[Federal Register Volume 62, Number 159 (Monday, August 18, 1997)]
[Proposed Rules]
[Pages 43955-43956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21795]


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Proposed Rules
                                                Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / 
Proposed Rules

[[Page 43955]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1446

RIN 0560-AFO1


Proposed Method for Setting the Sales Price Level for 1998-Crop 
Commodity Credit Corporation (CCC) Contract Additional Peanuts for 
Export Edible Use

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Advanced notice of proposed rulemaking with request for 
comments.

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SUMMARY: The purpose of this notice is to solicit comments concerning 
the method for determining the minimum export edible sales price for 
sales by the CCC of price support loan inventory of additional peanuts 
and the actual CCC sales price for export edible use. Increasing 
competition in the world edible peanut market and lack of consensus 
within the peanut industry about the minimum export edible sales price 
level require an evaluation of future levels and procedures for 
establishing export edible sales prices.

DATES: Comments concerning the method of establishing the level of the 
minimum export edible sales price for additional peanuts must be 
received by September 30, 1997, in order to be assured consideration.

ADDRESSES: Comments must be submitted to the Director, Tobacco and 
Peanuts Division, USDA, Farm Service Agency (FSA), STOP 0514, 1400 
Independence Avenue, S.W., Washington, D.C. 20250-0514. All written 
submissions will be made available for public inspection from 8:15 a.m. 
to 4:45 p.m.; Monday through Friday, except holidays, in room 5750-
South Building, 1400 Independence Avenue, S.W., Washington, DC 20250-
0514.

FOR FURTHER INFORMATION CONTACT: Kenneth M. Robison, FSA, USDA, STOP 
0514, 1400 Independence Avenue, S.W., Washington, DC 20250-0514, 
telephone 202-720-9255.

SUPPLEMENTARY INFORMATION: The establishment of a minimum price at 
which additional peanuts owned or controlled by CCC may be sold for 
use as edible peanuts in export markets is a discretionary action. 
The announcement of that price provides producers and handlers with 
information to facilitate the negotiation of private contracts for 
the sale of additional peanuts for export.

    An overly high price may discourage private sales. If too low, the 
minimum price could have an unnecessary, adverse effect on prices paid 
to producers for additional peanuts. The minimum price at which 1997 
crop additional peanuts owned or controlled by CCC may be sold for use 
as edible peanuts in export markets was established at $400 per short 
ton (st) on April 30, 1997. This price was designed to encourage 
exports while providing price stability for additional peanuts sold 
under contract. It was also designed to assure handlers that CCC would 
not undercut their export contracting efforts with offerings of 
additional peanuts for export edible sales below the minimum sales 
price.
    During the 1997-crop comment period seven comments were received 
concerning the minimum export edible sales price. Four suggested 
keeping the price at $400 per st, and three suggested lowering it to 
between $300 and $375 per st. Producer groups preferred keeping the 
minimum price at $400 per ton while shellers preferred lowering it.
    Since the 1997-crop comment period closed, several parties have 
requested that USDA study the method of setting the export edible sales 
price and its level. Competition in the world edible peanut market has 
increased markedly in recent years. Production in Argentina rose about 
65 percent between 1992 and 1996 and South African production is 
expanding. With increased imports and annual reductions in domestic use 
of peanuts, until the recent anticipated small increase, the 
competitiveness of U.S. peanuts in world markets becomes more 
important.
    Because of these requests and the increasing competitiveness in 
world edible peanut markets, industry and other comments are being 
solicited before setting the 1998 marketing year (MY) minimum sales 
price for additional peanuts sold for export use.
    Several options exist for establishing the additional peanut export 
edible sales price in 1998 and future years. These include: (1) 
Maintaining the $400 per st level that has been in effect since 1986; 
(2) lowering the level of the minimum export edible sales price; (3) 
basing the minimum export edible sales price solely on some fixed 
percentage of the average price for ``Segregation 1'' additional 
peanuts delivered under contract for such MY; (4) establishing a 
minimum level and setting the export edible price at the lower of an 
absolute number or some percentage of the average price for 
``Segregation 1'' additional peanuts delivered under contract for such 
MY; (5) basing the export edible minimum price on a calculated 
``world'' price of edible peanuts; (6) basing the export edible price 
on the lower of an absolute number and a calculated ``world'' price of 
edible peanuts; or (7) some combination of the above.
    Setting the minimum export edible sales price as an absolute number 
is the simplest and most straightforward. However, this method may not 
adequately consider the effect of supply and demand variations in the 
world marketplace.
    Basing the minimum export edible sales price on the basis of the 
average contract price for Segregation 1 peanuts delivered under 
contract would capture some of the effects of change in the world 
edible market. However, this technique could create greater uncertainty 
and could complicate recordkeeping. This method of establishing the 
minimum export edible sales price was used briefly in 1986 and could be 
reestablished with or without modification for 1998 and subsequent 
years. In 1986, in a February 14 press release and a March 5 press 
release clarification, the original determination for the 1986 crop was 
that the 1986-1990 crops of additional peanuts would be sold by CCC for 
export edible use at no less than the lower of (1) $400 per ton, or (2) 
102 percent of the average contract price by type for Segregation 1 
additional peanuts delivered under contract, plus cost, including 
inspection, warehousing, and shrinkage for such MYs as determined by 
CCC. However, after this policy was announced early contracting of 1986

[[Page 43956]]

peanuts slowed. For that reason, on April 22, 1986, the policy was 
changed to a minimum price of $400 per ton and this level has remained 
in effect for 12 consecutive years.
    A world price method of establishing the minimum export edible 
sales price could be ideal for capturing the effects of change in 
supply and demand in the world market. However, a lack of data for 
calculating world prices could limit USDA's ability to accurately 
capture the world price.
    Comments on absolute levels for the minimum export sales price and 
the method of calculating the price are being sought. Comments should 
address whether USDA should continue to announce an absolute number, or 
should a formula be used, or should an absolute number be used in 
combination with a formula. If a formula is recommended, comments 
should address what components should be included and how should the 
components be weighed.
    Following the receipt of comments, a proposed rule for the 1998 
crop and for subsequent crops, if deemed appropriate, will be issued 
which will allow for additional comment.
    Comments are sought in particular on the following questions:
    (1) Should the minimum CCC sales price for additional peanuts to be 
sold from the price support loan inventory for export edible use from 
the 1998 and future crops be changed?
    (2) Should the $400 per st level that has been in effect since 1986 
be changed?
    (3) Should USDA switch to a formula to determine the minimum price 
for additional loan peanuts sold for export edible use?
    (4) Should the formula be based on a set percentage of the weighted 
average contract price for additional peanuts for the current year?
    (5) Should the formula be based on a set percentage of the world 
price of peanuts converted to a ``Farmer Stock Basis'?
    (6) Should a formula and absolute number both be used for setting 
the export edible sales price?
    (7) Should the formula be based on a combination of contract prices 
and the world price for peanuts, and if so, what weight should contract 
additional prices and world peanut prices be given in the formula?

    Signed at Washington, DC, on August 7, 1997.
Bruce R. Weber,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 97-21795 Filed 8-15-97; 8:45 am]
BILLING CODE 3410-05-P