[Federal Register Volume 72, Number 3 (Friday, January 5, 2007)]
[Proposed Rules]
[Pages 475-480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-22627]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 94

[Docket No. APHIS-2005-0096]


Change in Disease Status of the Patagonia South Region of 
Argentina With Regard to Rinderpest and Foot-and-Mouth Disease

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the regulations to add that portion 
of the Patagonia region of Argentina located south of latitude 42[deg] 
south (Patagonia South) to the list of regions considered free of 
rinderpest and foot-and-mouth disease (FMD). We are taking this action 
because we have determined that Patagonia South is free of rinderpest 
and FMD. We are also proposing to add that region to the list of 
regions that are subject to certain import restrictions on meat and 
meat products because of their proximity to or trading relationships 
with rinderpest-or FMD-affected countries. These actions would update 
the disease status of Patagonia South with regard to rinderpest and FMD 
while continuing to protect the United States from an introduction of 
those diseases by providing additional requirements for any meat and 
meat products imported into the United States from Patagonia South.

DATES: We will consider all comments that we receive on or before March 
6, 2007.

ADDRESSES: You may submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov, select ``Animal and Plant Health Inspection 
Service'' from the agency drop-down menu, then click ``Submit.'' In the 
Docket ID column, select APHIS-2005-0096 to submit or view public 
comments and to view supporting and related materials available 
electronically. Information on using Regulations.gov, including 
instructions for accessing documents, submitting comments, and viewing 
the docket after the close of the comment period, is available through 
the site's ``User Tips'' link.
     Postal Mail/Commercial Delivery: Please send four copies 
of your comment (an original and three copies) to Docket No. APHIS-
2005-0096, 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-2005-0096.
    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 http://www.aphis.usda.gov.

FOR FURTHER INFORMATION CONTACT: Dr. Silvia Kreindel, Veterinary 
Medical Officer, Regionalization Evaluation Services, National Center 
for Import and Export, VS, APHIS, 4700 River Road Unit 38, Riverdale, 
MD 20737-1231; (301) 734-8419.

SUPPLEMENTARY INFORMATION:

[[Page 476]]

Background

    The regulations in 9 CFR part 94 (referred to below as the 
regulations) govern the importation of certain animals and animal 
products into the United States in order to prevent the introduction of 
various diseases, including rinderpest, foot-and-mouth disease (FMD), 
African swine fever, classical swine fever, and swine vesicular 
disease. These are dangerous and destructive communicable diseases of 
ruminants and swine. Section 94.1 of the regulations lists regions of 
the world that are declared free of rinderpest or free of both 
rinderpest and FMD. Rinderpest or FMD exists in all other parts of the 
world not listed. Section 94.11 of the regulations lists regions of the 
world that have been determined to be free of rinderpest and FMD, but 
that are subject to certain restrictions because of their proximity to 
or trading relationships with rinderpest-or FMD-affected regions.
    We are proposing to amend the regulations in Sec.  94.1 by adding 
that portion of the Patagonia region of Argentina located south of 
latitude 42[deg] south (referred to below as Patagonia South) to the 
list of regions that are considered free of both rinderpest and FMD. We 
are proposing this because there has been no outbreak of FMD in the 
Patagonia South region of Argentina since 1976 and there is no evidence 
that there are any species currently infected with FMD in Patagonia 
South. In addition, because rinderpest has never been diagnosed in 
Argentina and is not endemic to that region of the world, we are also 
proposing to recognize Patagonia South as free of rinderpest. Finally, 
we are proposing to amend the regulations in Sec.  94.11 by adding 
Patagonia South to the list of regions that are subject to certain 
import restrictions on meat and meat products because of their 
proximity to or trading relationships with rinderpest-or FMD-affected 
regions.

Risk Evaluation

    Using information submitted to us by the Federal Government of 
Argentina through the Servicio Nacional de Sanidad y Calidad 
Agroalimentario (SENASA), as well as information gathered during a site 
visit by APHIS staff to Argentina in December 2003 and published 
reports, we have reviewed and analyzed the animal health status of 
Patagonia South relative to rinderpest and FMD. This review and 
analysis was conducted in light of the factors identified in our 
regulations in 9 CFR 92.2, ``Application for recognition of the animal 
health status of a region,'' which are used to evaluate the risk 
associated with importing animals or animal products into the United 
States from a given region. Based on the information submitted to us, 
we have concluded the following:

Veterinary Infrastructure

    The veterinary services authorities in Argentina have the legal 
authority, organization, and infrastructure to detect, control, and 
eradicate FMD. Argentina's veterinary services are organized under 
SENASA, which translates in English to the National Health and Agrifood 
Quality Service. SENASA is divided into several sections, four of which 
focus on animal health issues: (1) The National Animal Health Office 
(DNSA), which is responsible for animal health control and eradication 
programs; (2) the National Agrifood Inspection Office (DNFA), which is 
responsible for enforcing hygiene and health requirements in slaughter 
establishments, processing plants, and storage facilities for animal 
and plant products and byproducts; (3) the Quarantine, Borders and 
Certification Unit (CCFyC), which oversees animal and plant quarantine 
and border movements and control; and (4) the Laboratories and 
Technical Control Office (DILACOT), which operates the national 
reference laboratory for food safety and animal and plant health, and 
manages regional laboratories and laboratories accredited by SENASA. 
Additional support for the animal health system in Argentina comes from 
349 local animal health offices, 10 of which are located in the 
Patagonia South region.
    In 2003, SENASA reported a total of 3,479 employees, including 
personnel who deal with plant issues. Of these, 2,558 were permanent 
staff members, of which 572 were veterinarians. SENASA has the 
authority to hire contract personnel, including veterinarians and 
animal health technicians, and to call on private veterinary 
practitioners, police, and local authorities to provide support to the 
Central Veterinary Office in depopulating infected premises, disposing 
of animal carcasses, and controlling and restricting animal movements. 
In 2003, SENASA reported a complement of 921 contractors, of which 219 
were contract veterinarians. SENASA's permanent staff in Patagonia 
South includes 12 veterinarians, 20 veterinary inspectors, 19 
provincial veterinarians, 202 private veterinarians, 20 technicians, 
and a number of administrative personnel.
    SENASA personnel are distributed among 25 regions within Argentina, 
each of which falls under the supervision of a regional supervisor. In 
the event of an animal disease emergency, SENASA has the legal 
authority to implement control measures.

Disease History and Surveillance

    Rinderpest has never been diagnosed in Argentina and is not endemic 
to that region of the world. The last outbreak of FMD in the Patagonia 
South region of Argentina occurred in October 1976 and was traced to 
its origin north of 42[deg] South. There is no evidence that there are 
any species currently infected with FMD in Patagonia South.
    Argentina has a structured system of notification and official 
involvement to investigate any suspected cases of FMD. Argentina 
maintains an active FMD surveillance program to monitor viral activity 
in various FMD-susceptible species. Surveillance for FMD in Patagonia 
South is conducted under the national surveillance program in Argentina 
and includes both active and passive surveillance for the disease. 
Argentina's surveillance program is adequate to detect disease and 
identify and measure FMD activity in the region.

Diagnostic Capabilities

    Argentina has the authority, personnel, and diagnostic capabilities 
to test herds for, and diagnose, FMD. Currently, there is one 
diagnostic laboratory in Argentina, located in Buenos Aires, that is 
authorized to perform FMD diagnostic and surveillance activities. This 
laboratory meets the biosafety requirements established by SENASA, as 
well as the biosafety guidelines issued by the World Organization for 
Animal Health (OIE). The OIE is recognized by the World Trade 
Organization as the international organization responsible for the 
development of standards, guidelines, and recommendations with respect 
to animal health and zoonoses (diseases that are transmissible from 
animals to humans).

Vaccination Status

    Vaccination against FMD is not practiced and has never been 
systematically applied in Patagonia South. In the event of a confirmed 
FMD outbreak in Patagonia South, the primary control measure would be 
to stamp out affected animals and contacts. Emergency vaccination 
against FMD may be undertaken in the event of a risk of an extensive 
outbreak of the disease. Emergency vaccination against FMD was last 
implemented in Patagonia South during the outbreak of FMD in 1976.

[[Page 477]]

Disease Status of Adjacent Regions

    Patagonia South is bordered by the Atlantic Ocean and shares land 
borders with Chile and the province of Rio Negro, Argentina. The 
province of Rio Negro, Argentina, is located in ``Patagonia North B,'' 
which is an FMD surveillance area situated to the north of Patagonia 
South. The last outbreak of FMD in Patagonia North B occurred in 1994. 
Chile is recognized by APHIS as free of FMD.

Degree of Separation From Adjacent Regions

    Patagonia South is sufficiently separated from Patagonia North B by 
mountains and other natural barriers; however, for the few areas where 
there are no natural barriers, government control measures compensate. 
These control measures include mobile patrols and a permanent 
coordination between national and provincial entities to maintain a 
constant presence at the region route controls by the National Border 
Police and other police authorities.

Movement Across Borders

    The movement of animals and animal products into Patagonia South 
from regions of higher disease risk is strictly controlled. The 
Government of Argentina has established a sanitary barrier across the 
entire line of latitude 42[deg] South to preserve the FMD-free status 
of Patagonia South. Movement of FMD-susceptible animals to Patagonia 
South is not allowed from any region of Argentina other than Patagonia 
North B. Imports from Patagonia North B to Patagonia South are allowed, 
provided that certain import requirements are met.
    There are 45 animal inspection border posts located in Argentina 
with SENASA personnel on duty at each to inspect animal products. All 
live animals and animal products imported into Argentina require an 
animal health permit issued by SENASA. In addition, all live animals 
imported into Argentina are placed in quarantine for 15 to 60 days, 
depending on the length of time it takes to complete required testing 
procedures, and are observed on the farm of destination for a period of 
60 days.
    Patagonia South shares an international land border with only one 
country: Chile. There are three animal inspection border posts located 
along this border. The animal health status of Chile and Patagonia 
South are equivalent. Breeding stock and commercial meat shipments are 
traded between these two regions.

Livestock Demographics and Marketing Practices

    Sheep production is the primary livestock production system in 
Patagonia South. In 2003, Patagonia South had approximately 7.49 
million sheep, 265,960 head of cattle, 12,731 pigs, and 141,614 goats. 
Each province has established standards for identifying and tracking 
animals. There is no known feature of livestock production in the 
region that increases the risk of disease spread.

Detection and Eradication of Disease

    FMD is a compulsorily notifiable disease in Argentina. The 
veterinary services in Argentina possess the authority, diagnostic 
capability, and personnel to rapidly detect, contain, and eradicate any 
incursion of FMD that might occur.
    These findings are described in further detail in a risk analysis 
that may be obtained by contacting the person listed under FOR FURTHER 
INFORMATION CONTACT. This analysis may also be viewed on the Internet 
on the Regulations.gov Web site (see ADDRESSES above for information 
about accessing documents on Regulations.gov). The risk analysis 
documents the factors that have led us to conclude that Patagonia South 
is free of FMD. As noted previously, rinderpest has never occurred in 
Argentina and is not endemic to the Americas. Therefore, we are 
proposing to recognize Patagonia South as free of rinderpest and FMD 
and add the region to the list in Sec.  94.1(a)(2) of regions that are 
considered free of rinderpest and FMD.
    These proposed actions would relieve certain restrictions due to 
FMD and rinderpest on the importation into the United States of certain 
live animals and animal products from Patagonia South. However, because 
Patagonia South shares common land borders with a region of Argentina 
not considered free of rinderpest and FMD under the regulations, the 
importation of meat and other products from ruminants and swine into 
the United States from Patagonia South would continue to be subject to 
certain restrictions.
    Specifically, we are proposing to add Patagonia South to the list 
in Sec.  94.11(a) of regions declared free of rinderpest and FMD but 
that are subject to special restrictions on the importation of their 
meat and other animal products into the United States. The regions 
listed in Sec.  94.11(a) are subject to these special restrictions 
because they: (1) Supplement their national meat supply by importing 
fresh (chilled or frozen) meat of ruminants or swine from regions that 
are designated in Sec.  94.1(a) as regions where rinderpest or FMD 
exists, (2) have a common land border with regions where rinderpest or 
FMD exists, or (3) import ruminants or swine from regions where 
rinderpest or FMD exists under conditions less restrictive than would 
be acceptable for importation into the United States.
    Patagonia South has a common land border with a region (Patagonia 
North B) not considered free of FMD. As a result, there is some risk 
that the meat and other animal products produced in Patagonia South 
could be commingled with the fresh (chilled or frozen) meat of animals 
from a region in which FMD exists and present an undue risk of 
introducing FMD into the United States if imported without restriction.
    Under Sec.  94.11, meat and other animal products of ruminants and 
swine, including ship stores, airplane meals, and baggage containing 
these meat or animal products, may not be imported into the United 
States except in accordance with Sec.  94.11 and the applicable 
requirements of the USDA's Food Safety and Inspection Service at 9 CFR 
chapter III.
    Section 94.11 generally requires that the meat and other animal 
products of ruminants and swine be: (1) Prepared in an inspected 
establishment that is eligible to have its products imported into the 
United States under the Federal Meat Inspection Act; (2) accompanied by 
a Department-approved meat inspection certificate; and (3) accompanied 
by an additional certificate, issued by a full-time salaried veterinary 
official of the national government of the exporting region, assuring 
that the meat or other animal products have not been commingled with or 
exposed to meat or other animal products originating in, imported from, 
transported through, or that have otherwise been in a region where 
rinderpest or FMD exists.
    The proposed changes discussed in this document would update the 
disease status of Patagonia South with regard to rinderpest and FMD 
while continuing to protect the United States from an introduction of 
those diseases by providing additional requirements for any meat and 
meat products imported into the United States from Patagonia South.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been reviewed under Executive Order 12866. 
For this action, the Office of Management and Budget has waived its 
review under Executive Order 12866.

[[Page 478]]

    This proposed rule would recognize the Patagonia South region of 
Argentina free of FMD and rinderpest. As such, this proposed rule would 
allow ruminants and ruminant products to be imported from this region 
into the United States, provided all other import requirements are 
satisfied. In the following initial regulatory flexibility analysis, we 
estimate the welfare effects of the proposed rule, as well as consider 
potential effects of the proposed rule on small entities, as required 
by the Regulatory Flexibility Act.
    While the proposed rule would allow the importation of all 
ruminants and ruminant products from the Patagonia South region, APHIS 
expects the rule to result in imports of lamb, mutton, and goat meat, 
with the overwhelming majority being lamb and mutton. According to 
information supplied by the government of Argentina, and supported in 
an APHIS risk assessment and by site visits, bovine production in 
Patagonia South is consumed locally. In fact, matured and deboned beef 
is imported to meet the consumption demands of the population in this 
region. On the other hand, the sheep industry in Patagonia South is the 
prevailing livestock activity, with this region producing almost 60 
percent of the entire sheep population in Argentina. The government of 
Argentina forecasts that it would export an average of 6,000 metric 
tons per year (or 13.2 million pounds) of sheep meat to the United 
States, with a maximum of 9,000 MT per year (or 19.8 million pounds) 
and a minimum of 4,000 MT per year (or 8.8 million pounds).\1\
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    \1\ USDA, APHIS-VS. Risk Analysis: Risk of exporting FMD in FMD-
Susceptible Species from Argentina, South of the 42[deg] Parallel 
(Patagonia South), to the United States. Riverdale, MD: APHIS-
Veterinary Services, National Center for Import and Export, 
Regionalization Evaluation Services, June 2005.
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    The U.S. sheep and wool industries have been marked by smaller 
inventories, declining production, shrinking revenues, and fewer 
operations over the last few decades. In fact, the United States is a 
net importer of lamb and mutton and relies on imports to meet domestic 
consumption demands. For example, in 2005, imports of lamb and mutton 
totaled 177 million pounds, and accounted for 47 percent of total 
supply, which was 372 million pounds. U.S. exports of lamb and mutton 
in 2005 totaled only 10 million pounds. Total reported consumption for 
that same year was 352 million pounds.\2\
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    \2\ USDA, ERS. Agricultural Outlook: Statistical Indicators, 
Table 10--U.S. Meat Supply & Use. Washington, DC: Economic Research 
Service, Feb. 2006.
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    We use a non-spatial, partial equilibrium welfare model to 
quantitatively estimate the economic effects of the proposed rule, 
referred to as welfare effects. This model measures expected changes in 
consumer surplus and producer surplus attributable to the rule. 
Consumer surplus is the difference between what a consumer would be 
willing to pay for a good or service and what that consumer actually 
has to pay, and producer surplus is the difference between what a 
supplier is paid for a good or service and what it cost to supply. 
Thus, the net expected effects of the proposed rule can be summed up by 
examining changes in consumer and producer surplus.
    We estimate the welfare effects of the proposed rule for three 
import quantity scenarios: (1) Average imports of 13.2 million pounds 
annually; (2) a low-end estimate of 8.8 million pounds annually; and 
(3) a high-end estimate of 19.8 million pounds annually. The baseline 
quantities and price we use are from 2005: U.S. consumption, 352 
million pounds; U.S. production, 192 million pounds; U.S. domestic 
supply,\3\ 182 million pounds; and a wholesale carcass price of $209.80 
per cwt, or $2.09 per pound.\4\ In addition, we use a demand elasticity 
of -0.729 for lamb and mutton, and a supply elasticity of 0.14.\5\ 
Table 1 presents the expected effects of the proposed rule, as measured 
by changes in consumer and producer surplus, for the three import 
scenarios.
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    \3\ U.S. domestic supply is calculated by subtracting exports 
from U.S. production [192 million lbs.-10 million pounds].
    \4\ Source for baseline quantities: ``Table 10--U.S. Meat Supply 
& Use.'' Source for baseline price: Red meat Yearbook, ``Table 85--
Lamb Carcass Price, East Coast, Choice-Prime Wholesale Price, 55-65 
lb.'' Livestock, Meat, & Wool, AMS, USDA; provided by ERS. [Note: 
East Coast wholesale prices are reflective of U.S. prices, because 
although lamb meat is primarily produced in the Southern Plains, 
Mountain, and Pacific regions, consumption patterns are 
overwhelmingly located throughout the Northeast.]
    \5\ Source for demand elasticity: USDA, ERS. ``Demand for U.S. 
Lamb and Mutton by Country of Origin: A Two-Stage Differential 
Approach'' by Keithly G. Jones, William F. Hahn, and Christopher G. 
Davis. Washington, DC: Economic Research Service, 2003. Source for 
supply elasticity: Research conducted at the University of Tennessee 
at Knoxville, the Policy Analyses System (POLYSYS) modeling 
framework. ``The POLYSYS Modeling Framework: A Documentation--
Chapter 5: Livestock Module'' by Daryll E. Ray, et al., May 1998. 
[http://apacweb.ag.utk.edu/polysys.html]

               Table 1.--Estimated Welfare Effects of the Proposed Rule for Three Import Scenarios
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                                                                                     Change in
                                                     Change in       Change in       producer      Net change in
                 Import scenario                  domestic price     consumer         surplus         welfare
                                                        $/lb          surplus         $1,000
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13,224,000 lbs..................................          -$0.10      $35,033.60     -$17,751.24      $17,282.36
8,816,000 lbs...................................           -0.07       23,224.92      -11,847.13       11,377.79
19,936,000 lbs..................................           -0.15       52,991.88      -26,583.08       26,408.81
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    Since the Government of Argentina estimates it would export an 
average of 6,000 MT per year (or 13.2 million lbs) of lamb and mutton 
to the United States, we focus on the implications of the rule using 
this scenario.

Costs

    The proposed rule may result in about a 4.7 percent reduction in 
the domestic wholesale price of lamb and mutton, or a price decline of 
about 10 cents per pound. The domestic sheep and lamb industry would be 
directly impacted by this price decline, as indicated by the annual 
$17.7 million loss in producer surplus. In 2004, there were 2,679,000 
sheep and lambs and 582,000 goats slaughtered in the United States.\6\ 
If we assume the same number were slaughtered in 2005, and given that 
there were 68,280 sheep and goat farms in the United States last year, 
we approximate that the number of animals sold for slaughter averaged 
about 50 head per farm. Assuming an average dressed carcass weight of 
75 pounds per lamb sold and a price of $209.80 per cwt yields an 
approximate average annual revenue of $7,868 per farm.\7\ Thus, a 4.7

[[Page 479]]

percent reduction in the wholesale price of lamb and mutton, a decline 
of $7.40 per animal, would result in a decrease in annual revenue of 
about $370 per farm, assuming average annual sales of 50 head.
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    \6\ USDA, NASS. 2005 Agricultural Statistics, Table 7-79. 
Washington, DC: National Agricultural Statistics, 2005.
    \7\ The average live weight of slaughter lambs, 136 lbs; the 
conversion rate for dressed carcass weight is 55 percent. Both of 
these values are based on information provided by ERS livestock 
specialists. [Carcass weight calculation: 136 lbs multiplied by 55 
percent = 74.8 lbs. Note: For the purposes of this discussion, we 
have rounded that up, to get an average carcass weight of 
slaughtered animals of 75 lbs.] A price of $209.80 per cwt, 
multiplied by an average carcass weight of 0.75 cwt [result = value 
per animal, or $157.35], multiplied by 50 animals per year, yields a 
potential annual revenue of about $7,868.
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    Other factors may also minimize effects of the proposed rule for 
producers. First, we assume that Patagonia South would be primarily 
engaging in the export of lamb meat. In the event that they decide to 
export large quantities of mutton, which is primarily used in the 
industrial market, such as for pet food, the potential price impacts of 
the proposed rule would be much less. The wholesale price of mutton 
meat is less than half that of the wholesale price of lamb meat.\8\
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    \8\ Per telephone conversation with Keithly Jones (ERS), March 
28, 2006.
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    Secondly, historically, lamb and mutton are viewed as byproducts of 
wool production for domestic producers. As such, if wool prices are 
high, producers would keep lambs longer to get additional shearing of 
wool, which would mean fewer animals would be sent to slaughter and 
lamb and mutton production would fall.\9\ The high correlation between 
wool prices and lamb and mutton production may serve to explain the 
inelasticity of supply. As indicated, the farm-level supply of lamb and 
mutton is highly inelastic, that is, producers are relatively 
unresponsive to price changes.\10\ Thus, this may illustrate that farm-
level production decisions are dictated more by changes in the price of 
wool than by changes in the wholesale price of lamb and mutton. The 
analysis shows that with the proposed rule there may be a decrease in 
the price of lamb of 4.7 percent, suggesting a decrease in supply of 
about 0.66 percent.\11\ So, in the case of high wool prices, the 
potential impacts of the proposed rule may be even smaller than 
described.
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    \9\ USDA-ERS. Briefing Room: Sheep and Wool: Overview. 
Washington, DC: Economic Research Service, August 23, 2004.
    \10\ The price elasticity of supply is equal to the percentage 
change in quantity supplied given a certain percentage change in 
price. A price elasticity of supply for lamb and mutton of 0.14 
means, for example, that an increase (decrease) in price of 10 
percent would increase (decrease) the supply by 1.4 percent.
    \11\ Assuming a price elasticity of supply of 0.14 and a price 
decline of 4.7 percent yields a decrease in supply of 0.66 percent 
(0.14 x 0.047 = 0.0066).
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    Thirdly, the estimated welfare gains and losses assume that none of 
the lamb and mutton meat imported from the Patagonia South region would 
substitute for, or displace, U.S. imports from other countries. In the 
case that such displacement may occur, the estimated price impacts of 
the proposed rule for sheep and lamb producers and other U.S. entities 
would be smaller than depicted.

Benefits

    The reduction in price of lamb and mutton would benefit domestic 
purchasers. As the model demonstrates, the annual change in consumer 
surplus as a result of the rule would be an increase of about $35 
million. This benefit would be realized at the wholesale level, but at 
least a portion of this gain may be passed on to subsequent retail 
buyers of lamb and mutton. We estimate the annual net benefit of the 
proposed rule would be about $17.2 million.

Affected Entities

    The proposed rule would have direct effects on domestic sheep and 
goat producers, specifically those engaged in lamb and mutton 
production. In 2005 there were 68,280 sheep, lamb, and goat farms.\12\ 
Inventory and value estimates for 2005 were 6.1 million sheep, with a 
total value of over $799 million, and 274,000 angora goats, with a 
total value of over $16 million.\13\ Additionally, in 2005 there were 
192 million pounds of lamb and mutton produced domestically.\14\
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    \12\ USDA-NASS, Quick Stats: Sheep & Lambs--Operations: Number 
by State & US, 2005. Washington, DC: National Agricultural 
Statistics Service.
    \13\ USDA-NASS, 2005 Agricultural Statistics, Tables 7-41 and 7-
80. Washington, DC: National Agricultural Statistics Service.
    \14\ USDA-ERS, Agricultural Outlook: Statistical Indicators, 
``Table 10--U.S. Meat Supply & Use.'' Washington, DC: Economic 
Research Service, Feb. 2006.
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    The U.S. Small Business Administration's (SBA) size standard for 
sheep and goat farming is $750,000 or less in annual receipts.\15\ The 
exact number of sheep and goat operations that would be considered 
small by SBA standards is unknown. However, the 2002 Census of 
Agriculture estimated there were 150 sheep and lamb farms with 
inventories of 5,000 or more. The value per head for sheep and lambs in 
2002 was $94.\16\ From this, we approximate that only 150 farms, or 
less than 1 percent, had total market values of $470,000 or more 
annually. This value is well below the small-entity threshold, and 
moreover, represents the 2002 inventory value of the largest holdings, 
not their annual receipts. Therefore, it is clear most sheep and goat 
operations are small.
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    \15\ Table of Size Standards based on NAICS 2002 [Sheep farming: 
NAICS code 112410; Goat farming: NAICS code 112420]. Washington, DC: 
U.S. Small Business Administration, effective January 5, 2006.
    \16\ USDA, 2005 Agricultural Statistics, Tables 7-41; and Quick 
Stats: Sheep & Lambs--Operations: Number by State & U.S., 2002 [in 
2002 there were 68,150 sheep and goat operations]. Washington, DC: 
National Agricultural Statistics Service.
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    Other industries that may be affected by the proposed rule, as 
categorized in the North American Industry Classification System 
(NAICS), are Meat and Meat Product Merchant Wholesalers (NAICS 424470), 
Supermarkets and Other Grocery (except Convenience) Stores (NAICS 
445110), and Meat Markets (NAICS 445210). All of these industries 
primarily consist of small entities.\17\ The first of these industries 
includes meat importers, who may directly benefit by the availability 
of lamb and mutton from the Patagonia South region. Other wholesale 
buyers of lamb and mutton may also benefit from the expected decline in 
price of lamb and mutton as a result of the proposed rule. Grocery 
stores and meat markets may also gain, depending on the extent to which 
decreases in wholesale prices are passed forward to the retail level.
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    \17\ The small entity definition for meat wholesalers is not 
more than 100 employees; for grocery stores, not more than $25 
million in annual receipts; and for meat markets, not more than $6.5 
million in annual receipts. Based on information from the SBA, 
Office of Advocacy, based on data provided by the U.S. Census 
Bureau, Statistics of U.S. Businesses, small operations comprise 
more than 80 percent of meat wholesalers, more than 60 percent of 
grocery stores, and more than 90 percent of meat markets.
---------------------------------------------------------------------------

    There are no projected reporting, recordkeeping, or other 
compliance requirements that small entities will be subject to as a 
result of implementing the proposed rule. (See ``Paperwork Reduction 
Act'' below).

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. If this proposed rule is adopted: (1) All State 
and local laws and regulations that are inconsistent with this rule 
will be preempted; (2) no retroactive effect will be given to this 
rule; and (3) administrative proceedings will not be required before 
parties may file suit in court challenging this rule.

Paperwork Reduction Act

    This proposed rule contains no information collection or 
recordkeeping requirements under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.).

[[Page 480]]

List of Subjects in 9 CFR Part 94

    Animal diseases, Imports, Livestock, Meat and meat products, Milk, 
Poultry and poultry products, Reporting and recordkeeping requirements.

    Accordingly, we propose to amend 9 CFR part 94 as follows:

PART 94--RINDERPEST, FOOT-AND-MOUTH DISEASE, FOWL PEST (FOWL 
PLAGUE), EXOTIC NEWCASTLE DISEASE, AFRICAN SWINE FEVER, CLASSICAL 
SWINE FEVER, AND BOVINE SPONGIFORM ENCEPHALOPATHY: PROHIBITED AND 
RESTRICTED IMPORTATIONS

    1. The authority citation for part 94 would continue to read as 
follows:

    Authority: 7 U.S.C. 450, 7701-7772, 7781-7786, and 8301-8317; 21 
U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.


Sec.  94.1  [Amended]

    2. In Sec.  94.1, paragraph (a)(2) would be amended by adding the 
words ``Argentina (only that region south of 42[deg] S.),'' before the 
word ``Australia''.


Sec.  94.11  [Amended]

    3. In Sec.  94.11, paragraph (a) would be amended by adding the 
words ``Argentina (only that region south of 42[deg] S.),'' before the 
word ``Austria''.

    Done in Washington, DC, this 28th day of December 2006.
W. Ron DeHaven,
 Administrator, Animal and Plant Health Inspection Service.
 [FR Doc. E6-22627 Filed 1-4-07; 8:45 am]
BILLING CODE 3410-34-P