### United States

Department of Agriculture Animal and Plant Health Inspection Service October 2011 Analysis in Support of Certification that the

Rule will not have a Significant Economic Impact on a Substantial Number of Small Entiti es Interim Rule 2011 - 0074 Karnal Bunt – Re mov al of Regulated Area s in California

Policy & Program Development Policy Analysis & Development1



### Summary This rule removes areas in the County of Riverside, California , from Karnal bunt (KB) quarantine ; as a result , the State of California will be KB
- free
. KB
- regulated area s in the United States will be reduced by

17,827 acres , and quarantine restrictions for affected wheat farms and related providers of agricultural services in Riverside County will e nd
. There were 17 wheat farms in Riverside County in 2007, m ost if not all of them small entities according to the Small Business Administration standard. Most i f not all providers of agricultural services for the se wheat farms are also small. T he effect s of the rule will be positive for these entities, but not significant. The quarantine restrictions that have been in place did not result in significant costs, and removal of the restrictions similarly will not yield significant benefits. The additional amount of wheat available for domestic use and for export that can be certified as grown in KB

- free areas because of this action will be very small. Riverside County ’s durum wheat production, 2008

- 2010, averaged less than 0.3 percent of U.S. total product ion, and the county ’s hard winter wheat production, less than 0.1 percent of the total. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action , if promulgated, will not have a signifi cant economic impact on a substantial number of small entities.2



### Introduction This analy sis provides the basis, as required by the Regulatory

Flexibility

Act, for certification by

the APHIS Administrator that the interim rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. Karnal bunt (KB) is a fungal disease of wheat, durum wheat, and triticale (a hybrid of wheat and rye) that seldom results in significant yi eld losses in the field . H owever, KB af fects flour quality

if more than 3 percent of the grain is bunted because it produces trimethylamine, which gives off a fishy odor. Pasta products made with flour contaminated with KB also can have an unacceptable color. Many U.S. trading partners will n ot accept U.S. wheat exports unless the wheat is certified to be from areas where KB is not known to occur. In March 1996, KB was detected for the first time in the United States in Arizona
. Immediately after the discovery , a F ederal quarantine was impose d and emergency actions were taken to prevent the spread of the disease to other wheat

- producing areas in the United States. Since then, the domestic quarantine has been modified both in terms of its phy sical boundaries and restrictions on the production and movement of regulated articles. With this rule, there will be no remaining KB quarantine areas in California, and the nation’s KB

- regulated areas will be reduce d by

17,827 acres. 

### Potential Impact on Small Entities The Regulatory

Flexibility

Act requ ires that agencies consider the economic effects of their rules on small businesses, organizations, and governmental jurisdictions. The entities affected b y this interim rule are wheat producers whose fields are in areas in Riverside County , California, that will be removed from the list of regulated areas and who plan to continue to grow wheat as well as providers of agricultural services to these producers
.3

In 2007, there were 17 wheat farms in Riverside County that had combined annual receipts of $1,720 ,000 , or average receipts of about $101,000 per farm

. 1 Most i f not all of these wheat farms are considered to be small , based on the Small Business Administration (SBA) small

- entity size standard for wheat farms (North American Industry Classification Sy s tem category 111140) of annual receipts of not more than $750,000

. Other entities that may

be affected b y this rule include ones that provide services to wheat farmers in support of agricultural activities, such as soil preparation , planting , and cultivati ng (NA IC S 115112), harvesting (NAICS 115113), and postharvest activities (NAICS 115114)
. The se providers of agricultural services are considered small by SBA standards if their annual receipts are not more than $7.0 million

. We expect that man y if not all of the providers of agricultural services to wheat farmers i n Riverside County are small entities, although we have not been able to acquire information to verify this supposition
. T he removal of areas in Riverside County from KB quarantine will be nefit these entities , irrespective of their size ; they will be able to move regulated articles from the se areas without restriction. KB q

uarantine regulations require that all conveyances, mechanized harvesting equipment, seed conditioning equipment, grain elevators, and structures used for storing and handling wheat, durum wheat, or triticale be cleaned by removing all soil and plant debris. Disinfection may

be required by

an inspector in addition to cleaning. With respect to the wheat grown within a KB

- quarant ined area , a grain sample must be drawn b y an APHI S inspector or designated State official during harvest

— or, if the crop is already harvested, from the storage bins

—and examined for bunted kernels. If the sample is taken from the wheat as it is being har vested and no bunted kernels are found, a certificate may

1 USDA NASS, 2007 Census of Agriculture.4

then be issued and the grain allowed to be transported to an y market. A permit may be issued if the grain sample is from grain already in storage and no bunted kernels are found. If one or more bunted kernels are found in the sample, then a notice is issued and the grain sealed in the storage facility prior to approved treatment or disposal. These inspection and movement requirements will no longer be required of wheat producers and service provid ers in the deregulated areas in Riverside County
. Data from the 2007 Census of Agriculture allow us to further consider the relative prevalence of certain categories of wheat farms in River side County , California . These operations are small family farms and farms for which one or more of the operators belong to specified sociall y disadvantaged groups. 2 A farm is reported as operated b y a member of a socially disadvantaged group if the principal operator is a woman or if any of the top

- three operators be longs to one of the ethnic or racial categories indicated in footnote 2
. Of the 17 wheat farms in Riverside County , one had a female person as its principal operator and another had a person of a Hispanic origin as one of its principal operators in 2007
. The data indicate that about 12 percent (2 out of 17) of the wheat farms in Riverside County had operators who belong to socially disadvantaged groups. Reportedly , there were no small family farms in Riverside County harvesting wheat. Durum wheat and hard winter wheat are produced in Riverside County
. D urum wheat is used exclusively in producing flour for pasta and hard winter wheat is used in the production of

2 USDA, ERS. Structure and Finances of U.S. Family Farms: Family Farm Report, 2007 edition , EIB

- 24. Any farm where the operator an d persons related to the operator own a majority of the business is considered a family farm. Small family farms have annual gross sales of less than $250,000. Socially disadvantaged operators are members of groups that historically have been subjected t o bias and prejudice. The categories are wom en; persons of Spanish, Hispanic, or Latino origin; American Indian or Alaska Native; Asian; Black or African American; and Native Hawaiian or other Pacific Islander
. These farm operators, themselves, may not h ave experienced bias or prejudice, but identify with one or more of these gender, ethnic, and racial groups.5

flour for bak ed goods . B oth pasta and bak ed goods require wheat that is of high quality and high in protein content. About half of U.S. wheat production is exported. The two main countries importing d urum and hard winter wheat from the United States are Nigeria and Ital y. Nigeria is the larger import er of the two and does not require certified KB
- free wheat. It al y imports only APHIS certified KB
- free wheat
. Wheat produced in Riverside County comprises a very

small share of the nation’s total production. The Riverside County farms produce d annually , between 2008 and 2010, on average around 25 0,000 bushels of durum wheat (compare d to U.S. durum wheat production during the same time period of 107 million bushels ) and less than 1 million bushels of hard winter wheat (compare d to U.S. production of 1.08 billion bushels ) (table 1)
. During this period , the United States exported an annual average of 616 million bushels of hard winter wheat and 43 million bushels of d

urum wheat
. 3 T he effect s of the rule will be positive for wheat farmers in Riverside County and entities that provide agricultural sup port services to them , but they will not be significant. The quarantine restrictions that have been in place did not result in significant costs for the affected entities, and removal of the restrictions similarly will not yield significant benefits. The additional amount of wheat available for domestic use and for export that can be certified as grown in KB

- free areas will be very small. Riverside County ’s durum wheat production , 2008
- 2010, averaged less than 0.3 percent of U.S. total production, and th e county ’s hard winter wheat production, less than 0.1 percent of the total. Under these circumstances, the Administrator of

3 USDA, ERS, Data Sets, Wheat classes: Supply and Disappearance, September 21, 2011; and USDA, World Agricultural Outlook Board, World Agricultur al Supply and Demand Estimates and supporting materials.6

the Animal and Plant Health Inspection Service has determined that this action , if promulgated, will not have a significant econom ic impact on a substantial number of small entities.
Table 1: Average annual p roduction and e xport of d urum wheat and h ard winter wheat , 2008
- 2010 **Riverside County, CA United States**  Production of durum wheat 249,000 bushels 107,000,000 bushels Product ion of hard winter wheat 995,000 bushels 1,080,000,000 bushels Exports of durum wheat NA 43,000,000 bushels Exports of hard winter wheat NA 616,000,000 bushels NA: Not available data ; Source : US Census; USDA, ERS: Data Sets, Wheat classes : Supply and Di sappearance, September 21, 2011 ; and World Agricultural Supply and Demand Estimates.