Rule2023-22332
Olives Grown in California; Increased Assessment Rate
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 10, 2023
Effective
November 9, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This final rule implements a recommendation from the California Olive Committee (Committee) to increase the assessment rate established for the 2023 fiscal year and subsequent fiscal years. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.
Full Text
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<title>Federal Register, Volume 88 Issue 194 (Tuesday, October 10, 2023)</title>
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[Federal Register Volume 88, Number 194 (Tuesday, October 10, 2023)]
[Rules and Regulations]
[Pages 69873-69876]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22332]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 932
[Doc. No. AMS-SC-22-0094]
Olives Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule implements a recommendation from the
California Olive Committee (Committee) to increase the assessment rate
established for the 2023 fiscal year and subsequent fiscal years. The
assessment rate will remain in effect indefinitely unless modified,
suspended, or terminated.
DATES: Effective November 9, 2023.
FOR FURTHER INFORMATION CONTACT: Jeremy Sasselli, Marketing Specialist,
or Gary Olson, Chief, West Region Branch, Market Development Division,
Specialty Crops Program, AMS, USDA; Telephone: (559) 487-5901 or Email:
<a href="/cdn-cgi/l/email-protection#08426d7a6d6571265b697b7b6d646461487d7b6c69266f677e"><span class="__cf_email__" data-cfemail="b8f2ddcaddd5c196ebd9cbcbddd4d4d1f8cdcbdcd996dfd7ce">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#e3a482919aa7cdac8f908c8da396908782cd848c95"><span class="__cf_email__" data-cfemail="7136100308355f3e1d021e1f31040215105f161e07">[email protected]</span></a>.
Small businesses may request information on complying with this
regulation by contacting Richard Lower, Market Development Division,
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP
0237, Washington, DC 20250-0237; Telephone: (202) 720-8085, or Email:
<a href="/cdn-cgi/l/email-protection#e8ba818b80899a8cc6a4879f8d9aa89d9b8c89c68f879e"><span class="__cf_email__" data-cfemail="05576c666d6477612b496a72607745707661642b626a73">[email 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. 932, as
amended (7 CFR part 932), regulating the handling of olives grown in
California. Part 932 referred to as the ``Order'' is effective under
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C.
601-674), hereinafter referred to as the ``Act.'' The Committee
administers the Order and is comprised of producers and handlers of
olives operating within the area of production and may have one public
member.
The Agricultural Marketing Service (AMS) is issuing this final rule
in conformance with Executive Orders 12866, 13563, and 14094. Executive
Orders 12866 and 13563 direct agencies
[[Page 69874]]
to assess 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. Executive Order 14094 updates and modernizes Executive
Order 12866 and directs agencies to conduct proactive outreach to
engage interested and affected parties through a variety of means, such
as through field offices, and alternative platforms and media. 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 that this 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. Under the Order now in effect, California olive
handlers are subject to assessments. Funds to administer the Order are
derived from such assessments. The assessment rate established herein
will be applicable to all assessable olives beginning on January 1,
2023, and continue until amended, suspended, or terminated.
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 United States
Department of Agriculture (USDA) a petition stating that the order, any
provision of the order, or any obligation imposed in connection with
the order is not in accordance with law and request a modification of
the order or to be exempted therefrom. Such handler is afforded the
opportunity for a hearing on the petition. After the hearing, USDA
would rule on the petition. The Act provides that the District Court of
the United States in any district in which the handler is an
inhabitant, or has his or her principal place of business, has
jurisdiction to review USDA's ruling on the petition, provided an
action is filed not later than 20 days after the date of the entry of
the ruling.
The Order provides authority for the Committee, with the approval
of AMS, to formulate an annual budget of expenses and to collect
assessments from handlers to administer the program. The members are
familiar with the Committee's needs and with the costs of goods and
services in their local area, and can formulate an appropriate budget
and assessment rate. The assessment rate is formulated and discussed in
a public meeting, and all directly affected persons have an opportunity
to participate and provide input.
This final rule increases the assessment rate from $16 per ton of
assessed olives, the rate that was established for the 2022 and
subsequent fiscal years, to $35 per ton of assessed olives for the 2023
and subsequent fiscal years. The higher rate is the result of the
significantly lower crop size in 2022 (fruit that is marketed over the
course of the 2023 fiscal year) and the need to maintain the
Committee's financial reserve.
The Committee met on December 13, 2022, and unanimously recommended
2023 fiscal year expenditures of $1,154,412 and an assessment rate of
$35 per ton of assessed olives. In comparison, last year's budgeted
expenditures were $1,245,085. The assessment rate of $35 is $19 higher
than the rate currently in effect. Producer receipts show a yield of
19,912 tons of assessable olives from the 2022 crop year, which is
substantially less than the quantity of olives harvested in the 2021
crop year, in which 46,359 tons of assessable olives were produced.
Olives harvested in 2022 will be marketed over the course of the
2023 fiscal year, which begins on January 1, 2023. The 19,912 tons of
assessable olives from the 2022 crop should generate $696,920 in
assessment revenue at the $35 per ton assessment rate. The balance of
funds needed to cover budgeted expenditures will come from interest
income, Federal grants, and the Committee's financial reserve. The 2023
fiscal year assessment rate increase is appropriate to ensure the
Committee has sufficient revenue to fund the recommended 2023 fiscal
year budgeted expenditures. Funds in the reserve are expected to remain
within the Order's requirement of no more than approximately one fiscal
year's budgeted expenses.
The Order has a fiscal year and a crop year that are independent of
each other. The crop year is a 12-month period that begins on August 1
of each year and ends on July 31 of the following year. The fiscal year
is the 12-month period that begins on January 1 and ends on December 31
of each year. Olives are an alternate-bearing crop, with a large crop
(2021) followed by a small crop (2022). For this assessment rate rule,
the actual 2022 crop year receipts are used to determine the assessment
rate for the 2023 fiscal year.
The major expenditures recommended by the Committee for the 2023
fiscal year include $547,700 for program administration, $193,000 for
marketing activities, $325,712 for research, and $88,000 for
inspection. Budgeted expenses for these items during the 2022 fiscal
year were $538,700; $284,000; $379,485; and $42,900, respectively.
The assessment rate recommended by the Committee resulted from
consideration of anticipated fiscal year expenses, actual olive tonnage
received by handlers during the 2022 crop year, and the amount in the
Committee's financial reserve. Income derived from handler assessments
and other revenue sources is expected to be adequate to cover budgeted
expenses. The assessment rate established in this rulemaking will
continue in effect indefinitely unless modified, suspended, or
terminated by AMS upon recommendation and information submitted by the
Committee or other available information.
Although this assessment rate will be in effect for an indefinite
period, the Committee will continue to meet prior to or during each
fiscal year 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 AMS.
Committee meetings are open to the public and interested persons may
express their views at these meetings. AMS will 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 budget for subsequent
fiscal years will be reviewed and, as appropriate, approved by AMS.
Final Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601-612), AMS has considered the economic impact of
this final 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
[[Page 69875]]
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 800 producers of olives in the production
area and 2 handlers subject to regulation under the Order. Small
agricultural producers of olives are defined by the Small Business
Administration (SBA) as those having annual olive receipts of less than
$3.5 million (NAICS code 111339, Other Noncitrus Fruit Farming), and
small agricultural service firms are defined as those whose annual
receipts are less than $34 million (NAICS code 115114, Postharvest Crop
Activities) (13 CFR 121.201).
Because of the large year-to-year variation in California olive
production, it is helpful to use two-year averages of seasonal average
grower price when undertaking calculations relating to average grower
revenue. The National Agricultural Statistics Service (NASS) reported
season average grower prices of olives utilized for canning for 2020
and 2021 of $1,060 and $1,110 per ton, respectively, with a two-year
average price of $1,085.
The appropriate quantities to consider are the annual assessable
olive quantities, which were 19,912 tons in 2022 and 43,336 tons in
2021, with two-year average production of 31,624 tons. Multiplying
31,624 tons by the two-year average grower price of $1,085 yields a
two-year average crop value of $34.312 million. Dividing the crop value
by the number of olive producers (800) yields calculated annual average
revenue per producer of $42,890, much less than SBA's size standard of
$3.5 million. Thus, the majority of olive producers may be classified
as small entities.
Dividing the $34.312 million average crop value by 2 (the number of
handlers) equals $17.156 million, which is the annual average olive
crop value processed by each of the 2 handlers over the two-year
period. Subtracting $17.156 million average crop value from the large
handler size threshold of $34 million yields a difference of $16.844
million. Dividing the $16.844 million difference by $17.156 average
crop value processed by each of the handlers yields an average
manufacturing margin of 98 percent to be considered large handlers. A
key question is whether 98 percent is a reasonable estimate of a
manufacturing margin for the olive canning process.
A review of economic literature on canned food manufacturing
margins found no recent published estimates. A series of Economic
Research Service reports on cost components of farm to retail price
spreads, published in the late 1970s and early 1980s, found that
margins above crop value for a canned vegetable product were in the
range of 76 to 85 percent. These margins are somewhat below the
computed margin estimate of 98 percent to reach the $34 million SBA
threshold to be a large, canned olive handler. Although the studies are
not recent, key observations are that canning technology has not
changed significantly in that time period, but canning costs may have
risen somewhat. Therefore, the conclusion to be drawn from these
computations is that the two handlers are slightly below the large
handler threshold of $34 million in annual canned olive sales, using
two-year average data, and assuming that the 2 handlers are about the
same size.
In a large crop year, one or both handlers could be considered
large handlers, depending on the proportion of the olive crop that each
of the handlers processed. For example, the 2021 quantity of assessable
olives was 43,336 tons, and half of that quantity was 21,668 tons.
Multiplying that tonnage by the average grower price of $1,085 per ton
yields a crop value per handler estimate of $23.51 million. To reach
the $34 million size threshold would mean canning costs of at least
$10.49 million, which would be a manufacturing margin of 45 percent
($10.49/$23.51)--well below the range of canning margins shown above.
The contrasting examples presented here show that in terms of
canned olive sales, the processors can be viewed as either being above
or below the SBA large handler size threshold, depending on the
assumptions used in alternative calculations.
This final rule increases the assessment rate collected from
handlers for the 2023 and subsequent fiscal years from $16 to $35 per
ton of assessable olives. The Committee unanimously recommended 2023
expenditures of $1,154,412 and an assessment rate of $35 per ton. The
increased assessment rate of $35 is $19 higher than the 2022 rate. The
quantity of assessable olives harvested in the 2022 crop year was
19,912 tons, as compared to 46,359 tons in 2021. Olives are an
alternate-bearing crop, with a large crop (2021) followed by a small
crop (2022). Income derived from the $35 per ton assessment rate, along
with interest income, Federal grants, and funds from the authorized
reserve, should be adequate to meet this fiscal year's budgeted
expenditures.
The Committee's financial reserve is projected to be sufficient to
partially fund 2023 fiscal year budgeted expenditures and remain within
the requirements of Sec. 932.40(a)(2) of the Order. The major
expenditures recommended by the Committee for the 2023 fiscal year
include $547,700 for program administration, $193,000 for marketing
activities, $325,712 for research, and $88,000 for inspection. Budgeted
expenses for these items during the 2022 fiscal year were $538,700;
$284,000; $379,485; and $42,900 respectively. The Committee deliberated
on many of the expenses, weighed the relative value of various programs
or projects, and decreased the budgeted expenses for research and
marketing activities, while increasing the budget for administration
and inspection program costs. Overall, the 2023 fiscal year budget of
$1,154,412 is $90,673 less than the $1,245,085 budgeted for the 2022
fiscal year.
Prior to arriving at the budget and recommended assessment rate,
the Committee considered information from various sources including the
Committee's Executive, Marketing, Inspection, and Research
Subcommittees. Alternate expenditure levels were discussed by these
groups, based upon the relative value of various projects to the olive
industry and the decreased olive production. The assessment rate of $35
per ton of assessable olives was derived by considering anticipated
expenses, the relatively low volume of assessable olives, the current
balance in the monetary reserve, and additional pertinent factors.
A review of NASS information indicates that the average producer
price for the 2021 crop year, the most recent crop year surveyed by
NASS, was $851 per ton. The quantity of assessable olives harvested
during the 2022 crop year was 19,912 tons, which makes estimated total
producer revenue $16,945,112 ($851 multiplied by 19,912 tons).
Therefore, using the assessment rate of $35 per ton, the assessment
revenue for the 2023 fiscal year as a percentage of estimated total
producer revenue is expected to be approximately 4.1 percent ($35
multiplied by 19,912 tons divided by $16,945,112 multiplied by 100).
This action increases the assessment obligation imposed on
handlers. Assessments are applied uniformly on all handlers, and some
of the costs may be passed on to producers. However, these costs are
expected to be offset by
[[Page 69876]]
the benefits derived by the operation of the Order.
The Committee's meetings are widely publicized throughout the
production area. The olive industry and all interested persons are
invited to attend the meetings and participate in Committee
deliberations on all issues. Like all Committee meetings, the December
13, 2022, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue. In addition,
interested persons were invited to submit comments on this rule,
including the regulatory and information collection impacts of this
action on small businesses.
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 are necessary in those requirements as a
result of this action. Should any changes become necessary, they will
be submitted to OMB for approval.
This final rule will not impose any additional reporting or
recordkeeping requirements on either small or large California olive
handlers. As with all Federal marketing order programs, reports and
forms are periodically reviewed to reduce information requirements and
duplication by industry and public sector agencies.
AMS is committed to complying with the E-Government Act, to promote
the use of the internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
AMS has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this action.
A proposed rule concerning this action was published in the Federal
Register on June 16, 2023 (88 FR 39374). Copies of the proposed rule
were also mailed or sent via email to California olive handlers. A copy
of the proposed rule was made available through the internet by AMS via
<a href="https://www.regulations.gov">https://www.regulations.gov</a>. A 30-day comment period ending July 17,
2023, was provided for interested persons to respond to the proposal.
No comments were received. Accordingly, no changes have been 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 recommendations submitted by the Committee and
other available information, AMS has determined that this rule tends to
effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 932
Marketing agreements, Olives, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, the Agricultural
Marketing Service amends 7 CFR part 932 as follows:
PART 932--OLIVES GROWN IN CALIFORNIA
0
1. The authority citation for 7 CFR part 932 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 932.230 is revised to read as follows:
Sec. 932.230 Assessment rate.
On and after January 1, 2023, an assessment rate of $35.00 per ton
is established for California olives.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-22332 Filed 10-6-23; 8:45 am]
BILLING CODE 3410-02-P
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