[Federal Register Volume 66, Number 109 (Wednesday, June 6, 2001)]
[Rules and Regulations]
[Pages 30291-30296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14236]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 985

[Docket No. FV-01-985-1 FR]


Marketing Order Regulating the Handling of Spearmint Oil Produced 
in the Far West; Salable Quantities and Allotment Percentages for the 
2001-2002 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule establishes the quantity of spearmint oil produced 
in the Far West, by class, that handlers may purchase from, or handle 
for, producers during the 2001-2002 marketing year, which begins on 
June 1, 2001. This rule establishes salable quantities and allotment 
percentages for Class 1 (Scotch) spearmint oil of 900,208 pounds and 48 
percent, respectively, and for Class 3 (Native) spearmint oil of 
938,944 pounds and 45 percent, respectively. The Spearmint Oil 
Administrative Committee (Committee), the agency responsible for local 
administration of the marketing order for spearmint oil produced in the 
Far West, recommended this rule for the purpose of avoiding extreme 
fluctuations in supplies and prices, and thus help to maintain 
stability in the spearmint oil market.

EFFECTIVE DATE: June 1, 2001, through May 31, 2002.

FOR FURTHER INFORMATION CONTACT: Robert J. Curry, Northwest Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1220 SW Third Avenue, suite 385, 
Portland, Oregon 97204; telephone: (503) 326-2724; Fax: (503) 326-7440; 
or George Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491; Fax: (202) 
720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 
720-8938, or E-mail: <a href="/cdn-cgi/l/email-protection#541e352d7a1321312636312614212730357a333b22"><span class="__cf_email__" data-cfemail="f1bb9088dfb6849483939483b184829590df969e87">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Order No. 985 (7 CFR part 985), as amended, regulating the handling of 
spearmint oil produced in the Far West (Washington, Idaho, Oregon, and 
designated parts of Nevada and Utah), hereinafter referred to as the 
``order.'' This 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 Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the provisions of 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 the quantity of spearmint oil produced in the Far West, by 
class, that may be purchased from or handled for producers by handlers 
during the 2001-2002 marketing year, which begins on June 1, 2001. This 
rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after the date of the entry of the ruling.
    Pursuant to authority in sections 985.50, 985.51, and 985.52 of the 
order, the Committee recommended the salable quantities and allotment 
percentages for the 2001-2002 marketing year at its October 11, 2000, 
meeting. The Committee unanimously recommended the establishment of a 
salable quantity and allotment percentage for Class 1 (Scotch) 
spearmint oil of 900,208 pounds and 48 percent, respectively, and a 
salable quantity and allotment percentage for Class 3 (Native) 
spearmint oil of 938,944 pounds and 45 percent, respectively.

[[Page 30292]]

    This final rule limits the amount of spearmint oil that handlers 
may purchase from, or handle for, producers during the 2001-2002 
marketing year, which begins on June 1, 2001, and ends on May 31, 2002. 
Salable quantities and allotment percentages have been placed into 
effect each season since the order's inception in 1980.
    The U.S. production of spearmint oil is concentrated in the Far 
West, primarily Washington, Idaho, and Oregon (part of the area covered 
by the marketing order). Spearmint oil is also produced in the Midwest. 
The production area covered by the marketing order currently accounts 
for approximately 55 percent of the annual U.S. production of Scotch 
spearmint oil and over 90 percent of the annual U.S. production of 
Native spearmint oil.
    When the order became effective in 1980, the U.S. produced nearly 
100 percent of the world's supply of Scotch spearmint oil, of which 
approximately 72 percent was produced in the regulated production area 
in the Far West. The Far West continued to produce an average of about 
69 percent of the world's Scotch spearmint oil supply during the period 
from 1980 to 1990. International production characteristics have 
changed since 1990, however, with foreign Scotch spearmint oil 
production contributing significantly to world production. The Far 
West's market share as a percent of total world sales has averaged 
about 44 percent since 1990.
    Starting with the 1996-97 marketing year, the Committee employed a 
marketing strategy for Scotch spearmint oil that was intended to foster 
market stability and expand market share. This marketing strategy was 
an attempt to remain competitive on an international level by regaining 
a substantial amount of the Far West's historical share of the global 
market for this class of oil. In employing this strategy, the Committee 
was recommending the establishment of a salable quantity and allotment 
percentage for Scotch spearmint oil in excess of the estimated trade 
demand for each marketing year. In the development of its annual 
marketing policy statements during this period, the Committee's 
strategy considered general market conditions for each class of 
spearmint oil, including the Far West's world market share as it 
relates to the overall market stability of spearmint oil.
    During its deliberations at the October 11, 2000, meeting, however, 
the Committee concluded that its marketing strategy for Scotch 
spearmint oil of the past few seasons has not been entirely effective. 
Although sales have increased, the Far West's market share as a 
percentage of total world sales has not increased on average, and the 
market price for Scotch spearmint oil has continued to decline 
throughout this period. During the last two marketing years, the price 
paid to producers for Scotch spearmint oil has dropped to a low of 
$7.00 per pound. The Committee believes that such a price is generally 
below the cost of production for most producers.
    Furthermore, due to the depressed market, many producers with 
allotment base have not planted Scotch spearmint in recent years. The 
order (7 CFR 985.53(e)) requires that producers must make a bona fide 
effort to produce their annual allotment, or failing to do so, have 
their allotment base reduced by an amount equivalent to the unproduced 
portions. With prices near or below the cost of production, many 
producers also face the potential of going out of business. The 
Committee determined that its only responsible course of action was to 
adjust its marketing strategy in an attempt to stabilize prices at a 
reasonable level while still considering market share. Therefore, the 
Committee's recommendation for Scotch spearmint oil for the 2001-2002 
marketing year is based on a desire to remain competitive on an 
international level while maintaining the supply of oil at a level that 
could enhance prices and thus help producers to remain solvent. The 
Committee believes that this recommendation will stabilize the market 
at a level that is sustainable for the majority of Scotch spearmint oil 
producers.
    Despite the recent downward trend in the price of both classes of 
spearmint oil, the Committee believes that the order has contributed 
extensively to the stabilization of producer prices, which prior to 
1980 experienced wide fluctuations from year to year. According to the 
National Agricultural Statistics Service, for example, the average 
price paid for both classes of spearmint oil ranged from about $4.00 
per pound to about $12.50 per pound during the period between 1968 and 
1980. Excluding the most recent two marketing years, prices since the 
order's inception have generally stabilized at about $11.00 per pound 
for Native spearmint oil and at about $13.00 per pound for Scotch 
spearmint oil. Over the last couple of years, the price has dropped to 
about $9.00 per pound and $7.00 per pound, respectively, for Native and 
Scotch spearmint oils despite the Committee's efforts to balance 
available supplies with demand. Based on comments made at the 
Committee's meeting, factors that could have contributed to the low 
prices include the relatively poor returns being realized from other 
essential oils, an abundant supply of spearmint oil, and the continuing 
overall weak farm situation.
    The major conditions contributing to the Committee's current 
recommendation of 45 percent for the Native spearmint oil allotment 
percentage for the 2001-2002 marketing year include a surplus of oil 
and the resultant softening price being offered to producers. The 
surplus has a basis in the higher than anticipated carry-in on June 1, 
2000, caused in part by a late-season increase in last year's salable 
quantity. The Committee recommended that increase last year due to 
signals from the industry that there was demand for more oil--a demand 
that did not materialize as expected. Thus, with over 90 percent of the 
world production currently located in the Far West, the Committee's 
method of calculating the Native spearmint oil salable quantity and 
allotment percentage continues to primarily utilize information on 
price and available supply as they are affected by the estimated trade 
demand.
    The Committee based its recommendation for the salable quantity and 
allotment percentage for each class of spearmint oil for the 2001-2002 
marketing year on the summary presented above, as well as the data 
outlined below.

(1) Class 1 (Scotch) Spearmint Oil

    (A) Estimated carry-in on June l, 2001--735,517 pounds. This figure 
is derived by subtracting the estimated 2000-2001 marketing year trade 
demand of 900,000 pounds from the revised 2000-2001 marketing year 
total available supply of 1,635,517 pounds. The 2000-2001 marketing 
year trade demand is an updated figure based on sales to date, 
historical data, and input from spearmint oil producers and handlers. 
The 2000-2001 marketing year total available supply has been revised 
from the figure originally estimated by the Committee during its 
deliberations for the 2000-2001 marketing year salable quantities and 
allotment percentages due to updated production estimates and the 
available reserve pool oil on June 1, 2000.
    (B) Total estimated allotment base for the 2001-2002 marketing 
year--1,875,433 pounds. This figure represents a one percent increase 
over the revised 2000-2001 total allotment base. Section 985.53(d)(1) 
requires that the Committee make additional allotment bases available 
for each class of oil in the amount of no more than 1 percent of the 
total allotment base for

[[Page 30293]]

that class of oil. The total allotment base for each marketing year is 
generally revised during each such marketing year since it is estimated 
several months earlier during the respective annual marketing policy 
meetings.
    (C) Average salable quantity as recommended at the five production 
area meetings--888,955 pounds.
    (D) Recommended allotment percentage--48 percent. This figure is 
based on the average of the salable quantity recommended at the five 
production area meetings divided by the total estimated allotment base. 
Committee records show that this is slightly above the average of the 
past seven years' sales (891,815 pounds or 47.6 percent).
    (E) The Committee's recommended salable quantity--900,208 pounds. 
This figure is the product of the recommended allotment percentage and 
the total estimated allotment base.
    (F) Estimated available supply for the 2001-2002 marketing year--
1,635,725 pounds. This figure is the sum of the recommended salable 
quantity and the estimated carry-in on June 1, 2001.
    (G) Estimated trade demand for the 2001-2002 marketing year--
875,000 pounds. This figure is based on estimates provided by producers 
and handlers at the five Scotch spearmint oil production area meetings 
held in September 2000. These estimates were derived using average 
sales figures for the past 20 years as well as input from handlers 
regarding current and projected demand for Far West spearmint oil.
    (H) Estimated carry-out on May 31, 2002--760,725 pounds. This 
figure is the difference between the estimated available supply and the 
estimated trade demand for the 2001-2002 marketing year.

(2) Class 3 (Native) Spearmint Oil

    (A) Estimated carry-in on June 1, 2001--130,929 pounds. This figure 
is the difference between the estimated 2000-2001 marketing year trade 
demand of 990,000 pounds and the revised 2000-2001 marketing year total 
available supply of 1,120,929 pounds.
    (B) Estimated trade demand for the 2001-2002 marketing year--
1,000,000 pounds. This figure is based on the average of the estimates 
provided at the four Native spearmint oil production area meetings held 
in September 2000.
    (C) Salable quantity required from the 2001-2002 marketing year 
production--864,071 pounds. This figure is the calculated difference 
between the estimated 2001-2002 marketing year trade demand and the 
estimated carry-in on June 1, 2001.
    (D) Total estimated allotment base for the 2001-2002 marketing 
year--2,086,542 pounds. This figure represents a one percent increase 
over the revised 2000-2001 total allotment base.
    (E) Computed allotment percentage--41.7 percent. This percentage is 
computed by dividing the required salable quantity by the total 
estimated allotment base.
    (F) Recommended allotment percentage--45 percent. This is the 
Committee's recommendation based on the computed allotment percentage, 
the average of the computed allotment percentage figures from the four 
production area meetings (46.4 percent), and input from producers and 
handlers.
    (G) The Committee's recommended salable quantity--938,944 pounds. 
This figure is the product of the recommended allotment percentage and 
the total estimated allotment base.
    (H) Estimated available supply for the 2001-2002 marketing year--
1,069,873 pounds.
    The salable quantity is the total quantity of each class of 
spearmint oil which handlers may purchase from or handle on behalf of 
producers during a marketing year. Each producer is allotted a share of 
the salable quantity by applying the allotment percentage to the 
producer's allotment base for the applicable class of spearmint oil.
    The Scotch spearmint oil salable quantity of 900,208 pounds and 
allotment percentage of 48 percent are based on the Committee's goal of 
maintaining market stability by avoiding extreme fluctuations in 
supplies and prices, and thereby helping the industry remain 
competitive on the international level. The Native spearmint oil 
salable quantity of 938,944 pounds and allotment percentage of 45 
percent are based on the anticipated supply and trade demand during the 
2001-2002 marketing year. The salable quantities are not expected to 
cause a shortage of spearmint oil supplies. Any unanticipated or 
additional market demand for spearmint oil which may develop during the 
marketing year can be satisfied by an increase in the salable 
quantities. Both Scotch and Native spearmint oil producers who produce 
more than their annual allotments during the 2001-2002 season may 
transfer such excess spearmint oil to a producer with spearmint oil 
production less than his or her annual allotment or put it into the 
reserve pool.
    This regulation is similar to those which have been issued in prior 
seasons. Costs to producers and handlers resulting from this action are 
expected to be offset by the benefits derived from a stable market and 
improved returns. In conjunction with the issuance of this final rule, 
the Committee's marketing policy statement for the 2001-2002 marketing 
year has been reviewed by the Department. The Committee's marketing 
policy statement, a requirement whenever the Committee recommends 
volume regulations, fully meets the intent of section 985.50 of the 
order. During its discussion of potential 2001-2002 salable quantities 
and allotment percentages, the Committee considered: (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) prospective 
production of each class of oil; (4) 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. 
Conformity with the Department's ``Guidelines for Fruit, Vegetable, and 
Specialty Crop Marketing Orders'' has also been reviewed and confirmed.
    The establishment of these salable quantities and allotment 
percentages allow for anticipated market needs. In determining 
anticipated market needs, consideration by the Committee was given to 
historical sales, as well as changes and trends in production and 
demand. This rule also provides producers with information on the 
amount of spearmint oil which should be produced for next season in 
order to meet anticipated market demand.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, the AMS 
has prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are 7 spearmint oil handlers subject to regulation under the 
order,

[[Page 30294]]

and approximately 116 producers of Class 1 (Scotch) spearmint oil and 
approximately 102 producers of Class 3 (Native) spearmint oil in the 
regulated production area. Small agricultural service firms are defined 
by the Small Business Administration (SBA)(13 CFR 121.201) as those 
having annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those whose annual receipts of less than 
$500,000.
    Based on the SBA's definition of small entities, the Committee 
estimates that 2 of the 7 handlers regulated by the order could be 
considered small entities. Most of the handlers are large corporations 
involved in the international trading of essential oils and the 
products of essential oils. In addition, the Committee estimates that 
25 of the 116 Scotch spearmint oil producers and 7 of the 102 Native 
spearmint oil producers could be classified as small entities under the 
SBA definition. Thus, a majority of handlers and producers of Far West 
spearmint oil may not be classified as small entities.
    The Far West spearmint oil industry is characterized by producers 
whose farming operations generally involve more than one commodity, and 
whose income from farming operations is not exclusively dependent on 
the production of spearmint oil. Crop rotation is an essential cultural 
practice in the production of spearmint oil for weed, insect, and 
disease control. A normal spearmint oil producing operation has enough 
acreage for rotation such that the total acreage required to produce 
the crop is about one-third spearmint and two-thirds rotational crops. 
An average spearmint oil producing farm has to have considerably more 
acreage than is planted to spearmint during any given season. To remain 
economically viable with the added costs associated with spearmint oil 
production, most spearmint oil producing farms fall into the SBA 
category of large businesses.
    This final rule establishes the quantity of spearmint oil produced 
in the Far West, by class, that handlers may purchase from, or handle 
for, producers during the 2001-2002 marketing year. The Committee 
recommended this rule for the purpose of avoiding extreme fluctuations 
in supplies and prices, and thus help to maintain stability in the 
spearmint oil market. This action is authorized by the provisions of 
sections 985.50, 985.51 and 985.52 of the order.
    Small spearmint oil producers generally are not extensively 
diversified and as such are more at risk to market fluctuations. Such 
small farmers generally need to market their entire annual crop and do 
not have the luxury of having other crops to cushion seasons with poor 
spearmint oil returns. Conversely, large diversified producers have the 
potential to endure one or more seasons of poor spearmint oil markets 
because incomes from alternate crops could support the operation for a 
period of time. Being reasonably assured of a stable price and market 
provides small producing entities with the ability to maintain proper 
cash flow and to meet annual expenses. Thus, the market and price 
stability provided by the order potentially benefit the small producer 
more than such provisions benefit large producers. Even though a 
majority of handlers and producers of spearmint oil may not be 
classified as small entities, the volume control feature of this order 
has small entity orientation.
    The U.S. spearmint oil market is considered a mature agricultural 
operation. Aggregate demand for spearmint oil tends to be relatively 
stable from year-to-year. The demand for spearmint oil is expected to 
grow slowly for the foreseeable future because the demand for consumer 
products that use spearmint oil is expected to expand slowly in line 
with population growth. Demand for spearmint oil at the farm level is 
derived from the demand for spearmint-flavored products at retail and 
the manufacturers of chewing gum, toothpaste, and mouthwash are by far 
the largest users of mint oil. In general, the farm-level demand for a 
commodity consists of the demand at retail or food service outlets 
minus per-unit processing and distribution costs incurred in 
transforming the raw farm commodity into a product available to 
consumers. These costs comprise what is known as the ``marketing 
margin.'' However, spearmint flavoring tends to be a very small 
component of the retail price for the products in which it is used.
    Mint producers tend to respond to price signals. Consequently, 
there has been a cycle where larger producer stocks of unsold spearmint 
oil have depressed producer prices for a number of years, and then 
shortages and high prices occur in subsequent years.
    The wide fluctuations in supply and prices that result from this 
cycle create liquidity problems for some producers, particularly those 
with a heavy debt load. Moreover, producers have been less able to 
weather these cycles in recent years because of the decline in prices 
of many alternative crops. As noted earlier, almost all spearmint oil 
producers diversify by growing other crops. It is important that 
spearmint be rotated with other crops to avoid the development of 
disease problems.
    Instability in the spearmint oil subsector of the mint industry is 
much more likely to originate on the supply side than the demand side. 
Fluctuations in yield and acreage planted from season-to-season tend to 
be larger than fluctuations in the amount purchased by buyers. From 
1980 through 2000, production averaged 1,888,810 pounds. The standard 
deviation over this period was 480,911 pounds. This indicates that 
production can vary by over 480,000 pounds from year-to-year.
    This variation in production has necessitated the use of a reserve 
pool to store product in large production years; these stocks are drawn 
down in short production years. In any given year, the total available 
supply of spearmint oil is composed of current production plus carry-
over stocks from the previous crop.
    In an effort to stabilize prices, the spearmint oil industry uses 
the volume control mechanisms authorized under the order. This 
authority allows the industry to recommend a salable quantity and 
allotment percentage for each class of oil for the upcoming marketing 
year. The salable quantity for each class of oil is the total volume of 
that oil which producers may sell during the marketing year.
    The allotment percentage for each class of spearmint oil is derived 
by dividing the salable quantity by the total allotment base. Each 
producer is then issued an annual allotment certificate, in pounds, for 
the applicable class of oil, which is calculated by multiplying the 
producer's allotment base by the applicable allotment percentage.
    By November 1 of each year, the Committee identifies any oil that 
individual producers have produced above the volume specified on their 
annual allotment certificates. This excess oil is placed into a reserve 
pool administered by the Committee.
    The reserve pool oil may not be sold during the current marketing 
year unless the Secretary approves a Committee recommendation to make a 
portion of the pool available. There is a reserve pool for each class 
of oil. However, a producer's reserve oil can be used to fill 
deficiencies in production (which is less than the salable quantity) 
and excess production can be sold to fill other producers' 
deficiencies.
    The order attempts to minimize the price depressing effect that 
excess producer stocks have on unsold spearmint oil. Furthermore, the 
order attempts to stabilize prices by having stocks available in short 
supply years when prices would increase

[[Page 30295]]

dramatically, and limiting supply and establishing reserves in high 
production years when prices would fall dramatically.
    It is the goal of the Committee to balance supply and demand with 
an appropriate carry-out in order to maintain market stability. If the 
industry has production in excess of the salable quantity, then the 
reserve pool absorbs the surplus and spearmint oil goes unsold.
    To assess the impact that volume control has on the prices 
producers receive for their commodity, an econometric model has been 
developed projecting that the volume control mechanism used by the 
spearmint oil industry will result in decreased production. Without 
volume control, spearmint oil markets would likely be over-supplied, 
resulting in low producer prices and a large volume of oil stored and 
carried over to the next crop year.
    The price received by producers for harvesting their crops is 
largely determined by the level of production and carry-in inventories. 
In years of oversupply and low prices, the season average producer 
price of spearmint oil has failed to cover the average variable cost of 
production. The estimated model provides a way to see what impacts 
volume control may have on producer prices. The econometric model is 
used to estimate producer prices with and without regulation. Without 
volume controls, the estimated season-average producer price would be 
approximately $8.97 per pound and production is assumed to increase to 
3,961,975 pounds. With volume controls, production would be limited to 
the salable quantity of 2,086,542 pounds and the producer price would 
be estimated at approximately $10.43 per pound.
    The Committee has estimated the total trade demand for spearmint 
oil to be 1,929,623 pounds for the 2001-2002 marketing year. Without 
volume controls, the volume supplied to the market would be 
approximately 3,961,975 pounds. This would result in a severe surplus 
situation for the spearmint oil market. This situation would not only 
negatively impact producer prices this year, but would dampen prospects 
for prices in future years because of the buildup in stocks. The 
econometric model shows that for every one percent increase in carry-in 
inventories, a decrease of 0.07 percent in producer prices occurs. The 
use of volume controls allows the industry to fully supply spearmint 
oil markets while avoiding the disastrous results of over-supplying 
these markets. The use of volume controls is believed to have little to 
no effect on consumer prices and will not result in fewer retail sales.
    Moreover, the use of volume controls is believed to have a positive 
impact on producers' revenues. With regulation, producers' revenues are 
estimated to be $20,125,968. In this scenario, demand is estimated at 
1,929,623 pounds and price at $10.43 per pound. Without regulation, 
producer prices are estimated to be $8.97 per pound and the total 
demand for spearmint oil would have to increase to 2,243,698 pounds for 
producers to be as well off as in the regulated scenario. However, even 
if demand were to increase to 2,243,698 pounds in response to the lower 
$8.97 per pound price, over 1,700,000 pounds of spearmint oil would 
likely be placed in storage, putting tremendous downward pressure on 
price the next crop year.
    The Committee discussed alternatives to this rule including higher 
and lower levels for the salable quantities and allotment percentages 
for both classes of oil, as well as not regulating the handling of 
spearmint oil during the 2001-2002 marketing year.
    During this discussion, one producer recommended that the Committee 
continue with the Scotch spearmint oil marketing strategy that it has 
used in the recent past. He recommended the establishment of an 
allotment percentage of 65 percent or higher, or alternatively, that 
there be no regulation established for Scotch spearmint oil during the 
2001-2002 marketing year. The producer was of the opinion that the 
global nature of Scotch spearmint oil production negates the 
stabilizing benefits of the order, and therefore the order, in regards 
to Scotch spearmint oil, no longer effectuates the declared policy of 
the Act. He opined that a swing in policy from 65 percent to a 48 
percent allotment percentage is radical and will not stabilize the 
market nor improve prices to producers.
    With several individuals commenting during the meeting, however, 
most indicated support for a change in the marketing strategy for 
Scotch spearmint oil to an approach that takes into consideration 
current price, supply, and demand along with the Far West's share of 
the world market. It was noted that, although world production of 
Scotch spearmint oil has increased significantly, the provisions of the 
order in regards to this class of oil are still relevant since demand 
for high quality Far West spearmint oil remains relatively good. 
Blending of essential oils is more prevalent today then in the past. 
Consequently, the Committee believes that buyers will continue to seek 
out the quality Far West spearmint oil for the purpose of blending with 
the readily available lower quality oils. The Committee's belief that 
the Scotch spearmint oil market can be improved and stabilized is 
reflected in its recommendation to establish the salable quantity and 
allotment percentage at 900,208 pounds and 48 percent, respectively. 
The Committee is of the view that levels higher than 48 percent could 
cause further depression in prices, thus potentially forcing some 
producers out of business.
    The Committee discussed alternative allotment percentage levels for 
Native spearmint oil from a low of 43 percent to a high of 46 percent. 
With the current price for Native spearmint oil lower than the 20 year 
average, and demand fairly flat, the Committee, after considerable 
discussion, decided on 938,944 pounds and 45 percent as the most 
effective salable quantity and allotment percentage, respectively, for 
the 2001-2002 marketing year.
    Further, 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) prospective production of each class of oil; (4) 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 
quantity and allotment percentage levels recommended will achieve the 
objectives sought.
    As stated earlier, the Committee believes that the order has 
contributed extensively to the stabilization of producer prices, which 
prior to 1980 experienced wide fluctuations from year to year. National 
Agricultural Statistics Service records show that the average price 
paid for both classes of spearmint oil ranged from about $4.00 per 
pound to about $12.50 per pound during the period between 1968 and 
1980. Excluding the most recent two marketing years, prices since the 
order's inception have generally stabilized at about $11.00 per pound 
for Native spearmint oil and at about $13.00 per pound for Scotch 
spearmint oil. Over the last two years, the price has dropped

[[Page 30296]]

to about $9.00 per pound and $7.00 per pound, respectively, for Native 
and Scotch spearmint oils despite the Committee's efforts to balance 
available supplies with demand.
    Without any regulations in effect, the Committee believes the 
industry would return to the pattern of cyclical prices of prior years, 
as well as suffer the potentially price depressing consequence that a 
release of over a million pounds of spearmint oil reserves would have 
on the market. Thus, according to the Committee, levels for the salable 
quantities and allotment percentages either higher or lower than those 
recommended would not achieve the intended goals of market and price 
stability.
    As stated earlier, annual salable quantities and allotment 
percentages have been issued for both classes of spearmint oil since 
the order's inception. Reporting and recordkeeping requirements have 
remained the same for each year of regulation. These requirements have 
been approved by the Office of Management and Budget under OMB Control 
No. 0581-0065. Accordingly, this action does not impose any additional 
reporting or recordkeeping requirements on either small or large 
spearmint oil producers and handlers. All reports and forms associated 
with this program are reviewed periodically in order to avoid 
unnecessary and duplicative information collection by industry and 
public sector agencies. The Department has not identified any relevant 
Federal rules that duplicate, overlap, or conflict with this final 
rule.
    Finally, the Committee's meeting was widely publicized throughout 
the spearmint oil industry and all interested persons were invited to 
attend and participate on all issues. Like all Committee meetings, the 
October 11, 2000, meeting was a public meeting and all entities, both 
large and small, were able to express views on this issue. Interested 
persons were also invited to submit information on the regulatory and 
informational impacts of this action on small businesses.
    A proposed rule was published in the Federal Register (66 FR 20615) 
on April 24, 2001. A 15-day comment period was provided to allow 
interested persons the opportunity to respond to the proposal, 
including any regulatory and informational impacts of this action on 
small businesses. A copy of the proposed rule was both faxed and mailed 
to the Committee office, which in turn notified Committee members and 
spearmint oil producers and handlers of the proposed action. A copy of 
the proposal was also made available on the Internet by the U.S. 
Government Printing Office. No comments were received.
    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/fv/moab.html. Any questions about the 
compliance guide should be sent to Jay Guerber at the previously 
mentioned address in the FOR FURTHER INFORMATION CONTACT section.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because the 2001-2002 marketing year 
begins on June 1, 2001. Further, handlers are aware of this rule, which 
was recommended at a public meeting. Also, a 15-day comment period was 
provided for in the proposed rule and no comments were received.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.

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

    1. The authority citation for 7 CFR Part 985 continues to read as 
follows:

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

    2. A new Sec. 985.220 is added to read as follows:

[Note: This section will not appear in the Code of Federal 
Regulations.]


Sec. 985.220  Salable quantities and allotment percentages--2001-2002 
marketing year.

    The salable quantity and allotment percentage for each class of 
spearmint oil during the marketing year beginning on June 1, 2001, 
shall be as follows:
    (a) Class 1 (Scotch) oil--a salable quantity of 900,208 pounds and 
an allotment percentage of 48 percent.
    (b) Class 3 (Native) oil--a salable quantity of 938,944 pounds and 
an allotment percentage of 45 percent.

    Dated: June 1, 2001.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 01-14236 Filed 6-1-01; 2:02 pm]
BILLING CODE 3410-02-P


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