Industry license fees that enforce the Perishable Agricultural Commodities Act will nearly double under a proposal from the U.S. Department of Agriculture.

The proposal, published March 11 in the Federal Register, would amend PACA to increase annual license fees from $550 to $995.  Fees for a company’s branch locations would rise from $200 in excess of nine locations, to $600 for each branch location, the USDA said. 

The maximum amount a licensee would pay per year under the proposal would increase from $4,000 to $8,000, the agency said. According to the USDA, only 56 firms currently meet maximum payment standards.

As of October 2008, the agency said there were 14,418 PACA licensees. Of that number, 4,125 were retailers and grocery wholesalers. Retailers and grocery wholesalers pay a $100 application processing fee but no annual fee.

The agency said the proposed increase in fees would result in estimated revenue of $12.4 million per year. AMS expects the PACA program will have adequate financing until fiscal year 2015, when reserves will dip below mandated levels another fee increase may be needed.Comments — which can be e-mailed to Pacalicensefee@ams.usda.gov — received before May 10 will be considered before the USDA finalizes the regulation, the agency said.

The USDA’s fruit and vegetable industry advisory committee unanimously endorsed the fee increase in February 2009.

Robert Guenther, senior vice president of public policy for the United Fresh Produce Association, Washington, D.C., said in an e-mail March 11 that the industry will closely scrutinize the proposal’s effect on commercial operations.

“In addition, with such a significant increase it is imperative that USDA clearly articulate and explain the justification for the increase, how does the department plan to utilize these industry funds, and (whether) there will be similar increases two, three or five years from now,” he said.

PACA license fees last increased in 1995. PACA officials said in 2008 that license fee increases were necessary to keep the branch solvent.

The big increase in the license fee is tempered in some respects by the length of time since the last increase, said Kathy Means, vice president of government relations and public affairs for the Newark, Del.-based Produce Marketing Association.

“I can’t think of anything from postage to milk that hasn’t gone up in 15 years,” she said. “We all knew that this increase was coming, but it is a significant increase and it could be tough on smaller and medium sized firms.”

PACA upholds contract requirements, mandates full and prompt payment for fresh and frozen fruits and vegetables in interstate and foreign commerce, removes unscrupulous individuals from the trade when needed and provides counsel on PACA trust protection.

Fee timeline

Karla Whalen, chief of the U.S. Department of Agriculture branch overseeing the program, told the agency’s fruit and vegetable industry advisory committee in September 2008 that the reorganization of the PACA branch in 2005 reduced expenses but fee increases were necessary.

The USDA proposal said there are now 80 full-time PACA employees, down from 116 in 2000.

Fee increases for the PACA cannot be increased, according to federal guidelines, until the reserve fund dips to 25% of what is needed to operate the program for the following fiscal year. The proposal said that the reserve funds are expected to fall below 25% of projected annual program costs in 2010 in 2011.