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Agricultural Marketing Service Issues Interim Rule on Class 1 Spearmint Oil Quantity Revision for 2014-2015(Targeted News Service Via Acquire Media NewsEdge) Targeted News Service WASHINGTON, Nov. 4 -- The U.S. Agricultural Marketing Service published the following rule in the Federal Register: Marketing Order Regulating the Handling of Spearmint Oil Produced in the Far West; Revision of the Salable Quantity and Allotment Percentage for Class 1 (Scotch) Spearmint Oil for the 2014-2015 Marketing Year A Rule by the Agricultural Marketing Service on 10/31/2014 Publication Date: Friday, October 31, 2014 Agencies: Department of Agriculture Agricultural Marketing Service Dates: Effective October 31, 2014 and applicable to the 2014-2015 marketing year; comments received by December 30, 2014 will be considered prior to issuance of a final rule. Effective Date: 10/31/2014 Comments Close: 12/30/2014 Entry Type: Rule Action: Interim rule with request for comments. Document Citation: 79 FR 64657 Page: 64657 -64661 (5 pages) CFR: 7 CFR 985 Agency/Docket Numbers: Doc. No. AMS-FV-13-0087 FV14-985-1A IR Document Number: 2014-25646 Shorter URL: https://federalregister.gov/a/2014-25646 Action Interim Rule With Request For Comments. Summary This interim rule revises the quantity of Class 1 (Scotch) spearmint oil that handlers may purchase from, or handle on behalf of, producers during the 2014-2015 marketing year under the Far West spearmint oil marketing order. This rule increases the Scotch spearmint oil salable quantity from 1,149,030 pounds to 1,984,423 pounds and the allotment percentage from 55 percent to 95 percent. The marketing order regulates the handling of spearmint oil produced in the Far West and is administered locally by the Spearmint Oil Administrative Committee (Committee). The Committee recommended this rule for the purpose of maintaining orderly marketing conditions in the Far West spearmint oil market. DATES: Effective October 31, 2014 and applicable to the 2014-2015 marketing year; comments received by December 30, 2014 will be considered prior to issuance of a final rule. ADDRESSES: Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number and the date and page number of this issue of the Federal Register and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the Internet at the address provided above. FOR FURTHER INFORMATION CONTACT: Barry Broadbent, Senior Marketing Specialist, or Gary Olson, Regional Director, Northwest Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or Email: [email protected] or [email protected]. Small businesses may request information on complying with this regulation by contacting Jeffrey Smutny, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected]. SUPPLEMENTARY INFORMATION: This interim rule is issued under Marketing Order No. 985 (7 CFR part 985), as amended, regulating the handling of spearmint oil produced in the Far West (Washington, Idaho, Oregon, and designated parts of Nevada and Utah), hereinafter referred to as the "order." The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the "Act." The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175. This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the provisions of the marketing order now in effect, salable quantities and allotment percentages may be established for classes of spearmint oil produced in the Far West. This rule increases the quantity of Scotch spearmint oil produced in the Far West that handlers may purchase from, or handle on behalf of, producers during the 2014-2015 marketing year, which began on June 1, 2014, and ends on May 31, 2015. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. This rule revises the quantity of Scotch spearmint oil that handlers may purchase from, or handle on behalf of, producers during the 2014-2015 marketing year under the Far West spearmint oil marketing order. This rule increases the Scotch spearmint oil salable quantity from 1,149,030 pounds to 1,984,423 pounds and the allotment percentage from 55 percent to 95 percent. Under the volume regulation provisions of the order, the Committee meets each year to adopt a marketing policy for the ensuing year. When the Committee's marketing policy considerations indicate a need for limiting the quantity of spearmint oil available to the market to establish or maintain orderly marketing conditions, the Committee submits a recommendation to the Secretary for volume regulation. Volume regulation under the order is effectuated through the establishment of a salable quantity and allotment percentage applicable to each class of spearmint oil handled in the production area during a marketing year. The salable quantity is the total quantity of each class of oil that handlers may purchase from, or handle on behalf of, producers during a given marketing year. The allotment percentage for each class of oil is derived by dividing the salable quantity by the total industry allotment base for that same class of oil. The total industry allotment base is the aggregate of all allotment base held individually by producers. Producer allotment base is the quantity of each class of spearmint oil that the Committee has determined is representative of a producer's spearmint oil production. Each producer is allotted a pro rata share of the total salable quantity of each class of spearmint oil each marketing year. Each producer's annual allotment is determined by applying the allotment percentage to the producer's individual allotment base for each applicable class of spearmint oil. The full Committee met on November 6, 2013, to consider its marketing policy for the ensuing year. At that meeting, the Committee determined that marketing conditions indicated a need for volume regulation of both classes of spearmint oil for the 2014-2015 marketing year. The Committee recommended salable quantities of 1,149,030 pounds and 1,090,821 pounds, and allotment percentages of 55 percent and 46 percent, respectively, for Scotch and Native spearmint oil. A proposed rule to that effect was published in the Federal Register on March 14, 2014 (79 FR 14441). Comments on the proposed rule were solicited from interested persons until March 31, 2014. No comments were received. Subsequently, a final rule establishing the salable quantities and allotment percentages for Scotch and Native spearmint oil for the 2014-2015 marketing year was published in the Federal Register on May 8, 2014 (79 FR 26359). Pursuant to authority contained in sections 985.50, 985.51, and 985.52 of the order, the full eight member Committee met again on September 11, 2014, to consider pertinent market information on the current supply, demand, and price of spearmint oil. After some deliberation, the Committee recommended increasing the 2014-2015 marketing year Scotch spearmint oil salable quantity from 1,149,030 pounds to 1,984,423 pounds and the allotment percentage from 55 percent to 95 percent. The motion to increase the salable quantity and allotment percentage for Scotch passed with six members in favor and one member opposed. The public member, while present, abstained from the vote. The member opposed to the motion agreed with the other members of the Committee that an increase in the salable quantity and allotment percentage was necessary for the industry to respond to increasing demand. However, he cast his vote against the motion based on his opinion that an 835,393 pound increase in the salable quantity, and a corresponding 40 percent increase in the allotment percentage, was too large of an increase this early in the marketing year. The member felt that it would be better to be conservative at this point in the marketing year, given that the Committee had the ability to further increase the volume control provisions later if marketing conditions warranted. Thus, taking into consideration the following discussion, this rule makes additional amounts of Scotch spearmint oil available to the market by increasing the salable quantity and allotment percentage. This rule increases the 2014-2015 marketing year Scotch spearmint oil salable quantity from 1,149,030 pounds to 1,984,423 pounds and raises the allotment percentage from 55 percent to 95 percent. Such additional oil may come from excess Scotch spearmint oil produced in the current marketing year or by releasing Scotch spearmint oil held in the reserve pool. As of May 31, 2014, the Committee records show that the Scotch spearmint oil reserve pool contained just 551 pounds of oil. In addition, the Committee estimates that producers have produced 222,544 pounds of Scotch spearmint oil production in excess of their annual allotments for the 2014-2015 marketing year. The increase in the salable quantity as a result of this rule represents an additional 835,393 pounds of Scotch spearmint oil being made available to the market. However, due to the limited amount of Scotch spearmint oil held by individual producers (oil produced in the current year or held in reserve from past years production), the Committee expects that only 211,877 pounds of additional Scotch spearmint oil will actually be made available to the spearmint oil market. The relatively high salable quantity resulting from this action, as compared to the actual quantity of spearmint oil that will be made available to the market, is necessary to ensure that those producers that have Scotch spearmint oil in inventory have enough annual allotment to be able to market that oil. Producers that do not have additional Scotch spearmint oil in inventory (either oil held in the reserve pool or from excess production in the current year) will not be able to utilize the additional annual allotment issued to them as a result of this action and the additional annual allotment will go unused. The 2014-2015 marketing year began on June 1, 2014, with an estimated carry-in of 7,064 pounds of salable Scotch spearmint oil. When the estimated carry-in is added to the 2014-2015 salable quantity of 1,149,030 pounds initially established for Scotch spearmint oil, the result is a total available supply for the 2014-2015 marketing year of 1,156,094 pounds. However, the Committee estimates that some Scotch spearmint oil producers do not have sufficient production from the 2014 crop to fill approximately 190,174 pounds of their respective 2014-2015 marketing year annual allotment. As such, the Committee estimates that the total actual supply of Scotch spearmint oil available to the market prior to the issuance of this rule is 965,920 pounds, not the 1,156,094 pounds as originally estimated. Of this amount, the Committee estimates that 927,675 pounds of Scotch spearmint oil have already been sold or have been committed to be sold as of the September 11, 2014, meeting date. This leaves just 38,245 pounds of uncommitted salable Scotch spearmint oil actually available for sale for the remainder of the 2014-2015 marketing year. The Committee believes that maintaining such a small amount of salable Scotch spearmint oil would be detrimental to the industry. In making the recommendation to increase the salable quantity and allotment percentage of Scotch spearmint oil, the Committee considered all currently available information on the price, supply, and demand of spearmint oil. The Committee also considered reports and other information from handlers and producers in attendance at the meeting. Lastly, the Committee manager presented information and reports that were provided to the Committee staff by handlers and producers who were not in attendance at the September 11, 2014, meeting. This action increases the 2014-2015 marketing year Scotch spearmint oil salable quantity by 835,393 pounds, to a total of 1,984,423 pounds. However, as mentioned previously, the net effect of the increase will be much less than the calculated increase due to the amount of actual oil individual producers have available to market from the current year's excess production and from reserve pool inventory. The Committee estimates that this action will actually make an additional 211,877 pounds of Scotch spearmint oil available to the market. That amount, combined with the 38,245 pounds of salable Scotch spearmint oil currently available, will make a total of 250,122 pounds that may be marketed through the remainder of the marketing year. The total supply of Scotch spearmint oil that is anticipated to be available to the market will be increased to 1,177,797 pounds. Actual sales of Scotch spearmint oil for the 2013-2014 marketing year totaled 1,065,725 pounds. The Committee estimates that this action will completely deplete reserve pool stocks of Scotch spearmint oil during the course of the 2014-2015 marketing year. In addition, the Committee estimates that all but 11,218 pounds of the current year's Scotch spearmint oil production will be available to enter the market. While these inventory levels are low, the Committee believes that trying to hold any Scotch spearmint oil in reserve under the current market conditions could result in the market experiencing a shortage of Scotch spearmint oil during the course of the 2014-2015 marketing year. Further, the Committee expects the Scotch spearmint oil industry to respond to the current market conditions with increased production in the coming years, and that Scotch spearmint oil inventory levels will quickly return to normal levels. When the original 2014-2015 marketing policy statement was drafted, handlers estimated the demand for Scotch spearmint oil for the 2014-2015 marketing year to be 1,000,000 pounds. The Committee's initial recommendation for the establishment of the Scotch spearmint oil salable quantity and allotment percentage for the 2014-2015 marketing year was based on that estimate and did not anticipate the increase in demand for Scotch spearmint oil that the market is currently experiencing. Handlers now estimate that Scotch spearmint oil demand for the 2014-2015 marketing year could be as much as 1,100,000 to 1,200,000 pounds. As such, the Committee believes that the supply of Scotch spearmint oil available to the market under the initially established salable quantity and allotment percentage is insufficient to satisfy the current level of demand for oil at reasonable price levels. The Committee further believes that the increase in the salable quantity and allotment percentage effectuated by this action is vital to ensuring an adequate supply of Scotch spearmint oil is available to the market moving forward. As previously stated, this action will make nearly all of the Scotch spearmint oil held by the industry available to the market. However, to achieve that desired net effect under the current supply conditions in the industry, it is necessary for the salable quantity and allotment percentage established under the volume regulation provisions of the order to be set at historically high levels. The Committee records show that very few producers hold Scotch spearmint oil in reserve. In addition, not every producer produced Scotch spearmint oil in excess of his/her annual allotment. Given the process by which volume regulation is effectuated under the order, those producers with large amounts of excess Scotch spearmint oil production are only able to market their entire inventory of Scotch spearmint oil when the allotment percentage is set very high. Likewise, producers that do not have excess Scotch spearmint oil production from the current year, or reserve oil from previous years, will not have any Scotch spearmint oil inventory to market, regardless of the level of increase in the allotment percentage. As such, the Committee expects that establishing a high salable quantity and allotment percentage for Scotch spearmint oil will translate into a large amount of the increased salable quantity going unused, as a number of producers have little or no Scotch spearmint oil available to sell. As an example, assume Producer A has 2,000 pounds of Scotch spearmint oil allotment base. In addition, assume that during the 2014-2015 marketing year Producer A produced 1,900 pounds of Scotch spearmint oil. Producer A currently holds no Scotch spearmint oil in reserve from production in prior years. Given that the initial 2014-2015 marketing year allotment percentage was established at 55 percent, Producer A would be able to market 1,100 pounds of the current year production (55 percent allotment percentage x 2,000 pounds of allotment base), leaving the producer with 800 pounds of excess production that was initially not available to market. Without an increase in the allotment percentage, the producer would not be able to market any of the 800 pounds of excess oil produced and the oil would be placed in the reserve pool for marketing in subsequent years. For Producer A to market all 1,900 pounds of his/her current year Scotch spearmint oil production, the allotment percentage would need to be increased by 40 percent to a total of 95 percent (95 percent x 2,000 pounds = 1,900 pounds). An increase in the allotment percentage of anything less than 40 percent would fail to release all of the Scotch spearmint oil that the producer produced in the current year. In contrast, assume that another producer, Producer B, likewise has 2,000 pounds of Scotch spearmint oil allotment base, but produced just 1,100 pounds of Scotch spearmint oil during the 2014-2015 marketing year. Producer B also has no oil held in reserve. As in the first case, Producer B would be able to market all of his/her current year production under the initial allotment percentage of 55 percent. However, a subsequent increase in the allotment percentage of 40 percent would have no impact on Producer B, as the producer has no excess Scotch spearmint oil production or reserve pool oil available to deliver to the market. As a result, the 800 pounds of additional annual allotment allocated to Producer B after a 40 percent increase in the allotment percentage would go unfilled. The Committee estimates that a 40 percent increase in the salable quantity and allotment percentage is required to make all of the Scotch spearmint oil reserve pool, and most of the 2014 crop year excess Scotch spearmint oil production, available to the market. As mentioned previously, the Committee estimates that producers hold just 551 pounds of Scotch spearmint oil in the reserve pool that could enter the market under the increase. As such, the Committee believes that the majority of the Scotch spearmint oil that may be released to the market as a result of this action will come from the estimated 222,544 pounds of 2014 crop year production that is in excess of the producer's annual allotments. The Committee expects that all but approximately 11,218 pounds of Scotch spearmint oil will be available after the 40 percent increase in salable quantity and allotment percentage. By the Committee's calculation, the salable quantity would need to be increased by 5,431,052 pounds and the allotment percentage increased by 260 percent for the last 11,218 pounds of the Scotch spearmint oil to be released to the market under the volume control provisions of the order. It is anticipated that the 11,218 pounds of Scotch spearmint oil will be available to the market at the beginning of the 2015-2016 marketing year on June 1, 2015. The Committee acknowledges that the high salable quantity, and the corresponding high allotment percentage, will create a large quantity of available Scotch spearmint oil for which no Scotch spearmint oil actually exists. Accordingly, the Committee expects that 623,516 pounds of the recommended 835,393 pound increase in salable quantity will go unfilled. The potentially large underutilized salable quantity has been factored into the Committee's recommendation. The Committee's stated intent in the use of marketing order volume control regulation is to keep adequate supplies available to meet market needs and to maintain orderly marketing conditions. With that in mind, the Committee developed its recommendation for increasing the Scotch spearmint oil salable quantity and allotment percentage for the 2014-2015 marketing year based on the information discussed above, as well as the summary data outlined below. (A) Estimated 2014-2015 Scotch Allotment Base--2,089,146 pounds. This is the estimate on which the original 2014-2015 salable quantity and allotment percentage was based. (B) Revised 2014-2015 Scotch Allotment Base--2,088,866 pounds. This is 280 pounds less than the estimated allotment base of 2,089,146 pounds. The difference is the result of annual adjustments made to the allotment base according to the provisions of the order. (C) Original 2014-2015 Scotch Allotment Percentage--55 percent. This was unanimously recommended by the Committee on November 6, 2013. (D) Original 2014-2015 Scotch Salable Quantity--1,149,030 pounds. This figure is 55 percent of the original estimated 2014-2015 allotment base of 2,089,146 pounds. (E) Adjusted 2014-2015 Scotch Salable Quantity--1,148,898 pounds. This figure reflects the salable quantity actually available at the beginning of the 2014-2015 marketing year. This quantity is derived by applying the 55 percent allotment percentage to the revised allotment base of 2,088,866. (F) Current Revision to the 2014-2015 Scotch Salable Quantity and Allotment Percentage: (1) Increase in Scotch Allotment Percentage--40 percent. The Committee recommended a 40 percent increase at its September 11, 2014, meeting. (2) 2014-2015 Scotch Allotment Percentage--95 percent. This figure is derived by adding the increase of 40 percent to the original 2014-2015 allotment percentage of 55 percent. (3) Calculated Revised 2014-2015 Scotch Salable Quantity--1,984,423 pounds. This figure is 95 percent of the revised 2014-2015 allotment base of 2,088,866 pounds. (4) Computed Increase in the 2014-2015 Scotch Salable Quantity--835,546 pounds. This figure is 40 percent of the revised 2014-2015 allotment base of 2,088,866 pounds. (5) Expected Actual Increase in the 2014-2015 Scotch Spearmint Oil Available to the Market--211,877 pounds. This figure is based on the Committee's estimation of oil actually held by producers that may enter the market as a result of this rule. Native spearmint oil is also regulated by the order. As mentioned previously, a salable quantity and allotment percentage for Native spearmint oil was established in a final rule published in the Federal Register on May 8, 2014 (79 FR 26359). At the September 11, 2014, meeting, the Committee considered the current production, inventory, and marketing conditions for Native spearmint oil. After receiving reports from the Committee staff and comments from the industry, the consensus of the Committee was that the previously established salable quantity and allotment percentage for Native spearmint oil was appropriate for the current market conditions. As such, the Committee took no action with regards to Native spearmint oil. This rule relaxes the regulation of Scotch spearmint oil and will allow producers to meet market demand while improving producer returns. In conjunction with the issuance of this rule, the Committee's revised marketing policy statement for the 2014-2015 marketing year has been reviewed by USDA. The Committee's marketing policy statement, a requirement whenever the Committee recommends implementing volume regulations or recommends revisions to existing volume regulations, meets the intent of section 985.50 of the order. During its discussion of revising the 2014-2015 salable quantities and allotment percentages, the Committee considered: (1) The estimated quantity of salable oil of each class held by producers and handlers; (2) the estimated demand for each class of oil; (3) the prospective production of each class of oil; (4) the total of allotment bases of each class of oil for the current marketing year and the estimated total of allotment bases of each class for the ensuing marketing year; (5) the quantity of reserve oil, by class, in storage; (6) producer prices of oil, including prices for each class of oil; and (7) general market conditions for each class of oil, including whether the estimated season average price to producers is likely to exceed parity. Conformity with USDA's "Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders" has also been reviewed and confirmed. The increase in the Scotch spearmint oil salable quantity and allotment percentage allows for anticipated market needs for that class of oil. In determining anticipated market needs, the Committee considered changes and trends in historical sales, production, and demand. [*Federal RegisterVJ 2014-10-31] For more information about Targeted News Service products and services, please contact: Myron Struck, editor, Targeted News Service LLC, Springfield, Va., 703/304-1897; [email protected]; http://targetednews.com. TNS 22VistaJ-141031 gv-1180413 (c) 2014 Targeted News Service |