[Federal Register: August 12, 2002 (Volume 67, Number 155)]
[Rules and Regulations]
[Page 52390-52393]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV02-989-6 IFR]
Raisins Produced From Grapes Grown In California; Decrease in
Desirable Carryout Used to Compute Trade Demand
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule decreases 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 rule
decreases the amount of tonnage available early in the season and is
expected to help the industry reduce an oversupply of California
raisins.
DATES: Effective August 13, 2002. Comments must be received by August
22, 2002.
ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent to the Docket Clerk, Fruit
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., STOP
0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or E-mail:
moab.docketclerk@usda.gov. All comments should reference the docket
number and the date and page number of this issue of the Federal
Register and will be made available for public inspection in the Office
of the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing
Specialist, California Marketing Field Office, 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, 1400 Independence
Avenue SW., STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, or Fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue SW., STOP 0237, Washington, DC 20250-0237; telephone (202) 720-
2491; Fax: (202) 720-8938; or E-mail: Jay.Guerber@usda.gov.
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 of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This 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 USDA 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, USDA 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 USDA's ruling on the
petition, provided an action is filed not later than 20 days after the
date of the entry of the ruling.
This rule decreases 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 the prior crop year needed during the first part
of the next crop year to meet market needs, before new crop raisins are
available. This rule decreases the desirable carryout for Natural (sun-
dried) Seedless (NS) raisins from a rolling average of 3 to 2 months of
prior year's shipments over the past 5 years, dropping the high and low
figures, and dividing the remaining sum by three, or 60,000 natural
condition tons, whichever is higher. This rule also decreases the
desirable carryout for all other varietal types of raisins covered
under the order from a rolling average of 3 to 2-1/2 months of prior
year's shipments over the past 5 years, dropping the high and low
figures, and dividing the remaining sum by three. These actions were
recommended by the Committee at meetings held on June 27 and July 24,
2002.
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
[[Page 52391]]
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 continued this
practice and, in 2000, desirable carryout was changed to equal a
rolling average of 3 months of prior year's shipments (August,
September, and October) over the past 5 years, dropping the high and
low figures.
June 27, 2002, Recommendation
At a meeting on June 27, 2002, the Committee reviewed the desirable
carryout level. Most Committee members believe that the supply of free
tonnage raisins on the market has once again become excessive and is
contributing to unstable market conditions. The following table
illustrates how handler inventories for NS raisins have been building
in recent years:
Carryout Inventory Over Past 5 Years
------------------------------------------------------------------------
Crop years \1\
--------------------------------------------------------------Inventory-
2001-02................................................... \2\ 133,815
2000-01................................................... 116,131
1999-2000................................................. 101,946
1998-99................................................... 98,291
1997-98................................................... 92,769
------------------------------------------------------------------------
\1\ Carryout inventory (natural condition tons).
\2\ Estimated.
To moderate the oversupply of marketable tonnage early in the crop
year, the Committee recommended reducing the desirable carryout level
for all varietal types of raisins from a rolling average of 3 months
(August, September, and October) to 2\1/2\ months (August, September,
and one-half of October) of prior year's shipments over the past 5
years, dropping the high and low figures. Committee staff estimated
that this change to the desirable carryout level would reduce the 2002
trade demand for NS raisins by 15,000 tons. Decreasing the trade demand
will reduce the free tonnage percentage, thus, making less free tonnage
available to handlers for immediate use.
The Committee's vote on this action was 41 in favor and 5 opposed.
Two of the members voting no commented that the large carryout at the
end of the current crop year was due mainly to an extra 32,000 tons of
reserve raisins that were purchased by handlers in September 2001. They
believe that the carryout problem will correct itself next season.
Other members commented that this action would create a hardship on
producers by reducing the free tonnage percentage, thereby reducing
producer payments. After much deliberation, the majority of Committee
members supported reducing the desirable carryout from a rolling
average of 3 to 2\1/2\ months of shipments over the past 5 years,
dropping the high and low figures.
Most of the discussion at the Committee's meeting concerned the
desirable carryout level for NS raisins. NS raisins 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 NS raisins for the past several seasons. However, the
Committee also believes that the decrease in desirable carryout should
apply to the other varietal types of raisins covered under the order.
July 24, 2002, Revised Recommendation for NS Raisins
The raisin industry continued to explore other avenues to reduce
the oversupply of California raisins, including implementing a
``surplus pool and non-harvest'' program for the 2002 crop year.
However, rulemaking would be required as appropriate.
The Committee met on July 24, 2002, and revisited its oversupply
situation and the desirable carryout issue. As a result, the Committee
voted to further reduce the NS supply by decreasing the NS desirable
carryout to a rolling average of 2 months (August and September) of
prior year's shipments over the past 5 years, dropping the high and low
figures, or 60,000 natural condition tons, whichever is higher.
Committee staff estimated that this would reduce the 2002 trade demand
for NS raisins by another 15,000 tons, or a total of 30,000 tons. The
desirable carryout for all other varietal types would remain at the
2\1/2\ month level recommended in June 2002.
The Committee's vote on this action was 32 in favor, 10 opposed,
and 2 abstentions. The members voting no were primarily concerned that
this action would reduce the free tonnage percentage and producer
payments.
Although this action will tighten the supply of raisins available
early in the season, handlers will still be provided an opportunity to
increase their inventories, if necessary, by purchasing raisins from
the reserve pool under order-mandated 10 plus 10 offers and other
releases of reserve raisins available under the order. The 10 plus 10
offers are two offers of reserve pool raisins, which are made available
to handlers each season. For each such offer, a quantity of raisins
equal to 10 percent of the prior year's shipments is made available for
free use. Although this rule tends to tighten the supply of raisins
early in the season, handlers will still have the opportunity to obtain
additional raisins from the 10 plus 10 offers. Thus, paragraph (a) in
Sec. 989.154 is modified accordingly.
Initial Regulatory Flexibility Act
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 initial 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 are
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
$750,000. Thirteen of the 20 handlers subject to regulation have annual
sales estimated to be at least $5,000,000, and
[[Page 52392]]
the remaining 7 handlers have sales less than $5,000,000. No more than
7 handlers, and a majority of producers, of California raisins may be
classified as small entities.
This rule reduces 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 the
prior crop year needed during the first part of the next crop year to
meet market needs, before new crop raisins are available. This rule
reduces the desirable carryout specified in paragraph (a) of
Sec. 989.154 for NS raisins from a rolling average of 3 months (August,
September, and October) to 2 months (August and September) of prior
year's shipments for the past 5 years, dropping the high and low
figures, and dividing the remaining sum by three, or 60,000 natural
condition tons, whichever is higher. This rule also reduces the
desirable carryout for all other varietal types covered under the order
from 3 months (August, September, and October) to 2\1/2\ months
(August, September, and one-half of October) of prior year's shipments
for the past 5 years, dropping the high and low figures, and dividing
the remaining sum by three.
The desirable carryout level applies uniformly to all handlers in
the industry, whether small or large, and there are no known additional
costs incurred by small handlers. As previously mentioned, reducing the
desirable carryout will reduce the trade demand and free tonnage
percentage, thus making less raisins available to handlers early in the
season. This action is expected to help reduce the burdensome supply of
California raisins, thereby improving market conditions. Handlers will
be provided opportunities throughout the crop year to purchase raisins
from the reserve pool to increase their inventories.
The Committee considered a number of alternative levels of
desirable carryout. The Committee has an appointed subcommittee, which
periodically holds public meetings to discuss changes to the order and
other issues. The subcommittee met on June 26, 2002, and discussed
desirable carryout. Some industry members supported maintaining the
status quo. Others supported an incremental reduction to the desirable
carryout, reducing the level to a rolling average of 2\3/4\ months in
2002, and to a rolling average of 2\1/2\ months in 2003. The
subcommittee ultimately recommended to the full Committee in June that
the desirable carryout be reduced for all varietal types to a rolling
average of 2\1/2\ months of prior year's shipments for the past 5
years, dropping the high and low figures, and dividing the remaining
sum by three. The full Committee adopted the subcommittee's June
recommendation.
As mentioned earlier, the raisin industry continued to explore
other avenues to reduce the oversupply of California raisins, including
implementing a ``surplus pool and non-harvest'' program for the 2002
crop year. However, rulemaking would be required as appropriate.
The Committee revisited the desirable carryout issue on July 24,
2002. At that meeting, the Committee reviewed an alternative proposal
that would revise the trade demand formula by eliminating the
adjustment for carryin and carryout inventory. The Committee also
reviewed the merits of reducing the desirable carryout for NS raisins
to a rolling average of 2 months of prior year's shipments over the
past 5 years, dropping the high and low figures, and dividing the
remaining sum by three, or 60,000 natural condition tons, whichever is
higher. After much discussion, the majority of Committee members
supported further reducing the desirable carryout for NS raisins to
this level. Committee staff estimated that this would reduce the 2002
trade demand for NS raisins by another 15,000 tons, or a total of
30,000 tons. The desirable carryout for all other varietal types would
remain at the 2\1/2\ month level recommended in June 2002.
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 information requirements and duplication by industry
and public sector agencies. Finally, USDA has not identified any
relevant Federal rules that duplicate, overlap or conflict with this
rule.
In addition, the Committee's subcommittee meeting on June 26, 2002,
and the Committee's meetings on June 27 and July 24, 2002, 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.
Finally, all interested persons are invited to submit information on
the regulatory and informational impacts of this action on small
businesses.
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.
This rule invites comments on reducing the desirable carryout level
specified under the order's regulations. Any comments received will be
considered prior to finalization of this rule.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee 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 and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect, and that good cause exists for not postponing the effective
date of this rule until 30 days after publication in the Federal
Register because: (1) This rule needs to be in effect as soon as
possible because the order specifies that the Committee must meet and
compute trade demand on or before August 15 each year; (2) this action
was recommended by more than two-thirds of the Committee members; (3)
producers and handlers are aware of this action which was recommended
by the Committee at a public meeting; and (4) this interim final rule
provides a comment period for written comments and all comments timely
received will be considered prior to finalization of this rule.
Further, in view of the above, a ten-day comment period is deemed
appropriate.
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.
[[Page 52393]]
2. In Sec. 989.154, paragraph (a) is revised to read as follows:
989.154 Marketing policy computations.
(a) Desirable carryout levels. The desirable carryout level to be
used in computing and announcing a crop year's marketing policy for
Natural (sun-dried) Seedless raisins shall be equal to the total
shipments of free tonnage during August and September for each of the
past 5 crop years, converted to a natural condition basis, dropping the
high and low figures, and dividing the remaining sum by three, or
60,000 natural condition tons, whichever is higher. The desirable
carryout level to be used in computing and announcing a crop year's
marketing policy for all other varietal types of raisins specified in
Sec. 989.110 shall be equal to the total shipments of free tonnage
during August, September, and one-half of October for each of the past
5 crop years, for each such varietal type, converted to a natural
condition basis, dropping the high and low figures, and dividing the
remaining sum by three.
* * * * *
Dated: August 8, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-20440 Filed 8-8-02; 12:46 pm]
BILLING CODE 3410-02-P
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