Importation of Hass Avocados From Peru, 651-664 [E8-31474]

Agencies

• DEPARTMENT OF AGRICULTURE
• Animal and Plant Health Inspection Service

[Federal Register Volume 74, Number 4 (Wednesday, January 7, 2009)]
[Proposed Rules]
[Pages 651-664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-31474]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 74, No. 4 / Wednesday, January 7, 2009 / 
Proposed Rules

[[Page 651]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Parts 305 and 319

[Docket No. APHIS-2008-0126]
RIN 0579-AC93


Importation of Hass Avocados From Peru

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the fruits and vegetables 
regulations to allow the importation of Hass avocados from Peru into 
the continental United States. As a condition of entry, Hass avocados 
from Peru would have to be produced in accordance with a systems 
approach that would include requirements for importation in commercial 
consignments; registration and monitoring of places of production and 
packinghouses; grove sanitation; pest-free areas or trapping for fruit 
flies; surveys for the avocado seed moth; and inspection for quarantine 
pests by the national plant protection organization of Peru. Hass 
avocados from Peru would also be required to be accompanied by a 
phytosanitary certificate with an additional declaration stating that 
the avocados were grown, packed, and inspected and found to be free of 
pests in accordance with the proposed requirements. This action would 
allow for the importation of Hass avocados from Peru into the United 
States while continuing to provide protection against the introduction 
of quarantine pests.

DATES: We will consider all comments that we receive on or before March 
9, 2009.

ADDRESSES: You may submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to https://
www.regulations.gov/fdmspublic/component/
main?main=DocketDetail&d=APHIS-2008-0126 to submit or view comments and 
to view supporting and related materials available electronically.
     Postal Mail/Commercial Delivery: Please send two copies of 
your comment to Docket No. APHIS-2008-0126, Regulatory Analysis and 
Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, 
Riverdale, MD 20737-1238. Please state that your comment refers to 
Docket No. APHIS-2008-0126.
    Reading Room: You may read any comments that we receive on this 
docket in our reading room. The reading room is located in room 1141 of 
the USDA South Building, 14th Street and Independence Avenue, SW., 
Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., 
Monday through Friday, except holidays. To be sure someone is there to 
help you, please call (202) 690-2817 before coming.
    Other Information: Additional information about APHIS and its 
programs is available on the Internet at https://www.aphis.usda.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Alex Belano, Assistant Branch 
Chief, Commodity Import Analysis and Operations, PPQ, APHIS, 4700 River 
Road Unit 140, Riverdale, MD 20737-1231; (301) 734-8758.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in ``Subpart--Fruits and Vegetables'' (7 CFR 
319.56-1 through 319.56-48, referred to below as the regulations) 
prohibit or restrict the importation of fruits and vegetables into the 
United States from certain parts of the world to prevent the 
introduction and dissemination of plant pests that are new to or not 
widely distributed within the United States.
    The national plant protection organization (NPPO) of Peru has 
requested that the Animal and Plant Health Inspection Service (APHIS) 
amend the regulations to allow Hass avocados from Peru to be imported 
into the United States.
    As part of our evaluation of Peru's request, we prepared a draft 
pest risk assessment (PRA), titled ``Importation of `Hass' Avocado 
(Persea americana) Fruit from Peru into the Continental United States'' 
(May 2006). The draft PRA evaluated the risks associated with the 
importation of Hass avocados into the continental United States (the 
lower 48 States and Alaska) from Peru.
    We published a notice \1\ in the Federal Register on May 25, 2006 
(71 FR 30113, Docket No. APHIS-2006-0072) in which we advised the 
public of the availability of the draft PRA and solicited comments on 
it for 60 days ending July 24, 2006. We received seven comments by that 
date, from exporters, importers, members of Congress, a domestic 
avocado industry association, researchers, and the NPPO of Peru.
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    \1\ To view the notice, the draft PRA, and the comments we 
received, go to https://www.regulations.gov/fdmspublic/component/
main?main=DocketDetail&d=APHIS-2006-0072.
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    We made changes to the May 2006 PRA in response to public comments 
and peer review comments. The changes we made are summarized in an 
appendix to the revised PRA. APHIS will accept comments on the revised 
PRA throughout the comment period for this proposed rule. Copies of the 
revised PRA, titled ``Importation of `Hass' Avocado (Persea americana) 
Fruit from Peru into the Continental United States'' (October 2008), 
may be obtained from the person listed under FOR FURTHER INFORMATION 
CONTACT or viewed on the Regulations.gov Web site (see ADDRESSES above 
for instructions for accessing Regulations.gov).
    The revised PRA identifies six pests of quarantine significance 
present in Peru that could be introduced into the United States through 
the importation of Hass avocados:
     Anastrepha fraterculus (Wiedemann), the South American 
fruit fly;
     Anastrepha striata Schiner, the guava fruit fly;
     Ceratitis capitata (Wiedemann), the Mediterranean fruit 
fly (Medfly);
     Coccus viridis (Green), the green scale;
     Ferrisia malvastra (McDaniel), a mealybug; and
     Stenoma catenifer Walsingham, the avocado seed moth.
    APHIS has determined that measures beyond standard port-of-entry 
inspection are required to mitigate the risks posed by these plant 
pests. To recommend specific measures to mitigate those risks, we 
prepared a risk management document (RMD). Copies of the RMD may be 
obtained from the person listed under FOR FURTHER INFORMATION CONTACT 
or viewed on the

[[Page 652]]

Regulations.gov Web site (see ADDRESSES above for instructions for 
accessing Regulations.gov).
    Based on the recommendations of the RMD, we are proposing to allow 
the importation of Hass avocados from Peru into the continental United 
States only if they are produced in accordance with a systems approach. 
The systems approach we are proposing would require:
     Registration, monitoring, and oversight of places of 
production;
     Grove sanitation;
     Pest-free areas or trapping for A. fraterculus, A. 
striata, and Medfly;
     Surveys for the avocado seed moth;
     Harvesting requirements for safeguarding and 
identification of the fruit;
     Packinghouse requirements for safeguarding and 
identification of the fruit; and
     Inspection by the NPPO of Peru for the quarantine pests.
    Hass avocados from Peru would also be required to be accompanied by 
a phytosanitary certificate with an additional declaration stating that 
the avocados were grown, packed, and inspected and found to be free of 
pests in accordance with the proposed requirements.
    We are proposing to add the systems approach to the regulations in 
a new Sec.  319.56-49 governing the importation of Hass avocados from 
Peru into the United States. The mitigation measures in the proposed 
systems approach are discussed in greater detail below.

Proposed Systems Approach

General Requirements

    Paragraph (a) of Sec.  319.56-49 would set out general requirements 
for the NPPO of Peru and for growers and packers producing avocados for 
export to the United States.
    Paragraph (a)(1) would require the NPPO of Peru to provide a 
workplan to APHIS that details the activities that the NPPO of Peru 
will, subject to APHIS' approval of the workplan, carry out to meet the 
requirements of proposed Sec.  319.56-49. As described in a notice we 
published on May 10, 2006, in the Federal Register (71 FR 27221-27224, 
Docket No. APHIS-2005-0085), a bilateral workplan is an agreement 
between APHIS' Plant Protection and Quarantine program, officials of 
the NPPO of a foreign government, and, when necessary, foreign 
commercial entities that specifies in detail the phytosanitary measures 
that will comply with our regulations governing the import or export of 
a specific commodity. Bilateral workplans apply only to the signatory 
parties and establish detailed procedures and guidance for the day-to-
day operations of specific import/export programs. Bilateral workplans 
also establish how specific phytosanitary issues are dealt with in the 
exporting country and make clear who is responsible for dealing with 
those issues. The implementation of a systems approach typically 
requires a bilateral workplan to be developed.
    Paragraph (a)(1) would also state that the NPPO of Peru must 
establish a trust fund in accordance with Sec.  319.56-6. Section 
319.56-6 of the regulations sets forth provisions for establishing 
trust fund agreements to cover costs incurred by APHIS when APHIS 
personnel must be physically present in an exporting country or region 
to facilitate exports. The systems approach may require APHIS personnel 
to monitor treatments if they are conducted in Peru.
    Paragraph (a)(2) would require the avocados to be grown at places 
of production that are registered with the NPPO of Peru and that meet 
the requirements for grove sanitation, pest-free areas or trapping for 
A. fraterculus, A. striata, and Medfly, and surveys for the avocado 
seed moth that are described later in this document.
    Paragraph (a)(3) would require the avocados to be packed for export 
to the United States in packinghouses that are registered with the NPPO 
of Peru and that meet the packinghouse requirements for fruit origin, 
pest exclusion, cleaning, safeguarding, and identification that are 
described later in this document.
    Paragraph (a)(4) would state that avocados from Peru may be 
imported in commercial consignments only. Produce grown commercially is 
less likely to be infested with plant pests than noncommercial 
consignments. Noncommercial consignments are more prone to infestations 
because the commodity is often ripe to overripe and is often grown with 
little or no pest control. Commercial consignments, as defined in Sec.  
319.56-2, are consignments that an inspector identifies as having been 
imported for sale and distribution. Such identification is based on a 
variety of indicators, including, but not limited to: Quantity of 
produce, type of packaging, identification of grower or packinghouse on 
the packaging, and documents consigning the fruits or vegetables to a 
wholesaler or retailer.
    Commercially produced avocados are cleaned as part of the packing 
process. This practice would help to mitigate the risk associated with 
C. viridis and F. malvastra. Both of these pests are external pests 
that would be dislodged by cleaning. In addition, the industry practice 
of culling damaged fruit would help to ensure that avocados exported 
from Peru are free of quarantine pests in general.

Monitoring and Oversight

    The systems approach we are proposing includes monitoring and 
oversight requirements in paragraph (b) of proposed Sec.  319.56-49 to 
ensure that the required phytosanitary measures are properly 
implemented throughout the process of growing and packing of avocados 
for export to the United States.
    Paragraph (b)(1) would require the NPPO of Peru to visit and 
inspect registered places of production monthly, starting at least 2 
months before harvest and continuing until the end of the shipping 
season, to verify that the growers are complying with the requirements 
for grove sanitation and surveys for the avocado seed moth that are 
discussed later in this document and follow pest control guidelines, 
when necessary, to reduce quarantine pest populations. The systems 
approach provides for the establishment of areas that are free of the 
three fruit flies or the use of trapping for those fruit flies; if 
trapping is conducted, the NPPO of Peru would also have to verify that 
the growers are complying with the trapping requirements and would have 
to certify that each place of production has effective fruit fly 
trapping programs. Any personnel conducting trapping and pest surveys 
would have to be trained and supervised by the NPPO of Peru. APHIS 
would monitor the places of production if necessary.
    Under paragraph (b)(2), in addition to conducting fruit inspections 
at the packinghouses, the NPPO of Peru would be required to monitor 
packinghouse operations to verify that the packinghouses are complying 
with the packinghouse requirements for fruit origin, pest exclusion, 
cleaning, safeguarding, and identification that are described later in 
this document.
    Under paragraph (b)(3), if the NPPO of Peru finds that a place of 
production or a packinghouse is not complying with the proposed 
regulations, no fruit from the place of production or packinghouse 
would be eligible for export to the United States until APHIS and the 
NPPO of Peru conduct an investigation and appropriate remedial actions 
have been implemented.
    Paragraph (b)(4) would require the NPPO of Peru to retain all forms 
and documents related to export program activities in groves and 
packinghouses for at least 1 year and, as requested, provide them to 
APHIS for review. Such forms and documents would include (but would not 
necessarily be limited to)

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fruit fly trapping records, avocado seed moth survey records, 
inspection records, and treatment records.

Grove Sanitation

    Under paragraph (c) of proposed Sec.  319.56-49, avocado fruit that 
has fallen from the trees would have to be removed from each place of 
production at least once every 7 days, starting 2 months before harvest 
and continuing to the end of harvest. This procedure would reduce the 
amount of material in the groves that could serve as potential host 
material for insect pests.
    Fruit that has fallen from avocado trees to the ground may be 
damaged and thus more susceptible to infestation. Therefore, proposed 
paragraph (c) would not allow fallen avocado fruit to be included in 
field containers of fruit brought to the packinghouse to be packed for 
export.

Mitigation Measures for A. fraterculus and A. striata

    Paragraph (d) of proposed Sec.  319.56-49 would provide two options 
for mitigating the risk associated with A. fraterculus and A. striata 
in avocados from Peru: Establishment of an area free of A. fraterculus 
and A. striata or trapping to demonstrate that places of production 
have a low prevalence of A. fraterculus and A. striata.
    Peru currently does not have any areas that APHIS considers to be 
free of A. fraterculus and A. striata. However, the NPPO of Peru has 
indicated its intention to establish areas within Peru that are free of 
A. fraterculus and A. striata in the future.
    Section 319.56-5 sets out specific requirements for determination 
that an area is a pest-free area. Paragraph (a) of Sec.  319.56-5 
states that determinations of pest-free areas be made in accordance 
with International Standards for Phytosanitary Measures (ISPM) No. 4, 
which is incorporated by reference in Sec.  300.5. ISPM No. 4 sets out 
three main criteria for recognition of a pest-free area:
     Systems to establish freedom;
     Phytosanitary measures to maintain freedom; and
     Checks to verify freedom has been maintained.
    Paragraph (b) of Sec.  319.56-5 requires that APHIS approve the 
survey protocol used to determine and maintain pest-free status, as 
well as protocols for actions to be taken upon detection of a pest. It 
also indicates that pest-free areas are subject to audit by APHIS to 
verify their status.
    If avocados were produced in an area designated by APHIS as free of 
A. fraterculus and A. striata in accordance with Sec.  319.56-5, no 
further mitigations for those fruit flies would be necessary for fruit 
produced in that area. Therefore, proposed paragraph (d)(1) would 
provide as an option for mitigating A. fraterculus and A. striata that 
the avocados are produced in a place of production located in an area 
that is designated as free of A. fraterculus and A. striata in 
accordance with Sec.  319.56-5.
    If we were to determine that an area in Peru is free of A. 
fraterculus and A. striata, the general requirements for fruits and 
vegetables imported from pest-free areas in paragraph (e) of Sec.  
319.56-5 would be addressed in other parts of the proposed systems 
approach in Sec.  319.56-49. Specifically:
     The traceability requirements in paragraph (h)(5) of 
proposed Sec.  319.56-49 fulfill the requirements in paragraph (e)(1) 
of Sec.  319.56-5;
     The phytosanitary certification requirement in paragraph 
(j) of proposed Sec.  319.56-49 fulfills the certification requirement 
in paragraph (e)(2) of Sec.  319.56-5; and
     The safeguarding requirements in paragraphs (g) and (h)(4) 
of proposed Sec.  319.56-49 fulfill the safeguarding requirement in 
paragraph (e)(3) of Sec.  319.56-5. These requirements are discussed in 
greater detail later in this document.
    Paragraph (d)(2) of proposed Sec.  319.56-49 would provide for the 
use of trapping to demonstrate that registered places of production 
have a low prevalence of A. fraterculus and A. striata. Although the 
PRA has determined that A. fraterculus and A. striata are both 
potentially pests of Hass avocados from Peru, Hass avocados are known 
to be poor hosts for Anastrepha spp. fruit flies in general. However, 
the risk that these fruit flies will infest Hass avocados increases if 
their population is high in areas where avocados are produced. Trapping 
to demonstrate an area of low pest prevalence would therefore be an 
appropriate mitigation for these two fruit flies.
    Beginning at least 1 year before harvest begins and continuing 
through the end of the harvest, trapping would have to be conducted in 
registered places of production with at least 1 trap per 0.2 square 
kilometers (km2) to demonstrate that the places of 
production have a low prevalence of A. fraterculus and A. striata. 
APHIS-approved traps baited with APHIS-approved plugs would have to be 
used and serviced at least once every 2 weeks.
    During the trapping, when traps are serviced, if A. fraterculus and 
A. striata are trapped at a particular place of production at 
cumulative levels above 0.7 flies per trap per day, pesticide bait 
treatments would have to be applied in the affected place of production 
in order for the place of production to remain eligible to export 
avocados to the United States. The NPPO of Peru would have to keep 
records of fruit fly detections for each trap, update the records each 
time the traps are checked, and make the records available to APHIS 
inspectors upon request.

Mitigation Measures for Medfly

    Paragraph (e) of proposed Sec.  319.56-48 would provide three 
options for mitigating the risk associated with Medfly in avocados from 
Peru: Establishment of an area free of Medfly, trapping to demonstrate 
that places of production are free of Medfly, or treatment.
    Similar to proposed paragraph (d)(1), proposed paragraph (e)(1) 
would provide as an option for Medfly that the avocados are produced in 
a place of production located in an area that is designated as free of 
Medfly in accordance with Sec.  319.56-5. Peru currently does not have 
any areas that APHIS considers to be free of Medfly. However, the NPPO 
of Peru has indicated its intention to establish areas within Peru that 
are free of Medfly in the future.
    Hass avocados are a better host for Medfly than they are for A. 
fraterculus and A. striata. For that reason, paragraph (e)(2) of 
proposed Sec.  319.56-49 would provide for the use of trapping to 
demonstrate that registered places of production are free of Medfly.
    Beginning at least 1 year before harvest begins and continuing 
through the end of the harvest, trapping would have to be conducted in 
registered places of production to demonstrate that the places of 
production are free of Medfly. There would have to be at least 2 traps 
per km2 in commercial production areas. APHIS-approved traps 
baited with APHIS-approved plugs would have to be used and serviced at 
least once every 2 weeks.
    During the trapping, when traps are serviced, if any Medfly are 
found, 10 additional traps would have to be deployed in a 0.5-
km2 area immediately surrounding all traps where Medfly was 
found to determine whether a reproducing population is established. If 
any additional Medfly are found within 30 days of the first detection, 
the affected place of production would be ineligible to export avocados 
without treatment for Medfly until the source of the infestation is 
identified and the infestation is eradicated. APHIS would have to 
concur with the determination

[[Page 654]]

that the infestation has been eradicated. The NPPO of Peru would have 
to keep records of fruit fly detections for each trap, update the 
records each time the traps are checked, and make the records available 
to APHIS inspectors upon request.
    If the avocados were not produced in an area free of Medfly or in a 
place of production free of Medfly, or if a reproducing population of 
Medfly is detected at a place of production and the infestation has not 
yet been eradicated, avocados from that place of production would only 
be allowed to be exported to the United States if they are treated in 
accordance with 7 CFR part 305. (We are proposing to approve five 
treatments for Medfly in avocados from Peru. This is discussed in 
further detail later in this document under the heading ``Addition of 
Treatments for Medfly in Avocados from Peru.'')

Surveys for the Avocado Seed Moth

    Paragraph (f) of proposed Sec.  319.56-49 would require surveys to 
demonstrate that registered places of production are free of the 
avocado seed moth. Specifically, Peruvian departamentos \2\ in which 
avocados are grown for export to the United States would have to be 
surveyed by the NPPO of Peru at least once annually, no more than 2 
months before harvest begins, and found to be free from infestation by 
the avocado seed moth. An annual survey is appropriate for the avocado 
seed moth because the pest has limited mobility; the results of a 
survey conducted no more than 2 months before harvest would indicate 
freedom from the avocado seed moth for the entire harvest period. APHIS 
would have to approve the survey protocol used to determine and 
maintain pest-free status and the actions to be performed if the 
avocado seed moth is detected.
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    \2\ In Peru, the departamento is the first level of political 
subdivision within the country, similar to the U.S. State. However, 
because Peru is about five-sixths of the size of Alaska and there 
are 25 departamentos, a typical departamento is smaller than most 
States.
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    Surveys would have to include representative areas from all parts 
of each registered place of production in each departamento. The NPPO 
of Peru would have to cut and inspect a biometric sample of fruit at a 
rate determined by APHIS. We expect that the biometric sample would 
include about 300 fruit from each place of production. Fruit sampled 
would have to be either from the upper half of the tree or from the 
ground. Sampled fruit would have to be cut and examined for the 
presence of eggs and larvae of the avocado seed moth in the pulp or 
seed and for the presence of eggs in the pedicel.
    If one or more avocado seed moths is detected in the annual survey, 
the affected place of production would be immediately suspended from 
the export program until appropriate measures to reestablish pest 
freedom, agreed upon by the NPPO of Peru and APHIS, have been taken. 
These measures could include further delimiting surveys, appropriate 
pesticide treatments, or removal of infested host material. The NPPO of 
Peru would have to keep records of the avocado seed moth detections for 
each orchard, update the records each time the orchards are surveyed, 
and make the records available to APHIS inspectors upon request. The 
records would have to be maintained for at least 1 year after the 
beginning of the harvest, in order to ensure that the records of the 
previous year's survey are available when conducting a survey.

Harvesting Requirements

    Paragraph (g) of proposed Sec.  319.56-49 sets out requirements for 
harvesting. Harvested avocados would have to be placed in field cartons 
or containers that are marked with the official registration number of 
the place of production. The place of production where the avocados 
were grown would have to remain identifiable when the fruit leaves the 
grove, at the packinghouse, and throughout the export process. These 
requirements would ensure that APHIS and the NPPO of Peru could 
identify the place of production where the avocados were produced if 
inspectors find quarantine pests in the fruit either before export or 
at the port of entry.
    We would require the fruit to be moved to a registered packinghouse 
within 3 hours of harvest or to be protected from fruit fly infestation 
until moved. (Because of its low mobility, the avocado seed moth is not 
expected to infest picked avocados in places of production that have 
been surveyed and found to be free of that pest.) The fruit would have 
to be safeguarded by an insect-proof screen or plastic tarpaulin while 
in transit to the packinghouse and while awaiting packing. These 
requirements would prevent the fruit from being infested by fruit flies 
between harvest and packing.

Packinghouse Requirements

    We are proposing several requirements for fruit origin and 
packinghouse activities, which would be contained in paragraph (h) of 
proposed Sec.  319.56-49.
    Paragraph (h)(1) would require registered packinghouses to accept 
only avocados that are from registered places of production and that 
are produced in accordance with the requirements of the systems 
approach during the time they are in use for packing avocados for 
export to the United States.
    Paragraph (h)(2) would require avocados to be packed within 24 
hours of harvest in an insect-exclusionary packinghouse. All openings 
to the outside of the packinghouse would have to be covered by 
screening with openings of not more than 1.6 mm or by some other 
barrier that prevents pests from entering. Screening with openings of 
not more than 1.6 mm excludes fruit flies. The packinghouse would have 
to have double doors at the entrance to the facility and at the 
interior entrance to the area where the avocados are packed. These 
proposed requirements are designed to exclude fruit flies from the 
packinghouse.
    Paragraph (h)(3) would require all avocados to be cleaned of all 
plant debris before packing. This procedure would ensure that the fruit 
alone is exported to the United States; other parts of the avocado tree 
may harbor pests other than the quarantine pests identified earlier. As 
noted earlier, the cleaning process also helps to remove C. viridis and 
F. malvastra.
    Paragraph (h)(4) would require fruit to be packed in insect-proof 
packaging, or covered with insect-proof mesh or a plastic tarpaulin, 
for transport to the United States, to prevent fruit fly infestation 
after the fruit is packed. These safeguards would have to remain intact 
until arrival in the United States.
    Paragraph (h)(5) would require shipping documents accompanying 
consignments of avocados from Peru that are exported to the United 
States to include the official registration number of the place of 
production at which the avocados were grown and to identify the packing 
shed or sheds in which the fruit was processed and packed. This 
identification would have to be maintained until the fruit is released 
for entry into the United States. These requirements would ensure that 
APHIS and the NPPO of Peru could identify the packinghouse at which the 
fruit was packed if inspectors find quarantine pests in the fruit 
either before export or at the port of entry.

Inspection by the NPPO of Peru

    To ensure that the mitigations required in the systems approach are 
effective at producing fruit free of the targeted quarantine pests, 
paragraph (i) of proposed Sec.  319.56-49 would require inspectors from 
the NPPO of Peru to inspect a biometric sample from each place of 
production at a rate to be

[[Page 655]]

determined by APHIS. The inspectors would have to visually inspect 
fruit from each place of production for all the quarantine pests. The 
inspectors would also have to cut fruit to inspect for the avocado seed 
moth and to inspect for A. fraterculus, A. striata, and Medfly if the 
avocados did not originate from an area free of those fruit flies.
    C. viridis and F. malvastra are both external pests that can be 
detected by inspection. We commonly use phytosanitary inspection, along 
with requiring the use of commercial production practices, to mitigate 
the risk associated with C. viridis and with mealybug pests. Inspection 
of cut fruit for A. fraterculus, A. striata, Medfly, and the avocado 
seed moth is effective at detecting these internal feeders. We have cut 
fruit to detect fruit flies in programs such as the program for the 
importation of clementines from Spain; such cutting is required in the 
regulations at Sec.  319.56-34(f). Similarly, the regulations governing 
the importation of Hass avocados from Mexico in Sec.  319.56-
30(c)(3)(iv) require fruit cutting to detect avocado pests including 
fruit flies and the avocado seed moth. We have determined that 
inspection can serve as an effective mitigation for the risk associated 
with these pests in avocados exported from Peru as well.
    If any quarantine pests are detected in this inspection, the place 
of production where the infested avocados were grown would immediately 
be suspended from the export program until an investigation has been 
conducted by APHIS and the NPPO of Peru and appropriate mitigations 
have been implemented.
    If Medfly is detected, avocados from the place of production where 
the infested avocados were produced would be allowed to be imported 
into the United States only if treated with an approved treatment for 
Medfly in accordance with 7 CFR part 305.

Phytosanitary Certificate

    To certify that the Hass avocados from Peru have been grown and 
packed in accordance with the requirements of proposed Sec.  319.56-49, 
proposed paragraph (j) would require each consignment of Hass avocados 
imported from Peru into the United States to be accompanied by a 
phytosanitary certificate issued by the NPPO of Peru with an additional 
declaration stating that the avocados in the consignment were grown, 
packed, and inspected and found to be free of pests in accordance with 
the requirements of proposed Sec.  319.56-49. In addition:
     If the avocados were produced in an area free of A. 
fraterculus and A. striata, the phytosanitary certificate would have to 
state that the avocados in the consignment were produced in an area 
designated as free of A. fraterculus and A. striata in accordance with 
7 CFR 319.56-5.
     If the avocados were produced in an area free of Medfly, 
the phytosanitary certificate would have to state that the avocados in 
the consignment were produced in an area designated as free of Medfly 
in accordance with 7 CFR 319.56-5.
     If the avocados were treated for Medfly prior to export, 
the phytosanitary certificate would have to state that the avocados in 
the consignment were treated for Medfly in accordance with 7 CFR part 
305.

Addition of Treatments for Medfly in Avocados From Peru

    The regulations in 7 CFR part 305 set out standards and schedules 
for treatments required in 7 CFR parts 301, 318, and 319 to prevent the 
introduction or dissemination of plant pests or noxious weeds into or 
through the United States through the importation or movement of 
fruits, vegetables, and other articles. Section 305.2 lists approved 
treatments; paragraph (h)(2)(i) lists approved treatments for imported 
fruits and vegetables, and paragraph (h)(2)(ii) lists approved 
treatments for fruits and vegetables moved interstate.
    Five treatments are currently listed as approved treatments for 
Medfly in avocados:
     Methyl bromide fumigation treatment schedule MB T101-c-1, 
approved for treating Medfly in avocados imported from Israel and from 
the Philippines;
     Methyl bromide fumigation followed by cold treatment 
schedules MB&CT T108-a-1, MB&CT T108-a-2, and MB&CT T108-a-3, approved 
for treating Medfly in avocados imported from Chile and avocados moved 
interstate from areas quarantined for Medfly;
     Cold treatment schedule T107-a, approved for avocados 
moved interstate from areas quarantined for Medfly.
    Because there are no differences between the avocados grown in Peru 
and the avocados grown in the United States or the other countries 
listed above that would affect the efficacy of the treatments, we have 
determined that these treatments would be effective for treating Medfly 
in avocados imported from Peru as well. Therefore, we are proposing to 
list MB T101-c-1, MB&CT T108-a-1, MB&CT T108-a-2, MB&CT T108-a-3, and 
CT T107-a as approved treatments for Medfly in avocados from Peru in 
paragraph (h)(2)(i) of Sec.  305.2.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
The proposed rule has been determined to be not significant for the 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget.
    In accordance with 5 U.S.C. 603, we have performed an initial 
regulatory flexibility analysis, which is set out below, regarding the 
economic effects of this proposed rule on small entities. Based on the 
information we have, there is no reason to conclude that adoption of 
this proposed rule would result in any significant economic effect on a 
substantial number of small entities. However, we do not currently have 
all of the data necessary for a comprehensive analysis of the effects 
of this proposed rule on small entities. Therefore, we are inviting 
comments on potential effects. In particular, we are interested in 
determining the number and kind of small entities that may incur 
benefits or costs from the implementation of this proposed rule.
    The NPPO of Peru has requested that APHIS authorize market access 
for commercial shipments of fresh Hass avocados into the continental 
United States for domestic consumption. APHIS is proposing to grant 
this request if Peru produces the Hass avocados in accordance with a 
systems approach that would include registration and monitoring of 
places of production and packinghouses; grove sanitation; pest-free 
areas or trapping for fruit flies; surveys for the avocado seed moth; 
and inspection for quarantine pests by Peru's NPPO. Hass avocados from 
Peru would also be required to be accompanied by a phytosanitary 
certificate with an additional declaration stating that the avocados 
have been inspected for quarantine pests and were grown and packed in 
accordance with the proposed requirements. These mitigations would 
allow for the importation of Hass avocados from Peru into the United 
States while providing protection against the introduction of 
quarantine pests. Application of the mitigation measures in granting 
Peru's request is consistent with World Trade Organization agreements 
that sanitary and phytosanitary regulatory restrictions should be based 
on scientific evidence and applied only to the extent necessary to 
protect human, animal, and plant health.

[[Page 656]]

    This analysis focuses on the potential economic impacts of allowing 
fresh Hass avocado imports from Peru. Expected benefits and costs are 
examined in accordance with Executive Order 12866. Expected economic 
impacts for small entities are also evaluated, as required by the 
Regulatory Flexibility Act. Our analysis indicates that, while producer 
revenues would be negatively affected, the benefits of the proposed 
rule would exceed costs overall. The study considers expected price and 
welfare changes due to projected annual imports of 19,000 metric tons 
of fresh Hass avocados from Peru.
    The United States is the world's leading importer of all fresh Hass 
avocados, with imports between 60 and 75 percent of total world exports 
annually. Japan and Canada rank a distant second and third with 
combined imports of 18 to 20 percent annually. The United States 
imports primarily from Mexico and Chile. Mexico and Chile account for 
approximately 50 and 30 percent, respectively.\3\ The United States 
exports less than 1.5 percent of its production; whereas U.S. 
consumption is more than double production. California is the largest 
U.S. producer of avocados, accounting for approximately 86 percent of 
all production and nearly all Hass avocado production. Peru has emerged 
as a major exporter of Hass avocados on the world market in recent 
years, accounting for approximately 18 percent of world exports. In 
Peru, the Hass avocado harvesting season occurs between May and 
September; whereas the California avocado marketing season is 
perennial.
---------------------------------------------------------------------------

    \3\ Global Trade Atlas data.
---------------------------------------------------------------------------

Analytical Approach, the Baseline, and Modeling Assumptions

    In this section, we describe the economic model used to compute 
expected impacts of the proposed rule on producers and consumers of 
fresh Hass avocados, as well as the assumptions of the analysis, 
including the baseline price and quantities, projected imports from 
Peru, the price elasticities of demand and supply, and possible levels 
of displacement of fresh Hass avocado imports from other countries by 
projected imports from Peru.

The Baseline Analysis System (BAS) Model

    The Baseline Analysis System (BAS) model is a non-spatial partial 
equilibrium welfare model.\4\ The BAS model can be applied to evaluate 
how market prices and quantities adjust to changes in policy, and how 
producers and consumers are thereby affected by implementation of the 
policy changes.
---------------------------------------------------------------------------

    \4\ A complete description of the model is provided in: 
Forsythe, K.W., ``An Economic Model for Routine Analysis of the 
Welfare Effects of Regulatory Changes.'' V3.00. U.S. Department of 
Agriculture, Animal and Plant Health Inspection Service, Veterinary 
Services, Centers for Epidemiology and Animal Health. April 20, 2005 
(draft). https://www.aphis.usda.gov/peer_review/content/printable_
version/bas_model_econOnly_apr20.pdf.
    The BAS economic model is based on methodology described in the 
following studies: Ebel, E.D., R.H. Hornbaker, and C.H. Nelson, 
``Welfare Effects of the National Pseudorabies Eradication 
Program.'' Amer. J. Agr. Econ. 74(August 1992):638-45; Forsythe, 
K.W., and B.A. Corso, ``Welfare Effects of the National Pseudorabies 
Eradication Program: Comment.'' Amer. J. Agr. Econ. 76(November 
1994):968-71; and Lichtenberg, E., D.D. Parker, and D. Zilberman, 
``Marginal Analysis of Welfare Cost of Environmental Policies: The 
Case of Pesticide Regulation.'' Amer. J. Agr. Econ. 70(November 
1988):867-74.
---------------------------------------------------------------------------

    Our analysis is non-spatial in that the price and quantity effects 
obtained from the model are assumed to be average effects across 
geographically separated markets. Partial equilibrium means that the 
model results are based on maintaining a supply-and-demand equilibrium 
in a limited portion of an overall economy. Economic sectors not 
explicitly included in the model are assumed to have a negligible 
influence on the model results. A partial equilibrium analysis is 
appropriate because the proposed rule is specific to the U.S. fresh 
Hass avocado market, and is therefore expected to have only limited 
effects on other sectors of the economy. Avocados are not close 
substitutes for other fruits.
    Expected effects of the proposed rule are described in terms of 
welfare impacts, as reflected in calculated changes in consumer and 
producer surplus. Consumer surplus is the difference between what the 
consumer pays for a unit of a good or service and the maximum price 
that the consumer would be willing to pay for that unit. Producer 
surplus is the difference between the price a producer is paid for 
supplying a unit of a good or service and the minimum price that the 
producer would be willing to accept to supply that unit.
    The consumer and producer surplus equations in the model are based 
on the assumption that demand and supply functions are approximately 
linear near the initial equilibrium point. For small shifts, this 
assumption results in reasonably accurate measures of consumer and 
producer surplus changes. Parallel shifts in the demand and supply 
functions are assumed. In addition to domestic demand and supply 
functions, an import supply function is included in the model to 
account for assumed changes in imports.

Baseline for Fresh Hass Avocados

    The model's baseline represents the current U.S. fresh Hass avocado 
market, in terms of production, consumption, import, and export 
quantities; price; and own-price elasticities of demand and supply. 
Price elasticities describe the responsiveness of sellers and buyers to 
price changes. Table 1 reports the baseline data used in calculating 
the welfare impacts of importing fresh Hass avocados from Peru. 
Baseline quantities are 5-year averages, for the seasons 2002-03 
through 2006-07, of U.S. fresh Hass avocado production, consumption, 
imports, and exports. The baseline price is the average import price 
for fresh Hass avocados on the domestic market over the same 5-year 
period, inflated to 2008 dollars using the gross domestic product 
deflator. Domestic demand for fresh Hass avocados is equivalent to 
consumption, or production plus imports minus exports. Domestic supply 
is measured as production minus exports.

           Table 1--U.S. Baseline Data for Fresh Hass Avocado
             [2002-03 through 2006-07 averages, metric tons]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Production \1\..........................................         174,869
Imports \2\.............................................         202,512
Exports \2\.............................................           2,616
Consumption \3\.........................................         374,766
Price per metric ton \2\................................         $1,410
------------------------------------------------------------------------
\1\ Source: California Avocado Commission (CAC) Annual Report 2006-07.
\2\ Source: World Trade Atlas data.
\3\ Calculated as production plus imports minus exports.

    For this analysis, we use short-run and long-run supply 
elasticities for Hass avocados of 0.15 and 1.50, respectively, and a 
demand elasticity of -1.20. These elasticities are taken from Hoddle, 
et al. (2003). This study utilized data from Carman and Craft (1998) 
and techniques developed by Armington (1969) to obtain the own-price 
elasticity of demand. The more elastic supply in the longer run 
reflects producers' greater ability to adjust to changes in price over 
longer periods of time.
    The Peru Avocado Growers Association estimates that 19,000 metric 
tons of fresh Hass avocados would be exported annually to the United 
States. It is likely that, given domestic demand constraints, a 
percentage of fresh Hass avocado imports from other sources would be 
displaced by these shipments. For the short- and long-term sets of

[[Page 657]]

demand and supply elasticities, we model the welfare impacts assuming 
three different levels of displacement of fresh Hass avocado imports 
from other sources: No displacement, 11 percent of imports from Peru 
would displace imports from elsewhere, and 24 percent of imports from 
Peru would displace imports from elsewhere.
    The 11 and 24 percent displacement levels are derived from the 
projected level of imports from Peru (19,000 metric tons), excess 
supply and demand elasticities for the United States (the same as those 
estimated by Hoddle, et al.), and market-clearing conditions of trade 
that include the excess supply of Hass avocados from Peru.\5\
---------------------------------------------------------------------------

    \5\ Displacement is calculated as a function of the excess 
supply of avocados from Peru and the excess demand for avocados by 
the United States, where displacement is equal to 1-[egr]/([eta]-
[egr]), [egr] represents the excess supply elasticity and [eta] 
represents the excess demand elasticity. This representation is 
derived from the trading relationship by taking the logarithmic 
differential of the excess supply equation and solving for the 
logarithmic change in excess supply. Trade creation is expressed as 
the change in excess supply divided by the change in Peruvian 
avocado imports. Trade displacement is the remaining portion of 
Peruvian imports and is calculated as one minus trade creation.
---------------------------------------------------------------------------

    As a measure of the sensitivity of the price and welfare effects to 
the projected level of imports from Peru, we calculate impacts assuming 
import levels would be 50 percent less or 50 percent greater (i.e., 
9,500 metric tons or 28,500 metric tons of fresh Hass avocados imported 
yearly from Peru) than the projected 19,000 metric tons. Table 2 
reports the net increases in U.S. Hass avocado imports for the three 
displacement scenarios and the three modeled levels of imports from 
Peru.

Table 2--Net Increase in U.S. Hass Avocado Imports, Based on Projected Import Levels of Fresh Hass Avocados From
                                         Peru and Displacement Scenarios
----------------------------------------------------------------------------------------------------------------
                                                                       Net increase in U.S. avocado imports
                                                                 -----------------------------------------------
    Percentage of imports from Peru assumed to displace other       50 percent                      50 percent
                             imports                                 less than       Projected       more than
                                                                     projected        imports        projected
                                                                      imports                         imports
----------------------------------------------------------------------------------------------------------------
                                                                                        MT
----------------------------------------------------------------------------------------------------------------
0...............................................................           9,500          19,000          28,500
11..............................................................           8,455          16,910          25,365
24..............................................................           7,220          14,400          21,660
----------------------------------------------------------------------------------------------------------------

Expected Costs and Benefits

    In this section we report the results of the quantitative analysis. 
Price impacts and welfare effects for domestic producers and consumers 
of fresh Hass avocados are presented. We evaluate the sensitivity of 
the results to fresh avocado import levels different from those 
projected by comparing the effects of importing 50 percent more or 50 
percent less from Peru than the projected 19,000 metric tons.

Model Results

    Based on data averaged over 5 seasons, price changes and welfare 
effects of the proposed rule are summarized in tables 3 through 5 for 
projected fresh avocado imports from Peru of 19,000 metric tons 
annually, at 0, 3, and 7 percent discount rates for each set of 
elasticities. As expected, the price decline is largest when there is 
zero displacement, and demand and supply are more inelastic.
    With a supply elasticity of 0.15 and a demand elasticity of -1.20, 
the price is calculated to decline by 4 percent when 19,000 metric tons 
of fresh Hass avocados are imported annually from Peru and there is no 
displacement of other imports. Undiscounted producer welfare losses 
under this set of elasticities and zero displacement total about $9.7 
million, with consumer welfare gains of approximately $21.6 million and 
a net welfare gain of nearly $12 million.
    When we assume that 24 percent of imports from Peru would displace 
imports from other sources, the same elasticities of demand and supply 
generate a price decline of 3.04 percent, undiscounted producer welfare 
losses of approximately $7.4 million, consumer welfare gains of $16.3 
million, and a net welfare gain of $8.9 million. We expect the 
displacement percentage to lie between zero and 24 percent. The impacts 
for producers and consumers are also calculated assuming 3 and 7 
percent rates of discount. Since the welfare effects are discounted 
only 1 year, from 2009, the presumed year of implementation, to the 
base year of 2008, the values when discounted at 3 and 7 percent are 
very similar to the undiscounted values. As expected, the net changes 
in welfare show small declines with increases in the discount rate.
    In the more intermediate run, when the responsiveness of consumers 
is not as inelastic, price decline is smaller. Given a supply 
elasticity of 1.50 and a demand elasticity of -1.20, the price is 
calculated to decline by 2.7 percent with 19,000 metric tons of fresh 
Hass avocados imported annually from Peru. Undiscounted producer 
welfare losses under this scenario total about $6.4 million, with 
consumer welfare gains of approximately $14 million for a net welfare 
gain of about $8 million. Assuming 24 percent displacement and the same 
elasticities of demand and supply, the price is calculated to decline 
by about 2 percent with undiscounted producer welfare losses of nearly 
$4.9 million, consumer welfare gains of $10.9 million, and net welfare 
gains of $6 million.
    The higher the level of displacement of imports from other 
countries, the smaller the price change and the smaller the welfare 
losses for producers and welfare gains for consumers. The extent to 
which displacement occurs is a critical factor affecting the size of 
potential impacts of the rule. Also, welfare gains for consumers and 
welfare losses for producers can be expected to be larger in the short 
run where supply is inelastic. Regardless of the percentage of 
displacement, the rate of discount, or the price elasticity of demand 
and supply, the benefits of the proposed rule to allow a projected 
19,000 metric tons of fresh Hass avocados to be imported into the 
United States from Peru would exceed the costs in the long run.

[[Page 658]]



  Table 3--One-Year Price and Welfare Effects for Projected Annual Imports of 19,000 Metric Tons of Fresh Hass
                                   Avocados From Peru, Discounted at 0 Percent
----------------------------------------------------------------------------------------------------------------
                                   Percentage of
                                   imports from                      Change in       Change in
 Demand and supply  elasticities     Peru that     Price change      consumer        producer       Net welfare
                                  displace other     (percent)        welfare         welfare         change
                                      imports
----------------------------------------------------------------------------------------------------------------
                                                                                      $1,000
----------------------------------------------------------------------------------------------------------------
D -1.20, S 0.15.................               0           -4.00          21,618          -9,675          11,944
D -1.20, S 0.15.................              11           -3.56          19,191          -8,613          10,577
D -1.20, S 0.15.................              24           -3.04          16,337          -7,358           8,979
D -1.20, S 1.50.................               0           -2.68          14,407          -6,386           8,021
D -1.20, S 1.50.................              11           -2.39          12,800          -5,696           7,104
D -1.20, S 1.50.................              24           -2.04          10,908          -4,877           6,031
----------------------------------------------------------------------------------------------------------------


  Table 4--One-Year Price and Welfare Effects for Projected Annual Imports of 19,000 Metric Tons of Fresh Hass
                                   Avocados From Peru, Discounted at 3 Percent
----------------------------------------------------------------------------------------------------------------
                                   Percentage of
                                   imports from                      Change in       Change in
 Demand and supply  elasticities     Peru that     Price change      consumer        producer       Net welfare
                                  displace other     (percent)        welfare         welfare         change
                                      imports
----------------------------------------------------------------------------------------------------------------
                                                                                      $1,000
----------------------------------------------------------------------------------------------------------------
D -1.20, S 0.15.................               0           -4.00          20,988          -9,393          11,596
D -1.20, S 0.15.................              11           -3.56          18,632          -8,362          10,269
D -1.20, S 0.15.................              24           -3.04          15,862          -7,144           8,718
D -1.20, S 1.50.................               0           -2.68          13,987          -6,200           7,787
D -1.20, S 1.50.................              11           -2.39          12,427          -5,530           6,897
D -1.20, S 1.50.................              24           -2.04          10,590          -4,735           5,855
----------------------------------------------------------------------------------------------------------------


  Table 5--One-Year Price and Welfare Effects for Projected Annual Imports of 19,000 Metric Tons of Fresh Hass
                                   Avocados From Peru, Discounted at 7 Percent
----------------------------------------------------------------------------------------------------------------
                                   Percentage of
                                   imports from                      Change in       Change in
 Demand and supply  elasticities     Peru that     Price change      consumer        producer       Net welfare
                                  displace other     (percent)        welfare         welfare         change
                                      imports
----------------------------------------------------------------------------------------------------------------
                                                                                      $1,000
----------------------------------------------------------------------------------------------------------------
D -1.20, S 0.15.................               0           -4.00          20,204          -9,042          11,162
D -1.20, S 0.15.................              11           -3.56          17,935          -8,050           9,885
D -1.20, S 0.15.................              24           -3.04          15,269          -6,877           8,392
D -1.20, S 1.50.................               0           -2.68          13,465          -5,968           7,497
D -1.20, S 1.50.................              11           -2.39          11,963          -5,324           6,639
D -1.20, S 1.50.................              24           -2.04          10,194          -4,558           5,636
----------------------------------------------------------------------------------------------------------------

    As indicated, in addition to considering the effects of three 
possible levels of displacement of fresh avocado imports from other 
sources, we analyzed the sensitivity of the results to changes in the 
projected quantity of fresh Hass avocados imported from Peru. We 
calculated the price and welfare effects assuming the possibility that 
avocado imports from Peru are 50 percent less or 50 percent greater 
than the 19,000 metric tons projected by Peruvian exporters.
    Fresh avocado imports from Peru of 19,000 metric tons (and zero 
displacement of fresh avocado imports from other countries) would 
increase U.S. annual imports by approximately 9 percent, given the 5-
year average of approximately 202,512 metric tons for the seasons 2002-
03 through 2006-07. Imports of Hass avocados from Peru that are 50 
percent more than is projected would increase the import supply by as 
much as 14 percent, whereas imports of Hass avocados from Peru that are 
50 percent less than is projected by Peruvian exporters would increase 
the import supply not quite 5 percent. The results of the sensitivity 
analysis, as reported in table 6, assume that the annual quantity 
imported is 50 percent less (9,500 metric tons) or 50 percent more 
(28,500 metric tons) than the projected level of imports for the two 
pairs of demand and supply elasticities, three displacement scenarios, 
and applying a 3 percent rate of discount. The ranges for the changes 
in price and for the welfare effects are calculated for each of the 
three displacement levels. Again, the change in price is greatest when 
there is zero displacement in the short run where supply is more 
inelastic than the long run.

[[Page 659]]



            Table 6--Sensitivity Analysis for Projected U.S. Imports of Fresh Hass Avocados From Peru
----------------------------------------------------------------------------------------------------------------
                                   Percentage of
                                   imports from                      Change in       Change in
 Demand and supply elasticities      Peru that     Price change      consumer        producer       Net welfare
                                  displace other     (percent)        welfare         welfare         change
                                      imports
----------------------------------------------------------------------------------------------------------------
                                                                                  Million Dollars
----------------------------------------------------------------------------------------------------------------
D -1.20, S 0.15.................               0    -2.0 to -6.0    10.7 to 31.8   -4.7 to -14.1     5.7 to 17.8
D -1.20, S 0.15.................              11    -1.8 to -5.3     9.2 to 28.2   -4.2 to -12.5     5.0 to 15.7
D -1.20, S 0.15.................              24    -1.5 to -4.6     7.9 to 24.0   -3.6 to -10.7     4.3 to 13.3
D -1.20, S 1.50.................               0    -1.3 to -4.0     6.9 to 21.1    -3.1 to -9.2     3.8 to 11.9
D -1.20, S 1.50.................              11    -1.2 to -3.6     6.2 to 18.7    -2.8 to -8.2     3.4 to 10.6
D -1.20, S 1.50.................              24    -1.0 to -3.1     5.3 to 16.0    -2.4 to -7.0     2.9 to 8.9
----------------------------------------------------------------------------------------------------------------
Note: Net welfare gains may not sum due to rounding. Only the welfare effects when discounted at 3 percent are
  presented, since the results are much the same when discount rates of 0 and 7 percent are used.

    The price of fresh Hass avocados is calculated to decline by 6 
percent if 28,500 metric tons of fresh Hass avocados were imported 
annually from Peru, there was no displacement of imports from other 
countries, and the demand and supply elasticities were -1.20 and 0.15; 
assuming an import level of 9,500 metric tons, no displacement, and the 
same elasticities yields a decrease in price of 2 percent.\6\ Without 
displacement, prices were estimated to fall between 1.3 and 4 percent 
as producers adjust to market changes.
---------------------------------------------------------------------------

    \6\ The changes in welfare discussed in the remainder of this 
section have been computed using a discount rate of 3 percent.
---------------------------------------------------------------------------

    When we assume 24 percent displacement, given the same elasticities 
of demand and supply, price is calculated to decline between 1.5 
percent (imports 50 percent less than projected) and 4.6 percent 
(imports 50 percent more than projected), with producer welfare losses 
ranging from $3.6 million to $10.7 million, consumer welfare gains from 
$7.9 million to $24 million, and net welfare gains from $4.3 million to 
$13.3 million.
    In the long run, as implied by a supply elasticity of 1.50 and a 
demand elasticity of -1.20, the price is calculated to decline between 
1 percent (imports 50 percent less than projected) and 3 percent 
(imports 50 percent more than projected), assuming 24 percent 
displacement of imports from other countries. Producer welfare losses 
under this scenario range from $2.4 million to $7 million, with 
consumer welfare gains ranging from $5.3 million to $16 million, for a 
net welfare gain of between $2.9 million and $8.9 million.
    Given the linearity of the BAS model, changes in welfare are 
proportional to the assumed levels of imports from Peru. The largest 
annual net welfare gains reported in the sensitivity analysis are $17.8 
million, with producer welfare losses of $14.1 million and consumer 
welfare gains of $31.9 million. These welfare impacts are based on 
fresh avocado imports from Peru totaling 28,500 metric tons and the 
unlikely possibility that none of these imports would displace fresh 
avocado imports from other countries. More reasonably, some portion of 
the imports from Peru would displace existing imports from foreign 
sources, and price and welfare effects of the rule for U.S. entities 
would be thereby moderated.

Benefit and Cost Conclusion

    According to the Peru Avocado Growers Association, exporters expect 
to ship approximately 19,000 metric tons of fresh Hass avocados per 
year from Peru to the United States if the proposed rule is finalized. 
The projected imports would be roughly 5 percent of U.S. fresh avoca