[Federal Register Volume 65, Number 225 (Tuesday, November 21, 2000)]
[Rules and Regulations]
[Pages 69851-69856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29705]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 /
Rules and Regulations
[[Page 69851]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 905
[Docket No. FV00-905-4 FIR]
Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida;
Limiting the Volume of Small Red Seedless Grapefruit
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, the provisions of an interim final rule
limiting the volume of small red seedless grapefruit entering the fresh
market under the marketing order covering oranges, grapefruit,
tangerines, and tangelos grown in Florida. The marketing order is
administered locally by the Citrus Administrative Committee
(Committee). This rule limits the volume of sizes 48 (at least 3\9/16\
inches in diameter) and 56 (at least 3\5/16\ inches in diameter) red
seedless grapefruit handlers can ship during the first 11 weeks of the
2000-2001 season beginning September 18, 2000. This limitation provides
a sufficient supply of small sized red seedless grapefruit to meet
market demand, without saturating all markets with these small sizes.
This rule should help stabilize the grapefruit market and improve
grower returns.
EFFECTIVE DATE: November 22, 2000.
FOR FURTHER INFORMATION CONTACT: William G. Pimental, Southeast
Marketing Field Office, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, P.O. Box 2276, Winter Haven, Florida
33883-2276; telephone: (863) 299-4770, Fax: (863) 299-5169; or George
Kelhart, Technical Advisor, Marketing Order Administration Branch,
Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: (202) 720-
5698.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box
96456, Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202)
720-5698, or E-mail: [email protected].
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement No. 84 and Marketing Order No. 905, both as amended (7 CFR
part 905), regulating the handling of oranges, grapefruit, tangerines,
and tangelos grown in Florida, hereinafter referred to as the
``order.'' The marketing agreement and order are effective under the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
The Department is issuing this rule in conformance with Executive
Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is not intended to have retroactive
effect. This rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After the hearing the Secretary would rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after the date of the entry of the ruling.
The order provides for the establishment of grade and size
requirements for Florida citrus, with the concurrence of the Secretary.
These grade and size requirements are designed to provide fresh markets
with citrus fruit of acceptable quality and size. This helps create
buyer confidence and contributes to stable marketing conditions. This
is in the interest of growers, handlers, and consumers, and is designed
to increase returns to Florida citrus growers. The current minimum
grade standard for red seedless grapefruit is U.S. No. 1, and the
minimum size requirement is size 56 (at least 3\5/16\ inches in
diameter).
This final rule limits the volume of small red seedless grapefruit
entering the fresh market. This rule establishes limits on the volume
of sizes 48 and 56 red seedless grapefruit handlers can ship during the
first 11 weeks of the 2000-2001 season. The limitations began September
18, 2000. This rule supplies enough small sized red seedless grapefruit
to meet market demand, without saturating all markets with these small
sizes. This rule will help stabilize the grapefruit market and improve
grower returns.
Section 905.52 of the order provides authority to limit shipments
of any grade or size, or both, of any variety of Florida citrus. Such
limitations may restrict the shipment of a portion of a specified grade
or size of a variety. Under such a limitation, the quantity of such
grade or size that may be shipped by a handler during a particular week
is established as a percentage of the total shipments of such variety
by such handler in a prior period, established by the Committee and
approved by the Secretary, in which the handler shipped such variety.
Section 905.153 of the regulations provides procedures for limiting
the volume of small red seedless grapefruit entering the fresh market.
The procedures specify that the Committee may recommend that only a
certain percentage of sizes 48 and 56 red seedless grapefruit be made
available for shipment into fresh market channels for any week or weeks
during the regulatory period. The regulation period is 11 weeks long
and begins the third Monday in September. Under such a limitation, the
quantity of sizes 48 and 56 red seedless grapefruit that may be shipped
by a handler during a regulated week is
[[Page 69852]]
calculated using the recommended percentage. By taking the recommended
weekly percentage times the average weekly volume of red grapefruit
handled by such handler in the previous five seasons, handlers can
calculate the total volume of sizes 48 and 56 they may ship in a
regulated week.
This rule limits the volume of small red seedless grapefruit that
can enter the fresh market for the remaining weeks of the 11-week
period, which began the week of September 18, 2000. This rule continues
in effect the interim final rule which established the weekly
percentage for the first three weeks (September 18 through October 8)
at 45 percent; for the fourth through seventh weeks (October 9 through
November 5) at 40 percent; and for the last four weeks (November 6
through December 3) at 35 percent.
These percentages are different from those originally recommended
by the Committee on May 26, 2000. At that time, the Committee
unanimously voted to establish a weekly percentage of 25 percent for
each of the 11 weeks. The Committee's initial recommendation was issued
as a proposed rule published in the Federal Register on July 11, 2000
(65 FR 42642). No comments were received during the comment period,
which expired August 10, 2000. The Committee subsequently met on August
31, 2000, and unanimously recommended adjusting the proposed
percentages. The Committee's recommendation was issued as an interim
final rule published on September 15, 2000 (65 FR 55885). Comments on
that action were invited until September 25, 2000. No comments were
received.
The Committee recognizes the need for and the benefits of the
weekly percentage regulation. Members believe that the problems
associated with an uncontrolled volume of small sizes entering the
market early in the season will recur without such action.
As in the previous three seasons, the Committee initially
recommended that the weekly percentage of size regulation be set at 25
percent for each week during the regulatory period. The Committee
thought it was best to set regulation at the most restrictive level, 25
percent for each of the 11 weeks in the regulated period, and then
relax the percentages as warranted by information available closer to
the start of the season.
On August 31, 2000, the Committee revisited the weekly percentage
issue and reviewed information it had acquired since its May meeting.
It determined that the initial recommendation was too restrictive, and
recommended raising the established base percentages from 25 percent
for each of the regulation weeks.
In its discussion, the Committee reviewed the initial percentages
recommended and the state of the crop. The Committee also reexamined
shipping information from past seasons, looking particularly at volume
across the 11 weeks. The Committee noted that more information helpful
in determining the appropriate weekly percentages is available closer
to the start of the harvesting season. At the time of the May meeting,
grapefruit had not yet begun to size, giving little indication as to
the distribution of sizes. Only the most preliminary of crop estimates
was available, with the official estimate not to be issued until
October.
The 2000-2001 season crop is continuing to size well. Current
indications are that early-season conditions for this year are similar
to those of last season. Due to the anticipated similarities, the
Committee considered the percentages established last year as a basis
for discussing this year's percentages. Committee members thought that
last season's percentages had worked well, providing some restriction
while affording volume for those markets that prefer the smaller sizes.
In making its recommendation, the Committee considered that there had
been a reduction in the overall available weekly industry base due to
industry consolidation, a reduction in shipments, and packinghouse
closings.
The available weekly industry base is the sum of each individual
handler's weekly base. A handler's base is calculated by taking that
handler's total red seedless grapefruit shipments during the 33 week
season for each of the past five seasons, adding them together and
dividing by five to calculate an average season. This number is then
divided by 33 to derive the average week. This average week is the base
for each handler for each of the 11 weeks of the regulatory period. The
overall available industry base per week was 937,257 cartons last
season. For the 2000-2001 season, the base calculates to 875,688
cartons.
To recognize this reduction in available base, the Committee
recommended establishing the weekly percentages at levels slightly
higher than those established for last season. The Committee agreed
that the percentage established for the first two weeks of last season
of 45 percent was still appropriate, and recommended that the
percentages for the first two weeks of the 2000-2001 season be
established at 45 percent. The Committee recommended that the third
week should also be established at 45 percent, a five percent increase
from last season's third week percentage. For the next four weeks the
Committee recommended that the weekly percentage be established at 40
percent, an increase from 37 percent for last season. For the last four
weeks of regulation, the Committee recommended that the percentage be
established at 35 percent, an increase from last season's 32 percent
for the final four weeks.
The ongoing problems affecting the European and Asian markets are
also a factor. In past seasons, these markets have shown a strong
demand for the smaller-sized red seedless grapefruit. The reduction in
shipments to these areas experienced during the last few years is
expected to continue during the upcoming season. This reduction in
demand could result in a greater amount of small sizes for remaining
markets to absorb. These factors increase the need for restrictions to
prevent the volume of small sizes from overwhelming all markets.
Therefore, based on available information and the experiences from
past seasons, the Committee recommended changing the initial weekly
percentages from their most restrictive level. The Committee could meet
again during the regulation period, as needed, when additional
information is available, and determine whether the set percentage
levels are appropriate. Any changes to the weekly percentages
established by this rule would require additional rulemaking and the
approval of the Secretary.
During the three seasons prior to implementation of weekly
percentage regulations (1994-95, 1995-96, and 1996-97), returns for red
seedless grapefruit had been declining, often not returning the cost of
production. On-tree prices for red seedless grapefruit had fallen
steadily from $9.60 per carton (\4/5\ bushel) during the 1989-90
season, to $3.45 per carton during the 1994-95 season, to $1.41 per
carton during the 1996-97 season.
The Committee determined that one problem contributing to the
market's condition was the excessive number of small-sized grapefruit
shipped early in the marketing season. In the 1994-95, 1995-96, and
1996-97 seasons, sizes 48 and 56 accounted for 34 percent of total
shipments during the 11-week regulatory period, with the average weekly
percentage exceeding 40 percent of shipments. This contrasted with
sizes 48 and 56 representing only 26 percent of total shipments for the
remainder of the season.
While there is a market for early grapefruit, shipping large
quantities of
[[Page 69853]]
small red seedless grapefruit in a short period oversupplies the fresh
market for these sizes and negatively impacts the market for all sizes.
For the majority of the season, larger sizes return higher prices than
smaller sizes. However, there is a push early to get fruit into the
market to take advantage of high prices available at the beginning of
the season. The early season crop tends to have a greater percentage of
small sizes. This creates a glut of smaller, lower-priced fruit on the
market, driving down the price for all sizes.
At the start of the season, larger-sized fruit command a premium
price. In some cases, the f.o.b. price is $4 to $10 more a carton than
for the smaller sizes. In October, the f.o.b. price for a size 27
averages around $14.00 per carton. This compares to an average f.o.b.
price of $6.00 per carton for size 56. In the three years before the
issuance of a percentage size regulation, by the end of the 11-week
period covered in this rule, the f.o.b. price for large sizes dropped
to within $1 or $2 of the f.o.b. price for small sizes.
In the three seasons prior to 1997-98, prices of red seedless
grapefruit fell from a weighted average f.o.b. price of $7.80 per
carton to an average f.o.b. price of $5.50 per carton during the period
covered by this rule. Later in the season the crop sized to naturally
limit the amount of smaller sizes available for shipment. However, the
price structure in the market had already been negatively affected. The
market never recovered, and the f.o.b. price for all sizes fell to
around $5.00 to $6.00 per carton for most of the rest of the season.
An economic study done by the University of Florida--Institute of
Food and Agricultural Sciences (UF-IFAS) in May 1997, found that on-
tree prices had fallen from a high near $7.00 per carton in 1991-92 to
around $1.50 per carton for the 1996-97 season. The study projected
that if the industry elected to make no changes, the on-tree price
would remain around $1.50 per carton. The study also indicated that
increasing minimum size restrictions could help raise returns.
The Committee believes that the over shipment of smaller sized red
seedless grapefruit early in the season contributes to poor returns for
growers and lower on-tree values. To address this issue, the Committee
voted to utilize the provisions of Sec. 905.153, and established a
weekly percentage of size regulation during the first 11 weeks of the
1997-98, 1998-99, and 1999-2000 seasons. The initial recommendation
from the Committee was to set the weekly percentages at 25 percent for
each of the 11 weeks. Then, as more information on the crop became
available, and as the season progressed, the Committee met again and
adjusted its recommendations for the weekly percentages as needed.
Actual weekly percentages established during the 11-week period during
the 1999-2000 season were 45 percent for the first two weeks, 40
percent for the third week, 37 percent for the fourth through the
seventh week, and 32 percent for the last four weeks. The Committee
considered information from past seasons, crop estimates, fruit size,
and other available information in making its recommendations.
The Committee has used the percentage size regulation to the
betterment of the industry. Prices have increased, and movement has
been stable. In each of the three seasons following the 1996-97 season,
the Committee has recommended utilizing the percentage size rule.
During the 11-week period of regulation, the average market price has
been higher than for the three years prior to regulation. In late
October, the average market price for red seedless grapefruit was $9.31
for the last three years regulation compared to $7.22 for the same
period for the three years prior to regulation. Market prices also
remained at a higher level, with an average price of $7.31 in mid-
December during regulation compared to $6.02 for the three years prior
to regulation. The average season price was also higher, with the past
three seasons averaging $7.13 compared to $5.83 for the three prior
years.
The on-tree earnings per box have also been increasing for the past
three years, providing better returns to growers. The on-tree price
increased from $3.42 for 1997-98, to $5.04 for 1998-99, to an estimated
$6.46 for the 1999-2000 season.
Another benefit of percentage size regulation has been in
maintaining higher prices for the larger-sized fruit. Larger fruit
commands a premium price early in the season. The f.o.b. price for a
larger size can be $4 to $10 more per carton than for smaller sizes.
However, the glut of smaller, lower-priced fruit on the early market
was driving down the prices for all sizes. In the three years prior to
the implementation of the percentage size rule, by the end of the 11-
week period covered, the f.o.b. price for the large sizes would drop to
within $2 of the f.o.b. price for the smaller sizes. This was not
acceptable to the industry.
During the past three years of regulation under the percentage size
rule, the average differential between the carton price for a size 27
and the price for a size 56 was $5.65 at the end of October and
remained at $3.43 in mid-December. During the three years prior to
regulation, the average differential between these two sizes was $3.47
at the end of October, but by mid-December the price for the larger
size had dropped to within $1.68 of the price for the smaller-size
fruit. In fact, the average prices for each size were higher during the
three years with regulation than for the three years prior to
regulation. The average prices for size 27, size 32, size 36, and size
40 during the 11-week period for the last three years were $9.07,
$7.91, $7.16, and $6.62, respectively. This compares to the average
prices for the same sizes during the same period for the three years
prior to regulation of $6.48, $5.63, $5.59, and $5.34, respectively.
The percentage size regulation has also been helpful in stabilizing
the volume of small sizes entering the fresh market early in the
season. During the three years prior to regulation, small sizes
accounted for over 34 percent of the total shipments of red seedless
grapefruit during the 11-week period covered in the rule. This compares
to 31 percent for the same period for the last three years of
regulation. There has also been a 43 percent reduction in the volume of
small sizes entering the fresh market during the 11-week regulatory
period from 1995-96 to 1999-2000.
An economic study done by Florida Citrus Mutual (Lakeland, Florida)
in April 1998 found that the weekly percentage regulation had been
effective. The study stated that part of the strength in early season
pricing appeared to be due to the use of the weekly percentage rule to
limit the volume of sizes 48 and 56. It said that prices were generally
higher across the size spectrum with sizes 48 and 56 having the largest
gains, and larger-sized grapefruit registering modest improvements. The
rule shifted the size distribution toward the higher-priced, larger-
sized grapefruit, which helped raise weekly average f.o.b. prices. It
further stated that size 48 and 56 grapefruit accounted for around 27
percent of domestic shipments during the same 11 weeks during the 1996-
97 season. Comparatively, sizes 48 and 56 accounted for only 17 percent
of domestic shipments during the same period in 1997-98, as small sizes
were used to supply export customers with preferences for small-sized
grapefruit.
During deliberations in past seasons as to weekly percentages, the
Committee considered how past shipments had affected the market. Based
on available statistical information, the Committee members believed
that once shipments of sizes 48 and 56 reach levels above
[[Page 69854]]
250,000 cartons a week, prices declined on those and most other sizes
of red seedless grapefruit. The Committee believed that if shipments of
small sizes could be maintained at around 250,000 cartons a week,
prices should stabilize and demand for larger, more profitable sizes
should increase.
While the Committee did eventually vote last season to increase the
weekly percentages, shipments of sizes 48 and 56 during the 11 weeks
regulated remained close to the 250,000-carton mark. This may have
contributed to the success of the regulation.
In setting the weekly percentage for each week at 25 percent for
the 2000-2001 season, the total available allotment would have
approximated 218,922 (25 percent of the total industry base of 875,688
cartons). Consequently, there was room to increase the percentages
while holding weekly shipments of sizes 48 and 56 close to the 250,000-
carton mark, as was done last season.
In making its recommendation, the Committee reviewed experiences
from the past seasons. The Committee examined shipment data covering
the 11-week regulatory period for the last three regulated seasons and
the three prior seasons. The information contained the amounts and
percentages of sizes 48 and 56 shipped during each week. The Committee
believes establishing weekly percentages during the last three seasons
was successful. The past regulations helped maintain prices at a higher
level than the previous years without regulation, and sizes 48 and 56
by count and as a percentage of total shipments were reduced. The
Committee considered the past problems and the success of the
percentage rule and decided to recommend using the percentage of size
provisions for the 2000-2001 season. The limitations began September
18, 2000.
Therefore, this rule continues in effect the interim final rule
which established the weekly percentages at 45 percent for the first
three weeks (September 18 through October 8); for the fourth through
seventh weeks (October 9 through November 5) at 40 percent; and for the
last four weeks (November 6 through December 3) at 35 percent.
Under Sec. 905.153, the quantity of sizes 48 and 56 red seedless
grapefruit that may be shipped by a handler during a regulated week
will be calculated using the recommended percentages 45, 40, or 35
percent, depending on the week. By taking the weekly percentage times
the average weekly volume of red grapefruit handled by such handler in
the previous five seasons, handlers can calculate the total volume of
sizes 48 and 56 they may ship in a regulated week.
The Committee calculates an average week for each handler using the
following formula. The total red seedless grapefruit shipments by a
handler during the 33 week period beginning the third Monday in
September and ending the first Sunday in May during the previous five
seasons are added and divided by five to establish an average season.
This average season is then divided by the 33 weeks to derive the
average week. This average week is the base for each handler for each
of the 11 weeks of the regulatory period. The weekly percentage, in
this case either 45, 40, or 35 percent, is multiplied by a handler's
average week. The product is that handler's total allotment of sizes 48
and 56 red seedless grapefruit for the given week.
Under this rule handlers can fill their allotment with size 56,
size 48, or a combination of the two sizes such that the total of these
shipments are within the established limits. The Committee staff
performs the specified calculations and provides them to each handler.
The average week for handlers with less than five previous seasons
of shipments is calculated by averaging the total shipments for the
seasons they did ship red seedless grapefruit during the immediately
preceding five years and dividing that average by 33. New handlers with
no record of shipments have no prior period on which to base their
average week. Therefore, a new handler can ship small sizes equal to
45, 40, or 35 percent, depending on the week, of their total volume of
shipments during their first shipping week (depending on when they
begin shipping). Once a new handler has established shipments, their
average week is calculated as an average of the weeks they have shipped
during the current season.
As mentioned before, the 2000-2001 regulatory period begins the
third Monday in September, September 18, 2000. Each regulation week
begins Monday at 12:00 a.m. and ends at 11:59 p.m. the following
Sunday, since most handlers keep records based on Monday being the
beginning of the workweek.
The rules and regulations governing percentage size regulation
contain a variety of provisions designed to provide handlers with some
marketing flexibility. When the Secretary establishes regulation for a
given week, the Committee calculates the quantity of small red seedless
grapefruit that may be handled by each handler. Section 905.153(d)
provides allowances for overshipments, loans, and transfers of
allotment. These tolerances allow handlers the opportunity to supply
their markets while limiting the impact of small sizes.
During any week for which the Secretary has fixed the percentage of
sizes 48 and 56 red seedless grapefruit, any handler could handle an
amount of sizes 48 or 56 red seedless grapefruit not to exceed 110
percent of their allotment for that week. The quantity of overshipments
(the amount shipped in excess of a handler's weekly allotment) is
deducted from the handler's allotment for the following week.
Overshipments are not allowed during week 11 because there are no
allotments the following week from which to deduct the overshipments.
If handlers fail to use their entire allotments in a given week,
the amounts undershipped are not carried forward to the following week.
However, a handler to whom an allotment has been issued can lend or
transfer all or part of such allotment (excluding the overshipment
allowance) to another handler. In the event of a loan, each party,
prior to the completion of the loan agreement, notifies the Committee
of the proposed loan and date of repayment. If a transfer of allotment
is desired, each party will promptly notify the Committee so that
proper adjustments of the records can be made. In each case, the
Committee confirms in writing all such transactions prior to the
following week.
The Committee can also act on behalf of handlers wanting to arrange
allotment loans or participate in the transfer of allotment. Repayment
of an allotment loan is at the discretion of the handlers party to the
loan. The Committee will notify each handler prior to that particular
week of the quantity of sizes 48 and 56 red seedless grapefruit such
handler can handle during a particular week, making the necessary
adjustments for overshipments and loan repayments.
This rule does not affect the provision that handlers may ship up
to 15 standard packed cartons (12 bushels) of fruit per day exempt from
regulatory requirements. Fruit shipped in gift packages that are
individually addressed and not for resale, and fruit shipped for animal
feed are also exempt from handling requirements under specific
conditions. Also, fruit shipped to commercial processors for conversion
into canned or frozen products or into a beverage base are not subject
to the handling requirements under the order.
The introductory text of Sec. 905.350 is being modified to reflect
a change to Sec. 905.306 establishing the minimum size for red seedless
grapefruit at size 56 on a continuous basis. A final rule implementing
this change has been
[[Page 69855]]
published in the Federal Register at 65 FR 66601, November 7, 2000.
Section 8e of the Act requires that whenever grade, size, quality,
or maturity requirements are in effect for certain commodities under a
domestic marketing order, including grapefruit, imports of that
commodity must meet the same or comparable requirements. This rule does
not change the minimum grade and size requirements under the order,
only the percentages of sizes 48 and 56 red grapefruit that may be
handled. Therefore, no change is necessary in the grapefruit import
regulations as a result of this action.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), AMS has considered the economic impact of this action on
small entities. Accordingly, AMS has prepared this final regulatory
flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 75 grapefruit handlers subject to
regulation under the order and approximately 11,000 growers of citrus
in the regulated area. Small agricultural service firms, which includes
handlers, have been defined by the Small Business Administration (SBA)
as those having annual receipts of less than $5,000,000, and small
agricultural producers are defined as those having annual receipts of
less than $500,000 (13 CFR 121.201).
Based on industry and Committee data, the average annual f.o.b.
price for fresh Florida red grapefruit during the 1999-2000 season was
around $7.52 per 4/5 bushel carton, and total fresh shipments for the
1999-2000 season are estimated at 25.6 million cartons of red
grapefruit. Approximately 25 percent of all handlers handled 70 percent
of Florida grapefruit shipments. In addition, many of these handlers
ship other citrus fruit and products which are not included in
Committee data but would contribute further to handler receipts. Using
the average f.o.b. price, about 69 percent of grapefruit handlers could
be considered small businesses under SBA's definition. Therefore, the
majority of Florida grapefruit handlers may be classified as small
entities. The majority of Florida grapefruit producers also may be
classified as small entities.
This rule continues to limit the volume of small red seedless
grapefruit entering the fresh market during the first 11 weeks of the
2000-2001 season, beginning September 18, 2000. The over shipment of
smaller-sized red seedless grapefruit early in the season has
contributed to below production cost returns for growers and lower on
tree values. This rule limits the volume of sizes 48 and 56 red
seedless grapefruit by setting the weekly percentage for the 11 weeks
at 45 percent for the first three weeks (September 18 through October
8); for the fourth through seventh weeks (October 9 through November 5)
at 40 percent; and for the last four weeks (November 6 through December
3) at 35 percent. This is a change from the Committee's original
recommendation of a 25 percent weekly percentage for the 11 weeks. The
quantity of sizes 48 and 56 red seedless grapefruit that may be shipped
by a handler during a particular week is calculated using the
recommended percentage. This rule utilizes the provisions of ``
905.153. Authority for this action is provided in Sec. 905.52 of the
order.
While this rule may necessitate spot picking, which could entail
slightly higher harvesting costs, many in the industry are already
using the practice. In addition, because this regulation is only in
effect for part of the season, the overall effect on costs is minimal.
This rule is not expected to appreciably increase costs to producers.
Over the past three seasons, producers have adjusted their harvesting
operations to more efficiently conform with the percentage size
regulation and to keep their harvesting costs as low as possible.
If a 25 percent restriction on small sizes had been applied during
the 11-week period for the three seasons prior to the 1997-98 season,
an average of 4.2 percent of overall shipments during that period would
have been constrained by regulation. A large percentage of this volume
most likely could have been replaced by larger sizes for which there
are no volume restrictions. Under regulation, larger sizes have been
substituted for smaller sizes with a nominal effect on overall
shipments. Also, handlers can transfer, borrow or loan allotment based
on their needs in a given week. Handlers also have the option of over
shipping their allotment by 10 percent in a week, provided the
overshipment is deducted from the following week's shipments.
Approximately 120 loans and transfers were utilized last season.
Statistics for 1999-2000 show that in none of the regulated weeks was
the total available allotment used. Therefore, the overall impact of
this regulation on total shipments should be minimal.
Handlers and producers have received higher returns under
percentage size regulation. In late October, during the last three
years with regulation, the average market price for red seedless
grapefruit was $9.31 compared to $7.22 for the same time during the
three years prior to regulation. Prices have also remained higher, with
an average price of $7.31 in mid-December during regulation compared to
$6.02 for the three years prior to regulation. The average season price
was also higher, with the past three seasons with regulation averaging
$7.13 compared to $5.83 for the three prior seasons.
The on-tree earnings per box have also increased for the past three
years, providing better returns to growers. The on-tree price increased
from $3.42 for 1997-98, to $5.04 for 1998-99, to an estimated $6.46 for
the 1999-2000 season. These increased returns when coupled with the
overall volume of red seedless grapefruit more than offset any
additional costs associated with this regulation.
The purpose of this rule is to help stabilize the market and
improve grower returns by limiting the volume of small sizes marketed
early in the season. This rule provides a supply of small-sized red
seedless grapefruit sufficient to meet market demand, without
saturating all markets with these small sizes. The opportunities and
benefits of this rule are expected to be available to all red seedless
grapefruit handlers and growers regardless of their size of operation.
The Committee considered one alternative to taking this action. The
alternative was leaving the weekly percentages at 25 percent. However,
the Committee believed that the 25 percent level was too restrictive.
Therefore, this option was rejected.
Handlers utilizing the flexibility of the loan and transfer aspects
of this action are required to submit a form to the Committee. The rule
increases the reporting burden on approximately 75 handlers of red
seedless grapefruit who will be taking about 0.03 hour to complete each
report regarding allotment loans or transfers. The information
collection requirements contained in this section have been approved by
the Office of Management and Budget (OMB) under the provisions of the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) and assigned OMB
number 0581-0094. As with all Federal marketing order programs, reports
and forms are periodically reviewed to reduce information
[[Page 69856]]
requirements and duplication by industry and public sectors.
The Department has not identified any relevant Federal rules that
duplicate, overlap or conflict with this interim final rule. However,
red seedless grapefruit must meet the requirements as specified in the
U.S. Standards for Grades of Florida Grapefruit (7 CFR 51.760 through
51.784) issued under the Agricultural Marketing Act of 1946 (7 U.S.C.
1621 through 1627).
The Committee's meetings were widely publicized throughout the
citrus industry and all interested persons were invited to attend the
meetings and participate in Committee deliberations on all issues. Like
all Committee meetings, the May 26, 2000 and the August 31, 2000,
meetings were public meetings and all entities, both large and small,
were able to express views on this issue. Also, interested persons were
invited to submit information on the regulatory and informational
impacts of this action on small businesses.
An interim final rule concerning this action was published in the
Federal Register on September 15, 2000 (65 FR 55885). Copies of the
rule were mailed or sent via facsimile to all Committee members and
grapefruit growers and handlers. The Office of the Federal Register,
the Department, and the Committee also made this rule available through
the Internet.
A 10-day comment period was provided to allow interested persons to
respond to the proposal. The comment period ended September 25, 2000.
No comments were received.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
After consideration of all relevant material presented, including
the Committee's recommendation, and other information, it is found that
finalizing the interim final rule, without change, as published in the
Federal Register (65 FR 55885, September 15, 2000) will tend to
effectuate the declared policy of the Act.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 553) because the 2000-2001 season is in full
swing and this action should be effective as soon as possible during
the 11-week regulatory period. Further, handlers are aware of this rule
which was recommended at two public meetings. Also a 30-day comment
period was provided in the proposed rule and a 10-day comment period
was provided in the interim final rule. No comments were received.
List of Subjects in 7 CFR Part 905
Grapefruit, Marketing agreements, Oranges, Reporting and
recordkeeping requirements, Tangelos, Tangerines.
PART 905--ORANGES, GRAPEFRUIT, TANGERINES, AND TANGELOS GROWN IN
FLORIDA
Accordingly, the interim final rule amending 7 CFR Part 905 which
was published at 65 FR 55885 on September 15, 2000, is adopted as a
final rule without change.
Dated: November 14, 2000
James R. Frazier
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-29705 Filed 11-20-00; 8:45 am]
BILLING CODE 3410-02-P