Olives Grown in California; Decreased Assessment Rate
| Published date | 12 July 2024 |
| Record Number | 2024-15247 |
| Citation | 89 FR 57061 |
| Court | Agricultural Marketing Service |
| Section | Rules and Regulations |
Federal Register, Volume 89 Issue 134 (Friday, July 12, 2024)
[Federal Register Volume 89, Number 134 (Friday, July 12, 2024)]
[Rules and Regulations]
[Pages 57061-57064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15247]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 932
[Doc. No. AMS-SC-23-0087]
Olives Grown in California; Decreased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This action decreases the assessment rate established for the
2024 fiscal year and subsequent fiscal years for California olives as
recommended by the California Olive Committee. The assessment rate will
remain in effect indefinitely unless modified, suspended, or
terminated.
DATES: Effective August 12, 2024.
FOR FURTHER INFORMATION CONTACT: Jeremy Sasselli, Marketing Specialist,
or Barry Broadbent, Chief, West Region Branch, Market Development
Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 487-
5901, or Email: [email protected] or [email protected].
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:
[email protected].
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 Agreement No. 148
and Order No. 932, both 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 locally administers the Order and is comprised
of producers and handlers of olives operating within the area of
production.
[[Page 57062]]
The Agricultural Marketing Service (AMS) is issuing this rule in
conformance with Executive Orders 12866, 13563, and 14094. 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. Executive Order 14094
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 rule has been reviewed under Executive Order 13175,
Consultation and Coordination with Indian Tribal Governments, which
requires agencies to consider whether their rulemaking actions will
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. This rule is not intended to have retroactive effect.
Under the Order now in effect, California olive handlers are subject to
assessments. Funds to administer the Order are derived from such
assessments. It is intended that the assessment rate this rule
establishes will be applicable to all assessable olives beginning on
January 1, 2024, 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 U.S. 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 requesting 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.
Section 932.38 of the Order authorizes the Committee, with the
approval of AMS, to formulate an annual budget of expenses and 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 are thus able 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.
This rule decreases the assessment rate from $35 per ton of
assessed olives, the rate that was established for the 2023 fiscal year
and subsequent fiscal years, to $28 per ton of assessed olives for the
2024 fiscal year and subsequent fiscal years. The lower rate is the
result of the significantly higher crop size in 2023 (fruit that is
marketed over the course of the 2024 fiscal year), and the need to
maintain the Committee's financial reserve at a responsible level.
The Committee met on December 12, 2023, and unanimously recommended
2024 expenditures of $1,100,151 and an assessment rate of $28 per ton
of assessed olives. In comparison, last year's budgeted expenditures
were $1,154,412. The assessment rate of $28 set for the remainder of
the 2024 fiscal year and subsequent fiscal years is $7 lower than the
rate established for the 2023 fiscal year. Producer receipts show total
production of approximately 34,000 tons of olives from the 2023 crop
year that will be assessable during the 2024 fiscal year. This amount
is substantially higher than the quantity of olives that was harvested
in 2022.
Olives harvested in 2023 will be marketed over the course of the
2024 fiscal year, which begins on January 1, 2024, as the harvested
olives are stored in brining tanks and processed over the subsequent
year. At the $28 per ton assessment rate, the estimated 34,000 tons of
assessable olives from the 2023 crop are expected to generate $952,000
in assessment revenue over the 2024 fiscal year. The balance of funds
needed to cover budgeted expenditures will come from interest income
and the Committee's financial reserve. The 2024 fiscal year assessment
rate decrease is appropriate to ensure the Committee has sufficient
revenue to fund the recommended 2024 fiscal year budgeted expenditures
while also ensuring that funds in the reserve do not exceed
approximately one fiscal year's expenses, the maximum reserve amount
permitted by Sec. 932.40.
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 small crop
(2022) followed by a large crop (2023). For this assessment rate rule,
the Committee utilized the estimated 2023 crop year receipts to
determine the recommended assessment rate for the 2024 fiscal year.
The major expenditures recommended by the Committee for the 2024
fiscal year include $350,250 for program administration, $164,650 for
export programs, $197,500 for marketing activities, $302,751 for
research, and $85,000 for inspection. Budgeted expenses for these items
during the 2023 fiscal year were $399,700, $148,000, $193,000,
$325,712, and $88,000, respectively.
The assessment rate recommended by the Committee resulted from
consideration of anticipated fiscal year expenses, estimated olive
tonnage received by handlers during the 2023 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 rule
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
[[Page 57063]]
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 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 800 producers of olives in the production
area and 2 handlers subject to regulation under the Order. Small
agricultural producers are defined by the Small Business Administration
(SBA) as those having annual receipts equal to or 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 equal to or less than $34.0 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 a two-year average of the seasonal
average producer price when undertaking calculations relating to
average producer revenue. The National Agricultural Statistics Service
(NASS) reported season average producer prices of olives utilized for
canning for 2021 and 2022 of $851 and $913 per ton, respectively, with
a two-year average price of $882. NASS had not reported the 2023 season
average producer price at the time this rule was published.
The appropriate quantities to consider are the annual assessable
olive quantities, which were 43,336 tons in 2021 and 19,912 tons in
2022, with the two-year average production being 31,624 tons.
Multiplying 31,624 tons by the two-year average producer price of $882
yields a two-year average crop value of $27,892,368. Dividing the crop
value by the number of olive producers (800) yields calculated annual
average producer revenue of $34,865, 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 $27,892,368 average crop value by 2 (the number of
handlers) equals $13,946,184, which is the annual average producer crop
value processed by each of the 2 handlers over the two-year period.
Dividing the $34.0 million annual sales SBA size threshold for a large
handler by the $13,946,184 crop value per handler yields an estimate of
a 125 percent manufacturing margin for the 2 handlers, on average, to
be considered large handlers. A key question is whether 125 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. Although the studies are not recent, canning
technology has not changed significantly since that time. Therefore,
with the 125 percent margin estimate for the 2 olive handlers, the data
indicates that they could be on the threshold of being large handlers
($34.0 million in annual 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 crop that each of the handlers
processed.
This action decreases the assessment rate collected from handlers
for the 2024 fiscal year and subsequent fiscal years from $35 to $28
per ton of assessable olives. The Committee unanimously recommended
2024 expenditures of $1,100,151 and an assessment rate of $28 per ton.
The recommended assessment rate of $28 is $7 lower than the 2023
assessment rate. The quantity of assessable olives harvested in the
2023 crop year is estimated to be 34,000 tons, compared to 19,912 tons
in 2022. Olives are an alternate-bearing crop, with a small crop (2022)
followed by a large crop (2023). Income derived from the $28 per ton
assessment rate, along with interest income and funds from the
authorized reserve, should be adequate to meet the 2024 fiscal year's
budgeted expenditures.
The major expenditures recommended by the Committee for the 2024
fiscal year include $350,250 for program administration, $164,650 for
export programs, $197,500 for marketing activities, $302,751 for
research, and $85,000 for inspection. Budgeted expenses for these items
during the 2023 fiscal year were $399,700, $148,000, $193,000,
$325,712, and $88,000, respectively.
The Committee deliberated on many of the expenses, weighed the
relative value of various programs or projects, and decreased their
expenses for inspection and research activities while increasing
marketing activities. Overall, the 2024 budget of $1,100,151 is $54,261
less than the $1,154,412 budgeted for the 2023 fiscal year.
Prior to arriving at this budget and 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
increased olive production. The assessment rate of $28 per ton of
assessable olives was derived by considering anticipated expenses, the
high volume of assessable olives, the current balance in the monetary
reserve, and additional pertinent factors.
A review of information from NASS indicates that the average
producer price for the 2022 crop year (the most recent year for which
information is available) was $913 per ton. Therefore, utilizing the
assessment rate established herein of $28 per ton, assessment revenue
for the 2024 fiscal year as a percentage of total producer revenue
would be approximately 3.1 percent ($28 divided by $913 times 100).
This action decreases the assessment obligation imposed on
handlers. Assessments are applied uniformly on all handlers. Some of
the assessment costs to handlers may be passed on to producers.
Decreasing the assessment rate is expected to reduce the burden on
handlers and may also, therefore, reduce the burden on producers.
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 as a result of this
action are necessary. Should any changes become necessary, they would
be submitted to OMB for approval.
This 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
[[Page 57064]]
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 rulemaking concerning this action was published in the
Federal Register on March 28, 2024 (89 FR 21441). Copies of the
proposed rulemaking were provided to all olive handlers. In addition,
the proposal was made available through the internet by AMS and the
Office of the Federal Register. A 30-day comment period ending April
29, 2024, was provided for interested persons to respond to the
proposal. There were no comments received during the comment period.
Accordingly, no changes will be made to the rulemaking as proposed.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. 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 is
consistent with, and will 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 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, 2024, an assessment rate of $28 per ton is
established for California olives.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-15247 Filed 7-11-24; 8:45 am]
BILLING CODE 3410-02-P
