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and the Canelos growers. Dr. Cook concluded that comparable
produce distribution agreements between unrelated parties
provided the most reliable basis for establishing an arm's-length
commission for petitioner. According to Dr. Cook, taken as a
whole, the third-party agreements and other industry agreements
which she considered provided substantiation for the arm's-length
nature of the commissions petitioner earned during the years in
issue.
Dr. Cook stated that when petitioner entered into the SCP
contract with Dole, petitioner agreed to a commission rate that
was favorable given the large volumes that were expected to
materialize. According to Dr. Cook, in the low-margin food
industry, firms make their profits on volume. Dr. Cook asserted
that commission rates are typically higher when distributors
provide growers with advances to fund capital needs for planting,
harvesting, packing, and transportation. Dr. Cook noted that for
the years in issue SCP, not petitioner, advanced funds to the
Canelos growers.
According to Dr. Cook, for Nogales distributors of Mexican
(dominated by Sinaloan) fresh produce, the common range of
commissions was 5 to 12 percent of the gross selling price. She
asserted that the larger the volumes handled and the fewer the
services provided by the distributor, the lower the commission
rate. She stated also that the financing of production,
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