Avocados Grown in South Florida; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 915

[Docket No. FV99-915-1 PR]

Avocados Grown in South Florida; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would increase the assessment rate from

$0.08 to $0.16 per 55-pound bushel container or equivalent of avocados

established for the Avocado Administrative Committee (Committee) under

Marketing Order No. 915 for the 1999-2000 and subsequent fiscal years.

The Committee is responsible for local administration of the marketing

order which regulates the handling of avocados grown in South Florida.

Authorization to assess avocado handlers enables the Committee to incur

expenses that are reasonable and necessary to administer the program.

The fiscal year begins April 1 and ends March 31. The assessment rate

would remain in effect indefinitely unless modified, suspended, or

terminated.

DATES: Comments must be received by April 16, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. Comments should reference the docket number

and the date and page number of this issue of the Federal Register and

will be available for public inspection in the Office of the Docket

Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Doris Jamieson, Southeast Marketing

Field Office, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 2276;

Winter Haven, FL 33883-2276; telephone: (941) 299-4770, Fax: (941) 299-

5169; or George Kelhart, Technical Advisor, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)

720-2491, Fax: (202) 720-5698. Small businesses may request information

on complying with this regulation, or obtain a guide on complying with

fruit, vegetable, and specialty crop marketing agreements and orders by

contacting Jay Guerber, Marketing Order Administration Branch, Fruit

and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,

Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-

5698, or E-mail: Jay__N__G[email protected]. You may view the marketing

agreement and order small business compliance guide at the following

web site:

http://www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 121 and Order No. 915, both as amended (7 CFR part 915),

regulating the handling of avocados grown in South Florida, hereinafter

referred to as the ``order.'' The marketing agreement and order are

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 rule has been reviewed under Executive Order 12988, Civil

Justice Reform. Under the marketing order now in effect, Florida

avocado handlers are subject to assessments. Funds to administer the

order are derived from such assessments. It is intended that the

assessment rate as issued herein will be applicable to all assessable

avocados beginning on April 1, 1999, and continue until amended,

suspended, or terminated. This rule will not preempt any State or local

laws, regulations, or policies, unless they present an irreconcilable

conflict with this rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and request a modification of the order or to be exempted

therefrom. Such 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 the date of the entry of the ruling.

This rule would increase the assessment rate established for the

Committee for the 1999-2000 and subsequent fiscal years from $0.08 per

55-pound bushel container or equivalent to $0.16 per 55-pound bushel

container or equivalent of South Florida avocados handled.

The Florida avocado marketing order provides authority for the

Committee, with the approval of the Department, to formulate an annual

budget of expenses and collect assessments from handlers to administer

the program. The members of the Committee are producers and handlers of

South Florida avocados. They are familiar with the Committee's needs

and with the costs for goods and services in their local area and are

thus in a position to formulate an appropriate budget and assessment

rate. The assessment rate is formulated and discussed in a public

meeting. Thus, all directly affected persons have an opportunity to

participate and provide input.

For the 1998-99 and subsequent fiscal years, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from fiscal year to fiscal year unless modified,

suspended, or terminated by the Secretary upon recommendation and

information submitted by the Committee or other information available

to the Secretary.

The Committee met on January 13, 1999, and unanimously recommended

1999-2000 expenditures of $167,335 and an assessment rate of $0.16 per

55-pound bushel container or equivalent of avocados handled. In

comparison, last year's budgeted expenditures were $174,344. The

assessment rate of $0.16 is $0.08 higher than the rate currently in

[[Page 13124]]

effect. For the 1998-99 fiscal period, the Committee voted to lower its

assessment rate from $0.16 to $0.08 to reduce the funds in its

operating reserve. It wanted to bring its reserve closer to one year's

operating expenses. With this accomplished, the Committee voted to

return the assessment rate to the previous level of $0.16 to cover

1999-2000 expenses. As discussed later, the Committee expects to use

interest income and reserve funds to cover its anticipated expenses

during 1999-2000 because the $0.16 per 55-pound bushel container or

equivalent assessment rate is expected to generate $144,000, which is

$23,335 less than the Committee's budgeted expenses.

The major expenditures recommended by the Committee for the 1999-

2000 year include $46,000 for salaries, $39,500 for production

research, $27,000 for local and national enforcement, $10,040 for

employee benefits, $8,955 for insurance and bonds, and $5,500 for

travel. Budgeted expenses for these items in 1998-99 were $46,000,

$41,500, $32,000, $9,778, $8,516, and $7,000, respectively.

The assessment rate recommended by the Committee was derived by

dividing anticipated expenses by expected shipments of Florida

avocados. Avocado shipments for the year are estimated at 900,000 55-

pound bushel containers which should provide $144,000 in assessment

income. Income derived from handler assessments, along with interest

income and funds from the Committee's authorized reserve, would be

adequate to cover budgeted expenses. Funds in the reserve (currently

$187,615) would be kept within the maximum of 3 fiscal years'

operational expenses permitted by the order (Secs. 915.42 and 915.142).

The proposed assessment rate would continue in effect indefinitely

unless modified, suspended, or terminated by the Secretary upon

recommendation and information submitted by the Committee or other

available information.

Although this assessment rate would be in effect for an indefinite

period, the Committee would continue to meet prior to or during each

fiscal period to recommend a budget of expenses and consider

recommendations for modification of the assessment rate. The dates and

times of Committee meetings are available from the Committee or the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department would

evaluate Committee recommendations and other available information to

determine whether modification of the assessment rate is needed.

Further rulemaking would be undertaken as necessary. The Committee's

1999-2000 budget and those for subsequent fiscal years would be

reviewed and, as appropriate, approved by the Department.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS) has considered the

economic impact of this 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

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 the 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 approximately 149 producers of avocados in the production

area and approximately 48 handlers subject to regulation under the

marketing order. Small agricultural producers have been defined by the

Small Business Administration (13 CFR 121.601) as those having annual

receipts less than $500,000, and small agricultural service firms are

defined as those whose annual receipts are less than $5,000,000.

The average price for fresh avocados during the 1996-97 season was

$13.20 per 55-pound bushel box equivalent for all domestic shipments

and the total shipments were 917,861 bushels. Approximately 10 percent

of all handlers handled 90 percent of the South Florida avocado

shipments during that season. Many handlers ship other tropical fruit

and vegetable products which are not included in the Committee data but

would contribute further to handler receipts. Using the average price

per 55-pound container or equivalent, about 90 percent of the avocado

handlers could be considered small businesses under SBA's definition

and about 10 percent of the handlers could be considered large

businesses. The majority of handlers and producers of Florida avocados

may be classified as small entities.

This rule would increase the assessment rate established for the

Committee and collected from handlers for the 1999-2000 and subsequent

fiscal years from $0.08 per 55-pound bushel container or equivalent to

$0.16 per 55-pound bushel container or equivalent of avocados. The

Committee unanimously recommended 1999-2000 expenditures of $167,335

and an assessment rate of $0.16 per 55-pound bushel container or

equivalent handled. The proposed assessment rate of $0.16 is $0.08

higher than the 1998-99 rate. The quantity of assessable avocados for

the 1999-2000 season is estimated at 900,000 containers. Thus, the

$0.16 rate should provide $144,000 in assessment income. Assessment

income, along with interest income and funds from the Committee's

authorized reserve, would be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 1999-

2000 year include $46,000 for salaries, $39,500 for production

research, $27,000 for local and national enforcement, $10,040 for

employee benefits, $8,955 for insurance and bonds, and $5,500 for

travel. Budgeted expenses for these items in 1998-99 were $46,000,

$41,500, $32,000, $9,778, $8,516, and $7,000, respectively.

During the 1998-99 season, the Committee voted to decrease the

assessment rate to bring its operating reserve closer to one year's

operating expenses. For the 1999-2000 fiscal period, the Committee

voted to return to the previous rate of $0.16 to cover authorized

expenses. The Committee expects to use interest income and funds from

its operating reserve to cover 1999-2000 expenses. This would be

necessary because assessment income is expected to total $144,000, and

the Committee's budget totals $167,335.

The Committee's 1999-2000 budgeted expenditures of $167,335 include

increases in employee benefits and office equipment. Prior to arriving

at this budget, the Committee considered information from various

sources, such as the Committee's Budget Subcommittee. Alternative

expenditure levels were discussed, based upon the relative value of

various research projects to the South Florida avocado industry.

The assessment rate of $0.16 per 55-pound bushel container or

equivalent of assessable avocados was then determined by dividing the

total recommended budget by the quantity of assessable avocados,

estimated at 900,000 55-pound bushel containers or equivalents for the

1999-2000 fiscal period. This rate is expected to provide $144,000 in

assessment income, which is $23,335 below budgeted expenses. The

Committee found this acceptable because interest income and funds from

the Committee's operating reserve would be available to make up the

deficit.

A review of historical information indicates that the grower price

for the 1999-2000 season could range between

[[Page 13125]]

$13.20 and $14.90 per 55-pound bushel container or equivalent of

avocados. Therefore, the estimated assessment revenue for the 1999-2000

fiscal year as a percentage of total grower revenue could range between

1 and 1.2 percent.

This action would increase the assessment obligation imposed on

handlers. While assessments impose some additional costs on handlers,

the costs are minimal and uniform on all handlers. Some of the

additional costs may be passed on to producers. However, these costs

would be offset by the benefits derived by the operation of the

marketing order. In addition, the Committee's meeting was widely

publicized throughout the Florida avocado industry and all interested

persons were invited to attend the meeting and participate in Committee

deliberations on all issues. Like all Committee meetings, the January

13, 1999, 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 information on the regulatory and

informational impacts of this action on small businesses.

This proposed rule would impose no additional reporting or

recordkeeping requirements on either small or large Florida avocado

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.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

A 30-day comment period is provided to allow interested persons to

respond to this proposed rule. Thirty days is deemed appropriate

because: (1) The 1999-2000 fiscal year begins on April 1, 1999, and the

marketing order requires that the rate of assessment for each fiscal

year apply to all assessable avocados handled during such fiscal year;

(2) the Committee needs to have sufficient funds to pay its expenses

which are incurred on a continuous basis; and (3) handlers are aware of

this action which was unanimously recommended by the Committee at a

public meeting and is similar to other assessment rate actions issued

in past years.

List of Subjects in 7 CFR Part 915

Avocados, Marketing agreements, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 915 is

proposed to be amended as follows:

PART 915--AVOCADOS GROWN IN SOUTH FLORIDA

1. The authority citation for 7 CFR part 915 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. Section 915.233 is revised to read as follows:

Sec. 915.233 Assessment rate.

On and after April 1, 1999, an assessment rate of $0.16 per 55-

pound bushel container or equivalent is established for avocados grown

in South Florida.

Dated: March 11, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-6490 Filed 3-16-99; 8:45 am]

BILLING CODE 3410-02-P