# Spearmint Oil Produced in the Far West; Salable Quantities and Allotment Percentages for the 1997-98 Marketing Year

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-281

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** January 7, 1997
- **Citation:** 62 FR 942

## Text

SUMMARY: This proposed rule would establish the quantity of spearmint
oil produced in the Far West, by class, that handlers may purchase
from, or handle for, producers during the 1997-98 marketing year. The
Spearmint Oil Administrative Committee (Committee), the agency
responsible for local administration of the marketing order for
spearmint oil produced in the Far West, recommended this rule for the
purpose of avoiding extreme fluctuations in supplies and prices, and
thus help to maintain stability in the spearmint oil market.

DATES: Comments must be received by February 6, 1997.

ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. Comments must be sent in triplicate to
the Docket Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525,
South Building, P.O. Box 96456, Washington, D.C. 20090-6456. Comments
should reference the docket 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.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, 1220 SW Third Avenue, room 369,
Portland, Oregon 97204; telephone: (503) 326-2043; Fax: (503) 326-7440;
or Caroline C. Thorpe, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, room 2525, South Building, P.O. Box
96456, Washington, D.C. 20090-6456; telephone: (202) 720-5127; Fax:
(202) 720-5698. Small businesses may request information on compliance
with this regulation by contacting: Jay Guerber, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.
Box 96456, room 2523-S, Washington, DC 20090-6456; telephone (202) 720-
2491; Fax (202) 720-5698.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing
Order No. 985 (7 CFR Part 985), regulating the handling of spearmint
oil produced in the Far West (Washington, Idaho, Oregon, and designated
parts of Nevada and Utah). This marketing order is effective under the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. Under the provisions of the marketing order now
in effect, salable quantities and allotment percentages may be
established for classes of spearmint oil produced in the Far West. This
proposed rule would establish the quantity of spearmint oil produced in
the Far West, by class, that may be purchased from or handled for
producers by handlers during the 1997-98 marketing year, which begins
on June 1, 1997. This proposed rule will not preempt any State or local
laws, regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After the hearing the Secretary would rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after date of the entry of the ruling.
Pursuant to authority contained in sections 985.50, 985.51, and
985.52 of the order, the Committee recommended the salable quantities
and allotment percentages for the 1997-98 marketing year at its October
2, 1996, meeting, and reconfirmed its recommendation following review
of additional information at its meeting held on November 14, 1996. The
Committee recommended the establishment of a salable quantity and
allotment percentage for Scotch spearmint oil with one member opposing
the motion because he favored the establishment of a higher salable
quantity and allotment percentage. In a unanimous vote, the Committee
recommended the establishment of a salable quantity and allotment
percentage for Native spearmint oil.
This proposed rule would establish a salable quantity of 996,522
pounds and an allotment percentage of 55 percent for Scotch spearmint
oil, and a salable quantity of 1,125,351 pounds and an allotment
percentage of 56 percent for Native spearmint oil. This proposed rule
would limit the amount of spearmint oil that handlers may purchase
from, or handle for, producers during the 1997-98 marketing year, which
begins on June 1, 1997. Salable quantities and allotment percentages
have been placed into effect each season since the marketing order's
inception in 1980.
The U.S. production of spearmint oil is concentrated in the Far
West, primarily Washington, Idaho, and Oregon (part of the area covered
by the marketing order). Spearmint oil is also produced in the Midwest.
The production area covered by the marketing order accounts for
approximately 75 percent of the annual U.S. production of both classes
of spearmint oil.
When the order became effective in 1980, the United States produced
nearly 100 percent of the world's supply of Scotch spearmint oil, of
which approximately 80 percent was produced

[[Page 943]]

in the regulated production area in the Far West. International
production characteristics have changed in recent years, however, with
foreign Scotch spearmint oil production contributing significantly to
world production. Although still a leader in production, the Far West's
market share has decreased to approximately 65 percent of the world
total. Thus, in recent marketing years, the Committee has taken a
different approach in its method of addressing the historical
fluctuations in supply and price. In conjunction with the goal of
maintaining price and market stability, the Committee seeks a moderate
growth rate in terms of total North American market share. The
Committee's recommendation is intended to find a stable price level
while keeping Far West Scotch spearmint oil in a competitive and viable
position in the international market. To that end, the Committee is
targeting a specific percentage of the North American market share for
use in its salable quantity and allotment percentage calculations. For
1997-98, the Committee is targeting 73 percent of the North American
market, compared to the nearly 65 percent targeted for the 1996-97
season. Preliminary figures indicate that the Far West Scotch spearmint
oil market share in North America will reach approximately 60 percent
in 1996-97, up from 55 percent in 1995-96.
Records show that the marketing order has contributed extensively
to the stabilization of grower prices, which prior to 1980 experienced
wide fluctuations from year to year. Prior to 1980, grower prices for
Native spearmint oil were historically cyclical. For example, between
1971 and 1975 the price of Native spearmint oil increased from $3.00
per pound to $11.00 per pound. In contrast, under the marketing order,
prices have stabilized between $10.50 and $11.50 per pound for the past
ten years. With approximately 90 percent of U.S. production of Native
spearmint oil located in the Far West, the method of calculating the
Native spearmint oil salable quantity and allotment percentage
primarily utilizes information on price and available supply as they
are affected by the estimated trade demand for Far West Native
spearmint oil.
The proposed salable quantity and allotment percentage for each
class of spearmint oil for the 1997-98 marketing year is based upon the
Committee's recommendation and the data presented below.
(1) Class 1 (Scotch) Spearmint Oil
(A) Estimated carry-in on June 1, 1997--309,927 pounds. This figure
is derived by subtracting the estimated 1996-97 marketing year trade
demand of 900,000 pounds from the revised 1996-97 marketing year total
available supply of 1,209,927 pounds.
(B) Estimated North American production (U.S. and Canada) for the
1997-98 marketing year--1,511,461 pounds. This figure is an estimate
based on information provided to the Committee by producers and buyers.
(C) Percentage of North American market targeted--73 percent. This
figure is an approximate average of the recommended target percentages
made at each of the five regional producer meetings held throughout the
Far West production area during the month of September, 1996.
(D) Total quantity of Scotch spearmint oil needed to reach targeted
percentage--1,103,367 pounds. This figure is the product of the
estimated 1997-98 North American production and the targeted
percentage.
(E) Minimum amount desired to have on hand throughout the season--
200,000 pounds. Producers at all of the five regional meetings had
recommended this amount, which continues to reflect the Committee's
commitment to regain market share by maintaining a minimum quantity on
hand.
(F) Total supply required--1,303,367 pounds. This figure is derived
by adding the minimum desired on hand amount to the total quantity
required to meet the targeted percentage.
(G) Additional quantity required--993,440 pounds. This figure
represents the actual amount of additional or new oil needed to meet
the Committee's projections, and is computed by subtracting the
estimated carry-in of 309,440 pounds from the total supply required of
1,303,367 pounds.
(H) Total allotment base for the 1997-98 marketing year--1,811,859
pounds.
(I) Computed allotment percentage--54.8 percent. This percentage is
computed by dividing the required salable quantity by the total
allotment base.
(J) Recommended allotment percentage--55 percent. This is the
Committee's recommendation based on the computed allotment percentage.
(K) The Committee's recommended salable quantity--996,522 pounds.
This figure is the product of the recommended allotment percentage and
the total 1997-98 allotment base.
(2) Class 3 (Native) Spearmint Oil
(A) Estimated carry-in on June 1, 1997--71,764 pounds. This figure
is derived by subtracting the estimated 1996-97 marketing year trade
demand of 1,162,500 pounds from the revised 1996-97 marketing year
total available supply of 1,234,264 pounds.
(B) Estimated trade demand (domestic and export) for the 1997-98
marketing year--1,212,500 pounds. This figure represents an average of
buyer estimates and the amounts recommended at the regional producer
meetings.
(C) Salable quantity required from 1997 production--1,140,736
pounds. This figure is the difference between the estimated 1997-98
marketing year trade demand and the estimated carry-in on June 1, 1997.
(D) Total allotment base for the 1997-98 marketing year--2,009,556
pounds.
(E) Computed allotment percentage--56.8 percent. This percentage is
computed by dividing the required salable quantity by the total
allotment base.
(F) Recommended allotment percentage--56 percent. This is the
Committee's recommendation based on the computed allotment percentage.
(G) The Committee's recommended salable quantity--1,125,351 pounds.
This figure is the product of the recommended allotment percentage and
the total 1997-98 marketing year allotment base.
The salable quantity is the total quantity of each class of oil
which handlers may purchase from or handle on behalf of producers
during a marketing year. Each producer is allotted a share of the
salable quantity by applying the allotment percentage to the producer's
allotment base for the applicable class of spearmint oil.
The Committee's recommended Scotch spearmint oil salable quantity
of 996,522 pounds and allotment percentage of 55 percent are based on
anticipated supply, demand, and a targeted percentage of the North
American market during the 1997-98 marketing year. The Committee's
recommended Native spearmint oil salable quantity of 1,125,351 pounds
and allotment percentages of 56 percent are based on anticipated supply
and trade demand during the 1997-98 marketing year. The proposed
salable quantities are not expected to cause a shortage of spearmint
oil supplies. Any unanticipated or additional market demand for
spearmint oil which may develop during the marketing year can be
satisfied by an increase in the salable quantities. Both Scotch and
Native spearmint oil producers who produce

[[Page 944]]

more than their annual allotments during the 1997-98 season may
transfer such excess spearmint oil to a producer with spearmint oil
production less than his or her annual allotment or put it into the
reserve pool.
This proposed regulation, if adopted, would be similar to those
which have been issued in prior seasons. Costs to producers and
handlers resulting from this proposed action are expected to be offset
by the benefits derived from a stable market, a greater market share,
and possible improved returns. In conjunction with the issuance of this
proposed rule, the Committee's marketing policy statement for the 1997-
98 marketing year has been reviewed by the Department. The Committee's
marketing policy statement, a requirement whenever the Committee
recommends volume regulations, fully meets the intent of the provisions
as set forth in 7 CFR Part 985.50. Conformity with other USDA
guidelines has also been reviewed and confirmed.
The establishment of these salable quantities and allotment
percentages would allow for anticipated market needs based on
historical sales, changes and trends in production and demand, and
information available to the Committee. Adoption of this proposed rule
would also provide spearmint oil producers with information on the
amount of oil which should be produced for next season.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities. Accordingly, AMS has
prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are 8 spearmint oil handlers subject to regulation under the
marketing order and approximately 250 producers of spearmint oil in the
regulated production area. Of the 250 producers, approximately 135
producers hold Class 1 (Scotch) oil allotment base, and approximately
115 producers hold Class 3 (Native) oil allotment base. Small
agricultural service firms are defined by the Small Business
Administration (13 CFR 121.601) as those having annual receipts of less
than $5,000,000, and small agricultural producers have been defined as
those whose annual receipts are less than $500,000.
The Far West spearmint oil industry is characterized by producers
whose farming operations generally involve more than one commodity, and
whose income from farming operations is not exclusively dependent on
the production of spearmint oil. Crop rotation is an essential cultural
practice in the production of spearmint for weed, insect, and disease
control. A normal spearmint producing operation would have enough
acreage for rotation such that the total acreage required to produce
the crop would be about one-third spearmint and two-thirds rotational
crops. An average spearmint producing farm would thus have to have
considerable more acreage than would be planted to spearmint during any
given season. To remain economically viable with the added costs
associated with spearmint production, most spearmint producing farms
would fall into the category of large businesses.
Based on the Small Business Administration's definition of small
entities, the Committee estimates that none of the eight handlers
regulated by the order would be considered small entities as all are
national and multinational corporations involved in the buying and
selling of essential oils and the products of such essential oils. The
Committee also estimates that 17 of the 135 Scotch spearmint oil
producers and 10 of the 115 Native spearmint oil producers would be
classified as small entities. Thus, a majority of handlers and
producers of Far West spearmint oil may not be classified as small
entities.
This proposed rule would establish the quantity of spearmint oil
produced in the Far West, by class, that handlers may purchase from, or
handle for, producers during the 1997-97 marketing year. The committee
recommended this rule for the purpose of avoiding extreme fluctuations
in supplies and prices, and thus help to maintain stability in the
spearmint oil market. This action is authorized by the provisions of
sections 985.50, 985.51 and 985.52 of the order.
The small spearmint oil producers generally are not extensively
diversified and as such are more at risk to market fluctuations. Such
small farmers generally need to market their entire annual crop and do
not have the luxury of having other crops to cushion seasons with poor
spearmint oil returns. Conversely, large diversified producers have the
potential to endure one or more seasons of poor spearmint oil markets
because incomes from alternate crops could support the operation for a
period of time. Being reasonably assured of a stable price and market
provides small producing entities with the ability to maintain proper
cash flow and to meet annual expenses. Thus, the market and price
stability provided by the order potentially benefit the small producer
more than such provisions benefit large producers. Even though a
majority of handlers and producers of spearmint oil may not be
classified as small entities, the volume control feature of this order
has small entity orientation.
Records show that the marketing order has contributed extensively
to the stabilization of grower prices, which prior to 1980 experienced
wide fluctuations from year to year. Prior to 1980, grower prices for
Native spearmint oil were historically cyclical. For example, between
1971 and 1975 the price of Native spearmint oil increased from $3.00
per pound to $11.00 per pound. In contrast, under the marketing order,
prices have stabilized between $10.50 and $11.50 per pound for the past
ten years.
Alternatives to this proposal included not regulating the handling
of spearmint oil during the 1997-98 marketing year, and recommending
either higher or lower salable quantities and allotment percentages.
The Committee reached its recommendation to establish salable
quantities and allotment percentages for both classes of oil after
careful consideration of all available information, and believe that
the levels recommended will achieve the objectives sought. Without any
regulations in effect, the Committee believes the industry would return
to the pattern of cyclical prices of prior years, as well as suffer the
potentially price depressing consequence that a release of the nearly
1,300,000 pounds of spearmint oil reserves would have on the market.
According to the Committee, higher or lower salable quantities and
allotment percentages would not achieve the intended balance between
market and price stability and market share maintenance and growth.
Annual salable quantities and allotment percentages have been
issued for both classes of spearmint oil since the order's inception.
Reporting and recordkeeping requirements have remained the same for
each year of regulation. Accordingly, this action would not impose any
additional reporting or recordkeeping requirements on either small or
large spearmint oil producers and handlers. All reports and forms
associated with this program are reviewed periodically in order to
avoid unnecessary and duplicitous

[[Page 945]]

information collection by industry and public sector agencies. The
Department has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this proposed rule.
Finally, the Committee's meetings were widely publicized throughout
the spearmint oil industry and all interested persons were invited to
attend and participate on all issues. Interested persons are also
invited to submit information on the regulatory and informational
impacts of this action on small businesses.
A 30-day comment period is provided to allow interested persons to
respond to this proposal. All written comments received within the
comment period 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. A new Sec. 985.216 is added to read as follows:

[Note: This section will not appear in the Code of Federal
Regulations.]

Sec. 985.216 Salable quantities and allotment percentages--1997-98
marketing year.

The salable quantity and allotment percentage for each class of
spearmint oil during the marketing year beginning on June 1, 1997,
shall be as follows:
(a) Class 1 (Scotch) oil--a salable quantity of 996,522 pounds and
an allotment percentage of 55 percent.
(b) Class 3 (Native) oil--a salable quantity of 1,125,351 pounds
and an allotment percentage of 56 percent.

Dated: December 31, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 97-281 Filed 1-6-97; 8:45 am]
BILLING CODE 3410-02-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-281. Public record. Not legal advice.