[Federal Register Volume 63, Number 34 (Friday, February 20, 1998)]
[Rules and Regulations]
[Pages 8559-8562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4036]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 63, No. 34 / Friday, February 20, 1998 /
Rules and Regulations
[[Page 8559]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Docket No. FV98-985-1 FR]
Marketing Order Regulating the Handling of Spearmint Oil Produced
in the Far West; Salable Quantities and Allotment Percentages for the
1998-99 Marketing Year
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule establishes the quantity of spearmint oil produced
in the Far West, by class, that handlers may purchase from, or handle
for, producers during the 1998-99 marketing year. The Spearmint Oil
Administrative Committee (Committee), the agency responsible for local
administration of the marketing order for spearmint oil produced in the
Far West, recommended this rule for the purpose of avoiding extreme
fluctuations in supplies and prices, and thus help to maintain
stability in the spearmint oil market.
EFFECTIVE DATES: June 1, 1998, through May 30, 1999.
FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, room 369,
Portland, Oregon 97204; telephone: (503) 326-2043; Fax: (503) 326-7440;
or Anne M. Dec, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, Washington,
DC 20090-6456; telephone: (202) 720-2491; Fax: (202) 205-6632. Small
businesses may request information on compliance with this regulation
by contacting: Jay Guerber, Marketing Order Administration Branch,
Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; telephone (202) 720-2491; Fax (202) 205-
6632.
SUPPLEMENTARY INFORMATION: This final 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.'' This 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 (Department) is issuing this rule in
conformance with Executive Order 12866.
This final 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 establishes the quantity of spearmint oil produced in the Far
West, by class, that may be purchased from or handled for producers by
handlers during the 1998-99 marketing year, which begins on June 1,
1998. This rule will not preempt any State or local laws, regulations,
or policies, unless they present an irreconcilable conflict with this
rule.
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 the Secretary 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 the Secretary 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 the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after date of the entry of the ruling.
Pursuant to authority contained in sections 985.50, 985.51, and
985.52 of the order, the Committee recommended the salable quantities
and allotment percentages for the 1998-99 marketing year at its October
8, 1997, meeting. With 6 members favoring the recommendation and 1
member opposed, the Committee recommended the establishment of a
salable quantity and allotment percentage for Class 1 (Scotch)
spearmint oil of 1,187,077 pounds and 65 percent, respectively. The
member in opposition favored the establishment of a higher salable
quantity and allotment percentage. In a unanimous vote, the Committee
recommended the establishment of a salable quantity and allotment
percentage for Class 3 (Native) spearmint oil of 1,155,217 pounds and
57 percent, respectively.
This final rule limits the amount of spearmint oil that handlers
may purchase from, or handle for, producers during the 1998-99
marketing year, which begins on June 1, 1998. Salable quantities and
allotment percentages have been placed into effect each season since
the order's inception in 1980.
The U.S. production of spearmint oil is concentrated in the Far
West, primarily Washington, Idaho, and Oregon (part of the area covered
by the marketing order). Spearmint oil is also produced in the Midwest.
The production area covered by the marketing order accounts for
approximately 65 percent of the annual U.S. production of Scotch
spearmint oil and approximately 90 percent of the annual U.S.
production of Native spearmint oil.
When the order became effective in 1980, the United States produced
nearly 100 percent of the world's supply of Scotch spearmint oil, of
which approximately 80 percent was produced in the regulated production
area in the Far West. International production characteristics have
changed in recent years, however, with foreign Scotch spearmint oil
production contributing significantly to world production. Although
still a leader in production, the Far West's market share has decreased
to approximately 41 percent of the world total. Therefore, the
Committee's recommendation for Scotch spearmint oil is designed to
maintain market stability by avoiding extreme fluctuations in supplies
and
[[Page 8560]]
prices, and may help the industry remain competitive on an
international level by potentially regaining some of the Far West's
historical share of the global market. The Committee's recommendation
is intended to foster market stability so that the Far West's Scotch
spearmint oil market share will not only be retained, but expanded as
well.
The order has contributed extensively to the stabilization of
producer prices, which prior to 1980 experienced wide fluctuations from
year to year. For example, between 1971 and 1975 the price of Native
spearmint oil ranged from $3.00 per pound to $11.00 per pound. In
contrast, under the order, prices have stabilized between $10.50 and
$11.50 per pound for the past ten years. With approximately 90 percent
of the U.S. production located in the Far West, the method of
calculating the Native spearmint oil salable quantity and allotment
percentage primarily utilizes information on price and available supply
as they are affected by the estimated trade demand.
The salable quantity and allotment percentage for each class of
spearmint oil for the 1998-99 marketing year is based upon the
Committee's recommendation and the data presented below.
(1) Class 1 (Scotch) Spearmint Oil
(A) Estimated carry-in on June 1, 1998--456,994 pounds. This figure
is derived by subtracting the estimated 1997-98 marketing year trade
demand of 853,987 pounds from the revised 1997-98 marketing year total
available supply of 1,310,981 pounds.
(B) Estimated world production for the 1997-98 marketing year--
2,186,128 pounds.
(C) Estimated Far West production for the 1997-98 marketing year--
892,628 pounds.
(D) Far West percentage of total world production in 1997-98--41
percent. This is down from the 1980 level of approximately 80 percent.
(E) Total estimated allotment base for the 1998-99 marketing year--
1,826,272 pounds. This figure represents a one percent increase over
the revised 1997-98 allotment base.
(F) Recommended 1998-99 allotment percentage--65 percent. This
figure is based upon recommendations made at the October 8, 1997,
meeting, as well as at five production area meetings held during
September.
(G) The Committee's computed 1998-99 salable quantity--1,187,077
pounds. This figure is the product of the recommended allotment
percentage and the total estimated allotment base.
(H) Estimated available supply for the 1998-99 marketing year--
1,644,071 pounds. This figure is derived by adding the computed salable
quantity to the June 1, 1998, carry-in volume, and represents the total
amount of Scotch spearmint oil that could be available to the market
during the 1998-99 marketing year.
(I) Estimated trade demand for Far West Scotch spearmint oil during
the 1998-99 marketing year--900,000 pounds. This figure is based upon
estimates provided to the Committee by buyers of spearmint oil.
(J) Estimated carry-out on June 1, 1999--744,071 pounds. This
figure is the difference between the 1998-99 estimated trade demand and
the 1998-99 estimated available supply.
(2) Class 3 (Native) Spearmint Oil
(A) Estimated carry-in on June 1, 1998--34,756 pounds. This figure
is the difference between the estimated 1997-98 marketing year trade
demand of 1,150,000 pounds and the revised 1997-98 marketing year total
available supply of 1,184,756 pounds.
(B) Estimated trade demand (domestic and export) for the 1998-99
marketing year--1,178,401 pounds. This figure is based on the average
of the three most recent years' sales figures and input from spearmint
oil buyers.
(C) Salable quantity required from 1998 production--1,143,645
pounds. This figure is the difference between the estimated 1998-99
marketing year trade demand and the estimated carry-in on June 1, 1998.
(D) Total estimated allotment base for the 1998-99 marketing year--
2,026,696 pounds. This figure represents a one percent increase over
the revised 1997-98 allotment base.
(E) Computed allotment percentage--56.4 percent. This percentage is
computed by dividing the required salable quantity by the total
estimated allotment base.
(F) Recommended allotment percentage--57 percent. This is the
Committee's recommendation based on the computed allotment percentage.
(G) The Committee's recommended salable quantity--1,155,217 pounds.
This figure is the product of the recommended allotment percentage and
the total estimated allotment base.
The salable quantity is the total quantity of each class of
spearmint oil which handlers may purchase from or handle on behalf of
producers during a marketing year. Each producer is allotted a share of
the salable quantity by applying the allotment percentage to the
producer's allotment base for the applicable class of spearmint oil.
The Committee's recommended Scotch spearmint oil salable quantity
of 1,187,077 pounds and allotment percentage of 65 percent are based on
the Committee's goal of maintaining market stability by avoiding
extreme fluctuations in supplies and prices, and thereby helping the
industry remain competitive on the international level. The Committee's
recommended Native spearmint oil salable quantity of 1,155,217 pounds
and allotment percentage of 57 percent are based on anticipated supply
and trade demand during the 1998-99 marketing year. The salable
quantities are not expected to cause a shortage of spearmint oil
supplies. Any unanticipated or additional market demand for spearmint
oil which may develop during the marketing year can be satisfied by an
increase in the salable quantities. Both Scotch and Native spearmint
oil producers who produce more than their annual allotments during the
1998-99 season may transfer such excess spearmint oil to a producer
with spearmint oil production less than his or her annual allotment or
put it into the reserve pool.
This regulation is similar to those which have been issued in prior
seasons. Costs to producers and handlers resulting from this action are
expected to be offset by the benefits derived from a stable market, a
greater market share, and possible improved returns. In conjunction
with the issuance of this rule, the Committee's marketing policy
statement for the 1998-99 marketing year has been reviewed by the
Department. The Committee's marketing policy statement, a requirement
whenever the Committee recommends volume regulations, fully meets the
intent of section 985.50 of the order. During its discussion of
potential 1998-99 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) prospective production of each class of oil; (4)
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 the Department's ``Guidelines for Fruit,
Vegetable, and Specialty Crop
[[Page 8561]]
Marketing Orders'' has also been reviewed and confirmed.
The establishment of these salable quantities and allotment
percentages allows for anticipated market needs. In determining
anticipated market needs, consideration by the Committee was given to
historical sales, and changes and trends in production and demand. This
rule also provides producers with information on the amount of
spearmint oil which should be produced for next season in order to meet
anticipated market demand.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, the AMS
has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are 9 spearmint oil handlers subject to regulation under the
order, and approximately 124 producers of Class 1 (Scotch) spearmint
oil and approximately 110 producers of Class 3 (Native) spearmint oil
in the regulated production area. Small agricultural service firms are
defined by the Small Business Administration (SBA) (13 CFR 121.601) as
those having annual receipts of less than $5,000,000, and small
agricultural producers have been defined as those whose annual receipts
are less than $500,000.
Based on the SBA's definition of small entities, the Committee
estimates that two of the nine handlers regulated by the order would be
considered small entities. Most of the handlers are large corporations
involved in the international trading of essential oils and the
products of essential oils. In addition, the Committee estimates that
29 of the 124 Scotch spearmint oil producers and 14 of the 110 Native
spearmint oil producers would be classified as small entities under the
SBA definition. Thus, a majority of handlers and producers of Far West
spearmint oil may not be classified as small entities.
The Far West spearmint oil industry is characterized by producers
whose farming operations generally involve more than one commodity, and
whose income from farming operations is not exclusively dependent on
the production of spearmint oil. Crop rotation is an essential cultural
practice in the production of spearmint oil for weed, insect, and
disease control. A normal spearmint oil producing operation would have
enough acreage for rotation such that the total acreage required to
produce the crop would be about one-third spearmint and two-thirds
rotational crops. An average spearmint oil producing farm would thus
have to have considerably more acreage than would be planted to
spearmint during any given season. Most farms producing spearmint oil
would fall under the SBA category of large businesses due to the added
costs associated with the production of this crop.
This final rule establishes the quantity of spearmint oil produced
in the Far West, by class, that handlers may purchase from, or handle
for, producers during the 1998-99 marketing year. The Committee
recommended this rule for the purpose of avoiding extreme fluctuations
in supplies and prices, and thus help to maintain stability in the
spearmint oil market. This action is authorized by the provisions of
sections 985.50, 985.51 and 985.52 of the order.
Small spearmint oil producers generally are not extensively
diversified and as such are more at risk to market fluctuations. Such
small producers generally need to market their entire annual crop and
do not have the luxury of having other crops to cushion seasons with
poor spearmint oil returns. Conversely, large diversified producers
have the potential to endure one or more seasons of poor spearmint oil
markets because incomes from alternate crops could support the
operation for a period of time. Being reasonably assured of a stable
price and market provides small producing entities with the ability to
maintain proper cash flow and to meet annual expenses. Thus, the market
and price stability provided by the order potentially benefit the small
producer more than such provisions benefit large producers. Even though
a majority of handlers and producers of spearmint oil may not be
classified as small entities, the volume control feature of this order
has small entity orientation.
The order has contributed extensively to the stabilization of
producer prices, which prior to 1980 experienced wide fluctuations from
year to year. For example, between 1971 and 1975 the price of Native
spearmint oil ranged from $3.00 per pound to $11.00 per pound. In
contrast, under the order, prices have stabilized between $10.50 and
$11.50 per pound for the past ten years.
Alternatives to this rule were discussed at the meeting and
included not regulating the handling of spearmint oil during the 1998-
99 marketing year, and recommending either higher or lower levels for
the salable quantities and allotment percentages. The Committee reached
its decision to recommend the establishment of salable quantities and
allotment percentages for both classes of spearmint oil for the 1998-99
marketing year after careful consideration of all available
information, including: (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) prospective production of each class of oil; (4)
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. Based on its review, the Committee believes that the
salable quantity and allotment percentage levels recommended will
achieve the objectives sought.
Without any regulations in effect, the Committee believes the
industry would return to the pattern of cyclical prices of prior years,
as well as suffer the potentially price depressing consequence that a
release of the nearly 1.2 million pounds of spearmint oil reserves
would have on the market. According to the Committee, higher or lower
salable quantities and allotment percentages would not achieve the
intended goals of market and price stability, with market share
maintenance and growth.
Annual salable quantities and allotment percentages have been
issued for both classes of spearmint oil since the order's inception.
Reporting and recordkeeping requirements have remained the same for
each year of regulation. Accordingly, this action would not impose any
additional reporting or recordkeeping requirements on either small or
large spearmint oil producers and handlers. All reports and forms
associated with this program are reviewed periodically in order to
avoid unnecessary and duplicative information collection by industry
and public sector agencies. The Department has not identified any
relevant Federal rules that duplicate, overlap, or conflict with this
rule.
A proposed rule was published in the Federal Register (62 FR 67297)
on
[[Page 8562]]
December 24, 1997. A 30-day comment period was provided to allow
interested persons the opportunity to respond to the proposal,
including any regulatory and informational impacts of this action on
small businesses. Copies of the rule were faxed and mailed to the
Committee office, which in turn notified Committee members and
spearmint oil producers and handlers of the proposed action. In
addition, the Committee's meetings were widely publicized throughout
the spearmint oil industry and all interested persons were invited to
attend and participate on all issues. A copy of the proposal was also
made available on the Internet by the U.S. Government Printing Office.
No comments were received.
Accordingly no changes are made to the rule as proposed.
After consideration of all relevant matter presented, including the
information and recommendation submitted by the Committee and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
List of Subjects in 7 CFR Part 985
Marketing agreements, Oils and fats, Reporting and recordkeeping
requirements, Spearmint oil.
For the reasons set forth in the preamble, CFR part 985 is amended
as follows:
PART 985--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL
PRODUCED IN THE FAR WEST
1. The authority citation for 7 CFR part 985 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. A new Sec. 985.217 is added to read as follows:
[Note: This section will not appear in the Code of Federal
Regulations.]
Sec. 985.217 Salable quantities and allotment percentages--1998-99
marketing year.
The salable quantity and allotment percentage for each class of
spearmint oil during the marketing year beginning on June 1, 1998,
shall be as follows:
(a) Class 1 (Scotch) oil--a salable quantity of 1,187,077 pounds
and an allotment percentage of 65 percent.
(b) Class 3 (Native) oil--a salable quantity of 1,155,217 pounds
and an allotment percentage of 57 percent.
Dated: February 12, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-4036 Filed 2-19-98; 8:45 am]
BILLING CODE 3410-02-P
