Marketing Order Regulating the Handling of Spearmint Oil Produced in the Far West; Salable Quantities and Allotment Percentages for the 2018-2019 Marketing Year, 14766-14771 [2018-06973]
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14766
Proposed Rules
Federal Register
Vol. 83, No. 67
Friday, April 6, 2018
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.
submitted in response to this proposal
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:
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Doc. No. AMS–SC–17–0073; SC18–985–1
PR]
Marketing Order Regulating the
Handling of Spearmint Oil Produced in
the Far West; Salable Quantities and
Allotment Percentages for the 2018–
2019 Marketing Year
Agricultural Marketing Service,
USDA.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
implement a recommendation from the
Far West Spearmint Oil Administrative
Committee (Committee) to establish
salable quantities and producer
allotments of Class 1 (Scotch) and Class
3 (Native) spearmint oil produced in
Washington, Idaho, Oregon, and
designated parts of Nevada and Utah
(the Far West) for the 2018–2019
marketing year. Salable quantities and
allotment percentages help maintain
stability in the Far West spearmint oil
market. This proposed rule would also
remove references to past volume
regulation no longer in effect.
DATES: Comments must be received by
June 5, 2018.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this proposed rule.
Comments must be sent to the Docket
Clerk, Marketing Order and Agreement
Division, Specialty Crops Program,
AMS, USDA, 1400 Independence
Avenue SW, STOP 0237, Washington,
DC 20250–0237; Fax: (202) 720–8938; or
internet: https://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: https://
www.regulations.gov. All comments
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SUMMARY:
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Barry Broadbent, Marketing Specialist,
or Gary Olson, Regional Director,
Northwest Marketing Field Office,
Marketing Order and Agreement
Division, Specialty Crops Program,
AMS, USDA; Telephone: (503) 326–
2724, Fax: (503) 326–7440, or Email:
Barry.Broadbent@ams.usda.gov or
GaryD.Olson@ams.usda.gov.
Small businesses may request
information on complying with this
regulation by contacting Richard Lower,
Marketing Order and Agreement
Division, Specialty Crops Program,
AMS, USDA, 1400 Independence
Avenue SW, STOP 0237, Washington,
DC 20250–0237; Telephone: (202) 720–
2491, Fax: (202) 720–8938, or Email:
Richard.Lower@ams.usda.gov.
This
action, pursuant to 5 U.S.C. 553,
proposes an amendment to regulations
issued to carry out a marketing order as
defined in 7 CFR 900.2(j). This proposal
is issued under Marketing Order No.
985, as amended (7 CFR part 985),
regulating the handling of spearmint oil
produced in the Far West. Part 985
(referred to as 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 Committee locally
administers the Order and is comprised
of spearmint oil producers operating
within the area of production, and a
public member.
The Department of Agriculture
(USDA) is issuing this proposed rule in
conformance with Executive Orders
13563 and 13175. This action falls
within a category of regulatory actions
that the Office of Management and
Budget (OMB) exempted from Executive
Order 12866 review. Additionally,
because this proposal does not meet the
definition of a significant regulatory
action, it does not trigger the
requirements contained in Executive
Order 13771. See OMB’s Memorandum
titled ‘‘Interim Guidance Implementing
Section 2 of the Executive Order of
January 30, 2017, titled ‘Reducing
SUPPLEMENTARY INFORMATION:
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Regulation and Controlling Regulatory
Costs’ ’’ (February 2, 2017).
This proposed rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. This proposal is not
intended to have retroactive effect.
Under the Order now in effect, salable
quantities and producer allotment
percentages may be established for
classes of spearmint oil produced in the
Far West. This proposed rule would
establish quantities and percentages for
Class 1 (Scotch) and Class 3 (Native)
spearmint oil for the 2018–2019
marketing year, which begins on June 1,
2018.
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.
Pursuant to §§ 985.50, 985.51, and
985.52, the Order requires the
Committee to meet each year to consider
supply and demand of spearmint oil
and a marketing policy for the ensuing
marketing year. When such
considerations indicate a need to
establish or maintain stable market
conditions through volume regulation,
the Committee recommends salable
quantity limitations and producer
allotments to regulate the quantity of
Far West spearmint oil available to the
market.
According to § 985.12, ‘‘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 total
industry allotment base is the aggregate
of all allotment bases held individually
by producers as prescribed under
§ 985.53(d)(1). The total allotment base
is generally revised each year on June 1
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due to producer base being lost because
of the bona fide effort production
provision of § 985.53(e). The allotment
percentage for each class of spearmint
oil is derived by dividing the salable
quantity by the total industry allotment
base for that same class of oil. The
allotment percentage is the percentage
used to calculate each producer’s
prorated share of the salable quantity or
their ‘‘annual allotment,’’ as defined in
§ 985.13.
The Committee met on October 25,
2017, to consider its marketing policy
for the 2018–2019 marketing year. At
that meeting, the Committee determined
that, based on overall market and
supply conditions, volume regulation
for Classes 1 and 3 (Scotch and Native,
respectively) spearmint oil would be
necessary. With a unanimous vote, the
Committee recommended the
establishment of a salable quantity and
allotment percentage for Class 1
(Scotch) and Class 3 (Native) spearmint
oil of 760,660 pounds and 35 percent,
and 1,307,947 pounds and 53 percent,
respectively. The Committee also
unanimously set its 2018–2019
marketing year trade demand estimate
for Far West Scotch spearmint oil at
850,000 pounds, and for Far West
Native spearmint oil at 1,306,605
pounds. Salable quantities and
allotment percentages have been placed
into effect each season since the Order’s
inception in 1980.
Class 1 (Scotch) Spearmint Oil
The Committee’s recommended 2018–
2019 marketing year salable quantity
and allotment percentage for Far West
Scotch spearmint oil represent a
decrease from the previous year’s
volume restrictions. The proposed
2018–2019 salable quantity of 760,660
pounds is 13,985 pounds less than the
2017–2018 salable quantity of 774,645
pounds. The producer allotment,
recommended at 35 percent for the
2018–2019 marketing year, is slightly
less than the 36 percent in effect the
previous year. The total estimated
allotment base for the coming marketing
year is estimated at 2,173,315 pounds.
This figure represents a one-percent
increase over the 2017–2018 total
allotment base of 2,151,797.
The Committee considered several
factors in making its recommendation,
including the current and projected
supply, estimated future demand,
production costs, and producer prices.
The Committee’s recommendations also
account for declining acreage of Far
West Scotch spearmint oil, decreasing
consumer demand, existing carry-in and
reserve pool volume, and increasing
production in competing markets.
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According to the Committee, as costs
of production have increased, many
producers have forgone new plantings.
This has resulted in a significant decline
in production of Far West Scotch
spearmint oil over past years.
Production has decreased from
1,229,258 pounds produced in 2015, to
1,113,346 pounds produced in 2016
and, finally, to an estimated 817,857
pounds for 2017.
Industry reports also indicate that the
relatively low trade demand for Far
West spearmint oil is the result of
decreased consumer demand for
spearmint-flavored products, especially
chewing gum in China and India. Far
West Scotch spearmint oil sales have
averaged 941,140 pounds per year over
the last three years and 966,875 pounds
over the last five years. For the 2017–
2018 crop, the Committee estimated
trade demand at 800,000 pounds.
In addition, increasing production of
spearmint oil in competing markets,
most notably Canada and the U.S.
Midwest, has also put downward
pressure on the Far West Scotch market.
Given the general decline in demand
and anticipated market conditions for
the coming year, the Committee decided
it was prudent to anticipate 2018–2019
trade demand at 850,000 pounds.
Should the proposed volume regulation
levels prove insufficient to adequately
supply the market, the Committee has
the authority to recommend intraseasonal increases, as in previous
marketing years.
The Committee calculated the
minimum salable quantity of Far West
Scotch spearmint oil that would be
required during the 2018–2019
marketing year by subtracting the
estimated salable carry-in on June 1,
2018, (215,757) from the estimated trade
demand (850,000), resulting in 634,243
pounds. This salable quantity represents
the minimum amount of Scotch
spearmint oil that may be needed to
satisfy estimated demand for the coming
year. The Committee then factored in a
projected 2019–2020 carry-in of 126,417
pounds to arrive at a recommended
2018–2019 salable quantity of 760,660
pounds.
The recommended salable quantity of
760,660 pounds combined with an
estimated 215,757 pounds of salable
quantity (salable carry-in) from the
previous year would yield a total
available supply of 976,417 pounds Far
West Scotch spearmint oil for the 2018–
2019 marketing year. The recommended
amount would adequately supply the
Committee’s estimated market demand
of 850,000 pounds for the 2018–2019
marketing year and would result in a
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desired 2019–2020 carry-in of 126,417
pounds.
Salable carry-in is the primary
measure of excess spearmint oil supply
under the Order, as it represents
overproduction in prior years that is
currently available to the market
without restriction. Under volume
regulation, spearmint oil that is
designated as salable continues to be
available to the market until it is sold
and may be marketed at any time at the
discretion of the owner. Salable
quantities established under volume
regulation over the last three seasons
have exceeded sales, leading to a
gradual build of Far West Scotch
spearmint oil salable carry-in.
The Committee estimates that there
will be 215,757 pounds of salable carryin of Scotch spearmint oil on June 1,
2018. If current market conditions are
maintained and the Committee’s
projections are correct, salable carry-in
will decrease to 126,417 pounds at the
beginning of the 2019–2020 marketing
year. This level would be slightly below
the quantity that the Committee
considers favorable (generally 150,000
pounds). However, the Committee
believes that this lower salable carry-in
will be manageable given the expected
production level of Far West Scotch
spearmint oil in the current marketing
year and the quantity of oil held in the
reserve pool.
Spearmint oil held in reserve is oil
that has been produced in excess of a
producer’s marketing year allotment. Oil
held in the reserve pool is a less reliable
indicator of excess supply as it is not
available to the market in the current
marketing year without an increase in
the salable quantity and allotment
percentage.
Far West Scotch spearmint oil held in
the reserve pool, which was completely
depleted at the beginning of the 2014–
2015 marketing year, has also been
gradually increasing over the past four
years. The Committee reported that
there were 71,088 pounds of Far West
Scotch spearmint oil held in the reserve
pool as of May 31, 2017. The Committee
estimates the reserve pool will increase
to 114,274 pounds by May 31, 2018.
This quantity of reserve pool oil should
be an adequate buffer to supply the
market, if necessary, if the industry
experiences an unexpected increase in
demand.
The Committee recommends a
producer allotment percentage of 35
percent for the 2018–2019 marketing
year. During its October 25, 2017,
meeting, the Committee calculated an
initial producer allotment percentage by
dividing the minimum required salable
quantity (634,243 pounds) by the total
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estimated allotment base (2,173,315
pounds), resulting in 29.2 percent.
However, producers and handlers at the
meeting indicated that the computed
percentage (29.2 percent) might not
adequately supply the potential 2018–
2019 Scotch spearmint oil market
demand or may result in inadequate
carry-in for the subsequent marketing
year. After deliberation, the Committee
increased the targeted producer
allotment percentage to 35 percent. The
total estimated allotment base
(2,173,315 pounds) for the 2018–2019
marketing year multiplied by the
recommended salable allotment
percentage (35 percent) yields 760,660
pounds, which is also the recommended
salable quantity for the 2018–2019
marketing year.
The 2018–2019 marketing year
computational data for the Committee’s
recommendations is further outlined
below.
(A) Estimated carry-in of Scotch
spearmint oil on June 1, 2018: 215,757
pounds. This figure is the difference
between the 2017–2018 marketing year
total available supply of 1,015,757
pounds and the 2017–2018 marketing
year estimated trade demand of 800,000
pounds.
(B) Estimated trade demand of Far
West Scotch spearmint oil for the 2018–
2019 marketing year: 850,000 pounds.
This figure was established at the
Committee meeting held on October 25,
2017.
(C) Salable quantity of Scotch
spearmint oil required from the 2018–
2019 marketing year production:
634,243 pounds. This figure is the
difference between the estimated 2018–
2019 marketing year trade demand
(850,000 pounds) and the estimated
carry-in on June 1, 2018 (215,757
pounds). This salable quantity
represents the minimum amount of
Scotch spearmint oil production that
may be needed to satisfy estimated
demand for the coming year.
(D) Total estimated allotment base of
Scotch spearmint oil for the 2018–2019
marketing year: 2,173,315 pounds. This
figure represents a one-percent increase
over the 2017–2018 total actual
allotment base of 2,151,797 pounds as
prescribed in § 985.53(d)(1). The onepercent increase equals 21,518 pounds
of Scotch spearmint oil. This total
estimated allotment base is generally
revised each year on June 1 in
accordance with § 985.53(e).
(E) Computed Scotch spearmint oil
allotment percentage for the 2018–2019
marketing year: 29.2 percent. This
percentage is computed by dividing the
minimum required salable quantity
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(634,243 pounds) by the total estimated
allotment base (2,173,315 pounds).
(F) Recommended Scotch spearmint
oil allotment percentage for the 2018–
2019 marketing year: 35 percent. This is
the Committee’s recommendation and is
based on the computed allotment
percentage (29.2 percent) and input
from producers and handlers at the
October 25, 2017, meeting. The
recommended 35 percent allotment
percentage reflects the Committee’s
belief that the computed percentage
(29.2 percent) may not adequately
supply anticipated 2018–2019 Scotch
spearmint oil market demand.
(G) Recommended Scotch spearmint
oil salable quantity for the 2018–2019
marketing year: 760,660 pounds. This
figure is the product of the
recommended salable allotment
percentage (35 percent) and the total
estimated allotment base (2,173,315
pounds) for the 2018–2019 marketing
year.
(H) Estimated total available supply
of Scotch spearmint oil for the 2018–
2019 marketing year: 976,417 pounds.
This figure is the sum of the 2018–2019
recommended salable quantity (760,660
pounds) and the estimated carry-in on
June 1, 2018 (215,757 pounds).
For the reasons stated above, the
Committee believes that the
recommended salable quantity would
adequately meet demand, would result
in a reasonable carry-in for the
following year, and would contribute to
orderly marketing conditions as
intended under the Order.
Class 3 (Native) Spearmint Oil
The Committee recommended a
Native spearmint oil salable quantity of
1,307,947 pounds and an allotment
percentage of 53 percent for the 2018–
2019 marketing year. These figures are,
respectively, 206,955 pounds and 9
percentage points less than the final
levels established for the 2017–2018
marketing year after an intra-seasonal
increase.
The Committee utilized handlers’
anticipated sales estimates of Far West
Native spearmint oil for the coming
year, historical and current Native
spearmint oil production, inventory
statistics, and international market data
obtained from consultants for the
spearmint oil industry to arrive at these
recommendations.
The Committee anticipates that 2017
production will total 1,462,976 pounds,
down from 1,694,684 pounds in 2016.
Committee figures show that declining
production is the result of a 1,107-acre
year-over-year reduction in total Native
spearmint acres, and an average yield
per acre drop from 166.2 pounds per
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acre in 2016 to 160.9 pounds per acre
in 2017. Conversely, sales of Native
spearmint oil have been increasing at
about a 4 percent rate from the 2015–
2016 season through the 2017–2018
marketing year.
The Committee expects that 57,968
pounds of salable Native spearmint oil
from prior years will be carried into the
2018–2019 marketing year. This amount
is down from the estimated 143,011
pounds of salable Native spearmint oil
carried into the 2017–2018 marketing
year, and 142,657 pounds carried into
the 2016–2017 marketing year.
Further, the Committee estimates that
there will be 1,237,237 pounds of Native
spearmint oil in the reserve pool at the
beginning of the 2018–2019 marketing
year. This figure is 142,578 pounds
higher than the quantity of reserve pool
oil held by producers the previous year
and is in line with the gradual increase
in reserves over the past three marketing
years.
Exports of Far West Native spearmint
oil, as of July 2017, are above their fiveyear average. Canada, India, and China
are the largest destination markets for
Far West Native spearmint oil exports.
As a common practice, large end users
often buy spearmint oil to build reserve
stocks when prices are low as a hedge
against future price increases. End users
of Native spearmint oil are expected to
continue to rely on Far West production
as their main source of high quality
Native spearmint oil, but demand may
be at lower quantities moving forward
in response to long-term market factors.
A sharp spike in demand for Far West
Native spearmint oil was experienced
by handlers late in the 2017–2018
marketing year, spurred by the
popularity of a new product in the
market. This sharp spike in demand
caused the remaining available 2017–
2018 salable quantity of Native oil to be
depleted.
The Committee estimates the 2018–
2019 marketing year Native spearmint
oil trade demand to be 1,306,605
pounds. This figure is based on input
provided by producers at six Native
spearmint oil production area meetings
held in mid-October 2017, as well as
estimates provided by handlers and
other meeting participants at the
October 25, 2017, meeting. This figure
represents an increase of 56,605 pounds
from the previous year’s initial estimate.
The average estimated trade demand for
Native spearmint oil from the six
production area grower’s meetings was
1,349,379 pounds, whereas the
handlers’ estimates ranged from
1,350,000 to 1,500,000 pounds. The
average of Far West Native spearmint oil
sales over the last three years is also
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1,305,605 pounds. However, the
quantity marketed over the most recent
full marketing year, 2016–2017, was
1,287,691 pounds. The Committee chose
to be slightly conservative in the
establishment of its trade demand
estimate for the 2018–2019 marketing
year to avoid oversupplying the market.
The estimated 2018–2019 carry-in of
57,968 pounds of Native spearmint oil
plus the recommended salable quantity
of 1,307,947 pounds would result in an
estimated total available supply of
1,365,915 pounds of Native spearmint
oil during the 2018–2019 marketing
year. With the corresponding estimated
trade demand of 1,306,605 pounds, the
Committee projects that 59,310 pounds
of Native spearmint oil will be carried
into the 2019–2020 marketing year,
resulting in a slight increase of 1,342
pounds year-over-year. The Committee
estimates that there will be 1,237,237
pounds of Native spearmint oil held in
the reserve pool at the beginning of the
2018–2019 marketing year. Should the
industry experience an unexpected
increase in trade demand, Native
spearmint oil in the reserve pool could
be released to satisfy that demand.
The Committee recommends a
producer allotment percentage of 53
percent for the 2018–2019 marketing
year. During its October 25, 2017,
meeting, the Committee calculated an
initial producer allotment percentage by
dividing the minimum required salable
quantity (1,248,637 pounds) by the total
estimated allotment base (2,467,825
pounds), resulting in 50.6 percent.
However, producers and handlers at the
meeting expressed that the computed
percentage (50.6 percent) may not
adequately supply the potential 2018–
2019 Native spearmint oil market
demand or result in adequate carry-in
for the subsequent marketing year. After
deliberation, the Committee increased
the targeted producer allotment
percentage to a recommended 53
percent. The total estimated allotment
base (2,467,825 pounds) for the 2018–
2019 marketing year multiplied by the
recommended salable allotment
percentage (53 percent) yields 1,307,947
pounds, which is also the recommended
salable quantity for that year.
The 2018–2019 marketing year
computational data for the Committee’s
recommendations is further outlined
below.
(A) Estimated carry-in of Native
spearmint oil on June 1, 2018: 57,968
pounds. This figure is the difference
between the revised 2017–2018
marketing year total available supply of
1,657,968 pounds and the revised 2017–
2018 marketing year estimated trade
demand of 1,600,000 pounds.
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(B) Estimated trade demand of Native
spearmint oil for the 2018–2019
marketing year: 1,306,605 pounds. This
estimate was established by the
Committee at the October 25, 2017,
meeting.
(C) Salable quantity of Native
spearmint oil required from the 2018–
2019 marketing year production:
1,248,637 pounds. This figure is the
difference between the estimated 2018–
2019 marketing year estimated trade
demand (1,306,605 pounds) and the
estimated carry-in on June 1, 2018
(57,968 pounds). This is the minimum
amount of Native spearmint oil that the
Committee believes would be required
to meet the anticipated 2018–2019
marketing year trade demand.
(D) Total estimated allotment base of
Native spearmint oil for the 2018–2019
marketing year: 2,467,825 pounds. This
figure represents a one-percent increase
over the 2017–2018 total actual
allotment base of 2,443,391 pounds as
prescribed in § 985.53(d)(1). The onepercent increase equals 24,434 pounds
of Native spearmint oil. This estimate is
generally revised each year on June 1,
due to producer base being lost because
of the bona fide effort production
provisions of § 985.53(e).
(E) Computed Native spearmint oil
allotment percentage for the 2018–2019
marketing year: 50.6 percent. This
percentage is calculated by dividing the
required salable quantity (1,248,637
pounds) by the total estimated allotment
base (2,467,825 pounds) for the 2018–
2019 marketing year.
(F) Recommended Native spearmint
oil allotment percentage for the 2018–
2019 marketing year: 53 percent. This is
the Committee’s recommendation based
on the computed allotment percentage
(50.6 percent) and input from producers
and handlers at the October 25, 2017,
meeting. The recommended 53 percent
allotment percentage is also based on
the Committee’s belief that the
computed percentage (50.6 percent) may
not adequately supply the potential
market for Native spearmint oil in the
2018–2019 marketing year.
(G) Recommended Native spearmint
oil 2018–2019 marketing year salable
quantity: 1,307,947 pounds. This figure
is the product of the recommended
allotment percentage (53 percent) and
the total estimated allotment base
(2,467,825 pounds). After completely
depleting the remaining salable quantity
for the 2017–2018 marketing year, to
prevent this from happening again, the
Committee recommended that the 2018–
2019 salable quantity be set at a level
slightly higher than the estimated trade
demand for the same year (1,306,605
pounds).
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(H) Estimated available supply of
Native spearmint oil for the 2018–2019
marketing year: 1,365,915 pounds. This
figure is the sum of the 2018–2019
recommended salable quantity
(1,307,947 pounds) and the estimated
carry-in on June 1, 2018 (57,968
pounds).
The Committee’s recommended
Scotch and Native spearmint oil salable
quantities and allotment percentages of
760,660 pounds and 35 percent, and
1,307,947 pounds and 53 percent,
respectively, would match the available
supply of each class of spearmint oil to
the estimated demand of each, thus
avoiding extreme fluctuations in
inventories and prices. This proposal, if
adopted, would be similar to regulations
issued in prior seasons.
The salable quantities in this proposal
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
could be satisfied by an intra-seasonal
increase in the salable quantity. The
Order contains a provision in § 985.51
for intra-seasonal increases to allow the
Committee the flexibility to respond
quickly to changing market conditions.
Under volume regulation, producers
who produce more than their annual
allotments during the marketing year
may transfer such excess spearmint oil
to producers who have produced less
than their annual allotment. In addition,
on December 1 of each year, producers
who have not transferred their excess
spearmint oil to other producers must
place their excess spearmint oil
production into the reserve pool to be
released in the future in accordance
with market needs and under the
Committee’s direction.
In conjunction with the issuance of
this proposed rule, USDA has reviewed
the Committee’s marketing policy
statement for the 2018–2019 marketing
year. The Committee’s marketing policy
statement, a requirement whenever the
Committee recommends volume
regulation, meets the requirements of
§§ 985.50 and 985.51.
The establishment of the proposed
salable quantities and allotment
percentages would allow for anticipated
market needs. In determining
anticipated market needs, the
Committee considered historical sales,
as well as changes and trends in
production and demand. This proposal
would also provide producers with
information on the amount of spearmint
oil that should be produced for the
2018–2019 season to meet anticipated
market demand.
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Initial Regulatory Flexibility Act
Pursuant to requirements set forth in
the Regulatory Flexibility Act (RFA) (5
U.S.C. 601–612), the Agricultural
Marketing Service (AMS) has
considered the economic impact of this
proposed rule on small entities.
Accordingly, AMS has prepared this
initial regulatory flexibility analysis.
The purpose of the RFA is to fit
regulatory actions to the scale of
businesses subject to such actions in
order that small businesses will not be
unduly or disproportionately burdened.
Marketing orders issued pursuant to the
Act, and the rules issued thereunder, are
unique in that they are brought about
through group action of essentially
small entities acting on their own
behalf.
There are approximately 43 producers
and 94 producers of Scotch and Native
spearmint oil, respectively, in the
regulated production area and
approximately seven spearmint oil
handlers subject to regulation under the
Order. Small agricultural service firms
are defined by the Small Business
Administration (SBA) as those having
annual receipts of less than $7,500,000,
and small agricultural producers are
defined as those having annual receipts
of less than $750,000 (13 CFR 121.201).
The Committee reported that recent
producer prices for spearmint oil range
from $15.50 to $18.00 per pound. The
National Agricultural Statistics Service
(NASS) reported that the 2016 U.S.
season average spearmint oil grower
price per pound was $17.40.
Multiplying $17.40 per pound by 2016–
17 spearmint oil utilization of 2,168,257
million pounds yields a crop value
estimate of about $37.7 million. Total
2016–17 spearmint oil utilization,
reported by the Committee, is 958,711
pounds and 1,209,546 pounds for
Scotch and Native spearmint oil,
respectively.
Given the accounting requirements for
the volume regulation provisions of the
Order, the Committee maintains
accurate records of each producer’s
production and sales. Using the $17.40
average spearmint oil price, and
Committee production data for each
producer, the Committee estimates that
38 of the 43 Scotch spearmint oil
producers and 88 of the 94 Native
spearmint oil producers could be
classified as small entities under the
SBA definition.
There is no third party or
governmental entity that collects and
reports spearmint oil prices received by
spearmint oil handlers. However, the
Committee estimates an average
spearmint oil handling markup at
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approximately 20 percent of the price
received by producers. Multiplying 1.20
by the 2016 producer price of $17.40
yields a handler f.o.b. price per pound
estimate of $20.88.
Multiplying this handler f.o.b price by
spearmint oil utilization of 2,168,257
pounds results in an estimated handlerlevel spearmint oil value of $45.3
million. Dividing this figure by the
number of handlers (7) yields estimated
average annual handler receipts of about
$6.5 million, which is below the SBA
threshold for small agricultural service
firms.
Using confidential data on pounds
handled by each handler, and the
abovementioned handler price per
pound, the Committee reported that it is
likely that at least two of the seven
handlers had 2016–2017 marketing year
spearmint oil sales value that exceeded
the SBA threshold.
Therefore, in view of the foregoing,
the majority of producers and handlers
of spearmint oil may be classified as
small entities.
This proposed rule would establish
the quantity of spearmint oil produced
in the Far West, by class, which
handlers may purchase from, or handle
on behalf of, producers during the
2018–2019 marketing year. The
Committee recommended this action to
help maintain stability in the spearmint
oil market by matching supply to
estimated demand, thereby avoiding
extreme fluctuations in supplies and
prices. Establishing quantities that may
be purchased or handled during the
marketing year through volume
regulations allows producers to
coordinate their spearmint oil
production with the expected market
demand. Authority for this proposal is
provided in §§ 985.50, 985.51, and
985.52.
The Committee estimated trade
demand for the 2018–2019 marketing
year for both classes of oil at 2,156,605
pounds and expects that the combined
salable carry-in will be 273,725 pounds.
The combined required salable quantity
is 1,882,880 pounds. Under volume
regulation, total sales of spearmint oil
by producers for the 2018–2019
marketing year would be held to
2,342,332 pounds (the recommended
salable quantity for both classes of
spearmint oil of 2,068,607 pounds plus
273,725 pounds of carry-in). This total
available supply of 2,342,332 pounds
should be more than adequate to supply
the 2,156,605 pounds of anticipated
total trade demand for spearmint oil. In
addition, as of May 31, 2017, the total
reserve pool for both classes of
spearmint oil stood at 1,067,138
pounds. Furthermore, that quantity is
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Fmt 4702
Sfmt 4702
expected to rise over the course of the
2017–2018 marketing year. Should trade
demand increase unexpectedly during
the 2018–2019 marketing year, reserve
pool spearmint oil could be released
into the market to supply that increase
in demand.
The recommended allotment
percentages, upon which 2018–2019
producer allotments are based, are 35
percent for Scotch spearmint oil and 53
percent for Native spearmint oil.
Without volume regulation, producers
would not be held to these allotment
levels, and could produce and sell
unrestricted quantities of spearmint oil.
The USDA econometric model
estimated that the season average
producer price per pound (from both
classes of spearmint oil) would decline
about $1.90 per pound because of the
higher quantities of spearmint oil that
would be produced and marketed
without volume regulation. The surplus
situation for the spearmint oil market
that would exist without volume
regulation in 2018–2019 also would
likely dampen prospects for improved
producer prices in future years because
of the buildup in stocks.
The use of volume regulation allows
the industry to fully supply spearmint
oil markets while avoiding the negative
consequences of over-supplying these
markets. The use of volume regulation
is believed to have little or no effect on
consumer prices of products containing
spearmint oil and would not result in
fewer retail sales of such products.
The Committee discussed alternatives
to the recommendations contained in
this rule for both classes of spearmint
oil. The Committee discussed and
rejected the idea of not regulating any
volume for either class of spearmint oil
because of the severe, price-depressing
effects that would likely occur without
volume regulation. The Committee also
discussed and considered salable
quantities and allotment percentages
that were above and below the levels
that were ultimately recommended for
both classes of spearmint oil.
Ultimately, the action taken by the
Committee was to decrease the salable
quantity and allotment percentage for
Class 1 (Scotch) spearmint oil, and to
increase the salable quantity and
allotment percentage Class 3 (Native)
spearmint oil from the 2017–2018
marketing year levels.
As noted earlier, the Committee’s
recommendation to establish salable
quantities and allotment percentages for
both classes of spearmint oil was made
after careful consideration of all
available information including: (1) The
estimated quantity of salable oil of each
class held by producers and handlers;
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(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.
Based on its review, the Committee
believes that the salable quantities and
allotment percentages recommended
would achieve the objectives sought.
The Committee also believes that,
should there be no volume regulation in
effect for the upcoming marketing year,
the Far West spearmint oil industry
would return to the pronounced cyclical
price patterns that occurred prior to the
promulgation of the Order. As
previously stated, annual salable
quantities and allotment percentages
have been issued for both classes of
spearmint oil since the Order’s
inception. The salable quantities and
allotment percentages proposed herein
are expected to facilitate the goal of
maintaining orderly marketing
conditions for Far West spearmint oil
for the 2018–2019 and future marketing
years.
Costs to producers and handlers, large
and small, resulting from this proposal
are expected to be offset by the benefits
derived from a more stable market and
increased returns. The benefits of this
rule are expected to be equally available
to all producers and handlers regardless
of their size.
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35), the Order’s information
collection requirements have been
previously approved by OMB and
assigned OMB No. 0581–0178, Specialty
Crops Program. No changes are
necessary in those requirements as a
result of this action. Should any changes
become necessary, they would be
submitted to OMB for approval.
This proposed rule would establish
the salable quantities and allotment
percentages for Class 1 (Scotch)
spearmint oil and Class 3 (Native)
spearmint oil produced in the Far West
during the 2018–2019 marketing year.
Accordingly, this proposal would not
impose any additional reporting or
recordkeeping requirements on either
small or large spearmint oil producers
or handlers. As with all Federal
marketing order programs, reports and
forms are periodically reviewed to
reduce information requirements and
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duplication by industry and publicsector agencies.
AMS is committed to complying with
the E-Government Act, to promote the
use of the internet and other
information technologies to provide
increased opportunities for citizen
access to Government information and
services, and for other purposes.
USDA has not identified any relevant
Federal rules that duplicate, overlap, or
conflict with this proposed rule.
In addition, the Committee’s meeting
was widely publicized throughout the
spearmint oil industry and all interested
persons were invited to attend the
meeting and participate in Committee
deliberations on all issues. Like all
Committee meetings, the October 25,
2017, meeting was a public meeting and
all entities, both large and small, were
able to express views on this issue.
Finally, interested persons are invited to
submit comments on this proposed rule,
including the regulatory and
informational impacts of this action on
small businesses.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: https://www.ams.usda.gov/
rules-regulations/moa/small-businesses.
Any questions about the compliance
guide should be sent to Richard Lower
at the previously mentioned address in
the FOR FURTHER INFORMATION CONTACT
section.
A 60-day comment period is provided
to allow interested persons to respond
to this proposal. All written comments
timely received will be considered
before a final determination is made on
this matter.
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, 7 CFR part 985 is proposed to
be 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. Revise § 985.233 to read as follows:
§ 985.233 Salable quantities and allotment
percentages.
The salable quantity and allotment
percentage for each class of spearmint
oil during the marketing year beginning
on June 1, 2018, shall be as follows:
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14771
(a) Class 1 (Scotch) oil—a salable
quantity of 760,660 pounds and an
allotment percentage of 35 percent.
(b) Class 3 (Native) oil—a salable
quantity of 1,307,947 pounds and an
allotment percentage of 53 percent.
§ 985.234
[Removed].
§ 985.235
[Removed].
■
3. Remove §§ 985.234 and 985.235.
Dated: April 2, 2018
Bruce Summers,
Acting Administrator, Agricultural Marketing
Service.
[FR Doc. 2018–06973 Filed 4–5–18; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1206
[Document No. AMS–SC–17–0002]
Mango Promotion, Research and
Information Order; Amendment To
Include Frozen Mangos
Agricultural Marketing Service,
USDA.
ACTION: Proposed rule.
AGENCY:
This proposed rule invites
comments on amending the Agricultural
Marketing Service’s (AMS) regulations
regarding a fresh mango national
research and promotion program to
include frozen mangos as a covered
commodity. Additionally, this proposal
announces AMS’ intent to request
approval by the Office of Management
and Budget (OMB) of new information
collection requirements necessary to
include frozen mangos under the
program.
DATES: Comments must be received by
June 5, 2018. Pursuant to the Paperwork
Reduction Act, comments on the
information collection burden that
would result from this proposal must be
received by June 5, 2018.
ADDRESSES: Interested persons are
invited to submit written comments
concerning this proposal. Comments
may be submitted on the internet at:
https://www.regulations.gov. Comments
may also be sent to the Promotion and
Economics Division, Specialty Crops
Program, AMS, USDA, Room 1406–S,
Stop 0244, 1400 Independence Avenue
SW, Washington, DC 20250–0244;
facsimile: (202) 205–2800. All
comments submitted should reference
the document number and page number
of this issue of the Federal Register and
will be made available for public
inspection, including name and address,
SUMMARY:
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]]>Agencies
[Federal Register Volume 83, Number 67 (Friday, April 6, 2018)]
[Proposed Rules]
[Pages 14766-14771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06973]
========================================================================
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.
========================================================================
Federal Register / Vol. 83, No. 67 / Friday, April 6, 2018 / Proposed
Rules
[[Page 14766]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 985
[Doc. No. AMS-SC-17-0073; SC18-985-1 PR]
Marketing Order Regulating the Handling of Spearmint Oil Produced
in the Far West; Salable Quantities and Allotment Percentages for the
2018-2019 Marketing Year
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would implement a recommendation from the
Far West Spearmint Oil Administrative Committee (Committee) to
establish salable quantities and producer allotments of Class 1
(Scotch) and Class 3 (Native) spearmint oil produced in Washington,
Idaho, Oregon, and designated parts of Nevada and Utah (the Far West)
for the 2018-2019 marketing year. Salable quantities and allotment
percentages help maintain stability in the Far West spearmint oil
market. This proposed rule would also remove references to past volume
regulation no longer in effect.
DATES: Comments must be received by June 5, 2018.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. Comments must be sent to the Docket
Clerk, Marketing Order and Agreement Division, Specialty Crops Program,
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938; or internet: https://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: https://www.regulations.gov. All comments submitted in response to this
proposal 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, Marketing Specialist,
or Gary Olson, Regional Director, Northwest Marketing Field Office,
Marketing Order and Agreement Division, Specialty Crops 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 Richard Lower, Marketing Order and Agreement
Division, Specialty Crops 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 action, pursuant to 5 U.S.C. 553,
proposes an amendment to regulations issued to carry out a marketing
order as defined in 7 CFR 900.2(j). This proposal is issued under
Marketing Order No. 985, as amended (7 CFR part 985), regulating the
handling of spearmint oil produced in the Far West. Part 985 (referred
to as 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 Committee locally administers the Order
and is comprised of spearmint oil producers operating within the area
of production, and a public member.
The Department of Agriculture (USDA) is issuing this proposed rule
in conformance with Executive Orders 13563 and 13175. This action falls
within a category of regulatory actions that the Office of Management
and Budget (OMB) exempted from Executive Order 12866 review.
Additionally, because this proposal does not meet the definition of a
significant regulatory action, it does not trigger the requirements
contained in Executive Order 13771. See OMB's Memorandum titled
``Interim Guidance Implementing Section 2 of the Executive Order of
January 30, 2017, titled `Reducing Regulation and Controlling
Regulatory Costs'[thinsp]'' (February 2, 2017).
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This proposal is not intended to have retroactive
effect. Under the Order now in effect, salable quantities and producer
allotment percentages may be established for classes of spearmint oil
produced in the Far West. This proposed rule would establish quantities
and percentages for Class 1 (Scotch) and Class 3 (Native) spearmint oil
for the 2018-2019 marketing year, which begins on June 1, 2018.
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.
Pursuant to Sec. Sec. 985.50, 985.51, and 985.52, the Order
requires the Committee to meet each year to consider supply and demand
of spearmint oil and a marketing policy for the ensuing marketing year.
When such considerations indicate a need to establish or maintain
stable market conditions through volume regulation, the Committee
recommends salable quantity limitations and producer allotments to
regulate the quantity of Far West spearmint oil available to the
market.
According to Sec. 985.12, ``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 total
industry allotment base is the aggregate of all allotment bases held
individually by producers as prescribed under Sec. 985.53(d)(1). The
total allotment base is generally revised each year on June 1
[[Page 14767]]
due to producer base being lost because of the bona fide effort
production provision of Sec. 985.53(e). The allotment percentage for
each class of spearmint oil is derived by dividing the salable quantity
by the total industry allotment base for that same class of oil. The
allotment percentage is the percentage used to calculate each
producer's prorated share of the salable quantity or their ``annual
allotment,'' as defined in Sec. 985.13.
The Committee met on October 25, 2017, to consider its marketing
policy for the 2018-2019 marketing year. At that meeting, the Committee
determined that, based on overall market and supply conditions, volume
regulation for Classes 1 and 3 (Scotch and Native, respectively)
spearmint oil would be necessary. With a unanimous vote, the Committee
recommended the establishment of a salable quantity and allotment
percentage for Class 1 (Scotch) and Class 3 (Native) spearmint oil of
760,660 pounds and 35 percent, and 1,307,947 pounds and 53 percent,
respectively. The Committee also unanimously set its 2018-2019
marketing year trade demand estimate for Far West Scotch spearmint oil
at 850,000 pounds, and for Far West Native spearmint oil at 1,306,605
pounds. Salable quantities and allotment percentages have been placed
into effect each season since the Order's inception in 1980.
Class 1 (Scotch) Spearmint Oil
The Committee's recommended 2018-2019 marketing year salable
quantity and allotment percentage for Far West Scotch spearmint oil
represent a decrease from the previous year's volume restrictions. The
proposed 2018-2019 salable quantity of 760,660 pounds is 13,985 pounds
less than the 2017-2018 salable quantity of 774,645 pounds. The
producer allotment, recommended at 35 percent for the 2018-2019
marketing year, is slightly less than the 36 percent in effect the
previous year. The total estimated allotment base for the coming
marketing year is estimated at 2,173,315 pounds. This figure represents
a one-percent increase over the 2017-2018 total allotment base of
2,151,797.
The Committee considered several factors in making its
recommendation, including the current and projected supply, estimated
future demand, production costs, and producer prices. The Committee's
recommendations also account for declining acreage of Far West Scotch
spearmint oil, decreasing consumer demand, existing carry-in and
reserve pool volume, and increasing production in competing markets.
According to the Committee, as costs of production have increased,
many producers have forgone new plantings. This has resulted in a
significant decline in production of Far West Scotch spearmint oil over
past years. Production has decreased from 1,229,258 pounds produced in
2015, to 1,113,346 pounds produced in 2016 and, finally, to an
estimated 817,857 pounds for 2017.
Industry reports also indicate that the relatively low trade demand
for Far West spearmint oil is the result of decreased consumer demand
for spearmint-flavored products, especially chewing gum in China and
India. Far West Scotch spearmint oil sales have averaged 941,140 pounds
per year over the last three years and 966,875 pounds over the last
five years. For the 2017-2018 crop, the Committee estimated trade
demand at 800,000 pounds.
In addition, increasing production of spearmint oil in competing
markets, most notably Canada and the U.S. Midwest, has also put
downward pressure on the Far West Scotch market.
Given the general decline in demand and anticipated market
conditions for the coming year, the Committee decided it was prudent to
anticipate 2018-2019 trade demand at 850,000 pounds. Should the
proposed volume regulation levels prove insufficient to adequately
supply the market, the Committee has the authority to recommend intra-
seasonal increases, as in previous marketing years.
The Committee calculated the minimum salable quantity of Far West
Scotch spearmint oil that would be required during the 2018-2019
marketing year by subtracting the estimated salable carry-in on June 1,
2018, (215,757) from the estimated trade demand (850,000), resulting in
634,243 pounds. This salable quantity represents the minimum amount of
Scotch spearmint oil that may be needed to satisfy estimated demand for
the coming year. The Committee then factored in a projected 2019-2020
carry-in of 126,417 pounds to arrive at a recommended 2018-2019 salable
quantity of 760,660 pounds.
The recommended salable quantity of 760,660 pounds combined with an
estimated 215,757 pounds of salable quantity (salable carry-in) from
the previous year would yield a total available supply of 976,417
pounds Far West Scotch spearmint oil for the 2018-2019 marketing year.
The recommended amount would adequately supply the Committee's
estimated market demand of 850,000 pounds for the 2018-2019 marketing
year and would result in a desired 2019-2020 carry-in of 126,417
pounds.
Salable carry-in is the primary measure of excess spearmint oil
supply under the Order, as it represents overproduction in prior years
that is currently available to the market without restriction. Under
volume regulation, spearmint oil that is designated as salable
continues to be available to the market until it is sold and may be
marketed at any time at the discretion of the owner. Salable quantities
established under volume regulation over the last three seasons have
exceeded sales, leading to a gradual build of Far West Scotch spearmint
oil salable carry-in.
The Committee estimates that there will be 215,757 pounds of
salable carry-in of Scotch spearmint oil on June 1, 2018. If current
market conditions are maintained and the Committee's projections are
correct, salable carry-in will decrease to 126,417 pounds at the
beginning of the 2019-2020 marketing year. This level would be slightly
below the quantity that the Committee considers favorable (generally
150,000 pounds). However, the Committee believes that this lower
salable carry-in will be manageable given the expected production level
of Far West Scotch spearmint oil in the current marketing year and the
quantity of oil held in the reserve pool.
Spearmint oil held in reserve is oil that has been produced in
excess of a producer's marketing year allotment. Oil held in the
reserve pool is a less reliable indicator of excess supply as it is not
available to the market in the current marketing year without an
increase in the salable quantity and allotment percentage.
Far West Scotch spearmint oil held in the reserve pool, which was
completely depleted at the beginning of the 2014-2015 marketing year,
has also been gradually increasing over the past four years. The
Committee reported that there were 71,088 pounds of Far West Scotch
spearmint oil held in the reserve pool as of May 31, 2017. The
Committee estimates the reserve pool will increase to 114,274 pounds by
May 31, 2018. This quantity of reserve pool oil should be an adequate
buffer to supply the market, if necessary, if the industry experiences
an unexpected increase in demand.
The Committee recommends a producer allotment percentage of 35
percent for the 2018-2019 marketing year. During its October 25, 2017,
meeting, the Committee calculated an initial producer allotment
percentage by dividing the minimum required salable quantity (634,243
pounds) by the total
[[Page 14768]]
estimated allotment base (2,173,315 pounds), resulting in 29.2 percent.
However, producers and handlers at the meeting indicated that the
computed percentage (29.2 percent) might not adequately supply the
potential 2018-2019 Scotch spearmint oil market demand or may result in
inadequate carry-in for the subsequent marketing year. After
deliberation, the Committee increased the targeted producer allotment
percentage to 35 percent. The total estimated allotment base (2,173,315
pounds) for the 2018-2019 marketing year multiplied by the recommended
salable allotment percentage (35 percent) yields 760,660 pounds, which
is also the recommended salable quantity for the 2018-2019 marketing
year.
The 2018-2019 marketing year computational data for the Committee's
recommendations is further outlined below.
(A) Estimated carry-in of Scotch spearmint oil on June 1, 2018:
215,757 pounds. This figure is the difference between the 2017-2018
marketing year total available supply of 1,015,757 pounds and the 2017-
2018 marketing year estimated trade demand of 800,000 pounds.
(B) Estimated trade demand of Far West Scotch spearmint oil for the
2018-2019 marketing year: 850,000 pounds. This figure was established
at the Committee meeting held on October 25, 2017.
(C) Salable quantity of Scotch spearmint oil required from the
2018-2019 marketing year production: 634,243 pounds. This figure is the
difference between the estimated 2018-2019 marketing year trade demand
(850,000 pounds) and the estimated carry-in on June 1, 2018 (215,757
pounds). This salable quantity represents the minimum amount of Scotch
spearmint oil production that may be needed to satisfy estimated demand
for the coming year.
(D) Total estimated allotment base of Scotch spearmint oil for the
2018-2019 marketing year: 2,173,315 pounds. This figure represents a
one-percent increase over the 2017-2018 total actual allotment base of
2,151,797 pounds as prescribed in Sec. 985.53(d)(1). The one-percent
increase equals 21,518 pounds of Scotch spearmint oil. This total
estimated allotment base is generally revised each year on June 1 in
accordance with Sec. 985.53(e).
(E) Computed Scotch spearmint oil allotment percentage for the
2018-2019 marketing year: 29.2 percent. This percentage is computed by
dividing the minimum required salable quantity (634,243 pounds) by the
total estimated allotment base (2,173,315 pounds).
(F) Recommended Scotch spearmint oil allotment percentage for the
2018-2019 marketing year: 35 percent. This is the Committee's
recommendation and is based on the computed allotment percentage (29.2
percent) and input from producers and handlers at the October 25, 2017,
meeting. The recommended 35 percent allotment percentage reflects the
Committee's belief that the computed percentage (29.2 percent) may not
adequately supply anticipated 2018-2019 Scotch spearmint oil market
demand.
(G) Recommended Scotch spearmint oil salable quantity for the 2018-
2019 marketing year: 760,660 pounds. This figure is the product of the
recommended salable allotment percentage (35 percent) and the total
estimated allotment base (2,173,315 pounds) for the 2018-2019 marketing
year.
(H) Estimated total available supply of Scotch spearmint oil for
the 2018-2019 marketing year: 976,417 pounds. This figure is the sum of
the 2018-2019 recommended salable quantity (760,660 pounds) and the
estimated carry-in on June 1, 2018 (215,757 pounds).
For the reasons stated above, the Committee believes that the
recommended salable quantity would adequately meet demand, would result
in a reasonable carry-in for the following year, and would contribute
to orderly marketing conditions as intended under the Order.
Class 3 (Native) Spearmint Oil
The Committee recommended a Native spearmint oil salable quantity
of 1,307,947 pounds and an allotment percentage of 53 percent for the
2018-2019 marketing year. These figures are, respectively, 206,955
pounds and 9 percentage points less than the final levels established
for the 2017-2018 marketing year after an intra-seasonal increase.
The Committee utilized handlers' anticipated sales estimates of Far
West Native spearmint oil for the coming year, historical and current
Native spearmint oil production, inventory statistics, and
international market data obtained from consultants for the spearmint
oil industry to arrive at these recommendations.
The Committee anticipates that 2017 production will total 1,462,976
pounds, down from 1,694,684 pounds in 2016. Committee figures show that
declining production is the result of a 1,107-acre year-over-year
reduction in total Native spearmint acres, and an average yield per
acre drop from 166.2 pounds per acre in 2016 to 160.9 pounds per acre
in 2017. Conversely, sales of Native spearmint oil have been increasing
at about a 4 percent rate from the 2015-2016 season through the 2017-
2018 marketing year.
The Committee expects that 57,968 pounds of salable Native
spearmint oil from prior years will be carried into the 2018-2019
marketing year. This amount is down from the estimated 143,011 pounds
of salable Native spearmint oil carried into the 2017-2018 marketing
year, and 142,657 pounds carried into the 2016-2017 marketing year.
Further, the Committee estimates that there will be 1,237,237
pounds of Native spearmint oil in the reserve pool at the beginning of
the 2018-2019 marketing year. This figure is 142,578 pounds higher than
the quantity of reserve pool oil held by producers the previous year
and is in line with the gradual increase in reserves over the past
three marketing years.
Exports of Far West Native spearmint oil, as of July 2017, are
above their five-year average. Canada, India, and China are the largest
destination markets for Far West Native spearmint oil exports. As a
common practice, large end users often buy spearmint oil to build
reserve stocks when prices are low as a hedge against future price
increases. End users of Native spearmint oil are expected to continue
to rely on Far West production as their main source of high quality
Native spearmint oil, but demand may be at lower quantities moving
forward in response to long-term market factors. A sharp spike in
demand for Far West Native spearmint oil was experienced by handlers
late in the 2017-2018 marketing year, spurred by the popularity of a
new product in the market. This sharp spike in demand caused the
remaining available 2017-2018 salable quantity of Native oil to be
depleted.
The Committee estimates the 2018-2019 marketing year Native
spearmint oil trade demand to be 1,306,605 pounds. This figure is based
on input provided by producers at six Native spearmint oil production
area meetings held in mid-October 2017, as well as estimates provided
by handlers and other meeting participants at the October 25, 2017,
meeting. This figure represents an increase of 56,605 pounds from the
previous year's initial estimate. The average estimated trade demand
for Native spearmint oil from the six production area grower's meetings
was 1,349,379 pounds, whereas the handlers' estimates ranged from
1,350,000 to 1,500,000 pounds. The average of Far West Native spearmint
oil sales over the last three years is also
[[Page 14769]]
1,305,605 pounds. However, the quantity marketed over the most recent
full marketing year, 2016-2017, was 1,287,691 pounds. The Committee
chose to be slightly conservative in the establishment of its trade
demand estimate for the 2018-2019 marketing year to avoid oversupplying
the market.
The estimated 2018-2019 carry-in of 57,968 pounds of Native
spearmint oil plus the recommended salable quantity of 1,307,947 pounds
would result in an estimated total available supply of 1,365,915 pounds
of Native spearmint oil during the 2018-2019 marketing year. With the
corresponding estimated trade demand of 1,306,605 pounds, the Committee
projects that 59,310 pounds of Native spearmint oil will be carried
into the 2019-2020 marketing year, resulting in a slight increase of
1,342 pounds year-over-year. The Committee estimates that there will be
1,237,237 pounds of Native spearmint oil held in the reserve pool at
the beginning of the 2018-2019 marketing year. Should the industry
experience an unexpected increase in trade demand, Native spearmint oil
in the reserve pool could be released to satisfy that demand.
The Committee recommends a producer allotment percentage of 53
percent for the 2018-2019 marketing year. During its October 25, 2017,
meeting, the Committee calculated an initial producer allotment
percentage by dividing the minimum required salable quantity (1,248,637
pounds) by the total estimated allotment base (2,467,825 pounds),
resulting in 50.6 percent. However, producers and handlers at the
meeting expressed that the computed percentage (50.6 percent) may not
adequately supply the potential 2018-2019 Native spearmint oil market
demand or result in adequate carry-in for the subsequent marketing
year. After deliberation, the Committee increased the targeted producer
allotment percentage to a recommended 53 percent. The total estimated
allotment base (2,467,825 pounds) for the 2018-2019 marketing year
multiplied by the recommended salable allotment percentage (53 percent)
yields 1,307,947 pounds, which is also the recommended salable quantity
for that year.
The 2018-2019 marketing year computational data for the Committee's
recommendations is further outlined below.
(A) Estimated carry-in of Native spearmint oil on June 1, 2018:
57,968 pounds. This figure is the difference between the revised 2017-
2018 marketing year total available supply of 1,657,968 pounds and the
revised 2017-2018 marketing year estimated trade demand of 1,600,000
pounds.
(B) Estimated trade demand of Native spearmint oil for the 2018-
2019 marketing year: 1,306,605 pounds. This estimate was established by
the Committee at the October 25, 2017, meeting.
(C) Salable quantity of Native spearmint oil required from the
2018-2019 marketing year production: 1,248,637 pounds. This figure is
the difference between the estimated 2018-2019 marketing year estimated
trade demand (1,306,605 pounds) and the estimated carry-in on June 1,
2018 (57,968 pounds). This is the minimum amount of Native spearmint
oil that the Committee believes would be required to meet the
anticipated 2018-2019 marketing year trade demand.
(D) Total estimated allotment base of Native spearmint oil for the
2018-2019 marketing year: 2,467,825 pounds. This figure represents a
one-percent increase over the 2017-2018 total actual allotment base of
2,443,391 pounds as prescribed in Sec. 985.53(d)(1). The one-percent
increase equals 24,434 pounds of Native spearmint oil. This estimate is
generally revised each year on June 1, due to producer base being lost
because of the bona fide effort production provisions of Sec.
985.53(e).
(E) Computed Native spearmint oil allotment percentage for the
2018-2019 marketing year: 50.6 percent. This percentage is calculated
by dividing the required salable quantity (1,248,637 pounds) by the
total estimated allotment base (2,467,825 pounds) for the 2018-2019
marketing year.
(F) Recommended Native spearmint oil allotment percentage for the
2018-2019 marketing year: 53 percent. This is the Committee's
recommendation based on the computed allotment percentage (50.6
percent) and input from producers and handlers at the October 25, 2017,
meeting. The recommended 53 percent allotment percentage is also based
on the Committee's belief that the computed percentage (50.6 percent)
may not adequately supply the potential market for Native spearmint oil
in the 2018-2019 marketing year.
(G) Recommended Native spearmint oil 2018-2019 marketing year
salable quantity: 1,307,947 pounds. This figure is the product of the
recommended allotment percentage (53 percent) and the total estimated
allotment base (2,467,825 pounds). After completely depleting the
remaining salable quantity for the 2017-2018 marketing year, to prevent
this from happening again, the Committee recommended that the 2018-2019
salable quantity be set at a level slightly higher than the estimated
trade demand for the same year (1,306,605 pounds).
(H) Estimated available supply of Native spearmint oil for the
2018-2019 marketing year: 1,365,915 pounds. This figure is the sum of
the 2018-2019 recommended salable quantity (1,307,947 pounds) and the
estimated carry-in on June 1, 2018 (57,968 pounds).
The Committee's recommended Scotch and Native spearmint oil salable
quantities and allotment percentages of 760,660 pounds and 35 percent,
and 1,307,947 pounds and 53 percent, respectively, would match the
available supply of each class of spearmint oil to the estimated demand
of each, thus avoiding extreme fluctuations in inventories and prices.
This proposal, if adopted, would be similar to regulations issued in
prior seasons.
The salable quantities in this proposal 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 could be satisfied by an intra-seasonal increase in the salable
quantity. The Order contains a provision in Sec. 985.51 for intra-
seasonal increases to allow the Committee the flexibility to respond
quickly to changing market conditions.
Under volume regulation, producers who produce more than their
annual allotments during the marketing year may transfer such excess
spearmint oil to producers who have produced less than their annual
allotment. In addition, on December 1 of each year, producers who have
not transferred their excess spearmint oil to other producers must
place their excess spearmint oil production into the reserve pool to be
released in the future in accordance with market needs and under the
Committee's direction.
In conjunction with the issuance of this proposed rule, USDA has
reviewed the Committee's marketing policy statement for the 2018-2019
marketing year. The Committee's marketing policy statement, a
requirement whenever the Committee recommends volume regulation, meets
the requirements of Sec. Sec. 985.50 and 985.51.
The establishment of the proposed salable quantities and allotment
percentages would allow for anticipated market needs. In determining
anticipated market needs, the Committee considered historical sales, as
well as changes and trends in production and demand. This proposal
would also provide producers with information on the amount of
spearmint oil that should be produced for the 2018-2019 season to meet
anticipated market demand.
[[Page 14770]]
Initial Regulatory Flexibility Act
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS)
has considered the economic impact of this proposed rule on small
entities. Accordingly, AMS has prepared this initial regulatory
flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf.
There are approximately 43 producers and 94 producers of Scotch and
Native spearmint oil, respectively, in the regulated production area
and approximately seven spearmint oil handlers subject to regulation
under the Order. Small agricultural service firms are defined by the
Small Business Administration (SBA) as those having annual receipts of
less than $7,500,000, and small agricultural producers are defined as
those having annual receipts of less than $750,000 (13 CFR 121.201).
The Committee reported that recent producer prices for spearmint
oil range from $15.50 to $18.00 per pound. The National Agricultural
Statistics Service (NASS) reported that the 2016 U.S. season average
spearmint oil grower price per pound was $17.40. Multiplying $17.40 per
pound by 2016-17 spearmint oil utilization of 2,168,257 million pounds
yields a crop value estimate of about $37.7 million. Total 2016-17
spearmint oil utilization, reported by the Committee, is 958,711 pounds
and 1,209,546 pounds for Scotch and Native spearmint oil, respectively.
Given the accounting requirements for the volume regulation
provisions of the Order, the Committee maintains accurate records of
each producer's production and sales. Using the $17.40 average
spearmint oil price, and Committee production data for each producer,
the Committee estimates that 38 of the 43 Scotch spearmint oil
producers and 88 of the 94 Native spearmint oil producers could be
classified as small entities under the SBA definition.
There is no third party or governmental entity that collects and
reports spearmint oil prices received by spearmint oil handlers.
However, the Committee estimates an average spearmint oil handling
markup at approximately 20 percent of the price received by producers.
Multiplying 1.20 by the 2016 producer price of $17.40 yields a handler
f.o.b. price per pound estimate of $20.88.
Multiplying this handler f.o.b price by spearmint oil utilization
of 2,168,257 pounds results in an estimated handler-level spearmint oil
value of $45.3 million. Dividing this figure by the number of handlers
(7) yields estimated average annual handler receipts of about $6.5
million, which is below the SBA threshold for small agricultural
service firms.
Using confidential data on pounds handled by each handler, and the
abovementioned handler price per pound, the Committee reported that it
is likely that at least two of the seven handlers had 2016-2017
marketing year spearmint oil sales value that exceeded the SBA
threshold.
Therefore, in view of the foregoing, the majority of producers and
handlers of spearmint oil may be classified as small entities.
This proposed rule would establish the quantity of spearmint oil
produced in the Far West, by class, which handlers may purchase from,
or handle on behalf of, producers during the 2018-2019 marketing year.
The Committee recommended this action to help maintain stability in the
spearmint oil market by matching supply to estimated demand, thereby
avoiding extreme fluctuations in supplies and prices. Establishing
quantities that may be purchased or handled during the marketing year
through volume regulations allows producers to coordinate their
spearmint oil production with the expected market demand. Authority for
this proposal is provided in Sec. Sec. 985.50, 985.51, and 985.52.
The Committee estimated trade demand for the 2018-2019 marketing
year for both classes of oil at 2,156,605 pounds and expects that the
combined salable carry-in will be 273,725 pounds. The combined required
salable quantity is 1,882,880 pounds. Under volume regulation, total
sales of spearmint oil by producers for the 2018-2019 marketing year
would be held to 2,342,332 pounds (the recommended salable quantity for
both classes of spearmint oil of 2,068,607 pounds plus 273,725 pounds
of carry-in). This total available supply of 2,342,332 pounds should be
more than adequate to supply the 2,156,605 pounds of anticipated total
trade demand for spearmint oil. In addition, as of May 31, 2017, the
total reserve pool for both classes of spearmint oil stood at 1,067,138
pounds. Furthermore, that quantity is expected to rise over the course
of the 2017-2018 marketing year. Should trade demand increase
unexpectedly during the 2018-2019 marketing year, reserve pool
spearmint oil could be released into the market to supply that increase
in demand.
The recommended allotment percentages, upon which 2018-2019
producer allotments are based, are 35 percent for Scotch spearmint oil
and 53 percent for Native spearmint oil. Without volume regulation,
producers would not be held to these allotment levels, and could
produce and sell unrestricted quantities of spearmint oil. The USDA
econometric model estimated that the season average producer price per
pound (from both classes of spearmint oil) would decline about $1.90
per pound because of the higher quantities of spearmint oil that would
be produced and marketed without volume regulation. The surplus
situation for the spearmint oil market that would exist without volume
regulation in 2018-2019 also would likely dampen prospects for improved
producer prices in future years because of the buildup in stocks.
The use of volume regulation allows the industry to fully supply
spearmint oil markets while avoiding the negative consequences of over-
supplying these markets. The use of volume regulation is believed to
have little or no effect on consumer prices of products containing
spearmint oil and would not result in fewer retail sales of such
products.
The Committee discussed alternatives to the recommendations
contained in this rule for both classes of spearmint oil. The Committee
discussed and rejected the idea of not regulating any volume for either
class of spearmint oil because of the severe, price-depressing effects
that would likely occur without volume regulation. The Committee also
discussed and considered salable quantities and allotment percentages
that were above and below the levels that were ultimately recommended
for both classes of spearmint oil. Ultimately, the action taken by the
Committee was to decrease the salable quantity and allotment percentage
for Class 1 (Scotch) spearmint oil, and to increase the salable
quantity and allotment percentage Class 3 (Native) spearmint oil from
the 2017-2018 marketing year levels.
As noted earlier, the Committee's recommendation to establish
salable quantities and allotment percentages for both classes of
spearmint oil was made after careful consideration of all available
information including: (1) The estimated quantity of salable oil of
each class held by producers and handlers;
[[Page 14771]]
(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.
Based on its review, the Committee believes that the salable
quantities and allotment percentages recommended would achieve the
objectives sought. The Committee also believes that, should there be no
volume regulation in effect for the upcoming marketing year, the Far
West spearmint oil industry would return to the pronounced cyclical
price patterns that occurred prior to the promulgation of the Order. As
previously stated, annual salable quantities and allotment percentages
have been issued for both classes of spearmint oil since the Order's
inception. The salable quantities and allotment percentages proposed
herein are expected to facilitate the goal of maintaining orderly
marketing conditions for Far West spearmint oil for the 2018-2019 and
future marketing years.
Costs to producers and handlers, large and small, resulting from
this proposal are expected to be offset by the benefits derived from a
more stable market and increased returns. The benefits of this rule are
expected to be equally available to all producers and handlers
regardless of their size.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the Order's information collection requirements have been
previously approved by OMB and assigned OMB No. 0581-0178, Specialty
Crops Program. No changes are necessary in those requirements as a
result of this action. Should any changes become necessary, they would
be submitted to OMB for approval.
This proposed rule would establish the salable quantities and
allotment percentages for Class 1 (Scotch) spearmint oil and Class 3
(Native) spearmint oil produced in the Far West during the 2018-2019
marketing year. Accordingly, this proposal would not impose any
additional reporting or recordkeeping requirements on either small or
large spearmint oil producers or handlers. As with all Federal
marketing order programs, reports and forms are periodically reviewed
to reduce information requirements and duplication by industry and
public-sector agencies.
AMS is committed to complying with the E-Government Act, to promote
the use of the internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this proposed rule.
In addition, the Committee's meeting was widely publicized
throughout the spearmint oil industry and all interested persons were
invited to attend the meeting and participate in Committee
deliberations on all issues. Like all Committee meetings, the October
25, 2017, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue. Finally, interested
persons are invited to submit comments on this proposed rule, including
the regulatory and informational impacts of this action on small
businesses.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions
about the compliance guide should be sent to Richard Lower at the
previously mentioned address in the FOR FURTHER INFORMATION CONTACT
section.
A 60-day comment period is provided to allow interested persons to
respond to this proposal. All written comments timely received will be
considered before a final determination is made on this matter.
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, 7 CFR part 985 is
proposed to be amended as follows:
PART 985--MARKETING ORDER REGULATING THE HANDLING OF SPEARMINT OIL
PRODUCED IN THE FAR WEST
0
1. The authority citation for 7 CFR part 985 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Revise Sec. 985.233 to read as follows:
Sec. 985.233 Salable quantities and allotment percentages.
The salable quantity and allotment percentage for each class of
spearmint oil during the marketing year beginning on June 1, 2018,
shall be as follows:
(a) Class 1 (Scotch) oil--a salable quantity of 760,660 pounds and
an allotment percentage of 35 percent.
(b) Class 3 (Native) oil--a salable quantity of 1,307,947 pounds
and an allotment percentage of 53 percent.
Sec. 985.234 [Removed].
Sec. 985.235 [Removed].
0
3. Remove Sec. Sec. 985.234 and 985.235.
Dated: April 2, 2018
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2018-06973 Filed 4-5-18; 8:45 am]
BILLING CODE 3410-02-P
