Tuesday, January 27, 2009

General fund reductions to stress inspection programs?

One Fresh Talk reader passes on this letter about fruit and vegetable inspection services in Michigan. The topic: shrinking general funds availability in the state will translate to higher inspection fees. This is an issue that transcends any one state, I believe. Here is the letter:

Jan. 16, 2009
Fruit and Vegetable Partners:
Subject: Fruit and Vegetable Grading Fees
As you are aware from previous communications the Pesticide and Plant Pest Management Division has sustained general fund reductions over the past several years. These general fund revenues have been critical to keeping user fees down and sustaining the Fruit and Vegetable Inspection Programs. With the loss of these general funds we have looked at all of our inspection programs and adjusted user fees for those that were important to continue.
Many of you attended a meeting for processors on October 27, 2008 or a meeting for shipping point inspection clients on November 20, 2008, where we shared information on our costs and potential revenue needs. I gathered additional information and attempted to answer any questions you had regarding the future of these inspection programs. We appreciate your participation in these sessions.
After a review of all the information and careful consideration we have arrived at a set of revised fee rates. These rates will take effect on February 15, 2009. A schedule of fee rates is attached. In most areas these rates represent substantial increases. Again, these increases are driven by the loss of general fund revenue support but also by increasing costs and need to cover program costs by users as instructed by the authorizing statute.
For processors, we have offered to provide training, at your cost, in order for you to develop an “in-house” inspection program if that would meet your needs. That offer still stands.
As we concluded the informational sessions we agreed to host a conference call for each client group to provide an opportunity for comment. These conference call opportunities are as follows:
Process Inspection: 9:00am, Friday, January 23rd
Shipping Point Inspection: 10:30am, Friday, January 23rd
P.O. BOX 30017

(517) 373-1104

Fruit and Vegetable Partners
January 16, 2009
Page 2
Conference Call Number: 877-873-8018 (Call in and follow the prompts)
Access Code: 3149559
Our intent with these conference calls is to answer any questions you may have regarding these fee rates.
I recognize that these fee increases are not pleasant news. We have diligently implemented efficiencies in the way we offer inspection services, and have worked to keep these rates as low as possible and yet continue to offer our grading services.
I appreciate your understanding in this matter.
Kenneth J. Rauscher, Director
Pesticide and Plant Pest Management Division
Michigan Department of Agriculture


Anonymous said...

A few months ago, when the USDA raised their overhead (admin) fees on the state programs, from a 5% overhead to a 7% overhead, this 40% increase meant serious trouble for the states.

Add in the state's own budget problems and you could see the demise of the state inspection programs coming a mile away. Higher fees are in the forecast, which always lead to a drop in inspection requests.

Anonymous said...

Not a big surprise. This program has been teetering for years. All it really took was a few final shoves in the form of AMS Fresh Products Branch (FPB) fee increases to put yet another program in peril. (The State Programs make every attempt to raise fees when AMS does. In fact, it may even be mandated in many instances. i.e., the States have no choice).

When is ANYONE going to wake up to the fact that the "government" inspection service, be it the Feds or the States, is slowly but surely pricing themself right out of the market with each new few increase? It's now become too expensive to get smaller lots of produce inspected. So, industry polices themself now and fewer "official" inspections are called. Result: LESS revenue for the inspection service! Knee-jerk reaction from management(AMS FPB, et al): RAISE fees to make up for the volume loss. This accelerates the downward spiral whereby even FEWER inspections will be called because of the higher fees. This can only happen for so long before the inspection service is completely bankrupt. (And they aren't far from it now). Maybe it's time the genius managers of the Fresh Products Branch tried something different as their current approach does not and WILL not work over the long haul.

It's said that a fish rots from the head down. Perhaps it's time for some new leadership at the helm of USDA FPB? (That and perhaps a MAJOR cut to some of the overpriced, non-revenue producing help/"pork" in HQ).

Rack it......