### United States

Department of Agriculture Animal and Plant Health Inspection Service May 2012 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 2012 - 0008 RIN 0579 -AD70 M ovement of mature green Sharwil avocado s from Hawaii to the continental United States using a systems approach for pest mitigation

Policy & Program Development Policy Analysis & Developmenti



### Summary This proposed rule would allow the use of a s ys tems approach for the movement of fresh, mature green Sharwil avocados from Hawaii to the continental United States. Avocado s produc ed in the United States are principall y grown in Califor nia, where nearly

all of the fruit is of the small, dark
- colored, rough
- skinned Hass variety
. Smaller volumes of avocados are produced in Florida and Hawaii, where varieties like the Sharwil that are larger and bright green in color are predominant. The 2 007 Census of Agriculture reported that there were a total of 8,245 avocado farms in the United States, with about 76 percent in California, 13 percent in Hawaii, and 11 percent in Florida. Average gross receipts for California avocado producers for the 2 007
- 08 season was about $52,700, compared to average receipts of about $12,700 for Florida ’s growers and about $75 0 for Hawaii ’s growers. The Small Business Administration ’s small
- entity standard for avocado farms is annual receipts of not more than $750, 000. While nearly all U.S. avocado operations are small entities, it is evident that there is significant variation among the three States in average farm size. We anticipate that Sharwil avocado consignments from Hawaii to the mainland would total about 180 metric tons per year , equivalent to about one
- half of one percent of the U.S. supply of non
- Hass avocados and to less than one
- twentieth of one percent of the U.S. supply of all avocado varieties. They would be shipped between November and March, sup plementing winter supplies. The APHI S Administrator has determined that this action , if promulgated, will not have a significant economic impact on a substantial number of small entities.ii



### Table of Contents Summary
................................ ................................ ................................ .............................. i Introduction
................................ ................................ ................................ ......................... 1 Potential Impact on Small Entities
................................ ................................ ...................... 11



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

Flexibility

Act, for certification by

the APHIS A dministrator that the proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. Hawaii has a history

of quarantine treatment for Sharwil avocados due a variety of pests. APHI S conducted a pest risk anal ys is that found 11 quarantine significant pests that could be introduced with consignments of fresh , mature green Sharwil avocado s into the continental United States. Currently , i nterstate movement is authorized if the avocados are fumigated with methyl bromide or fumigated in combination with cold treatment. However, both of these treatment regimes reduce the marketability of the avocados. The stand
- alone fumigation causes fruit pitting and discoloration, resulting in a three
- to four
- day reduction in shelf life; methyl bromide combined with cold treatment also results in a significant reduction in shelf life due to the days the fruit is cold treated
. The proposed rule would allow interstate movement of fresh, mature green Sharwil avocados from Hawaii under a s ys tems approach. The proposed sy stems approach consists of orchard certification, trapping, orchard control and sanitation, harvest restrictions, post harvest safeguards, fruit culling, sampling, trace back requirements, limited distributi on , and a limited harvest period. The proposed measures satisfy our commitment under the Plant Protection Act to allow interstate movement of plants and plant products subject to the least restrictive measures consistent with phy

tosanitary security. 

### Poten tial Impact on Small Entities Avocado production in the United States largel y t akes place in California, where nearl y all of the fruit grown is of the small, dark
- colored , rough
- skinned Hass variety . In Florida and2

Hawaii, varieties like the Sharwil , whic h is much larger and bright green in color, ar e predominant
. Most avocado imports and exports by the United States are Hass. Given our limited understanding of the strength of consumers’ preferences for the various avocado varieties (that is, their degree of substitutability ), we consider potential effects of the proposed rule for producers of non
- Hass varieties as well as for all U.S. avocado farmers
. 1 According to the 2007 Census of Agriculture, there were a total of 8,245 avocado farms in the Unit ed States that year , with about 76 percent (6,230 farms) in California , 13 percent (1,047 farms) in Hawaii, and 11 percent (951 farms) Florida. 2 There were also 16 farms in Texas and 1 farm in Arizona producing avocados in 2007. Avocado farms in the thre e principal States differ significantl y in size ; in 2007, the average size s ranged from about 12 acres in California, to 7 acres in Florida, to 1 acre in Hawaii. While cash receipts by

size of avocado farm were not reported in the 2007 Census of Agriculture , value
- of

- production data for the 2007
- 08 season can be combined with the number of farms reported in the 2007 Census of Agriculture for an indication of average sales per farm by State
. 3 Average gross receipts for California avocado producers for the 2007
- 08 season was about $52,700, compared to average receipts of about $12,700 for Florida ’s growers and about $75 0 for Hawaii ’s growers. Avocado producers are included within the North Am erican Industry Classification Sy stem category of Other Non
- Citrus Fruit Farming (NAICS 111339)
. The Small Business Administration’s small
- entity standard for this industry is annual receipts of

1 One indicator of distinct markets is sizable price differences. For the four production years, 2006
- 07 through 2009
- 10, California avocados had an average wholesale price of 96 cents per pound, compared to 70 cents per pound for Hawaii avocados and 30 cents per pound for Florida avocados. ( 2011 Agricultural Statistics Annual, Table 5
- 16. http://www.nass.usda.gov/Publications/Ag_Statistics/2011/Chapter05.pdf) 2 NASS, USDA, “United States: Summary and State Data, Volume 1,” 2007 Census of Agriculture, issued February 2009 and updated Decembe r 2009. http://www.agcensus.usda.gov/Publications/2007/Full_Report/CenV1US1.txt 3 2011 Agricultural Statistics Annual, Table 5
- 16. http://www.nass.usda.gov/Publications/Ag_Statistics/2011/Chapter05.pdf3

not more than $750,000
. While clearly most U.S. avocado pro ducers are small entities, there is significant variation among the three States in average farm size. U.S. avocado production and trade over the four
- year period, 2007
- 2010, are shown in table 1. Notwithstanding the generalizing assumptions noted in the table with respect to California production and U.S. exports , it is evident that the Hass variety dominates the U.S. avocado market. Table 1. Average annual avocado production, imports, and exports, and supply of all avocado varieties and of non - Hass v arieties, 2007
- 2010, metric tons All avocado varieties Production 171,020 Imports 360,13 0 Exports 7,3 40 Supply 523,8 10 Non
- Hass avocado varieties Production 21,3 80 Imports 12,1 20 Exports 0 Supply 33, 500 Sources: Production quantities, 2011 Agricultural Statistics Annual; trade quantities, U.S. Census Bureau. Note: Production averages are for the seasonal years, 2006
- 07 through 2009
- 10. We assume that a ll Hass avocado production in the United States takes place in California and other varieties are not grown in California. We also assume that a ll U.S. avocado exports are Hass variety. Production quantities include avocado that is processed. As noted, we have little knowledge of the extent to which the Sharwil variety substitutes for the more prevalent Hass variety. We therefore compare the size of anticipated annual Sharwil consignments from Hawaii to U.S. suppl ies of both non - Hass avocados and all varieties of avocado s . The pes t risk management document for this proposed rule notes that the volume of avocado s that would be moved from Hawaii to the continental United States is unknown.4

However, given current production levels, the volume is anticipated to be fewer than 10 standard shipping containers per year. This is an amount equivalent to about 180 metric tons. When compared to the levels of supply shown in table 1, annual Sharwil avocado consignments of 180 metric tons would be equivalent to about one
- half of one percent of the U.S. supply of non
- Hass avocados and to less than one
- twentieth of one percent of the U.S. suppl y of all avocado varieties. While the proposed rule would benefit Hawaiian avocado producers by allowing them to
use a s ys tems approach to mitigate pes t risk , making the sale of Sharwil avocado s to the continental United States more economically feasible, the quantity

that is expected to be shipped would not significantl y affect the mainland avocado market overall or the more limited market for non - Hass varieties. With imports providing one
- third of the U.S. supply of non
- Hass avocados and two
- thirds of the U.S. supply of all avocados, any effects of the proposed rule for U.S. mainland producers would be further muted. Moreover, the Sharwil avocados fro m Hawaii would be shipped between November and March , when there is increased reliance on foreign suppliers. Any market effects of the proposed rule could be expected to be borne proportionatel y by avocados supplied from abroad during the winter months. Based on these factors, the APHIS Administrator has determined that this action , if promulgated, will not have a significant economic impact on a substantial number of small entities.