Shippers rethink USDA inspections as prices rise

01/25/2008 12:00:00 AM
Tom Karst


The price the U.S. Department of Agriculture charges for a basic inspection of 51 packages or more will shoot up to $151 after March 1, compared with $86 for the same service in 2003.

(Jan. 25) It is a catch 22, or, in this case, a catch 15%.

Fresh produce destination inspection fees charged by the U.S. Department of Agriculture will increase 15% in March on the heels of a 15% increase in November, and previous 15% increases in 2006 and 2004.

The cost of a basic inspection — 51 packages or more — increases to $151 after March 1 this year. That fee compares with $86 for the service in 2003.

This trend is not over. The agency previously said 10% increases were likely in 2009 and 2010, with planned single-digit increases after that.

Changes in the industry, combined with increases in user fees in the past few years, have resulted in stable or decreased demand for USDA inspections, receivers say.

“It creates a Catch-22,” said Alan Siger, president of Consumers Produce Co. Inc., Pittsburgh. “They don’t have the number of inspections to do any more as business has dropped, but on the other hand as business drops, you have got to raise prices because you have certain fixed prices. By raising the prices they have cut down on demand for the service.”

Incremental fee increases — as opposed to a massive increase of 70% — have been supported by the USDA’s 2003 Fruit and Vegetable Industry Advisory Committee, said Bob Keeney, deputy administrator of fruit and vegetable programs at the USDA’s Agricultural Marketing Service.

“We don’t anticipate another increase for at least a year and perhaps into 2010,” Keeney said.

CHANGING USE

U.S. produce marketers said federal inspections are essential to their business but offered differing views about the effect of the latest fee increases.

One produce shipper said some growers may balk at asking receivers for federal inspections if fees keep rising.

Clark Mullins, manager of H.C. Schmieding Produce Co. Inc., Springdale, Ark., said growers are typically given the option of asking for an inspection when a receiver reports a problem with a load. If the grower does not ask for inspection, the receiver is cleared to work with the load “with protection,” or allowing changes in price for problems in quality.

However, he said the fee increase may not have a big effect.


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