2021/2022 Rates Charged for AMS Services: Revised Tobacco Grading Rates

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Notice.

SUMMARY:

The Agricultural Marketing Service (AMS) is announcing revisions to the 2021/2022 rates it will charge for voluntary grading services for tobacco. Revised rates are based on financial information obtained since the 2021/2022 rates were announced on April 21, 2021, and will be applied to all services provided since July 1, 2021, and thereafter.

DATES:

September 1, 2021.

FOR FURTHER INFORMATION CONTACT:

Dr. Stephen Slinsky, Economist, Cotton and Tobacco Program, AMS, USDA, 3275 Appling Road, Memphis, TN 38133; telephone (901) 384-3000, or email stephen.slinsky@usda.gov.

SUPPLEMENTARY INFORMATION:

The Agricultural Marketing Act of 1946, as amended (AMA) (7 U.S.C. 1621-1627), provides for the collection of fees to cover costs of various inspection, grading, certification, or auditing services covering many agricultural commodities and products. More specifically, the Tobacco Inspection Act (7 U.S.C. 511-511s) provides for the recovery of costs associated with tobacco inspection and grading services.

On November 13, 2014, the U.S. Department of Agriculture (USDA) published in the Federal Register a final rule that established standardized formulas for calculating fee rates charged by AMS user-funded programs (79 FR 67313). Every year since then, USDA has published in the Federal Register a notice announcing rates for its user-funded programs.

On April 21, 2021, the notice announcing the 2021/2022 fee rates was published in the Federal Register (86 FR 20476). Since publication of this notice, per-unit rates necessary to cover direct and indirect costs associated with providing tobacco inspection and grading services and necessary to maintain mandated financial reserves have decreased. Therefore, AMS is announcing revisions to the 2021/2022 rates it will charge for voluntary grading services for tobacco. Revised rates are based on updated financial information and will be applied to all services provided since July 1, 2021, and thereafter.

Rates reflect direct and indirect costs of providing services. Direct costs include the cost of salaries, employee benefits, operating costs and, if applicable, travel costs. Indirect or overhead costs include the cost of Program and Agency activities supporting services provided to the industry. The formula used to calculate these rates also considers the need to maintain operating reserves.

Services provided to the tobacco industry include the grading and certification of quality factors in accordance with established U.S. Grade Standards. The quality grades serve as a basis for market prices and reflect the value of agricultural commodities to both producers and consumers. AMS's grading and certification services are voluntary tools paid for by the users on a fee-for-service basis. Industry participants may choose to use these tools to promote and communicate the quality of tobacco to consumers. AMS is required by statute to recover costs associated with providing these services.

Rates Calculations

AMS calculated rates for services, on a per-unit basis, by dividing total AMS operating cost associated with tobacco grading, inspection and certification by the total number of units graded, inspected and certified the previous year, which is then multiplied by the next year's percentage of cost-of-living increase, plus an allowance for bad debt rate. If applicable, travel expenses may also be added to the cost of providing the service.

Authority: 7 U.S.C. 511, 511s; and 7 U.S.C. 1621-1627.