Pork Promotion, Research, and Consumer Information Act of 1985 Increase in Assessment Rate

DEPARTMENT OF AGRICULTURE

7 CFR Part 1230

RIN 0581-AB36

[No. LS-94-010]

Pork Promotion, Research, and Consumer Information Act of 1985--

Increase in Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: Pursuant to the Pork Promotion, Research, and Consumer

Information Act of 1985 (Act) and the Pork Promotion, Research, and

Consumer Information Order (Order) thereunder, this final rule

increases the rate of assessment of 0.35 percent of market value of

porcine animals to 0.45 percent; and adjusts the amount of assessment

per pound due on imported pork and pork products to reflect the

assessment rate increase of 0.10 percent and the decrease in the 1994

average price for domestic barrows and gilts. The assessment increase

and the adjustment in assessments on imported pork and pork products

will increase annual funding of the promotion, research, and consumer

information program by an estimated $10 million to $12 million over a

12-month period.

EFFECTIVE DATE: September 3, 1995.

ADDRESSES: Ralph L. Tapp, Chief; Marketing Programs Branch; Livestock

[[Page 29963]] and Seed Division; Agricultural Marketing Service (AMS),

USDA; P.O. Box 96456, Room 2606-S; Washington, DC 20090-6456.

FOR FURTHER INFORMATION CONTACT: Ralph L. Tapp, Chief, Marketing

Programs Branch, 202/720-1115.

SUPPLEMENTARY INFORMATION:

Executive Orders 12866 and 12778 and Regulatory Flexibility Act

This rule has been determined to be not significant for purposes of

Executive Order 12866, and therefore has not been reviewed by the

Office of Management and Budget.

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This final rule is not intended to have a

retroactive effect. The Act states that the statute is intended to

occupy the field of promotion and consumer education involving pork and

pork products and of obtaining funds thereof from pork producers and

that the regulation of such activity (other than a regulation or

requirement relating to a matter of public health or the provision of

State or local funds for such activity) that is in addition to or

different from the Act may not be imposed by a State.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 1625 of the Act, a

person subject to an order may file a petition with the Secretary

stating that such order, a provision of such order or an obligation

imposed in connection with such order is not in accordance with law;

and requesting a modification of the order or an exemption from the

order. Such person 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 the

district in which the person resides or does business has jurisdiction

to review the Secretary's determination, if a complaint is filed not

later than 20 days after the date such person receives notice of such

determination.

Information available to the Department indicates that nearly all

of the estimated 278,000 pork producers and many of the estimated 200

importers can be classified as small entities. This final rule

increases the rate of the assessment from 0.35 percent of the market

value of porcine animals to 0.45 percent, and increases the cents per

pound and per kilogram of assessments on imported pork and pork

products subject to assessment. Adjusting the rate of assessment from

0.35 to 0.45 percent and increasing the assessment on imported pork and

pork products results in an estimated increase in assessments of $10

million to $12 million over a 12-month period. However, the gross

market value of all swine marketed in the United States during 1993

exceeded $10.6 billion. The economic impact of the assessments will not

be a significant part of the total market value of swine.

This rule also adjusts importer assessments to reflect the increase

in the assessment rate from 0.35 to 0.45 percent and to reflect a

decrease in the 1994 average market price for domestic barrows and

gilts. The combined effect of the assessment rate increase and the

decrease in the average market price increases the assessments on

imported pork and pork products subject to assessments by two- to four-

hundredths of a cent per pound, or as expressed in cents per kilogram,

four- to nine-hundredths of a cent per kilogram. Adjusting the

assessments on imported pork and pork products would result in an

estimated increase in assessments of $175,000 over a 12-month period.

Accordingly, the Administrator of AMS has determined that this

action will not have a significant economic impact on a substantial

number of small entities.

The information collection requirements contained in part 1230,

subparts A and B, have been previously approved by the Office of

Management and Budget (OMB) and have been assigned OMB Control Number

0851-0151.

The Act (7 U.S.C. 4801-4819) approved December 23, 1985, authorized

the establishment of a national pork promotion, research, and consumer

information program. The program is funded by an assessment rate of

0.35 percent of the market value of all porcine animals marketed in the

United States and an equivalent amount of assessment on imported

porcine animals, pork, and pork products. The final Order establishing

a pork promotion, research, and consumer information program was

published in the September 5, 1986, issue of the Federal Register (51

FR 31898; as corrected, at 51 FR 36383, and amended at 53 FR 1909, 53

FR 30243, 56 FR 4, and 56 FR 51635). Assessments began on November 1,

1986.

The Order requires that producers pay to the Board an assessment of

0.35 percent of the market value of each porcine animal upon sale.

However, for purposes of collecting and remitting assessments, porcine

animals are divided into three separate categories (1) feeder pigs, (2)

slaughter hogs, and (3) breeding stock. The Order specifies that

purchasers of feeder pigs, slaughter hogs, and breeding stock shall

collect an assessment on these animals if assessments are due. The

Order further provides that for the purpose of collecting and remitting

assessments persons engaged as a commission merchant, auction market or

livestock market in the business of receiving such porcine animals for

sale on commission for or on behalf of a producer shall be deemed to be

a purchaser.

The Order requires importers of porcine animals to pay the U.S.

Customs Service (USCS), upon importation, the assessment of 0.35

percent of the porcine animal's declared value and importers of pork

and pork products to pay USCS, upon importation, the assessment of 0.35

percent of the market value of the live porcine animals from which such

pork and pork products were produced.

The procedures for collection and remittance of assessments are

specified in Sec. 1230.71 of the Order.

Pursuant to section 1620 of the Act, the assessment rate of 0.25

percent of the market value of porcine animals, pork, or pork products

sold or imported was established in the initial Order and was changed

to 0.35 percent on December 1, 1991. Based on the assessment rate of

0.35 percent, the total annual assessments collected during 1994 were

approximately $42 million. Assessments on imported pork and pork

products accounted for about $1.5 million of the total.

The Act and Sec. 1230.71 of the Order contain provisions for

increasing the initial rate of assessment. Section 1620(b)(2) of the

Act provides that the rate of the assessment in the initial Order may

be increased by not more than 0.1 percent per year upon recommendation

of the National Pork Producers Delegate Body (Delegate Body) whose

producer and importer members are appointed annually by the Secretary.

The Act further provides that the rate of assessment may be increased

by no more than 0.1 percent annually not to exceed 0.5 percent of the

market value unless the Delegate Body recommends a greater increase and

the increase is approved in a referendum.

The 1994 Delegate Body, at its annual meeting on March 3-5, 1994,

in Kansas City, Missouri, voted overwhelmingly to recommend to the

Secretary that the rate of assessment of 0.35 percent be increased to

0.45 percent. There were 170 Delegate Body members appointed by the

Secretary in 1994. At the Delegate Body meeting 154 delegates were

present during voting and voted 37,226 valid share votes. States and

importers are allotted one share per $1,000 of the

[[Page 29964]] aggregated amount of assessment collected. There were

31,089 share votes cast in favor of the 0.1 percent increase.

On February 15, 1995, AMS published in the Federal Register (60 FR

8579) a proposed rule to increase the rate of assessment of 0.35

percent of market value of porcine animals to 0.45 percent; and adjust

the amount of assessment per pound due on imported pork and pork

products to reflect the assessment rate increase of 0.10 percent and

the decrease in the 1994 average price for domestic barrows and gilts.

The proposed rule was published with a request for comments by March

17, 1995.

The following example will illustrate the effect of the increase of

0.10 percent on a per head basis. Based on the 1994 annual average five

market price of $39.57 per hundredweight for barrows and gilts with an

average weight of 248 pounds as reported in the USDA's publication

``Livestock, Meat, and Wool Weekly Summary and Statistics'' published

in January 1995, the total assessment per head at the assessment rate

of 0.45 percent would be 44 cents. At the assessment rate of 0.35

percent, the total per-head assessment would be 34 cents. Based on the

Delegate Body's recommendation in accordance with Sec. 1230.71(d) of

the Order, this final rule increases the rate of assessment from 0.35

to 0.45 percent, which would increase assessments collected $10 million

to $12 million over a 12-month period.

This final rule also increases the amount of assessment on all of

the imported pork and pork products subject to assessment as published

in the Federal Register as a final rule September 8, 1994, and

effective on October 11, 1994 (59 FR 46323). This adjustment reflects

the increase in the assessment rate to 0.45 percent and would be

consistent with the decrease in the annual average price of domestic

barrows and gilts for calendar year 1994 as reported by USDA, AMS,

Livestock and Grain Market News (LGMN) Branch. This adjustment in

assessments will make the equivalent market value of the live porcine

animal from which the imported pork and pork products were derived

reflect the recent decrease in the market value of domestic porcine

animals, thereby promoting comparability between the importer and

domestic assessments.

The methodology for determining the per-pound amounts for imported

pork and pork products was described in the supplementary information

accompanying the Order and published in the September 5, 1986, Federal

Register at 51 FR 31901. The weight of imported pork and pork products

is converted to a carcass weight equivalent by utilizing conversion

factors which are published in the USDA Statistical Bulletin No. 616

``Conversion Factors and Weights and Measures.'' These conversion

factors take into account the removal of bone, weight lost in cooking

or other processing, and the nonpork components of pork products.

Secondly, the carcass weight equivalent is converted to a live animal

equivalent weight by dividing the carcass weight equivalent by 70

percent, which is the average dressing percentage of porcine animals in

the United States. Thirdly, the equivalent value of the live porcine

animal is determined by multiplying the live animal equivalent weight

by an annual average market price for barrows and gilts as reported by

the USDA, AMS, LGMN Branch. The annual average price, which was based

on price data from six major markets, is now based on only five markets

as one of the six markets--St. Louis--closed in 1994. This average

price is published on a yearly basis during the month of January in the

LGMN Branch's publication ``Livestock, Meat, and Wool Weekly Summary

and Statistics.'' Finally, the equivalent value is multiplied by the

applicable assessment rate of 0.45 percent due on imported pork and

pork products. The end result is expressed in an amount per pound for

each type of pork or pork product. To determine the amount per kilogram

for pork and pork products subject to assessment under the Act and

Order, the cent-per-pound assessments are multiplied by a metric

conversion factor 2.2046 and carried to the sixth decimal.

The formula in the preamble for the Order at 51 FR 31901

contemplated that it would be necessary to recalculate the equivalent

live animal value of imported pork and pork products to reflect

increases in the rate of assessments or changes in the annual average

price of domestic barrows and gilts to maintain equity of assessments

between domestic porcine animals and imported pork and pork products.

Substituting the assessment rate of 0.45 percent in the formula and

using the 1994 average annual five market price for domestic barrows

and gilts of $39.57 per hundredweight results in an increase in

assessments for all the Harmonized Tariff Systems (HTS) numbers in the

table in Sec. 1230.110, 59 FR 46323; September 8, 1994, of an amount

equal to two- to four-hundredths of a cent per pound, or as expressed

in cents per kilogram, four- to nine-hundredths of a cent per kilogram.

Based on Department of Commerce, Bureau of Census, data on the volume

of imported pork and pork products available for the period January 1,

1994, through September 30, 1994, the increase in the assessment

amounts would result in an estimated $175,000 increase in importer

assessments over a 12-month period.

The Department's review of the supplementary information revealed

that the location of the March 3-5, 1994, Delegate Body meeting was

incorrectly listed as Denver, Colorado. The meeting was held in Kansas

City, Missouri, and the supplementary information has been corrected.

The Department received 87 comments after the publication of the

proposed rule. Thirty-four commenters, including the National Pork

Board, the National Pork Producers Council, 23 State pork producer

associations representing over 62,000 producers which represents a

significant proportion of the estimated State producer association

members nationwide, and 9 individuals supported the rate increase

stating that it would provide additional opportunities for enhanced

returns to pork producers and it is consistent with industry goals and

plans. Fifty-one individual commenters did not support the rate

increase, citing the decline in live hog prices, disfavor with the

program and suggesting that the current rate was high enough or that

there should be no assessment at all. Two commenters did not

specifically address the proposed assessment rate increase; however

they both believed the pork promotion program was successful.

One of the two commenters argued that the comment period of 30 days

was not sufficient time for producers to review the proposed rule and

submit comments since most pork producers do not receive the Federal

Register. The Department believes that a 30 day comment period is

sufficient to allow for public comment. A press release was issued when

the proposed rule was published to facilitate timely notification of

interested parties of their opportunity to comment. The press release

also indicated that interested persons could request copies of the

proposed rule either by the phone or mail and listed the phone number

and address. The other commenter expressed concern about the magnitude

of the price spread between the wholesale price and retail price for

pork.

The Department carefully considered the comments, the

recommendation of the Delegate Body and additional information

regarding the usefulness of the proposed assessment rate increase. It

has been determined that the additional [[Page 29965]] revenues which

will be gained from the increase will be useful in strengthening the

position of the pork industry in the marketplace and in maintaining,

developing, and expanding markets for pork and pork products.

The increase in total annual assessments, resulting from the

increase in the assessment rate from .35 to .45 percent, will enable

the pork promotion and research program to continue the funding pattern

that has helped keep pork competitive with other meats and poultry

since 1987. The increase will also provide the necessary funding to

finance the pork industry's long range strategic plan which will

address issues and initiatives that pork producers and importers

believe will have the most significant economic impact on the future of

the industry. These issues include environmental management, odor

control, animal care, swine health, and food safety. The increase in

annual assessment will provide the additional funding necessary to help

producers take full advantage of the enhanced foreign trade

opportunities created by NAFTA and GATT. In voting for the assessment

rate increase, the National Pork Producers Delegate Body believed that

the increase was necessary to make sure all producers have access to

the latest research, technology, and information available to help them

remain competitive in a rapidly changing industry.

Accordingly, this final rule adopts the increase in the assessment

rate from 0.35 percent of market value of porcine animals to 0.45

percent as proposed; and the adjustment in the amount of assessment per

pound due on imported pork and pork products to reflect the assessment

rate increase of 0.10 percent and the decrease in the 1994 average

price for domestic barrows and gilts as proposed.

List of Subjects in 7 CFR Part 1230

Administrative practice and procedure, Advertising, Agriculture

research, Marketing agreement, Meat and meat products, Pork and pork

products.

For the reasons set forth in the preamble, 7 CFR part 1230 is

amended as set forth below:

PART 1230--PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION

1. The authority citation for 7 CFR Part 1230 continues to read as

follows:

Authority: 7 U.S.C. 4801-4819.

Subpart--[Amended]

2. Subpart B--Rules and Regulations is amended by revising

Sec. 1220.110 to read as follows:

Sec. 1230.110 Assessments on imported pork and pork products.

(a) The following HTS categories of imported live porcine animals

are subject to assessment at the rate specified.

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Live porcine animals Assessment

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0103.10.0000....................... 0.45 percent Customs Entered Value.

0103.91.0000....................... 0.45 percent Customs Entered Value.

0103.92.0000....................... 0.45 percent Customs Entered Value.

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(b) The following HTS categories of imported pork and pork products

are subject to assessment at the rates specified.

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Assessment

Pork and pork products -----------------------

cents/lb cents/kg

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0203.11.0000.................................... .25 .551150

0203.12.1010.................................... .25 .551150

0203.12.1020.................................... .25 .551150

0203.12.9010.................................... .25 .551150

0203.12.9020.................................... .25 .551150

0203.19.2010.................................... .30 .661380

0203.19.2090.................................... .30 .661380

0203.19.4010.................................... .25 .551150

0203.19.4090.................................... .25 .551150

0203.21.0000.................................... .25 .551150

0203.22.1000.................................... .25 .551150

0203.22.9000.................................... .25 .551150

0203.29.2000.................................... .30 .661380

0203.29.4000.................................... .25 .551150

0206.30.0000.................................... .25 .551150

0206.41.0000.................................... .25 .551150

0206.49.0000.................................... .25 .551150

0210.11.0010.................................... .25 .551150

0210.11.0020.................................... .25 .551150

0210.12.0020.................................... .25 .551150

0210.12.0040.................................... .25 .551150

0210.19.0010.................................... .30 .661380

0210.19.0090.................................... .30 .661380

1601.00.2010.................................... .35 .771610

1601.00.2090.................................... .35 .771610

1602.41.2020.................................... .38 .837748

1602.41.2040.................................... .38 .837748

1602.41.9000.................................... .25 .551150

1602.42.2020.................................... .38 .837748

1602.42.2040.................................... .38 .837748

1602.42.4000.................................... .25 .551150

1602.49.2000.................................... .35 .771610

1602.49.4000.................................... .30 .661380

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3. Subpart B-Rules and Regulations is amended by revising

Sec. 1230.112 to read as follows:

Sec. 1230.112 Rate of assessment.

In accordance with Sec. 1230.71(d) the rate of assessment shall be

0.45 percent of market value.

Dated: June 1, 1995.

Lon Hatamiya,

Administrator.

[FR Doc. 95-13920 Filed 6-6-95; 8:45 am]

BILLING CODE 3410-02-P