to arrive in Hawaii and U.S territories, consumers w ill benefit from this additional source of fresh bananas. APHI S does not expect the final rule to have a significant economic impact on small entities. 

### Projected Repo **rting, Recordkeeping, and Other Compliance Requirements**  Reporting and recordkeeping requirements associated with the final rule are discussed in the rule under the heading "Paperwork Reduction Act." 

### Steps **taken by APHIS to minimize Significant Economic Impacts on Small Entitie**  **s**

2 http://www.unctad.org/infocomm/anglais/banana/market .htm 3 Haw aii Farm Facts, May 2010. http://www.nass.usda.gov/Statistics_by_State/Hawaii/Publications/Fruits_and_Nuts/annbanFF.pdf4

Based on our review of available information, APH IS does not expect the rule to have a significant economic impact on small entities. In the absence of significant economic impacts , we have not identified alternatives that would minimize such impacts.