AMS Proposes to Exempt Certain Organic Product Importers/Exporters, Etc. from Research and Promotion Fees

(AMS explains that Section 10607 of the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) amended the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act) to exempt any person that produces and markets solely 100% organic products, and that does not produce any conventional or nonorganic products, from paying assessments under a commodity promotion law with respect to any agricultural commodity that is produced on a certified organic farm as defined in Section 2103 of the Organic Foods Production Act of 1990 (7 USC 6502).)

Proposed Eligibility Criteria for Organic Exemption

In its proposed rule, AMS set forth the following eligibility criteria for persons seeking an organic exemption from research and promotion assessments (partial list):

Produce and market solely 100% organic products. AMS states that to be exempt from a commodity promotion assessment, a person - meaning an individual, group of individuals, corporation, association, cooperative, or other business entity - must produce and market solely 100% organic products and must not produce any nonorganic or conventional products.

For purposes of this proposed rule, "produce" means to grow or produce food, feed, livestock, or fiber or to receive food, feed, livestock, or fiber and alter that product by means of feeding, slaughtering, or processing.

AMS states that producers, handlers, first handlers, processors, importers, exporters, feeders and seed stock producers may be eligible for the exemption if they meet the definition of "produce" for purposes of this proposed rule.

AMS notes that four of the sixteen research and promotion programs apply only to traditional producers. As a result, "produce" will not be redefined for these programs. See below for further details.

Possess organic certification. In addition, such persons must possess certification from a USDA-accredited certifying agent and certify that the farm or handling operation meets the requirements of 100% organic as defined in Section 2103 of the Organic Foods Production Act of 1990.

AMS Examples Illustrate Which Operations Would Qualify for Organic Exemption

In its proposed rule, AMS provides certain examples of operations that would qualify for the proposed exemption. It also illustrates what operations would not be eligible for the organic exemption from research and promotion assessments.

Examples of operations which would qualify include:

An importer who imports 100% organic boxed beef and imports 100% organic beef and processes it into ground beef; and

An importer who imports 100% organic live cattle, feeds and grows the cattle, and is a certified handling operation.

Examples of operations that would notqualify include:

A farmer growing 100% organic soybeans and conventional corn would not be eligible for the exemption because the production is not solely 100% organic; and

An importer importing 100% organic boxed beef and selling it to another party would not be eligible for exemption because the importer does not meet the proposed rule's definition of "producer."

9-Digit Alphanumeric HTS Classification Proposed for Exempt Imports

According to AMS sources, of the 16 research and promotion programs, the following nine require importers to pay assessments: beef, blueberries, cotton, Hass avocados, honey, mushrooms, pork, potatoes, and watermelons.

AMS states that with respect to these nine research and promotion programs, their respective boards would issue importers a 9-digit alphanumeric HTS classification valid for 1 year from the date of issue. AMS explains that this HTS classification would be entered by the importer, in the appropriate location as determined by the U.S. Customs Service on the Customs entry documentation.

AMS states that any line item entry of such 100% organic products bearing this HTS classification assigned by the boards would not be subject to assessments.

Certain Research and Promotion Programs Do not Apply to Imported Products

According to AMS sources, the research and promotion programs for dairy, eggs, fluid milk, lamb, peanuts, popcorn, and soybeans do not assess fees on imports.

AMS adds that because the dairy, peanut, soybean, and egg research and promotion programs are strictly producer programs, the definition of "produce" will not be redefined as stated above because traditional producers are the only parties assessed.

(In December 2003, AMS issued a proposed rule to exempt those persons producing and marketing solely 100% organic products from paying assessments for market promotion activities, including paid advertising, to the 28 AMS-administered marketing order programs. (These marketing order programs are distinct from the research and promotion programs that are the subject of the instant April 26, 2004 proposed rule). The December 2003 proposed rule is available at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-29958.pdf.

AMS' proposed rule also states that if a mango research and promotion program is finalized, an exemption from the assessment would have to be crafted for those persons producing and marketing solely 100% organic products.)

-written comments must be received by May 26, 2004. Comments on the information collection burden that would result from this proposal must be received by June 25, 2004.

AMS Contact - Angela Snyder (202) 720-5631

AMS Proposed Rule (D/N PY-02-006, FR Pub 04/26/04) available athttp://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2004/pdf/04-9259.pdf