[Federal Register Volume 65, Number 138 (Tuesday, July 18, 2000)]
[Rules and Regulations]
[Pages 44405-44408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18073]
========================================================================
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. 138 / Tuesday, July 18, 2000 / Rules
and Regulations
[[Page 44405]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV00-989-3 FR]
Raisins Produced From Grapes Grown in California; Increase in
Desirable Carryout Used To Compute Trade Demand
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule increases the desirable carryout used to compute the
yearly trade demand for raisins covered under the Federal marketing
order for California raisins (order). The order regulates the handling
of raisins produced from grapes grown in California and is administered
locally by the Raisin Administrative Committee (Committee). This action
will ultimately make more raisins available to handlers, especially for
immediate use early in the season, and will allow desirable carryout to
more accurately reflect actual carryout inventory.
EFFECTIVE DATE: August 1, 2000.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing
Specialist, California Marketing Field Office, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202
Monterey Street, suite 102B, Fresno, California 93721; telephone: (559)
487-5901, Fax: (559) 487-5906; 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, or 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, P.O. Box 96456, room
2525-S, Washington, DC 20090-6456; telephone (202) 720-2491; Fax: (202)
720-5698; or E-mail: [email protected].
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Agreement and Order No. 989 (7 CFR part 989), both as amended,
regulating the handling of raisins produced from grapes grown in
California, hereinafter referred to as the ``order.'' The order is
effective under the Agricultural Marketing Agreement Act of 1937, as
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
Question and Answer Overview
What Are Marketing Orders?
Marketing orders are rules which are authorized under the
Agricultural Marketing Agreement Act of 1937. They are based on
evidence developed at a formal hearing. Marketing orders help fruit and
vegetable growers work together to solve marketing problems that cannot
be solved individually. Industries voluntarily implement these programs
and choose to have Federal oversight of certain aspects of their
operations.
The California raisin industry has operated under a marketing order
since 1949. The order authorizes implementation of volume control for
the various varietal types grown. Preliminary and interim free and
reserve percentages are computed and announced by the Committee and
final percentages are established by the Department of Agriculture.
When volume controls are implemented for a particular varietal type, a
portion of the crop can be sold by handlers to any market (free
tonnage), and the remaining portion (reserve tonnage) is required to be
held by handlers for the account of the Committee. Reserve raisins are
disposed of through programs authorized under the marketing order.
Under the order, reporting and recordkeeping requirements for gathering
statistical information and supporting volume control activities are
implemented. Quality controls, and marketing research and development,
and promotional activities also are implemented in the interest of
growers, handlers, and consumers.
What Is Desirable Carryout?
Desirable carryout is the amount of raisins from one season needed
during the first part of the next season for market needs, and is one
of the factors used in computing yearly trade demand. When computed
trade demand is less than the quantity of raisins produced, volume
controls are implemented under the order.
Why Did the Committee Recommend This Action?
The Committee recommended the increase in the desirable carryout to
make more raisins available to handlers for immediate use early in the
season when supplies are often tight, and to bring desirable carryout
more in line with actual carryout inventory and early season shipments.
The increase is expected to more accurately reflect the marketing
conditions currently facing the industry.
Who Will Be Affected by This Action?
Growers and handlers of raisins produced in California will be
affected by this action. Volume controls implemented under the order
are designed to promote orderly marketing conditions, stabilize prices
and supplies, and improve grower returns.
Were Any Comments Received on This Action?
One comment was received. The commenter supports the increase in
desirable carryout, but expressed concern over the impact of the change
on the Committee's program to promote California raisin sales in
foreign markets. The increase in desirable carryout would make more
raisins available to handlers as free tonnage, and might reduce the
amount of reserve raisins purchased to meet their market needs.
However, Committee sponsored promotional activities are not expected to
be negatively impacted by the amount of the desirable carryout, because
those activities are planned and implemented later in the season when
carrying inventories and size of the new crop are known. Additionally,
those promotional activities are planned by the Committee with the most
recent information available, and approved by the Department.
[[Page 44406]]
When Will This Action Be Effective?
This action will be effective August 1, 2000, the beginning of the
2000/2001 crop year, and the increased desirable carryout will be used
to compute trade demand for that year.
Executive Orders 12866 and 12998
The Department of Agriculture (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 in equity 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.
Discussion of the Increase in Desirable Carryout
This final rule increases the desirable carryout used to compute
the yearly trade demand for raisins regulated under the order. Trade
demand is computed based on a formula specified in the order, and is
used to determine volume regulation percentages for each crop year, if
necessary. Desirable carryout, one factor in this formula, is the
amount of tonnage from one crop year needed during the first part of
the next crop year to meet market needs, before new crop raisins are
available. This rule increases the desirable carryout from 2\1/2\
months (August, September, and one-half of October) of prior year's
shipments to a rolling average of 3 months (August, September, and
October) of shipments over the past 5 years, dropping the high and low
figures. This action was recommended by the Committee at a meeting on
November 10, 1999.
The order provides authority for volume regulation designed to
promote orderly marketing conditions, stabilize prices and supplies,
and improve producer returns. When volume regulation is in effect, a
certain percentage of the California raisin crop may be sold by
handlers to any market (free tonnage) while the remaining percentage
must be held by handlers in a reserve pool (reserve) for the account of
the Committee. Reserve raisins are disposed of through certain programs
authorized under the order. For instance, reserve raisins may be sold
by the Committee to handlers for free use or to replace part of the
free tonnage raisins they exported; used in diversion programs; carried
over as a hedge against a short crop the following year; or disposed of
in other outlets not competitive with those for free tonnage raisins,
such as government purchase, distilleries, or animal feed. Funds
generated from sales of reserve raisins are also used to support
handler sales to export markets. Net proceeds from sales of reserve
raisins are ultimately distributed to the reserve pool's equity
holders, primarily producers.
Section 989.54 of the order prescribes procedures to be followed in
establishing volume regulation and includes methodology used to
calculate volume regulation percentages. Trade demand is based on a
computed formula specified in this section, and is also part of the
formula used to determine volume regulation percentages. Trade demand
is equal to 90 percent of the prior year's shipments, adjusted by the
carryin and desirable carryout inventories.
At one time, Sec. 989.54(a) also specified actual tonnages for
desirable carryout for each varietal type regulated. However, in 1989,
these tonnages were suspended from the order, and flexibility was added
so that the Committee could adopt a formula for desirable carryout in
the order's rules and regulations. The formula has allowed the
Committee to periodically adjust the desirable carryout to better
reflect changes in each season's marketing conditions.
The formula for desirable carryout has been specified since 1989 in
Sec. 989.154. Initially, the formula was established so that desirable
carryout was based on shipments for the first 3 months of the prior
crop year--August, September, and October (the crop year runs from
August 1 through July 31). This amount was gradually reduced to 2\1/2\
months in 1991-92, 2\1/4\ months in 1995-96, and to 2 months in 1996-
97. The Committee reduced the desirable carryout between 1991-1997
because it believed that an excessive supply of raisins was available
early in a new crop year creating unstable market conditions.
In 1998, the Committee determined that, because of the reduced
desirable carryout, not enough raisins were being made available for
growth. Thus, the desirable carryout was increased to 2\1/2\ months of
prior year's shipments to allow for a higher trade demand figure and,
thus, a higher free tonnage percentage, making more raisins available
to handlers, especially for immediate use early in the season when
supplies are often tight. This action also allowed desirable carryout
to move towards what handlers actually hold in inventory at the end of
a crop year, or about 100,000 tons.
The Committee would like to continue to bring the desirable
carryout in line with handlers' actual inventory at the end of a crop
year. Desirable carryout has averaged 63,364 tons at 2 months, 71,203
tons at 2\1/4\ months, and 80,248 tons at 2\1/2\ months. For the past 5
years, an average of 102,452 tons has been held in inventory by all
handlers at the end of a crop year. Increasing the desirable carryout
will also bring this factor more in line with early-season shipments
while providing some raisins for market expansion. For the past 5
years, an average of 94,147 tons of raisins has been shipped during the
first 3 months of the crop year (August, September, and October).
Thus, the Committee met on November 10, 1999, and recommended
increasing the desirable carryout to a rolling average of 3 months of
shipments (August, September, and October) over the past 5 years,
dropping the high and low figures. If this formula would have been used
for the current crop year (1999-2000), the desirable carryout would
have equaled 94,083 tons as compared to the current 73,809 tons. The
94,083-ton figure would have thus been much closer to the actual
inventory of 102,452 tons, and closer to the 5-year average level of
shipments for August, September, and October of 94,147 tons. The
following table illustrates this computation.
[[Page 44407]]
Table 1.--Computation of Proposed New Desirable Carryout Crop Years
----------------------------------------------------------------------------------------------------------------
A 1998-99 B 1997-98 C 1996-97 D 1995-96 E 1994-95
----------------------------------------------------------------------------------------------------------------
Total of free tonnage shipments during 91,015 89,756 98,731 96,109 95,125
August, September, and October (Natural
condition tons)..........................
Total of 3-months of shipments over the 94,083
past 5 years, dropping the high and low
figures, and dividing the remaining sum
by 3 (Natural condition tons)\1\.........
----------------------------------------------------------------------------------------------------------------
\1\ (Columns A+D+E)/3
Finally, as with the 1998-99 increase in the formula, this action
will result in a higher free tonnage percentage which will make more
raisins available to handlers, especially for immediate use early in
the season when supplies can be tight. A higher free tonnage percentage
may also improve early season returns to producers (producers are paid
an established field price for their free tonnage).
Much of the discussion at the Committee's meeting concerned the
desirable carryout of Natural (sun-dried) Seedless raisins (Naturals).
Naturals are the major commercial varietal type of raisin produced in
California. With the exception of the 1998-99 crop year, volume
regulation has been implemented for Naturals for the past several
seasons. However, the Committee also believes that the increase in
desirable carryout should apply to the other varietal types of raisins
covered under the order.
The Committee's vote on this action was 24 in favor and 13 opposed.
The no votes were primarily from members who favored a higher desirable
carryout. After much deliberation, the majority of Committee members
supported basing desirable carryout on a rolling average of 3 months of
shipments over the past 5 years, dropping the high and low figures.
Thus, paragraph (a) in Sec. 989.154 is modified accordingly.
Regulatory Flexibility Analysis
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (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 20 handlers of California raisins who are
subject to regulation under the order and approximately 4,500 raisin
producers in the regulated area. Small agricultural service firms have
been defined by the Small Business Administration (13 CFR 121.201) 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. Thirteen of the 20 handlers subject to regulation
have annual sales estimated to be at least $5,000,000, and the
remaining 7 handlers have sales less than $5,000,000, excluding
receipts from any other sources. No more than 7 handlers, and a
majority of producers, of California raisins may be classified as small
entities.
This final rule increases the desirable carryout used to compute
the yearly trade demand for raisins regulated under the order. Trade
demand is computed based on a formula specified under Sec. 989.54(a) of
the order. It is also part of another formula used to determine volume
regulation percentages for each crop year, if necessary. Desirable
carryout, one factor in this formula, is the amount of tonnage from one
crop year needed during the first part of the succeeding crop year to
meet market needs, before new crop raisins are available for shipment.
This rule will increase the desirable carryout specified in paragraph
(a) of Sec. 989.154 from 2\1/2\ months (August, September, and one-half
of October) of prior year's shipments to a rolling average of 3 months
(August, September, and October) of shipments for the past 5 years,
dropping the high and low figures.
The new desirable carryout level will apply uniformly to all
handlers in the industry, whether small or large, with no known
additional costs incurred by small handlers. As previously mentioned,
increasing the desirable carryout will increase the trade demand and
free tonnage percentage, making more raisins available to handlers
early in the season. A higher free tonnage percentage may also improve
early season returns to producers (producers are paid an established
field price for their free tonnage).
The Committee considered a number of alternatives to the 3-month
rolling shipment average in the desirable carryout level. The Committee
has an appointed subcommittee which periodically holds public meetings
to discuss changes to the order and other issues. The subcommittee met
on November 9, 1999, and discussed desirable carryout. All of the
subcommittee members agreed with increasing the desirable carryout and
considered a number of alternatives. Options considered included:
Basing desirable carryout on a 5-year rolling average of actual
carryout inventory; an average of 3 months of prior year's shipments;
or a rolling average of 3 months of shipments over the past 5 years,
dropping the high and low figures. The subcommittee ultimately
recommended to the full Committee that desirable carryout be based on a
5-year rolling average of actual carryout inventory.
At the Committee meeting on November 10, 1999, these options were
again reviewed. After much discussion, the majority of Committee
members agreed that desirable carryout should be based on shipments,
not actual carryout inventory. Most Committee members concurred that
basing desirable carryout on actual carryout inventory could create
problems if handlers carried out large inventories. In addition, most
members believed that shipments are driven by market demand, and should
thus continue to be the basis for desirable carryout. The Committee
ultimately recommended that the desirable carryout be based on a
rolling average of 3 months of shipments for the past 5 years, dropping
the high and low figures.
This rule imposes no additional reporting or recordkeeping
requirements on either small or large raisin handlers. As with all
Federal marketing order programs, reports and forms are periodically
reviewed to reduce
[[Page 44408]]
information requirements and duplication by industry and public sector
agencies. Finally, the Department has not identified any relevant
Federal rules that duplicate, overlap or conflict with this rule.
In addition, the Committee's subcommittee meeting on November 9,
1999, and the Committee meeting on November 10, 1999, where this action
was deliberated, were public meetings widely publicized throughout the
raisin industry. All interested persons were invited to attend the
meetings and participate in the industry's deliberations.
A proposed rule concerning this action was published in the Federal
Register on January 31, 2000 (65 FR 4583). Copies of the rule were
mailed by the Committee's staff to all Committee members and
alternates, the Raisin Bargaining Association, handlers, and
dehydrators. In addition, the rule was made available through the
Internet by the Office of the Federal Register. That rule provided for
a 60-day comment period which ended March 31, 2000. One comment was
received.
The commenter supports the change in desirable carryout, but
expressed concern over the impact of the change on the Committee's
program to promote California raisin sales in foreign markets. The
purpose of this rulemaking action is to change the desirable carryout
to more accurately reflect actual carryout inventory and early-season
shipments. Desirable carryout is the amount of tonnage from a specific
crop year needed during the first part of the succeeding crop year to
meet market needs. Failure to provide adequate raisins for market needs
during the first part of the crop year would likely have a negative
impact on prices and sales later in the season. Such an impact would
likely be felt in domestic and foreign markets. The increase in
desirable carryout would make more raisins available to handlers as
free tonnage, and might reduce the amount of reserve raisins handlers
purchase to meet their market needs. However, Committee sponsored
promotional activities are not expected to be negatively impacted by
this action. Those promotional activities are planned and implemented
later in the season, when carryin inventories and the size of the new
crop are known. Additionally, those promotional activities are planned
by the Committee with the most recent information available, and
approved by the Department.
Accordingly, no changes will be made to the rule, as proposed,
based on the comment received.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at the
following web site: 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 matter presented, including the
information and recommendation submitted by the Committee, the comment
received, and other available information, it is hereby found that this
rule, as hereinafter set forth, will tend to effectuate the declared
policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found that good cause exists
for not postponing the effective date of this action until 30 days
after publication in the Federal Register because: (1) The 2000-2001
crop year begins on August 1, 2000, and this rule should be effective
promptly because the order provides that the Committee meet on or
before August 15 to compute and announce the trade demand, and the
desirable carryout level is a necessary item in that calculation; (2)
this action is a relaxation in that it will make more raisins available
to handlers especially for use early in the season; (3) producers and
handlers are aware of this action which was unanimously recommended by
the Committee at a public meeting; and (4) a 60-day comment period was
provided for in the proposed rule, and the comment received is
addressed in this final rule.
List of Subjects in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 989 is
amended as follows:
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
1. The authority citation for 7 CFR part 989 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 989.154 is amended by revising paragraph (a) to read as
follows:
Sec. 989.154 Marketing policy computations.
(a) Desirable carryout levels. The desirable carryout levels to be
used in computing and announcing a crop year's marketing policy shall
be equal to the total shipments of free tonnage during August,
September, and October for each of the past 5 crop years, for each
varietal type, converted to a natural condition basis, dropping the
high and low figures, and dividing the remaining sum by three.
* * * * *
Dated: July 11, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-18073 Filed 7-17-00; 8:45 am]
BILLING CODE 3410-02-P