PACA rule - Fee increase for complaints

Big Apple first posted this proposed PACA rule on the Fresh Produce Industry Discussion Group early this a.m.
The USDA rule - and other revenue raising measures on the horizon - were discussed by the fruit and vegetable industry advisory committee earlier this year. The USDA notes the proposed fee increase will raise revenues by only $144,000 annually, and the agency said PACA's annual shortfall is $3 million; more fee increases coming, for sure........

From January this year, this is what I wrote about the industry advisory meeting:

WASHINGTON, D.C. -- In addition to affirming previous recommendations on fruit and vegetable priorities in the farm bill, the fruit and vegetable industry advisory committee also considered budget issues for the USDA's Perishable Agricultural Commodities Act Branch.
* On Jan. 23, the committee's PACA Working Group for the fruit and vegetable industry advisory committee made three motions that found approval of the committee. One of the recommendations was to raise the PACA informal complaint filing fee from $60 to $100 and the formal complaint fee from $100 to $500.
* Another motion approved by the committee was the recommendation to raise PACA license fees in fiscal year 2010 so that the PACA Trust Fund will not fall below the threshold level of 25% of the program's budget obligations by 2012. The recommendation doesn't mention a specific dollar amount, but in discussions the fee increase was projected to increase from the current $550 to $1,150.
* Finally, the working group recommended and the committee approved that the USDA create a fee structure for those who request PACA audits in connection with reparation complaints. The audit fee structure would be $1,000 for licensees and $3,000 for non-licensees.
Some in the working group said that foreign companies sometimes request PACA audits as a "fishing expedition." About half of the PACA's 400 audits last year were requested by non-U.S. firms.
Bruce Summers, chief of the USDA's PACA branch, reported to the committee Jan. 23 that PACA was unveiling a customer service call center for the branch. The customer service line had been suggested by a previously appointed fruit and vegetable advisory committee.
The customer service line can help the trade with questions about the law or contract issues.
The number for the new customer service call center is (800)-495-PACA, Summers said. The service center is available from 8 a.m. in the Eastern U.S. to 4 p.m. on the West Coast.


TK: With that back story out of the way, here is the proposed rule. By the way, the industry has until Dec. 31 to comment on the proposed rule.

SUMMARY: The Department of Agriculture (USDA) is proposing to amend the Rules of Practice under the Perishable Agricultural Commodities Act (PACA) (7 CFR part 47) to increase informal complaint filing fees and formal complaint handling fees. The proposal would increase from $60 to $100 the fee for filing an informal complaint; and would increase from $300 to $500 the fee for handling a formal complaint.


Here is the supplementary information USDA provided on the proposed rule:

The PACA program is financed by license and user fees and has an annual operating budget of approximately $10 million. Currently, annual expenses exceed revenue by $3 million, a disparity that is projected to increase each year by another 3 to 5 percent. Greater than half of the program's expenditures are payroll and related expenses, followed at a distant second by the cost of maintaining office space through rent, communications, and utility expenses. The PACA license and complaint filing fees have remained unchanged since 1995, in part due to a one-time Congressional appropriation of $30.45 million deposited into the PACA reserve fund on October 1, 2000. One of the most important functions of the Act is to require that PACA licensees fulfill their contractual obligations, and the Act provides a forum, before the Secretary, where firms that buy and sell fruits and vegetables can settle commercial disputes outside of the civil court system and recover damages for losses they have suffered. These cases are called reparation cases. In 1995, Section 6 of the PACA (7 U.S.C. 499f) was amended to require a $60 filing fee for filing an informal reparation complaint and a $300 handling fee for filing a formal reparation complaint with USDA under the PACA. Section 6 of the PACA also authorized the Secretary of Agriculture to alter the filing and handling fees by rulemaking. During its January 2007 meeting, the Fruit and Vegetable Industry Advisory Committee (Committee) recommended to the Secretary that the fee for filing an informal reparation complaint be increased to $100, and the handling fee for filing a formal reparation complaint be increased to $500. The Secretary accepted the Committee's recommendation. This proposed rule would implement the Committee's recommendation by increasing from $60 to $100 the fee for filing an informal reparation complaint; and increasing from $300 to $500 the fee for handling a formal reparation complaint. PACA Rules of Practice applicable to reparation complaint proceedings inform the industry of USDA's procedures and requirements for the handling of informal and formal complaints under the Act (7 CFR, Part 47). Section 47.3(a) of the current Rules of Practice (7 CFR 47.3(a)) requires that a $60 filing fee accompany any written correspondence and related documents pertaining to the transaction(s) involved in the dispute before AMS can process and open an informal reparation complaint on behalf of the complainant. When an informal reparation complaint is filed, AMS makes every effort to assist the parties in reaching a settlement of their dispute while gathering documents as part of its investigation. Mediation services are also offered to the parties throughout the informal handling of the complaint. If an informal settlement cannot be reached, however, the complainant is given the opportunity to file a formal reparation complaint. Section 47.6(c) of the current Rules of Practice (7 CFR 47.6(c)) requires that a complainant filing a formal reparation complaint pay a $300 handling fee to AMS to initiate formal complaint proceedings. Under formal complaint procedures, USDA's Judicial Officer issues a binding decision in the case. In Fiscal Year 2007, there were 1,418 informal reparation complaints and 325 formal reparation complaints filed with AMS under the PACA. Over 91 percent of the informal complaints filed under the Act were resolved informally within 4 months. These complaints involved produce transactions valued at over[[Page 61821]]$17.5 million. USDA issued formal decision and orders in 322 cases involving award amounts totaling approximately $5.6 million. The largest award issued by USDA in Fiscal Year 2007 ordered payment of over $257,000 to a fruit and vegetable dealer. In Fiscal Year 2006, AMS received 1,559 informal reparation complaints of which 92 percent were resolved informally within a 4-month timeframe. In Fiscal Year 2006, informal settlements exceeded $18.7 million. There were 300 formal reparation complaints filed under the Act that year. AMS does not expect this proposal to raise a significant amount of revenue for the PACA program (estimated at $144,000 annually), but by increasing the fees for filing informal and formal reparation complaints, AMS believes that the burden for financing the PACA program is shifted more towards those who benefit directly from using PACA program services.

You have reached the voice mail of.....

I'm not guilty only because I don't try, but it seems that everyone else I leave a message with this week has embarrassingly outdated phone messages.

"I'm at the PMA show and I'll be returning"

"I'll be out till Oct. 26....

"I'll be back from vacation July 24..."

For the sake of bewildered callers, let's all take about 15 minutes and update the phone message, That is, everyone except for me.

As for me, I have quit trying to keep my schedule in sync with my phone message. I figure that people can send me an email or perhaps check the blog and see where I happen to be at any given time. Presumptuous, I'm sure, but certainly no worse than the alternative.

New money for nutrition

It could be some of the battles on the floor of the Senate over the farm bill may be avoided with this news from the office of Sen. Tom Harkin. Meanwhile, Robert Guenther said this morning that senior staff on the Hill told him the farm bill may start later rather than earlier next week. Probably not a Monday start...
From Harkin's office:

Farm Bill Negotiation Improves ACR Program, Boosts Nutrition Funding by $1 Billion Chairman, Members of Senate Agriculture Committee Strike Deal to Allocate Savings Provided in Revenue Proposal

Washington, D.C. – An additional $1 billion will be devoted to boosting USDA nutrition assistance in the Senate version of the new farm bill – the Food and Energy Security Act of 2007 – under an agreement concluded among Chairman Tom Harkin (D-IA) and other members of the Committee on Agriculture, Nutrition and Forestry. The additional funding became available when the Congressional Budget Office (CBO) estimated additional cost savings from the Average Crop Revenue (ACR) program as details of an amendment by Senator Pat Roberts (R-KS) were worked out. The Committee agreed last week to devote any surplus funds generated from the ACR-related amendment to nutrition assistance. This week, it was determined that additional ten-year budget savings under the modified ACR would be $1.092 billion. The ACR program included in the farm bill reported from the Committee closely reflect legislation authored by Senators Dick Durbin (D-IL) and Sherrod Brown (D-OH). “The agreement we were able to work out among members of the Committee re-invests these critical farm bill dollars in one of our nation’s most urgent needs – nutrition assistance to low-income Americans,” said Chairman Harkin.
“Throughout this farm bill process I have advocated for additional funding to improve our USDA food assistance. The ACR savings allow us to raise the food stamp asset limit and thus allow low-income Americans to nutrition assistance before hitting rock, increase the minimum food stamp benefit, which is especially important to seniors, and also strengthen federal help to our nation’s food banks.”

“During the deliberations in the Agriculture Committee over the Roberts amendment, my goal was to improve ACR and, if possible, expand nutrition programs. Today’s compromise goes beyond my initial expectations – it will feed the hungry by providing more people with more benefits while improving the ACR option for farmers,” said Brown, the first Ohio Senator in 40 years to serve on the Agriculture Committee. “However, there is much work left to done to give farmers a real choice in farm programs. I will continue to work on behalf of Ohio farmers to strengthen the program as it moves to the floor of the Senate.”

“The improved ACR program that was recently negotiated will save us an additional $1 billion while providing better protection for farmers by protecting revenue rather than merely price as the current system does,” said Durbin. "The proposal included in Chairman Harkin's bill is a significant step forward and it will help us make our support programs work better for both producers and taxpayers."

The savings determined by CBO will not only strengthen nutrition, but also improve the ACR program by raising the fixed payment on base acres from 85 percent to 100 percent. The savings are from the reduced payment acres for the revenue portion and from the one-time signup, i.e., producers can enroll in either 2010, 2011, or 2012, but once a producer signs up, the producer has to stay in the ACR through the end of the farm bill. Other savings occur because there is less participation in the direct and counter-cyclical payments, and loan benefits, and from the 2 percentage point reduction in administrative and operating expenses for crop insurance. According to the agreement, the savings will be allocated as follows: Increase food stamp asset limit from $2000 to $3500 for most households. from $3000 to $4500 for households containing an elderly individual or an individual with a disability. Increase food stamp minimum benefit to 10 percent of the maximum benefit for a household of one. This matches the minimum benefit agreed to in the House-passed farm bill. This would raise the minimum monthly benefit from $10 to $18 by 2012. Provide an additional $10 million annually for The Emergency Food Assistance Program (TEFAP) and food banks over the committee mark. This brings the annual increase for TEFAP to $110 million annually.

The Food and Energy Security Act of 2007 was approved by the Senate Agriculture Committee Thursday, October 25th and is scheduled for floor consideration the week of November 5th. The funding changes agreed to will be incorporated into the bill through procedural, technical changes before floor consideration.

Grapefruit swoon - Bearing Acreage

The USDA reports total U.S. grapefruit acreage has been cut in half in 25 years, and this chart clearly shows Florida has been driving the trend.