### United States Department of Agriculture Animal and Plant Health Inspection Service September 2011 Analysis in Support of Certification that the Rule W ill N ot H ave a Significant Economic Impact on a Substantial Number of Small Entities

Interim Rule APHIS

- 2011

- 00 93 Tuberculosis in Cattle and Bison; State and Zone Designations; New Mexico

Policy & Program Development Policy Analysis & Developmenti Summary New Mexico currently has a split State status for bovine tuberculosis (TB) with an Accredited Free (AF) zone and a Modified Accredited Advanced (MAA) zone . This interim rule will reclassify the status of two counties in eastern New Mexico (Curry and Roosevelt) from
MAA to AF

. MA A status imposes various requirements for TB testing of cattle

. Reclassification to AF removes all movement restrictions . The Regulatory Flexibility Act (RFA) of 1980 (Public Law 96

- 354) requires agencies to evaluate the potential effects of proposed and final rules on small businesses, small organizations, and small government jurisdictions. Section 605 of the RFA allows an agency to certify that a rule will not have a significant impact on substantial number of small entities. Advancement of status for these two counties will eliminate testing requirements, saving cattle pr oducers time and money. Because the reduction in the number of animals tested per herd is small and the testing costs are small when compared to the value of the cattle tested , the savings for individual producers are expected to be relatively small. This action will not significantly change program operations and will have no significant effects on other Federal agencies, State governments or local governments.
T he Administrator of the Animal and Plant Health Inspection Service has determined that th is action will not have a significant economic impact on a substantial number of small entities.1 

### Introduction
This analysis provides the basis, as required by the Regulatory Flexibility Act, for certification by the APHIS A dministrator that the interim rule will not have a significant economic impact on a substantial number of small entities. Bovine tuberculosis is a contagious and infectious granulomatous disease caused by the bacterium Mycobacterium bovis . Although commonly defined as a chronic debili tating disease, bovine tuberculosis can occasionally assume an acute, rapidly progressive course. While any body tissue can be affected, lesions are most frequently observed in the lymph nodes, lungs, intestines, liver, spleen, pleura, and peritoneum. Al though cattle are considered to be the true hosts of M

. bovis , the disease has been reported in several other species of both domestic and nondomestic animals , as well as in humans

. The Cooperative State

- Federal Tuberculosis Eradication Program, which beg a n in 1917, has been administered by the Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture, State animal health agencies, and U.S. livestock producers . This
program has nearly eradicated bovine TB from the Nation's li vestock population. The disease's presence in humans has been reduced as a result of the eradication program, advances in sanitation and hygiene, the discovery of effective drugs, and pasteurization of milk. APHIS has established five status stages (or levels), for States and zones, based upon the prevalence of bovine TB within cattle and bison. These five stages are: non

- accredited, accredited preparatory, modified accredited, modified accredited advanced, a nd accredited

- free. New Mexico is regionalized in to these two zones (AF, MAA ) and the zone statuses last updated in an interim rule published in the Federal Register March 23, 200 9

. New Mexico has asked to advance the status of its MAA zone under the National Bovine Tubercu losis Eradication2 Program. Two counties in e a stern New Mexico will be advanced to AF status. Once these two counties move to AF status, the entire State of New Mexico will be classified as AF

. 

### P otential Impact on Small Entities

T he cattle industry plays an important role in New Mexico’s economy. There were 17,855 beef and dairy herds in New Mexico in 20 10 with a total inventory of 1.5 4 million head. 1
State

- wide cash receipts from cattle and calves and dairy products totaled $ 1.1 9 b illion and $ 1.24 b illion, respectively, in 2010

. The t en - year average cash receipts for cattle and calves and dairy products ( 2001

- 2010 ) were $ 916 m illion and $ 1.01 b illion , respectively. 2
The Small Business Administration (SBA) has established guidelin es for determining which businesses are considered small. According to SBA size standards for beef cattle ranchin g and farming (NAICS 112111) and for dairy cattle and milk production (NAICS 112120), operations with not more than $750,000 in annual sales a re considered small entities. For cattle feedlots (NAICS 112112), operations with not more than $2.5 million in annual sales are
considered small entiti es. The vast majority of beef operations in New Mexico are considered small

. In 200 7 , 98 percent of cattle / calf farms and 27 percent of dairy farms generated less than $500,0 00 in cash receipts and less than one percent of beef farms and about 71 percent of dairy farms generated $1 million or more

. 3 The composition of New Mexico ’s catt le inventory i s shown in table 1

.

1 2010 New Mexico Bovine Tuberculosis Annual Report

. 2 USDA/ERS Cash Receipts, by Commodity Groups and Selected Commodities, United States and States, 2000

- 2007

. http://www.ers.usda.gov/Data/farmincome/FinfidmuXls.htm 3 2007 Census of Agriculture. National Agriculture Statistics Service, USDA.3 New Mexico currently has t wo TB status zones: an AF a nd MAA zone. This rule will reclassify Curry and Roosevelt counties in e astern New Mexico from MAA to AF. The elevation of an area to AF status removes all movement restrictions

. While m ovement restriction s on cattle from MAA zones have been generally suspended under Federal Order , testing has occurred in the MAA zone as a result of a memorandum of understanding (MOU) between the State of New Mexico and APHIS

. No testing is require d for cattle moving out of an
AF zone. It should be noted however some surveillan ce testing does still occur in an AF zone. In 2010, t h ere were about 1,557 beef cattle herds with about 341,889 head and 64 dairy herds with 150,581 head in the area being elevated from MAA status. Cattle herd owners in the
two counties being upgraded to AF from MAA status will see an actual reduction in testing

. Testing that occurred as a result of the MOU will no longer be required

. TB testing , including veterinary fees , costs about $10 to $15 per head . Producers will there fore benefit from reduced
costs. In FY 2011, about 80,500 animals were tested in the MAA zone, or about 16 percent of the cattle in the zone. A bout 2.9 percent of the cattle in the AF zone were tested in FY2011 for TABLE 1. New Mexico Cattle Inventory, January 1, 20 11 Type Number (1,000) Percentage of Total Beef cows 488 31.7 % Milk cows 322 21 % Heifers Beef cow replacements 9 5 6.17 % Milk cow replacements 140 9.1 % Other heifers 95 6.17 % Total heifers 330 21.4 % Steers 125 8.1 % Bulls 40 2.6 % Calves 235 15.3 % TOTAL 1,540 Source: National Agriculture Statistics Service, USDA.4 surveillance purposes. We expect that surveillance testing in the two affected counties following the upgrade to AF status will occur at a similar rate. Therefore, about 14,300 head will continue to be tested annually in th ose counties

. Based on this , there would be an annual r eduction of about 66,200 tests in the upgraded counties. The cost savings associated with the reduction in testing will be positive, but small for producers. The annual cost savings associated with the removal of those tests for the 1,621 herds in the af fected area are expected to be between $ 662,000 and $ 993,000, or from $408 to $613 per herd on average

. In addition, t esting costs are small when compared to the value of the cattle tested. On January 1, 2010 , all cattle and calves in New Mexico had an average per animal value of $ 870

. 4



### Conclusion The savings in TB test ing costs represent no more than about 1.7 percent of the
average per - head value of cattle in New Mexico ($15 / $ 870 ).

New Mexico currently has t wo TB status zones: an AF a nd MAA zone. This interim rule will reclassify the status for two counties from MAA to AF which will remove all movement restrictions

. Cattle herd owners in parts of the two counties being upgraded to AF status from
MAA status will see an actual reduction in testing

. E ven though a Federal Order has suspended
movement tes ting requirements in MAA zones , testing has occurred in the MAA zone as a result of a MOU between the State of New Mexico and APHIS

. Th e expected savings will be positive but relatively small, between $10 and $15 per animal tested. This is about $662,000 and $993,000 in total, or from $408 to $613 per herd on average

. In addition, TB testing costs represent no more than about 1.7 percent of the value of the cattle tested. Under these

4 2010 Agricultural Statistics Annual, Chapter 7 , Ta ble 7

- 3 http://www.nass.usda.gov/Publications/Ag_Statistics/2010/Chapter07.pdf5 circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action , if promulgated, will not have a significant economic impact on a substantial number of small entities.