FR 2021-00165

The document published by the Agricultural Marketing Service (AMS) outlines the fee schedule for 2021 regarding the official inspection and weighing services of grain under the United States Grain Standards Act (USGSA). This fee schedule is crucial for maintaining fair practices in grain inspection and weighing across the U.S. The new fees, set to comply with Federal Grain Inspection Service (FGIS) regulations, saw a necessary adjustment due to a shortfall in operating reserves.

General Summary

The document explains that due to an operating reserve below the target level set by the regulations, a 5% increase in Schedule A fees was instituted for 2021. The operating reserve acts as a financial cushion for the operations of the FGIS, and adjustments to the fees ensure it remains within the targeted range. The fees are ultimately defined by both national and local factors related to grain tonnage over a rolling 5-year average.

Significant Issues and Concerns

1. Lack of Detail on Local Tonnage Fees: While the document discusses a 5% increase for Schedule A fees, it does not specifically break down how local tonnage fees are calculated or their final amounts. This omission leaves stakeholders without clarity on these specific charges, raising questions about fairness and accuracy.

2. Opaque Calculation Explanations: The document mentions technical regulations (like 7 CFR 800.71) without sufficiently breaking them down for those not versed in such regulatory language. Thus, the general public might find it challenging to understand how these increases were precisely implemented.

3. Ignoring Alternative Solutions: Although fees were increased due to shortfalls in the operating reserve, there is no mention of exploring alternative measures, such as cutting expenses, to address the deficit. This narrow approach to financial adjustments might seem shortsighted to the public and stakeholders.

Public Impact

The adjustments in fees primarily affect those in the agriculture industry involved in processing, exporting, and shipping grains. For the broader public, the implications might appear indirect. However, these fees potentially influence the prices of products that depend on such grains, which could slightly impact consumer costs.

Impact on Stakeholders

Specific stakeholders, including exporters, grain processors, and possibly small businesses, might experience more significant impacts due to the fee adjustments than others. With a 5% rise in fees, the operational costs for handling grain increase, particularly affecting smaller entities with tight budget constraints. Unfortunately, the document does not discuss potential mitigation strategies for these businesses, raising concerns about the lack of transparency or support for these groups. Conversely, maintaining a stable operating reserve protects the integrity of grain inspection services, suggesting a long-term benefit in ensuring fair and accurate trade practices.

In conclusion, while the fee increase is a regulatory requirement to sustain operational capabilities, the document's lack of accessible explanation and consideration of stakeholder variability is noteworthy. For improved public engagement, clearer communication and an exploration of alternative methods to address financial shortfalls are essential.

The document under review, published by the Agricultural Marketing Service (AMS), outlines the fee schedule for official inspection and weighing services under the United States Grain Standards Act (USGSA) for the year 2021. This fee schedule impacts the Federal Grain Inspection Service (FGIS), an entity that reviews and adjusts these fees to ensure the program's financial stability.

Summary of Financial Components

The primary financial reference in the document is the adjustment of Schedule A fees, which is influenced by the operating reserve levels. The document states that for every $1,000,000 deviation from the desired operating reserve, Schedule A fees are adjusted by 2 percent. This mechanism ensures that the FGIS maintains the required operating reserve, which should ideally cover 4.5 months of operating expenses. The actual operating reserve at the end of fiscal year 2020 was $10,007,544, contrasting with the target reserve of $13,424,097. This shortfall of $3,416,553 prompts a 5 percent increase in Schedule A fees.

National and Local Tonnage Fees

In addition to the Schedule A adjustment, the document discusses the tonnage fees, which consist of national and local components. The national tonnage fee is determined by dividing the national program's administrative costs from the previous fiscal year—$5,704,963—by the rolling average of grain inspected or weighed over five years. This calculation resulted in a national tonnage fee of $0.047 per metric ton. The local tonnage fees are computed similarly but focus on the specific administrative costs and tonnage handled by field offices, though the exact figures and fees for local offices are not disclosed in the document.

Relating Financial References to Identified Issues

One issue identified is the lack of detailed breakdowns in the final calculations of local tonnage fees. Without these specifics, it is difficult for stakeholders to assess the fairness and accuracy of the proposed fees. The increase of 5 percent in Schedule A fees due to the $3.4 million shortfall in the operating reserve is clear but lacks context on its overall financial impact, particularly on small businesses or other stakeholders. These omissions may suggest a lack of transparency.

Moreover, the focus on increasing fees to address the shortfall ignores the potential exploration of expense reduction tactics. This omission reflects a narrow approach to financial management, emphasizing revenue generation over cost efficiency.

Lastly, the document uses technical language and references specific regulations (e.g., 7 CFR 800.71), which might not be easily understood by those unfamiliar with such terminology. This could hinder a more comprehensive understanding of the financial implications for stakeholders without specialized knowledge.

In summary, while the document provides an overview of fee adjustments and fiscal calculations, certain financial details, particularly those concerning local tonnage fees, remain insufficiently detailed, affecting transparency and stakeholder insight.