Marketing Order Regulating the Handling of Spearmint Oil Produced in the Far West; Salable Quantities and Allotment Percentages for the 2021-2022 Marketing Year

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Published

August 13, 2021

Effective

September 13, 2021

Issuing agencies

Agriculture DepartmentAgricultural Marketing Service

Abstract

This rule implements a recommendation from the Far West Spearmint Oil Administrative Committee to establish salable quantities and allotment percentages for 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 2021-2022 marketing year.

Full Text

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[Federal Register Volume 86, Number 154 (Friday, August 13, 2021)]
[Rules and Regulations]
[Pages 44587-44593]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-17293]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Doc. No. AMS-SC-20-0087; SC21-985-1 FR]

Marketing Order Regulating the Handling of Spearmint Oil Produced
in the Far West; Salable Quantities and Allotment Percentages for the
2021-2022 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation from the Far West
Spearmint Oil Administrative Committee to establish salable quantities
and allotment percentages for 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 2021-2022 marketing
year.

DATES: Effective September 13, 2021.

FOR FURTHER INFORMATION CONTACT: Joshua R. Wilde, 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, or Email: <a href="/cdn-cgi/l/email-protection#e7ad88948f9286c9b5c9b08e8b8382a792948386c9808891"><span class="__cf_email__" data-cfemail="8fc5e0fce7faeea1dda1d8e6e3ebeacffafcebeea1e8e0f9">[email&#160;protected]</span></a> or
<a href="/cdn-cgi/l/email-protection#5b1c3a29221f7514372834351b2e283f3a753c342d"><span class="__cf_email__" data-cfemail="226543505b660c6d4e514d4c62575146430c454d54">[email&#160;protected]</span></a>.
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: <a href="/cdn-cgi/l/email-protection#9bc9f2f8f3fae9ffb5d7f4ecfee9dbeee8fffab5fcf4ed"><span class="__cf_email__" data-cfemail="782a111b10190a1c5634170f1d0a380d0b1c19561f170e">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553,
amends regulations issued to carry out a marketing order as defined in
7 CFR 900.2(j). This rule 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
Far West Spearmint Oil Administrative Committee (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 final rule in
conformance with Executive Orders 12866 and 13563. Executive Orders
12866 and 13563 direct agencies to assess all costs and benefits of
available regulatory alternatives and, if regulation is necessary, to
select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety effects,
distributive impacts and equity). Executive Order 13563 emphasizes the
importance of quantifying both costs and benefits, reducing costs,
harmonizing rules, and promoting flexibility. This action falls within
a category of regulatory actions that the Office of Management and
Budget (OMB) exempted from Executive Order 12866 review.
This final rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which
requires agencies to consider whether their rulemaking actions would
have tribal implications. AMS has determined this final rule is
unlikely to have substantial direct effects on one or more Indian
tribes, on the relationship between the Federal Government and Indian
tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian tribes.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
Under the Order now in effect, salable quantities and allotment
percentages may be established for classes of spearmint oil produced in
the Far West. This rule establishes quantities and allotment
percentages for Scotch and Native spearmint oil for the 2021-2022
marketing year, which begins on June 1, 2021.
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 a marketing order may file with USDA a
petition stating that the marketing order, any provision of the
marketing order, or any obligation imposed in connection with the
marketing order is not in accordance with law and request a
modification of the marketing order or to be exempted therefrom. Such 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

[[Page 44588]]

no 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 to adopt a marketing policy for the ensuing
marketing year. When such considerations indicate a need to establish
or to 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 (Scotch or Native) 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 revised each year on
June 1 to account for producer base being lost as a result of the
``bona fide effort'' production provision of Sec. 985.53(e) and
additional base made available pursuant to the provisions of Sec.
985.153.
Each producer's prorated share of the salable quantity of each
class of oil, or the ``annual allotment'' as defined in Sec. 985.13,
is calculated by using an allotment percentage. The allotment
percentage is derived by dividing the salable quantity of each class of
spearmint oil by the total industry allotment base for that same class
of oil.
The Committee met on October 14, 2020, to consider its marketing
policy for the 2021-2022 marketing year. At that meeting, the Committee
determined that, based on the current market and supply conditions,
volume regulation for both classes of oil would be necessary. With a 6-
1 vote, the Committee recommended a salable quantity and allotment
percentage for Scotch spearmint oil of 846,684 pounds and 38 percent.
The member voting in opposition to the recommendation favored volume
regulation but supported an unspecified lower salable quantity and
allotment percent than what was recommended. The Committee voted six in
favor, with one abstention, to recommend a salable quantity and
allotment percentage for Native spearmint oil of 938,397 pounds and 37
percent. The member abstaining did not give a reason.
This action establishes the amount of Scotch and Native spearmint
oil that handlers may purchase from, or handle on behalf of, producers
during the 2021-2022 marketing year, which begins on June 1, 2021.
Salable quantities and allotment percentages have been placed into
effect each season since the Order's inception in 1980.

Scotch Spearmint Oil

The Committee recommended a Scotch spearmint oil salable quantity
of 846,684 pounds and an allotment percentage of 38 percent for the
2021-2022 marketing year. The 2021-2022 marketing year salable quantity
of 846,684 pounds is 8,355 pounds more than the 2020-2021 marketing
year salable quantity of 838,329 pounds. The allotment percentage,
recommended at 38 percent for the 2021-2022 marketing year, is the same
as the percentage in effect the previous year. The total allotment base
for the coming marketing year is estimated to be 2,228,116 pounds. This
figure represents a one-percent increase over the 2020-2021 marketing
year total allotment base of 2,206,055 pounds. The salable quantity
(846,684 pounds) is the product of total allotment base (2,228,116
pounds) times the allotment percentage (38 percent).
The Committee considered several factors in making its
recommendation, including the current and projected future supply,
estimated future demand, production costs, and producer prices. The
Committee's recommendation also accounts for the established acreage of
Scotch spearmint, consumer demand, existing carry-in, reserve pool
volume, and increased production in competing markets.
According to the Committee, as costs of production have increased
and spearmint oil prices have decreased, many producers have forgone
new plantings of Scotch spearmint. This has resulted in a significant
decline in production of Scotch spearmint oil in recent years.
Production has decreased from 1,113,346 pounds produced in 2016 to an
estimated 498,322 pounds of Scotch spearmint oil produced in 2020.
Industry reports indicate that trade demand for Far West Scotch
spearmint oil has decreased over the past five years as international
markets for spearmint-flavored products have slowed. Sales of Far West
Scotch spearmint oil have averaged 740,216 pounds per year over the
last five years but have averaged only 645,965 pounds over the last
three years. In addition to declining spearmint oil demand, increasing
production of Scotch spearmint oil in competing markets, most notably
by Canadian producers, has put additional downward pressure on the Far
West Scotch spearmint oil market.
Given the general decline in demand and anticipated market
conditions for the coming year, the Committee estimates that Scotch
spearmint oil trade demand for the 2021-2022 marketing year trade will
be 623,000 pounds, which is 19,000 pounds higher than the prior year
estimate, but still down from the three-year average of actual sales.
Should the volume regulation levels established by this action prove
insufficient to adequately supply the market, the Committee has the
authority to recommend intra-seasonal increases, as it has in previous
marketing years.
The Committee calculated the minimum salable quantity of Scotch
spearmint oil that will be required during the 2021-2022 marketing year
(359,424 pounds) by subtracting the estimated salable carry-in on June
1, 2021, (263,576 pounds) from the estimated trade demand (623,000
pounds). This minimum salable quantity represents the estimated minimum
amount of Scotch spearmint oil that will be needed to satisfy estimated
trade demand for the coming year. To ensure that the market will be
fully supplied, the Committee recommended a 2021-2022 marketing year
salable quantity of 846,684 pounds. The recommended salable quantity,
combined with an estimated 263,576 pounds of salable quantity carried
in from the previous year, will yield a total available supply of
1,110,260 pounds of Scotch spearmint oil for the 2021-2022 marketing
year. With the recommended salable quantity and current market
environment, the Committee estimates that as much as 487,260 pounds of
salable Scotch spearmint oil could be carried into the 2022-2023
marketing year.
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 four seasons have
exceeded sales, leading to a gradual build of Scotch spearmint oil
salable carry-in.
The Committee estimates that there will be 263,576 pounds of
salable carry-in of Scotch spearmint oil on June 1, 2021. If current
market conditions are maintained and the Committee's projections are
correct, salable carry-in will increase to 487,260 pounds at the
beginning of the 2022-2023 marketing year. This level will be above the

[[Page 44589]]

quantity that the Committee generally considers favorable (150,000
pounds). However, the Committee believes that, given the current
economic conditions in the Scotch spearmint oil industry, some Scotch
spearmint oil producers may not produce enough oil in the 2021-2022
marketing year to fill all of their annual allotment. The Committee
estimates that as much as 245,352 pounds of 2020-2021 marketing year
annual allotment may not be filled by producers. While the Committee
has not projected unused base allotment for the 2021-2022 marketing
year and did not incorporate this factor in its recommendation, it
anticipates that the actual quantity of Scotch spearmint oil carried
into the following marketing year will be significantly less than the
quantity calculated above (487,260 pounds).
Spearmint oil held in reserve is oil that has been produced in
excess of a producer's marketing year allotment and is not available to
the market in the current marketing year without an increase in the
salable quantity and allotment percentage. Oil held in the reserve pool
is another indicator of excess supply. Scotch spearmint oil held in the
reserve pool was 67,645 pounds as of May 31, 2020, down from 132,984
pounds as of May 31, 2019. However, the Scotch spearmint oil reserve is
expected to rebound slightly to an estimated 83,608 pounds by the end
of the 2020-2021 marketing year. This quantity of reserve pool oil
should be an adequate buffer to supply the market, if necessary, should
the industry experience an unexpected increase in demand.
The Committee recommended an allotment percentage of 38 percent for
the 2021-2022 marketing year for Scotch spearmint oil. During its
October 14, 2020, meeting, the Committee calculated an initial
allotment percentage by dividing the minimum required salable quantity
(359,424 pounds) by the total estimated allotment base (2,228,116
pounds), resulting in 16.1 percent. However, producers and handlers at
the meeting indicated that the computed percentage (16.1 percent) might
not adequately supply potential 2021-2022 Scotch spearmint oil market
demand and may also result in a less than desirable carry-in for the
subsequent marketing year. After deliberation, the Committee increased
the recommended allotment percentage to 38 percent. The total estimated
allotment base (2,228,116 pounds) for the 2021-2022 marketing year,
multiplied by the recommended salable allotment percentage (38
percent), yields 846,684 pounds, which is the recommended salable
quantity for the 2021-2022 marketing year.
The 2021-2022 marketing year computational data for the Committee's
recommendations is detailed below.
(A) Estimated carry-in of Scotch spearmint oil on June 1, 2021:
263,576 pounds. This figure is the difference between the 2020-2021
marketing year total available supply of 867,576 pounds and the 2020-
2021 marketing year estimated trade demand of 604,000 pounds. The
estimated 2020-2021 marketing year trade demand was revised down from
the original estimate of 750,000 pounds by the Committee at its October
14, 2020, meeting.
(B) Estimated trade demand of Scotch spearmint oil for the 2021-
2022 marketing year: 623,000 pounds. This figure was established at the
Committee meeting held on October 14, 2020.
(C) Salable quantity of Scotch spearmint oil required from the
2021-2022 marketing year production: 359,424 pounds. This figure is the
difference between the estimated 2021-2022 marketing year trade demand
(623,000 pounds) and the estimated carry-in on June 1, 2021 (263,576
pounds). This salable quantity represents the minimum amount of Scotch
spearmint oil that may be needed to satisfy estimated demand for the
coming year.
(D) Total estimated Scotch spearmint oil allotment base for the
2021-2022 marketing year: 2,228,116 pounds. This figure represents a
one-percent increase over the 2020-2021 total actual allotment base of
2,206,055 pounds, as prescribed by Sec. 985.153. The one-percent
increase equals 22,061 pounds. This total estimated allotment base is
revised each year on June 1 in accordance with Sec. 985.53(e).
(E) Computed Scotch spearmint oil allotment percentage for the
2021-2022 marketing year: 16.1 percent. This percentage is computed by
dividing the minimum required salable quantity (359,424 pounds) by the
total estimated allotment base (2,228,116 pounds).
(F) Recommended Scotch spearmint oil allotment percentage for the
2021-2022 marketing year: 38 percent. This is the Committee's
recommendation and is based on the computed allotment percentage (16.1
percent) and input from producers and handlers at the October 14, 2020,
meeting. The recommended 38 percent allotment percentage reflects the
Committee's belief that the computed percentage (16.1 percent) may not
adequately supply the anticipated 2021-2022 marketing year Scotch
spearmint oil market demand.
(G) Recommended Scotch spearmint oil salable quantity for the 2021-
2022 marketing year: 846,684 pounds. This figure is the product of the
recommended salable allotment percentage (38 percent) and the total
estimated allotment base (2,228,116 pounds) for the 2021-2022 marketing
year.
(H) Estimated total available supply of Scotch spearmint oil for
the 2021-2022 marketing year: 1,110,260 pounds. This figure is the sum
of the 2021-2022 marketing year recommended salable quantity (846,684
pounds) and the estimated carry-in on June 1, 2021 (263,576 pounds).
For the reasons stated above, the Committee believes that the
recommended salable quantity and allotment percentage will adequately
satisfy trade demand, will result in a reasonable carry-in for the
following year, and will contribute to the orderly marketing of Scotch
spearmint oil.

Native Spearmint Oil

The Committee recommended a Native spearmint oil salable quantity
of 938,397 pounds and an allotment percentage of 37 percent for the
2021-2022 marketing year. These figures are, respectively, 292,089
pounds and 12 percentage points lower than the levels established for
the 2020-2021 marketing year. The Committee utilized handlers'
estimated trade demand of 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 2021 Native spearmint oil production
will total 1,181,230 pounds, down substantially from the previous
year's production of 1,493,686 pounds. Committee records show an
estimated 7,957 acres of Native spearmint production in the Far West in
2020 compared to an estimated 9,013 acres of Native spearmint
production in 2019.
Sales of Native spearmint oil have also been declining, falling
from a high of 1,565,515 pounds in the 2017-2018 marketing year to
1,076,906 pounds over the 2019-2020 marketing year, the last full year
of reported sales. The Committee estimates that trade demand for Native
spearmint oil will be 1,059,167 pounds for the 2020-2021 marketing
year, well below the 5-year sales average of 1,283,266 pounds.
The Committee expects that 694,137 pounds of salable Native
spearmint oil from prior years will be carried into the 2021-2022
marketing year. This amount

[[Page 44590]]

is up from the 522,818 pounds of salable oil carried into the 2020-2021
marketing year and well above the level that the Committee generally
considers favorable.
Further, the Committee estimates that there will be 1,130,264
pounds of Native spearmint oil in the reserve pool at the beginning of
the 2021-2022 marketing year. This figure is 49,256 pounds lower than
the quantity of reserve pool oil held by producers on June 1, 2020, but
is still higher than the level that the Committee believes is optimal.
This modest decline in the reserve oil reverses the recent trend of
gradual increases that the industry has experienced over the past
several marketing years.
The Committee expects end users of Native spearmint oil to continue
to rely on Far West production as their primary source of high-quality
Native spearmint oil. Overseas production of Native spearmint has
declined in recent years. As a result, U.S. exports of Native spearmint
oil have been increasing since 2018. However, the increase in domestic
production from other states outside the Far West region has more than
offset the decline in foreign production of Native spearmint oil. For
instance, production of Native spearmint oil in the U.S. Midwest region
has spiked in recent years, rising from fewer than 2,000 acres in 2016
to approximately 5,500 acres in 2020. Additionally, the sharp increase
in demand for Native spearmint experienced during the 2017-2018
marketing year has tapered off in recent years. These factors have
contributed to declining trade demand for Far West Native spearmint oil
and led to downward pressure on producer prices.
The Committee chose to be cautiously optimistic in the
establishment of its trade demand estimate for the 2021-2022 marketing
year to ensure that the market will be adequately supplied. At the
October 14, 2020, meeting, the Committee estimated the 2021-2022
marketing year Native spearmint oil trade demand to be 1,125,000
pounds. This figure is based on input provided by producers at nine
production area meetings held in early October 2020, as well as
estimates provided by handlers and other meeting participants. This
figure represents an increase of 65,833 pounds from the previous year's
revised trade demand estimate. The average estimated trade demand for
Native spearmint oil derived from the area producer meetings was
1,105,556 pounds, whereas the handlers' estimates ranged from 900,000
to 1,300,000 pounds. The average of Native spearmint oil sales over the
last three years was 1,295,832 pounds. The quantity marketed over the
most recent full marketing year, 2019-2020, was 1,076,906 pounds.
The estimated June 1, 2021, carry-in of 694,137 pounds of Native
spearmint oil, plus the recommended 2021-2022 marketing year salable
quantity of 938,397 pounds, results in an estimated total available
supply of 1,632,534 pounds of Native spearmint oil during the 2021-2022
marketing year. With the corresponding estimated trade demand of
1,125,000 pounds, the Committee projects that 507,534 pounds of oil
will be carried into the 2022-2023 marketing year, resulting in a year-
over-year decrease of 186,603 pounds. The Committee estimates that
there will be 1,130,264 pounds of Native spearmint oil held in the
reserve pool at the beginning of the 2021-2022 marketing year. Should
the industry experience an unexpected increase in trade demand, oil in
the Native spearmint oil reserve pool could be released through an
intra-seasonal increase to satisfy that demand.
The Committee recommended a producer allotment percentage of 37
percent for the 2021-2022 marketing year. During its October 14, 2020,
meeting, the Committee calculated an initial producer allotment
percentage of 17 percent by dividing the minimum required salable
quantity to satisfy estimated trade demand (430,863 pounds) by the
total allotment base (2,536,208 pounds). However, producers and
handlers at the meeting expressed that the computed percentage of 17
percent may not adequately supply the potential 2021-2022 Native
spearmint oil market demand or result in adequate carry-in for the
subsequent marketing year. After deliberation, the Committee increased
the recommended allotment percentage to 37 percent. The total estimated
allotment base (2,536,208 pounds) for the 2021-2022 marketing year
multiplied by the recommended salable allotment percentage (37 percent)
yields 938,397 pounds, the recommended salable quantity for the year.
The 2021-2022 marketing year computational data for the Committee's
recommendations is further outlined below.
(A) Estimated carry-in of Native spearmint oil on June 1, 2021:
694,137 pounds. This figure is the difference between the revised 2020-
2021 marketing year total available supply of 1,753,304 pounds and the
revised 2020-2021 marketing year estimated trade demand of 1,059,167
pounds.
(B) Estimated trade demand of Native spearmint oil for the 2021-
2022 marketing year: 1,125,000 pounds. This estimate was established by
the Committee at the October 14, 2020, meeting.
(C) Salable quantity of Native spearmint oil required from the
2021-2022 marketing year production: 430,863 pounds. This figure is the
difference between the estimated 2021-2022 marketing year estimated
trade demand (1,125,000 pounds) and the estimated carry-in on June 1,
2021 (694,137 pounds). This is the minimum amount of Native spearmint
oil that the Committee believes will be required to meet the
anticipated 2021-2022 marketing year trade demand.
(D) Total estimated allotment base of Native spearmint oil for the
2021-2022 marketing year: 2,536,208 pounds. This figure represents a
one-percent increase over the 2020-2021 total actual allotment base of
2,511,097 pounds as prescribed in Sec. 985.153. The one-percent
increase equals 25,111 pounds of oil. This estimate is revised each
year on June 1, due to adjustments resulting from the bona fide effort
production provisions of Sec. 985.53(e).
(E) Computed Native spearmint oil allotment percentage for the
2021-2022 marketing year: 17 percent. This percentage is calculated by
dividing the required salable quantity (430,863 pounds) by the total
estimated allotment base (2,536,208 pounds) for the 2021-2022 marketing
year.
(F) Recommended Native spearmint oil allotment percentage for the
2021-2022 marketing year: 37 percent. This is the Committee's
recommendation based on the computed allotment percentage (17 percent)
and input from producers and handlers at the October 14, 2020, meeting.
The recommended 37 percent allotment percentage is also based on the
Committee's belief that the computed percentage (17 percent) may not
adequately supply the potential market for Native spearmint oil in the
2021-2022 marketing year or allow for salable Native spearmint oil to
be carried into the beginning of the 2022-2023 marketing year.
(G) Recommended Native spearmint oil 2021-2022 marketing year
salable quantity: 938,397 pounds. This figure is the product of the
recommended allotment percentage (37 percent) and the total estimated
allotment base (2,536,208 pounds).
(H) Estimated available supply of Native spearmint oil for the
2021-2022 marketing year: 1,632,534 pounds. This figure is the sum of
the 2021-2022 recommended salable quantity (938,397 pounds) and the
estimated carry-in on June 1, 2021 (694,137 pounds). This amount could
be increased, as needed, through an intra-seasonal increase in the

[[Page 44591]]

salable quantity and allotment percentage.
The Committee's recommended Scotch and Native spearmint oil salable
quantities and allotment percentages of 846,684 pounds and 38 percent,
and 938,397 pounds and 37 percent, respectively, will 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 rule is similar to regulations issued in prior seasons.
The salable quantities established in this final rule are not
expected to cause a shortage of either class of spearmint oil. Any
unanticipated or additional market demand for either class of spearmint
oil which may develop during the marketing year could be satisfied by
an intra-seasonal increase in the salable quantity and corresponding
allotment percentage. 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.
USDA has reviewed the Committee's marketing policy statement for
the 2021-2022 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 salable quantities and allotment percentages
in this rule is expected to fully satisfy anticipated market needs. In
determining anticipated market needs, the Committee considered
historical sales, as well as changes and trends in production and
demand. This rule also provides producers with information regarding
the amount of spearmint oil that should be produced for the 2021-2022
season to meet anticipated market demand.

Final 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 rule on small entities.
Accordingly, AMS has prepared this final 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 40 producers and 94 producers of Scotch and
Native spearmint oil, respectively, in the regulated production area
and approximately 8 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 $30,000,000, and small agricultural producers are defined as those
having annual receipts of less than $1,000,000 (13 CFR 121.201).
The Committee reported that recent producer prices for spearmint
oil have ranged from $12.00 to $17.00 per pound. The National
Agricultural Statistics Service (NASS) reported that the 2019 U.S.
season average spearmint oil producer price per pound was $16.90.
Spearmint oil utilization for the 2019-2020 marketing year, as reported
by the Committee, was 598,706 pounds and 1,076,906 pounds for Scotch
and Native spearmint oil, respectively, for a total of 1,675,612
pounds. Multiplying $16.90 per pound by 2019-2020 marketing year
spearmint oil utilization of 1,675,612 pounds yields a crop value
estimate of about $28.3 million.
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 $16.90 average
spearmint oil price, and Committee production data for each producer,
the Committee estimates that 37 of the 40 Scotch spearmint oil
producers and 90 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 2018 producer price of $16.90 yields a handler
free on board (f.o.b.) price per pound estimate of $20.28.
Multiplying this estimated handler f.o.b. price by the 2019-2020
marketing year total spearmint oil utilization of 1,675,612 pounds
results in an estimated handler-level spearmint oil value of $33.98
million. Dividing this figure by the number of handlers (8) yields
estimated average annual handler receipts of about $4.25 million, which
is well below the SBA threshold for small agricultural service firms.
Furthermore, using confidential data on pounds handled by each
handler, and the abovementioned estimated handler price per pound, the
Committee reported that it is not likely that any of the eight handlers
had 2019-2020 marketing year spearmint oil sales that exceeded the $30
million SBA threshold.
Therefore, the majority of producers of spearmint oil may be
classified as small entities, and all of the handlers of spearmint oil
may be classified as small entities.
This final rule establishes 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 2021-2022 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 regulation allows producers to coordinate their
spearmint oil production with the expected market demand. Authority for
this action is provided in Sec. Sec. 985.50, 985.51, and 985.52 of the
Order.
The Committee estimates the total trade demand for the 2021-2022
marketing year for both classes of oil at 1,748,000 pounds. In
addition, the Committee expects that the combined salable carry-in for
both classes of spearmint oil will be 957,713 pounds. As such, the
combined required salable quantity for the 2021-2022 marketing year is
estimated to be 790,287 pounds (1,748,000 pounds trade demand less
957,713 pounds carry-in). Under volume regulation, total sales of
spearmint oil by producers for the 2021-2022 marketing year will be
held to 2,742,794 pounds (the recommended salable quantity for both
classes of spearmint oil of 1,785,081 pounds plus 957,713 pounds of
carry-in).
This total available supply of 2,742,794 pounds should be more than
adequate to supply the 1,748,000

[[Page 44592]]

pounds of anticipated total trade demand for spearmint oil. In
addition, as of May 31, 2020, the total reserve pool for both classes
of spearmint oil stood at 1,247,165 pounds. That quantity is expected
to remain relatively unchanged over the course of the 2021-2022
marketing year, with current Committee reserve pool estimates totaling
1,366,673 pounds. Should trade demand increase unexpectedly during the
2021-2022 marketing year, reserve pool spearmint oil could be released
into the market to supply that increase in demand.
The established allotment percentages, upon which 2021-2022
marketing year annual allotments are based, are 38 percent for Scotch
spearmint oil and 37 percent for Native spearmint oil. Without volume
regulation, producers will not be held to these allotment levels, and
could sell unrestricted quantities of spearmint oil.
The USDA econometric model used to evaluate the Far West spearmint
oil market estimated that the season average producer price per pound
(from both classes of spearmint oil) would decline about $1.70 per
pound without volume regulation. The surplus situation for the
spearmint oil market that would exist without volume regulation in the
2021-2022 marketing year also would likely dampen prospects for
improved producer prices in future years because of the excessive
buildup in stocks.
In addition, the econometric model estimated that spearmint oil
prices would fluctuate with greater amplitude in the absence of volume
regulation. The coefficient of variation, or CV (a standard measure of
variability), of Far West spearmint oil producer prices for the period
1980-2019 (the years in which the Order has been in effect), is 25
percent, compared to 49 percent for the 20-year period (1960-1979)
immediately prior to the establishment of the Order. Since higher CV
values correspond to greater variability, this is an indicator of the
price stabilizing impact of the Order.
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 will 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
rejected the idea of not regulating volume for either class of
spearmint oil because of the severe, price-depressing effects that will
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 recommended by the
Committee was to maintain the allotment percentage for Scotch spearmint
oil (which will slightly increase the salable quantity) and to decrease
both the salable quantity and allotment percentage for Native spearmint
oil from the levels established for the 2020-2021 marketing year.
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; (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 established in this rule will
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 will 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
established herein are expected to facilitate the goal of maintaining
orderly marketing conditions for Far West spearmint oil for the 2021-
2022 and future marketing years.
Costs to producers and handlers, large and small, resulting from
this action 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 sizes.
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, Vegetable
and Specialty Crops. No changes in those requirements are necessary as
a result of this rule. Should any changes become necessary, they would
be submitted to OMB for approval.
This rule establishes the salable quantities and allotment
percentages for Scotch spearmint oil and Native spearmint oil produced
in the Far West during the 2021-2022 marketing year. Accordingly, this
rule does 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. In addition, USDA
has not identified any relevant Federal rules that duplicate, overlap,
or conflict with this final rule.
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.
A proposed rule concerning this action was published in the Federal
Register on April 16, 2021 (86 FR 20038). Copies of the proposed rule
were also mailed or sent via email to all Far West spearmint oil
handlers. The proposal was made available through the internet by USDA
and the Office of the Federal Register. A 60-day comment period ending
June 15, 2021, was provided for interested persons to respond to the
proposal. No comments were received during the comment period.
Accordingly, no changes will be made to the rule as proposed.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at:
<a href="https://www.ams.usda.gov/rules-regulations/moa/small-businesses">https://www.ams.usda.gov/rules-regulations/moa/small-businesses</a>. Any
questions about the compliance guide should be sent to Richard Lower at
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT
section.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Board and other
available information, it is hereby found that this rule will tend to
effectuate the declared policy of the Act.

[[Page 44593]]

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
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. Section 985.236 is added to read as follows:

Sec. 985.236 Salable quantities and allotment percentages--2021-2022
marketing year.

The salable quantity and allotment percentage for each class of
spearmint oil during the marketing year beginning on June 1, 2021,
shall be as follows:
(a) Class 1 (Scotch) oil--a salable quantity of 846,684 pounds and
an allotment percentage of 38 percent.
(b) Class 3 (Native) oil--a salable quantity of 938,397 pounds and
an allotment percentage of 37 percent.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2021-17293 Filed 8-12-21; 8:45 am]
BILLING CODE P

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