### Initial Regulatory Flexibility Analysis Proposed Rule Hass Avocados from Mexico; Importation into the Commonwealth of Puerto Rico and Other Changes

APHIS - 2008 - 0060

U.S. Department of Agriculture Animal and Plant Health Inspection Service

April 2010i



### Summary
We are proposing to amend our quarantine regulations to provide for the importation of Hass avocados into Puerto Rico under the same systems approach currently required in § 319.56-30 for the importation of Hass variety avocados into the continental United States from Michoacán, Mexico, and to amend the regulations to provide for the Mexican NPPO to use an approved d esignee to inspect avocados for export. We are also proposing to amend the regulations to suspend importation of avocados from Michoacán, Mexico, only from specific orchards or packinghouses when seed pests are detected rather than suspending imports from the entire municipality where the affected orchards or packinghouses are located.
Th is analysis identifies avocado producers , importers , and wholesalers in Puerto Rico as the small entities most likely to be affected by this action and considers the effec ts of increased imports of avocados. Puerto Rico is a large net importer of avocados. Imports for 2007 totaled around 3,700 short tons while exports totaled only 8 short tons, as preliminarily reported by the Puerto Rican Department of Agriculture's Offi ce of Agricultural Statistics. 1 In other words, three

- fifths of Puerto Rico’s avocado supply is imported. In addition, there may well be movement of avocado from the mainland United States to Puerto Rico, which would not be reported as imports. Based on th e information presented in the analysis, we expect affected entities would experience minimal economic effects as a result of additional imports arriving in Puerto Rico from Mexico.

1 Puerto Rico Dept. of Agriculture, Office of Agricultural Statistics. “18.58F23 Fresh Fruits

. ” November 13 , 2007. p. 23.ii



### Table of Contents Summary

................................ ................................ ................................ .............................. i Introduction

................................ ................................ ................................ ......................... 1 Initial Regulatory Flexibility Analysis

................................ ................................ ................ 1 Reasons Action is Being Considered

................................ ................................ .............. 1 Objectives of and Legal Basis for the Rule

................................ ................................ .... 2 Affected Small Entities

................................ ................................ ................................ ... 3 Projected Reporting, Recordkeeping, and Other Compliance Requirements

................. 7 Duplication, Overlap, or Conflict with Existing Rules and Regulations

........................ 7 Alternatives to minimize Significant Economic Impacts of the Rule

............................. 71



### Introduction
We are proposing to amend our quarantine regulations to provide for the importation of Hass avocados into Puerto Rico unde r the same systems approach currently required in § 319.56-30 for the importation of Hass variety avocados into the continental United States from Michoacán, Mexico, and to amend the regulations to provide for the Mexican NPPO to use an approved designee t o inspect avocados for export. We are also proposing to amend the regulations to suspend importation of avocados from Michoacán, Mexico, only from specific orchards or packinghouses when seed pests are detected rather than suspending imports from the enti re municipality where the affected orchards or packinghouses are located. 

### Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act requires agencies to evaluate the potential effects of their proposed and final rules on small businesses, smal l 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

. Reasons Action is Being Considered At the request of the Government of Mexico, APHIS is proposing to amend the fruits and vegetables regulations to allow commercial shipments of Hass avocados from Mexico into Puerto Rico. Hass avocados would be imported under certain conditions that would address the phytosanitary risks associated with the importation of Hass avocados from Michoacán, Mexico. Phytosanitary risks would be mitigated using the same systems approach that is currently employed for the importation of Hass avocados from Michoacán, Mexico, into the 50 States, as set forth in § 319.56

- 30. Those import requirements include trapping, orchard certification,2

limited production area, trace back labeling, pre

- harvest orchard surveys for all pests, orchard sanitation, host resistance, post

- harvest safeguards, fruit cutting and inspection at the packinghouse, port

- of

- arrival inspection and clearance activities. This action would allow for the importation of Hass avocados from Michoacán, Mexico, into Puerto Rico while continuing to provide pr otection against the introduction of quarantine pests. As a separate matter, the proposed rule would amend the regulations to provide that APHIS will suspend shipments from specific orchards or packing houses in Mexico where pests have been detected rath er than from an entire municipality, as is currently required. Shipments to the United States are suspended from an entire municipality when certain pests are detected during semi

- annual pest surveys, orchard surveys, packing house inspections, or other

m onitoring or inspection activities. APHIS has determined that suspension of shipments from an affected orchard or packing house rather than from an entire municipality would provide sufficient safeguards against pest introduction while minimizing trade di sruptions. Objectives of and Legal Basis for the Rule The objectives of the proposed rule are (1) to allow importation of Hass avocados from Mexico into Puerto Rico under the same phytosanitary restrictions as required for their entry into the 50 States, (2) to limit shipment suspensions to the particular orchards or packing houses in Mexico where pests have been detected rather than an entire municipality, and (3) provide for the Mexican NPPO to use an approved designee to inspect avocados for export. The legal basis for the proposed rule is the Plant Protection Act (7 U.S.C. 7701 et

. seq . It authorizes the Secretary of Agriculture to implement programs and policies designed to prevent the introduction and spread of plant pests and diseases.3

Affected Smal l Entities Businesses most likely to be affected by this rule would be avocado producers in Puerto Rico. Avocado production is classified under North American Industry Classification System (NAICS) 111339, other non

- citrus fruit farming. The Small Busine ss Administration (SBA) small

- entity standard for avocado producers is annual sales of not more than $750,000. In the United States in 2002, NASS reported that 95 percent of fruit and tree nut farming (NAICS 1113) entities made less than $500,000. Most, if not all, avocado producers in Puerto Rico are presumably small entities. Puerto Rican importers and wholesalers of avocado could be affected by the proposed rule as well. These industries and their small

- entity size standards are: Fresh fruit and vege table wholesalers (NAICS 4224280, not more than 100 employees), wholesalers and other grocery stores (NAICS 445110, not more than $23 million in annual receipts), warehouse clubs and superstores (NAICS 452910, not more than $23 million in annual receipts), and fruit and vegetable markets (NAICS 445230, not more than $6 million in annual receipts). Many of the entities that comprise these industries in the 50 States are small. We can assume, similarly, that many of these entities in Puerto Rico would be sm all. The 2002 Census of Agriculture reported that 1,217 farms in Puerto Rico harvested avocados, an increase from 1,106 farms in 1998. Over this same period, however, avocado acreage decreased from 1,567 acres to 1,104 acres, almost a 30 percent drop. In the 2006

- 2007 season (July

- June), avocado production in Puerto Rico was around 2,100 short tons, compared to approximately 1,900 short tons for the 2005

- 2006 season. 2

2 Puerto Rico Department of Agriculture. Agricultural Statistics. “Ingreso Bruto Agricola.” Total production of avocados, p. 3. Conve rted as 1 avocado = 0.5 lbs. http://www.gobierno.pr/NR/rdonlyres/CF939105

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Puerto Rico is a large net importer of avocados. Imports for 2007 totaled around 3,700 short tons while exports totaled only 8 short tons, as preliminarily reported by the Puerto Rican Department of Agriculture's Office of Agricultural Statistics. 3 In other words, three

- fifths of Puerto Rico’s avocado supply is imported. In addition, there may well be movement of avocado from the mainland United States to Puerto Rico, which would not be reported as imports.

We note that there would not be production constraints for Mexico as far as the quantity of Hass avocados that it could export to Pue rto Rico. Estimated Hass avocado production in the State of Michoacán for the 2007

- 2008 season (August through July) totaled about 650,000 short tons, produced by 20,000 growers on more than 227,000 acres. 4

The United States is already a major market for Mexico’s Hass avocado industry. The total volume of U.S. avocado imports (determined by the Secretary of the U.S. Department of Agriculture (USDA) to be Hass

- like) in the 2006

- 2007 season (August

- July) was about 330,000 short tons, valued at $417 million . Mexico accounted for over 60 percent of U.S. imports of Hass avocados (more than 201,000 short tons) and nearly 80 percent of the total value of Hass avocado imports (over $330 million). 5 Other foreign avocado imports into the United States come from C hile, New Zealand, and the Dominican Republic. In the 2006

- 2007 season, 6 the United States commercially produced more than 149,000 short tons of avocados worth approximately $208 million in production value. 7 California

41622555F06A/0/IngresoBrutoAgricola2006_07.pd f 3 Puerto Rico Dept. of Agriculture, Office of Agricultural Statistics. “18.58F23 Fresh Fruits” 13 Nov. 2007. p. 23 4 Socios Unidos en Materia Agricula. “Estimated Hass Avocado Production in Michoacan State for the 2007

- 2008 season.” Production in Tons. http://www.masuma.com.mx/ 5 USDA Foreign Agricultural Service. FASonline. Harmonized Schedule (HS) code search HS 0804400010. Converted from metric tons. August

- July total based on monthly values. 6 California’s season runs October

- November, Florida’s season runs May

- June. 7 USDA Economic Research Service (ERS). Fruit and Tre e Nuts Situation and Outlook Yearbook 2007.5

produces more than 90 percent of all avocados grown in the United States. Ninety

- five percent of California avocados are of the Hass variety. Our lack of knowledge regarding certain trade and production statistics prevents us from being able to project whether the potential impact of th e proposed rule may be significant for a substantial number of Puerto Rico’s small

- entity avocado producers, importers, and wholesalers. These unknowns include: The quantity of Hass avocados that Mexico can be expected to export to Puerto Rico; the percen tage shares of Hass and non

- Hass avocado varieties grown in Puerto Rico and imported by Puerto Rico; Puerto Rico’s current sources of imports; the varieties and quantities of avocados shipped from the U.S. mainland to Puerto Rico; the extent to which
Puert o Rico’s avocado producers rely upon avocado production for total farm revenue; and price and quality comparisons for Mexican Hass avocados and those grown in Puerto Rico. We welcome public comment that would inform our understanding of Puerto Rico’s produ ction and trade in avocados, especially Hass avocados, and the potential impact of the rule for Puerto Rico’s small entities. The proposed rule would also allow for the suspension of shipments from orchards and packing houses in Mexico where pests are foun d, rather than from entire municipalities. This change would benefit U.S. importers and consumers by reducing the magnitude of pest

- related disruptions to Hass avocado imports from Mexico while maintaining effective phytosanitary safeguards. There are 41 listed firms that import Hass avocados from Mexico, most of which are located in California, Texas and Illinois (see table 1). As indicated above, most likely at least some of these entities are small.

Oct. 2007. p. 46.6

Table 1.− U.S. importers of Hass avocados from Mexic o

Arizona 4
Cal i fornia 16
Florida 1 Georgia 1
Illinois 6
Massachusetts 1
New York 1
Ohio 1
Texas 10
Total 41

Source: Association of Michoacán Avocado Growers, Packers and Exporters. AvocadosfromMexico.com, 2007.

In order to certify that the Hass avocados have been produced in accordance with the systems approach, the Mexican NPPO has requested to be allowed to use an approved designee to perform those functions. This change would not be expected to have any effects on any entities, as regula ted entities would still have to comply with the provisions of the regulations; this change would simply allow a designee approved by the Mexican NPPO, rather than the NPPO itself, to perform certification functions.7

Projected Reporting, Recordkeeping, an d Other Compliance Requirement s The proposed rule would not entail reporting, recordkeeping, or other compliance requirements for Puerto Rican entities beyond those already required for the importation of fresh avocados into Puerto Rico. Duplication, Overl ap , or Conflict with Existing Rules and Regulations APHIS has not identified any duplication, overlap, or conflict of the proposed [interim] rule with other Federal rules.
Alternatives to minimize Significant Economic Impacts of the Rule Based on our review of available information, APH IS does not expect the proposed 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.