Raisins produced from grapes grown in California,
[Federal Register: June 1, 1998 (Volume 63, Number 104)]
[Rules and Regulations]
[Page 29531-29535]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jn98-3]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[FV98-989-1 FIR]
Raisins Produced From Grapes Grown in California; Final Free and Reserve Percentages for 1997-98Crop Natural (Sun-Dried) Seedless and Zante Currant Raisins
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 which established final volume regulation percentages for 1997-98crop Natural (sun-dried) Seedless (Naturals) and Zante Currant (Zantes) raisins covered under the Federal marketing order for California raisins. The order regulates the handling of raisins produced from grapes grown in California and is administered locally by the Raisin Administrative Committee (Committee). The volume regulation percentages are 66 percent free and 34 percent reserve for Naturals and 44 percent free and 56 percent reserve for Zantes. Free tonnage raisins may be sold by handlers to any market. Reserve raisins must be held in a pool for the account of the Committee and are disposed of through various programs authorized under the order. The volume regulation percentages are intended to help stabilize raisin supplies and prices and strengthen market conditions.
EFFECTIVE DATE: July 1, 1998.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing Specialist, California Marketing Field Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721; telephone: (209) 487-5901, Fax: (209) 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) 205-6632. Small businesses may request information on compliance 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) 205-6632.
SUPPLEMENTARY INFORMATION: This 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.''
The Department is issuing this rule in conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the order provisions now in effect, final free and reserve percentages may be established for raisins acquired by handlers during the crop year. This rule establishes final free and reserve percentages for Natural and Zante raisins for the 1997-98crop year, which began August 1, 1997, and ends July 31, 1998. This rule will not
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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 filednot later than 20 days after the date of the entry of the ruling.
This rule continues in effect the provisions of an interim final rule which established final volume regulation percentages for 1997-98 crop Natural and Zante raisins covered under the order. The volume regulation percentages are 66 percent free and 34 percent reserve for Naturals and 44 percent free and 56 percent reserve for Zantes. Free tonnage raisins may be sold by handlers to any market. Reserve raisins must be held in a pool for the account of the Committee and are disposed of through various programs authorized under the order. For example, 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. The volume regulation percentages are intended to help stabilize raisin supplies and prices and strengthen market conditions. Final percentages were recommended by the Committee at a meeting on February 12, 1998.
Section 989.54 of the order prescribes the procedures and time frames to be followed in establishing volume regulation. This includes methodology used to calculate percentages. Pursuant to Sec. 989.54(a) of the order, the Committee met on August 14, 1997, to review shipment and inventory data, and other matters relating to the supplies of raisins of all varietal types. The Committee computed a trade demand for each varietal type for which a free tonnage percentage might be recommended. Trade demand is a computed formula specified in the order and, for each varietal type, is equal to 90 percent of the prior year's shipments of free tonnage and reserve tonnage raisins sold for free use into all market outlets, adjusted by subtracting the carryin on August 1 of the current crop year and by adding the desirable carryout at the end of that crop year. As specified in Sec. 989.154, the desirable carryout for each varietal type is equal to the shipments of free tonnage raisins of the prior crop year during the months of August and September. In accordance with these provisions, the Committee computed and announced 1997-98trade demands for Naturals and Zantes at 252,398 and 2,058 tons, respectively, as shown below.
Computed Trade Demands
[Natural condition tons]
Naturals Zantes
Prior year's shipments........................ 314,013
3,277 Multiplied by 90 percent......................
0.90
0.90 Equals adjusted base.......................... 282,612
2,949 Minus carryin inventory....................... 92,769
1,679 Plus desirable carryout....................... 62,555
788 Equals computed trade demand.................. 252,398
2,058
As required under Sec. 989.54(b) of the order, the Committee met on October 2, 1997, and announced a preliminary crop estimate of 353,583 tons for Naturals. With the crop estimate much higher than the trade demand of 252,398 tons, the Committee determined that volume regulation was warranted. The Committee announced preliminary free and reserve percentages for Naturals which released 65 percent of the computed trade demand since the field price had not yet been established. The preliminary percentages were 46 percent free and 54 percent reserve. The Committee authorized its staff to modify the preliminary percentages to release 85 percent of the trade demand when the field price was established. The field price was established on October 17, 1997, and the preliminary percentages were thus modified to 61 percent free and 39 percent reserve. As discussed later in this rule, the 353,583 ton crop estimate was subsequently revised to 381,484 tons, the largest crop since 1993-94. The production of Naturals has exceeded market needs during the current crop year, as in most seasons. Volume regulation in such a large crop year should help stabilize prices and improve market conditions.
Also at its October 2, 1997, meeting, the Committee announced a preliminary crop estimate for Zantes at 4,812 tons. This compared to the trade demand of 2,058 tons. It was determined that a Zante reserve pool was warranted because estimated production exceeded the trade demand by a significant amount. The Committee computed preliminary percentages for Zantes at 36 percent free and 64 percent reserve which would have released 85 percent of the computed trade demand. However, as authorized under Sec. 989.54(c), the Committee modified the computed preliminary percentages and established interim percentages to release slightly less than the full trade demand (98.8 percent) at 42.5 percent free and 57.5 percent reserve. Volume regulation for Zantes should also help stabilize prices and improve market conditions.
Also at that meeting, the Committee computed and announced preliminary crop estimates for Dipped Seedless, Oleate and Related Seedless, Golden Seedless, Sultana, Muscat, Monukka, and Other Seedless raisins. The Committee computed preliminary volume regulation percentages for these varieties, but determined that such regulation was only warranted for Naturals and Zantes. It determined that the supplies of the other varietal types would be less than or close enough to the computed trade demands for each of these varietal types. As in past seasons, the Committee submitted its marketing policy to the Department for review.
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The Committee met on February 12, 1998, and revised its crop estimates for both Naturals and Zantes as follows: for Naturals, the estimate was increased from 353,583 to 381,484 tons; and for Zantes, the estimate was increased from 4,812 to 4,955 tons. The Committee also announced interim percentages for Naturals at 65.75 percent free and 34.25 percent reserve. Regarding Zantes, the Committee modified its trade demand figure from 2,058 to 2,200 tons at an earlier meeting in November 1997. At its February meeting, the Committee revised its interim percentages for Zantes to 43.75 percent free and 56.25 percent reserve. As required under Sec. 989.54(d) of the order, the Committee also recommended to the Secretary at its February meeting final free and reserve percentages which, when applied to the final production estimate of a varietal type, will tend to release the full trade demand for any varietal type. The Committee's calculations to arrive at final percentages for Naturals and Zantes are shown in the table below.
Final Volume Regulation Percentages
[Tonnage as natural condition weight]
Naturals Zantes
Trade demand.................................. 252,398
2,200 Divided by crop estimate...................... 381,384
4,955 Equals free percentage........................
66
44 100 minus free percentage equals reserve
percentage...................................
34
56
In addition, the Department's ``Guidelines for Fruit, Vegetable, and Speciality Crop Marketing Orders'' (Guidelines) specify that 110 percent of recent years' sales should be made available to primary markets each season for marketing orders utilizing reserve pool authority. This goal was met for Naturals and Zantes by the establishment of final percentages which released 100 percent of the trade demand and the offers of additional reserve raisins for sale to handlers under the ``10 plus 10 offers.'' As specified in Sec. 989.54(g), the 10 plus 10 offers are two offers of reserve pool raisins which are made available to handlers during each season. Handlers may sell their 10 plus 10 raisins to any market. For each such offer, a quantity of reserve raisins equal to 10 percent of the prior year's shipments is made available for free use.
For Naturals, the first 10 plus 10 offer was made available in December 1997 and about 31,000 tons of raisins were purchased by handlers. The second 10 plus 10 offer was made available to handlers in May 1998 at which time about another 31,000 tons of reserve Naturals were offered for sale to handlers. Adding the 62,000 tons of 10 plus 10 raisins to the 252,398 ton trade demand figure, plus 92,769 tons of 1996-97 carryin inventory equates to about 407,170 tons natural condition raisins or 381,750 tons packed raisins made available for free use, or to the primary market. This is 130 percent of the quantity of Naturals shipped in 1997 (314,013 natural condition tons or 294,406 packed tons).
For Zantes, both Zante 10 plus 10 offers were made available simultaneously in November 1997 and 656 tons of raisins were purchased by handlers. Adding the 656 tons of 10 plus 10 raisins to the 2,200 ton trade demand figure, plus 1,679 tons of 1996-97 carryin inventory equates to 4,535 tons natural condition raisins or about 3,970 tons packed raisins made available for free use, or to the primary market. This is 138 percent of the quantity of Zantes shipped in 1997 (3,277 natural condition tons or 2,868 packed tons).
In addition to the 10 plus 10 offers, Sec. 989.67(j) of the order provides authority for sales of reserve raisins to handlers under certain conditions such as a national emergency, crop failure, change in economic or marketing conditions, or if free tonnage shipments in the current crop year exceed shipments of a comparable period of the prior crop year. Such reserve raisins may be sold by handlers to any market. These additional offers of reserve raisins would thus make even more raisins available to primary markets which is consistent with the Department's Guidelines.
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 121.601) 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. No more than 7 handlers, and a majority of producers, of California raisins may be classified as small entities. 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.
Pursuant to Sec. 989.54(d) of the order, this rule continues in effect the provisions of an interim final rule which established final volume regulation percentages for 1997-98crop Natural and Zante raisins. The volume regulation percentages are 66 percent free and 34 percent reserve for Naturals and 44 percent free and 56 percent reserve for Zantes. Free tonnage raisins may be sold by handlers to any market. Reserve raisins must be held in a pool for the account of the Committee and are disposed of through certain programs authorized under the order. The volume regulation percentages are intended to help stabilize raisin supplies and prices and strengthen market conditions.
Many years of marketing experience led to the development of the current volume regulation procedures. These procedures have helped the industry address its marketing problems by keeping supplies in balance with domestic and export market needs, and strengthening market conditions. The current volume regulation procedures fully supply the domestic and export markets, provide for market expansion, and help prevent oversupplies in the domestic market.
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In discussing the possibility of volume regulation for the 1997-98 crop year, the Committee considered the following factors:
Naturals* Zantes*
Estimated tonnage held by producers, handlers,
and for the account of the Committee at the
beginning of the crop year................... 92,769
1,679 Estimated tonnage of standard raisins which
will be produced in 1997-98.................. 381,484
4,955 Trade demand for raisins in free tonnage
outlets for 1997-98.......................... 252,398
2,200 Estimated desirable carryout at the end of the
1997-98crop year for free tonnage........... 58,875
545
*Natural condition tons.
The Committee also considered the estimated world raisin supply and demand situation; the current prices being received and the probable level of prices to be received for raisins by producers and handlers; and the trend and level of consumer income.
The Committee's review resulted in the computation and announcement in October 1997 of volume regulation percentages for Naturals and Zantes. Naturals are the major commercial varietal type of raisin produced in California. Volume regulation has been implemented under the order for Naturals for the past several seasons. With the crop estimate of 381,484 tons, much higher than the computed trade demand of 252,398 tons, the Committee determined that volume regulation was warranted.
In comparison, Zante production is much smaller than that of Naturals. Volume regulation was last implemented for Zantes during the 1995-96 crop year. Volume regulation was warranted for Zantes this season because the crop estimate of 4,955 tons exceeded the trade demand of 2,200 tons by a significant amount.
Raisin variety grapes can be marketed as fresh grapes, crushed for use in the production of wine or juice concentrate, or dried into raisins. Annual fluctuations in the fresh grape, wine, and concentrate markets, as well as weather related factors, cause fluctuations in raisin supply. These supply fluctuations can cause producer price instability and disorderly market conditions. Volume regulation is helpful to the raisin industry because it lessens the impact of such fluctuations and contributes to orderly marketing. For example, producer returns for Naturals have remained fairly steady over the last 5 crop years although production has varied. As shown in the table below, production over the last 5 years has varied from a low of 272,063 tons in 1996-97 and to a high of 387,007 tons in 1993-94, or 42 percent. According to Committee data, total producer return per ton, which includes proceeds from both free tonnage plus reserve pool raisins, has varied from a low of $901 in 1992-93 to a high of $1,049 in 1996-97, or 16 percent.
Natural Seedless Producer Returns
Production
(natural Producer Crop year
condition returns tons)
1996-97....................................... 272,063 $1,049 1995-96....................................... 325,911
1,007 1994-95....................................... 378,427
928 1993-94....................................... 387,007
904 1992-93....................................... 371,516
901
Free and reserve percentages are established by variety, and only in years when the supply exceeds the trade demand by a large enough margin that the Committee believes volume regulation is necessary to maintain market stability. Accordingly, in assessing whether to apply volume regulation or, as an alternative, not to apply such regulation, the Committee recommended only two of the nine raisin varieties defined under the order for volume regulation this season.
The free and reserve percentages release the full trade demand and apply uniformly to all handlers in the industry, regardless of size. Small and large raisin producers and handlers have been operating under volume regulation percentages every year since 1983-84. There are no known additional costs incurred by small handlers that are not incurred by large handlers. All handlers are regulated based on the quantity of raisins which they acquire from producers. While the level of benefits of this rulemaking are difficult to quantify, the stabilizing effects of the volume regulations impact both small and large handlers positively by helping them maintain and expand markets even though raisin supplies fluctuate widely from season to season. Likewise, price stability positively impacts small and large producers by allowing them to better anticipate the revenues their raisins will generate.
There are some reporting, recordkeeping and other compliance requirements under the order. The reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The requirements are the same as those applied last season. Thus, this action will not impose any additional reporting or recordkeeping burdens on either small or large handlers. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. The information collection and recordkeeping requirements have been previously approved by the Office of Management and Budget under OMB Control No. 0581-0178. As with other, similar marketing order programs, reports and forms are periodically studied to reduce or eliminate duplicate information collection burdens by industry and public sector agencies. In addition, the Department has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Further, Committee and subcommittee meetings are widely publicized in advance and are held in a location central to the production area. The meetings are open to all industry members, including small business entities, and other interested persons who are encouraged to participate in the deliberations and voice their opinions on topics under discussion. Thus, Committee recommendations can be considered to represent the interests of small business entities in the industry.
An interim final rule concerning this action was published in the Federal Register on March 10, 1998. Copies of the rule were mailed by the Committee's staff to all raisin handlers. 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 on May 11, 1998. Interested persons were also invited to submit information on the regulatory and informational impacts of this action on small businesses. No comments were received.
After consideration of all relevant material presented, including the
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Committee's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the Federal Register (63 FR 11585; March 10, 1998) will tend to effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping requirements.
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
Accordingly, the interim final rule amending 7 CFR part 989 which was published at 63 FR 11585 on March 10, 1998, is adopted as a final rule without change.
Dated: May 26, 1998. Robert C. Keeney, Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-14422Filed5-29-98; 8:45 am]
BILLING CODE 3410-02-P
