[Federal Register: November 21, 2002 (Volume 67, Number 225)]
[Rules and Regulations]
[Page 70140-70146]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21no02-4]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 920
[Docket No. FV02-920-3 FIR]
Kiwifruit Grown in California; Relaxation of Pack and Container
Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, without change, an interim final rule which revised pack and
container requirements prescribed under the California kiwifruit
marketing order (order). The order regulates the handling of kiwifruit
grown in California and is administered locally by the Kiwifruit
Administrative Committee (Committee). This rule continues to allow
handlers to pack more individual pieces of fruit per 8-pound sample for
three size designations and one less piece of fruit per 8-pound sample
for one size designation. This rule also continues in effect revisions
to lot stamping requirements for plastic containers, suspension of the
standard packaging requirement for volume filled containers of
kiwifruit designated by weight for the 2002-03 season, and removal of
obsolete language from the text of the regulation. These changes were
unanimously recommended by the Committee and are expected to help
handlers compete more effectively in the marketplace, better meet the
needs of buyers, and to improve grower returns.
EFFECTIVE DATE: December 23, 2002.
FOR FURTHER INFORMATION CONTACT: Rose Aguayo, 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, 1400
Independence Avenue SW., STOP 0237, Washington, DC 20250-0237;
telephone: (202) 720-2491, 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 Order
No. 920, as amended (7 CFR part 920), regulating the handling of
kiwifruit 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 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 continues in effect container and pack requirements
currently prescribed for California kiwifruit under the order. This
rule continues to allow handlers to pack more individual pieces of
fruit per 8-pound sample for three size designations and one less piece
of fruit per 8-pound sample for one size designation. This rule
continues in effect revisions to lot stamping
[[Page 70141]]
requirements for plastic containers, suspension of the standard
packaging requirement for volume filled containers of kiwifruit
designated by weight for the 2002-03 season, and removal of obsolete
language from the text of the regulation. These changes were
unanimously recommended by the Committee and are expected to help
handlers compete more effectively in the marketplace, better meet the
needs of buyers, and to improve grower returns. The Committee
unanimously recommended these changes at its April 9, 2002, meeting.
Numerical Count Size Designations
Under the terms of the order, fresh market shipments of kiwifruit
grown in California are required to be inspected and meet grade, size,
maturity, pack, and container requirements.
Section 920.52 authorizes the establishment of pack requirements.
Section 920.302(a)(4) of the order's administrative rules and
regulations outlines pack requirements for fresh shipments of
California kiwifruit.
Section 920.302(a)(4)(iii) establishes a maximum number of fruit
per 8-pound sample for each numerical count size designation for fruit
packed in bags, volume filled, or bulk containers.
The amount of kiwifruit supplied to the domestic market by
California handlers has declined 40 percent since the 1992-93 season,
while imports from Europe have increased 1,409 percent. During the
2000-01 season approximately 3.2 million tray equivalents were imported
from Europe. Imports from Europe are in direct competition with
California kiwifruit. Additionally, grower prices have steadily
declined in spite of a continuous increase in the U.S. per capita
consumption of kiwifruit. When the order was implemented in 1984, the
average Free-on-Board (FOB) value was $1.14 per pound. A recent review
of FOB values showed that the average FOB value for the 1992-93 season
through the 1999-2000 season was $0.56 per pound, a decline of $0.58
per pound.
As previously mentioned, the rules and regulations specify a
maximum number of fruit per 8-pound sample for each numerical count
size designation for kiwifruit packed in bags, volume filled, or bulk
containers. California and imported fruit size designations by weight
have differed since the implementation of the order. In 1998, the
Committee addressed these differences by revising the numerical count
per size designation specified in Sec. 920.302(a)(4)(iv) of the
order's administrative rules and regulations. An interim final rule
published in the Federal Register on September 3, 1998 (63 FR 46861),
increased the number of fruit that could be packed per 8-pound samples
of size designations 30 through 42. A final rule concerning this matter
was published in the Federal Register on July 29, 1999 (64 FR 41010).
Buyers generally prefer to purchase containers with a greater
number of pieces of fruit in the box. Therefore, at its September 19,
2001, meeting, the Committee again addressed the differences in size
designations between California kiwifruit and imported kiwifruit and
unanimously recommended relaxing pack requirements under Sec.
920.302(a)(iii) to permit handlers to pack more individual pieces of
fruit in an 8-pound sample for various sizes.
The Committee unanimously recommended increasing the maximum number
of fruit per 8-pound sample for sizes 42 through 25, eliminating size
21, and adding new sizes 20 and 23. These changes as shown in the
following chart were implemented through an interim final rule (66 FR
1413, October 29, 2001) and a final rule (67 FR 11396, March 14, 2002).
Changes are in bold.
------------------------------------------------------------------------
Maximum number
Size designation of fruit per 8-
pound sample
------------------------------------------------------------------------
20................................................... 27
23................................................... 29
25................................................... 32
27/28................................................ 35
30................................................... 38
33................................................... 43
36................................................... 45
39................................................... 49
42................................................... 54
45................................................... 55
------------------------------------------------------------------------
This chart is commonly referred to as the ``Size Designation
Chart'' in the industry. Increasing the maximum number of fruit per 8-
pound sample allowed some smaller-sized fruit to be packed into a
larger-size category. This change allowed one more piece of fruit to be
packed per 8-pound sample in sizes 42 and 39, three more pieces of
fruit to be packed in size 36, seven more pieces of fruit to be packed
in size 33, and five more pieces of fruit to be packed in sizes 27/28
and 25.
Increasing the maximum number of fruit permitted per 8-pound
samples during the 2001-02 season enabled handlers to better meet the
needs of buyers, because kiwifruit sells by the piece, and buyers
desire as much fruit in each container as the container can comfortably
hold.
The changes to the size designation chart helped reduce the sizing
differences between California and imported kiwifruit during the 2001-
02 season and allowed more fruit to be sold; however, handlers found
that adjustments were still needed in some of the size designations to
bring them closer to imported fruit size designations and to allow more
accurate sorting into the size categories with handler sizing
equipment. Sizing equipment had difficulty during the 2001-02 season
distinguishing between sizes.
At its April 9, 2002, meeting, the Committee unanimously
recommended and the USDA approved increasing the maximum number of
fruit per 8-pound sample for sizes 23, 30, and 36, and reducing the
maximum number of fruit per 8-pound sample for size 42 (67 FR 54327,
August 22, 2002). The maximum number of fruit allowed in size 23
increased from 29 pieces of fruit per 8-pound sample to 30 pieces; in
size 30, 39 pieces of fruit were allowed instead of 38 pieces; in size
36, 46 pieces of fruit were allowed instead of 45; and in size 42, the
number of fruit allowed was decreased from 54 pieces of fruit per 8-
pound sample to 53 pieces. These changes are shown in bold in the
following chart.
------------------------------------------------------------------------
Maximum number
Size designation of fruit per 8-
pound sample
------------------------------------------------------------------------
20................................................... 27
23................................................... 29 30
25................................................... 32
27/28................................................ 35
30................................................... 38 39
33................................................... 43
36................................................... 45 46
39................................................... 49
42................................................... 54 53
45................................................... 55
------------------------------------------------------------------------
The Committee believes that increasing the number of fruit
permitted per 8-pound samples of sizes 23, 30, and 36, and decreasing
the number of fruit per 8-pound sample for size 42 will result in more
clearly defined size categories, and allow sizing equipment to more
uniformly separate fruit of different sizes. Additionally, these
adjustments will make the four size designations more similar to those
for imported fruit. This action will not affect import requirements.
Lot Stamping Requirements
Section 920.52 of the order authorizes the establishment of
container requirements. Section 920.55 of the order requires inspection
and certification of kiwifruit, handled by handlers.
Prior to issuance of the interim final rule (67 FR 54327, August
22, 2002),
[[Page 70142]]
Sec. 920.303(d) required all exposed or outside containers of
kiwifruit, but not less than 75 percent of the total containers on a
pallet to be plainly marked with the lot stamp number corresponding to
the lot inspection conducted by an authorized inspector. It further
required that individual consumer packages of kiwifruit placed directly
on a pallet have all outside or exposed packages on a pallet plainly
marked with the lot stamp number corresponding to the lot inspection
conducted by an authorized inspector or have one inspection label
placed on each side of the pallet. However, kiwifruit packed into
individual consumer packages within a master container that are being
directly loaded into a vehicle for export shipment under the
supervision of the Federal or Federal-State Inspection Service
(inspection service) were exempted, and continue to be exempted, from
the lot stamp number requirement. The lot stamp number is used by the
inspection service to identify and locate the corresponding inspector's
working papers or notes. Working papers are the documents each
inspector completes while performing an inspection on a lot of
kiwifruit.
During the 2001 season, the kiwifruit industry began using plastic
containers of various dimensions that can hold either bulk or tray
packed kiwifruit. Some of these containers are reusable. Kiwifruit
packed in reusable plastic containers (RPCs) is typically delivered to
the retailer, where the containers are emptied and returned to a
clearinghouse for cleaning and redistribution. As RPCs do not support
markings that are permanently affixed to the container, all markings
must be printed on cards, which slip into tabs on the front or sides of
the containers. The cards are easily inserted and removed and
contribute to the efficient use of the container. Because of their
unique portability, the industry and inspection service are concerned
that the cards on pallets of inspected containers could easily be moved
to pallets of uninspected containers, enabling a handler to avoid
inspection on a lot or lots of kiwifruit.
The industry experimented last season with round adhesive labels on
RPCs. The lot stamp number was stamped on the round adhesive label and
placed on the RPCs; however, manufacturers found that it was difficult
to remove the adhesive label in the wash cycle. Additionally, handlers
found that increased labor was needed to affix the adhesive labels and
lot stamp number to the plastic containers. Handler members calculated
that affixing adhesive labels to RPCs and one-way plastic containers
cost the kiwifruit industry approximately $0.10 per container in
materials and labor.
The inspection service and the Committee have presented their
concerns to the manufacturers of these types of containers. One
manufacturer has indicated a willingness to address the problem by
offering an area on the principal display panel where the container
markings will adhere to the plastic container. However, the
manufacturer believes that this change may not be feasible in the near
future.
To address the additional time and cost of affixing adhesive labels
to containers, the Committee unanimously recommended and the USDA
approved allowing handlers to use any method of positive lot
identification (PLI) in accordance with Federal or Federal-State
Inspection Service (inspection service) procedures (67 FR 54327, August
22, 2002). The Committee estimated that allowing handlers to use any
method of PLI acceptable to the inspection service will reduce handler
costs by $8,700, and will make handler operations more efficient. This
action will not affect import requirements.
Standard Packaging for Volume Filled Containers Designated by Weight
Section 920.52 authorizes the establishment of pack requirements.
Paragraphs (a)(1) and (3) of Sec. 920.52 specify that the USDA may fix
the weight of containers used in the handling of kiwifruit.
Section 920.302(a)(4) of the order's administrative rules and
regulations outlines pack requirements for fresh shipments of
California kiwifruit.
Prior to issuance of the interim final rule (67 FR 54327, August
22, 2002), Sec. 920.302(a)(4)(v) required that all volume filled
containers of kiwifruit designated by weight shall hold 22-pounds (10-
kilograms) net weight of kiwifruit unless such containers hold less
than 10-pounds or more than 35-pounds net weight of kiwifruit.
In a volume filled container, fairly uniform size kiwifruit are
loosely packed without cell compartments, cardboard fillers or molded
trays. Handlers may ship volume filled containers marked by either the
appropriate count or net weight of kiwifruit. Handler shipments are
based upon the preference of the receiver.
In 1994, the Committee unanimously recommended and USDA established
standard packaging for certain volume filled containers designated by
weight. At that time 52 percent of the total crop was packed into
volume filled containers. The percentage of the total crop packed into
volume filled containers increased to 85 percent during the 2001-02
season. In 2001-02, imports from the Northern hemisphere (Greece,
Italy, and France) totaled approximately 17 percent of the U.S. market
share. The majority of imported kiwifruit was shipped in 19.8-pound (9-
kilogram) volume filled containers, whereas the order limited
California handlers to 22-pound (10-kilogram) net weight volume filled
containers. Retailers did not differentiate between an imported 19.8-
pound (9-kilogram) and a 22-pound (10-kilogram) net weight volume
filled container from California. Because buyers paid the same price
for each container in 2001, the effect was not favorable for California
handlers.
Additionally, prior to publication of the above-mentioned interim
final rule, Sec. 920.302(a)(4)(v) required handlers to utilize a
standard packaging of 22-pounds (10-kilograms) net weight for volume
filled containers that were over 10-pounds or less than 35-pounds net
weight of kiwifruit. This restriction limited California kiwifruit
handlers in meeting buyer's demands for other types of packaging.
At its April 9, 2002, meeting, the Committee unanimously
recommended and the USDA approved suspending the standardized packaging
requirement of 22-pounds (10-kilograms) net weight for volume filled
containers for the 2002-03 season (67 FR 54327, August 22, 2002). The
Committee expects that this suspension will enable California handlers
to meet the packaging demands of retailers for volume filled
containers, make California kiwifruit more competitive by allowing
handlers to match other packaging styles, and reduce handlers'
packaging costs. This change will not affect the import regulation.
Removal of Obsolete Language
Paragraphs (a) and (b) of Sec. 920.60 authorize reporting
requirements for kiwifruit handlers under the marketing order.
Section 920.160 requires each handler who ships kiwifruit to file a
report of shipment and inventory data to the Committee no later than
the fifth day of the month following such shipment. Handlers who ship
less than 10,000 trays or the equivalent thereof, per fiscal year, and
who have qualified with the Committee are only required to furnish such
report of shipment and inventory data twice each year. Prior to
publication of the interim final rule (67 FR 54327, August 22, 2002),
paragraphs (a)(1) through (a)(6) of Sec. 920.160 specified the types
of information to be provided on the shipment report.
[[Page 70143]]
Paragraph (a)(4) required handlers to report inventory at the end of
the reporting period by container; paragraph (a)(5) required handlers
to report the amount of kiwifruit lost in repack; and paragraph (a)(6)
required handlers to report the amount of fruit set aside for
processing.
The Committee had not been collecting this information from
handlers since the early 1990's. Therefore, the Committee unanimously
recommended removing these obsolete reporting requirements from Sec.
920.160 of the order's rules and regulations at the April 9, 2002,
meeting.
Final 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 the 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 52 handlers of California kiwifruit subject
to regulation under the marketing order and approximately 326 growers
in the production area. Small agricultural service firms are defined as
those whose annual receipts are less than $5,000,000, and small
agricultural growers are defined by the Small Business Administration
(13 CFR 121.201) as those whose annual receipts are less than $750,000.
None of the 52 handlers subject to regulation have annual kiwifruit
sales of at least $5,000,000. Two of the 326 growers subject to
regulation have annual sales of at least $750,000. Therefore, a
majority of the kiwifruit handlers and growers may be classified as
small entities.
This rule continues to allow handlers to pack more individual
pieces of fruit per 8-pound sample for three size designations and one
less piece of fruit per 8-pound sample for one size designation. This
rule continues in effect revisions to lot stamping requirements for
plastic containers, suspension of the standard packaging requirement
for volume filled containers of kiwifruit designated by weight for the
2002-03 season, and removal of obsolete language contained in
paragraphs (a)(4), (a)(5), and (a)(6) of Sec. 920.160 that has not
been applicable for several years. This rule is expected to help
handlers compete more effectively in the marketplace, better meet the
needs of buyers, and to improve grower returns. Authority for these
actions is provided in Sec. Sec. 920.52, 920.55, and 920.60 of the
order.
Numerical Count Size Designations
Under the terms of the order, fresh market shipments of kiwifruit
grown in California are required to be inspected and meet grade, size,
maturity, pack, and container requirements.
Section 920.302(a)(4) of the order's administrative rules and
regulations outlines pack requirements for fresh shipments of
California kiwifruit.
Section 920.302(a)(4)(iii) establishes a maximum number of fruit
per 8-pound sample for each numerical count size designation for fruit
packed in bags, volume filled, or bulk containers.
The amount of kiwifruit supplied to the domestic market by
California handlers has declined 40 percent since the 1992-93 season,
while imports from Europe have increased 1,409 percent. During the
2000-01 season approximately 3.2 million tray equivalents were imported
from Europe. Imports from Europe are in direct competition with
California kiwifruit. Additionally, grower prices have steadily
declined in spite of a continuous increase in the U.S. per capita
consumption of kiwifruit. When the order was implemented in 1984, the
average Free-on-Board (FOB) value was $1.14 per pound. A recent review
of FOB values showed that the average FOB value for the 1992-93 season
through the 1999-2000 season was $0.56 per pound, a decline of $0.58
per pound.
As previously mentioned, the rules and regulations specify a
maximum number of fruit per 8-pound sample for each numerical count
size designation for kiwifruit packed in bags, volume filled, or bulk
containers. California and imported fruit size designations by weight
have differed since the implementation of the order. In 1998, the
Committee addressed these differences by revising the numerical count
per size designation specified in Sec. 920.302(a)(iv) of the order's
administrative rules and regulations. An interim final rule published
in the Federal Register on September 3, 1998 (63 FR 46861), increased
the number of fruit that could be packed per 8-pound samples of size
designations 30 through 42. A final rule concerning this matter was
published in the Federal Register on July 29, 1999 (64 FR 41010).
Buyers generally prefer to purchase containers with a greater
number of pieces of fruit in the box. Therefore, at its September 19,
2001, meeting, the Committee again addressed the differences in size
designations between California kiwifruit and imported kiwifruit and
unanimously recommended relaxing pack requirements under Sec.
920.302(a)(4)(iii) to permit handlers to pack more individual pieces of
fruit in an 8-pound sample for various size designations, and, thus,
better meet buyer preferences.
The Committee unanimously recommended increasing the maximum number
of fruit per 8-pound sample for sizes 42 through 25, eliminating size
21, and adding new sizes 20 and 23. These changes, as shown in the
following chart, were implemented through an interim final rule (66 FR
1413, October 29, 2001), and finalized by a final rule (67 FR 11396,
March 14, 2002). Changes are shown in bold.
------------------------------------------------------------------------
Maximum number
Size designation of fruit per 8-
pound sample
------------------------------------------------------------------------
20................................................... 27
23................................................... 29
25................................................... 32
27/28................................................ 35
30................................................... 38
33................................................... 43
36................................................... 45
39................................................... 49
42................................................... 54
45................................................... 55
------------------------------------------------------------------------
This chart is commonly referred to as the ``Size Designation
Chart'' in the industry. Increasing the maximum number of fruit per 8-
pound sample allowed some smaller-sized fruit to be packed into a
larger-size category. This change allowed one more piece of fruit to be
packed per 8-pound sample in sizes 42 and 39, three more pieces of
fruit to be packed in size 36, seven more pieces of fruit to be packed
in size 33, and five more pieces of fruit to be packed in sizes 27/28
and 25.
Increasing the maximum number of fruit permitted per 8-pound
samples during the 2001-02 season enabled handlers to better meet the
needs of buyers, because kiwifruit sells by the piece, and buyers
desire as much fruit in each container as the container can comfortably
hold.
The changes to the size designation chart helped reduce the sizing
differences between California and imported kiwifruit during the 2001-
02 season and allowed more fruit to be sold. However, handlers found
that adjustments were still needed in some of the size designations to
bring them closer to imported fruit size designations and to allow more
accurate sorting into the size categories with handler sizing
equipment. Sizing
[[Page 70144]]
equipment had difficulty during the 2001-02 season distinguishing
between sizes.
At its April 9, 2002, meeting, the Committee unanimously
recommended and the USDA approved increasing the maximum number of
fruit per 8-pound sample for sizes 23, 30, and 36, and reducing the
maximum number of fruit per 8-pound sample for size 42 (67 FR 54327,
August 22, 2002). Size 23 was increased from 29 pieces of fruit per 8-
pound sample to 30 pieces, size 30 was increased from 38 pieces of
fruit per 8-pound sample to 39 pieces of fruit, size 36 was increased
from 45 pieces of fruit per 8-pound sample to 46 pieces, and size 42
was decreased from 54 pieces of fruit per 8-pound sample to 53 pieces.
These changes are shown in the following chart in bold.
------------------------------------------------------------------------
Maximum number
Size designation of fruit per 8-
pound sample
------------------------------------------------------------------------
20................................................... 27
23................................................... 29 30
25................................................... 32
27/28................................................ 35
30................................................... 38 39
33................................................... 43
36................................................... 45 46
39................................................... 49
42................................................... 54 53
45................................................... 55
------------------------------------------------------------------------
The Committee believes that increasing the number of fruit
permitted per 8-pound samples of sizes 23, 30, and 36, and decreasing
the number of fruit in 8-pound samples for size 42 will result in more
clearly defined size categories and allow sizing equipment to more
uniformly separate fruit of different sizes. Additionally, these
adjustments will make the four size designations more similar to those
for imported fruit. This action will not affect import requirements.
The Committee discussed alternatives to these changes. It
considered suspending the size designation chart to lower inspection
costs and allow handlers to pack similar to imports. However, it did
not adopt this option because it concluded inspection costs will not be
significantly lowered and because a recent grower survey showed that
uniform sizing is one of the most important issues to California
kiwifruit growers.
Another suggestion presented was to leave the size designation
chart unchanged. The Committee did not adopt this suggestion because it
believes that handlers will benefit from the revised numerical counts
for sizes 23, 30, 36, and 42.
After considering these alternatives, the Committee recommended and
the USDA approved relaxing the pack requirements for three sizes and
tightening the pack requirements for one size (67 FR 54327, August 22,
2002). Small and large growers and handlers are expected to benefit
from these changes. A reasonable crop estimate for the 2002-03 season
is 7.5 million tray equivalents. The average FOB value for the 2001-02
season is estimated to be $3.50 per tray equivalent. The Committee
estimated that the changes to the numerical count for size designations
23, 30, 36, and 42 will increase the average FOB value for the 2002-03
season to $3.75 per tray equivalent. It is anticipated that the FOB
value for the 2002-03 season will increase by $1,875,000 ($3.75 - $3.50
x 7,500,000 tray equivalents). This change will not affect the minimum
size and will not allow fruit currently considered ``undersized'' to be
shipped. These changes will not affect import requirements. These
changes are expected to help handlers compete more effectively in the
marketplace, better meet the needs of buyers, and to improve grower
returns.
Lot Stamping Requirements
Prior to issuance of the interim final rule (67 FR 54327, August
22, 2002), Sec. 920.303(d) required all exposed or outside containers
of kiwifruit, but not less than 75 percent of the total containers on a
pallet, to be plainly marked with the lot stamp number corresponding to
the lot inspection conducted by an authorized inspector. It further
required that individual consumer packages of kiwifruit placed directly
on a pallet have all outside or exposed packages on a pallet plainly
marked with the lot stamp number corresponding to the lot inspection
conducted by an authorized inspector or have one inspection label
placed on each side of the pallet. However, kiwifruit packed into
individual consumer packages within a master container that are being
directly loaded into a vehicle for export shipment under the
supervision of the inspection service were exempted, and continue to be
exempted, from the lot stamp number requirement. The lot stamp number
is used by the inspection service to identify and locate the
corresponding inspector's working papers or notes. Working papers are
the documents each inspector completes while performing an inspection
on a lot of kiwifruit and the information in the working papers is used
by the inspector to determine the grade of the inspected lot.
During the 2001 season, the kiwifruit industry began using plastic
containers of various dimensions that can hold either bulk or tray
packed kiwifruit. Some of these containers are reusable. Kiwifruit
packed in reusable plastic containers (RPCs) is typically delivered to
the retailer where the containers are emptied and returned to a
clearinghouse for cleaning and redistribution. As RPCs do not support
markings that are permanently affixed to the container, all markings
must be printed on cards, which slip into tabs on the front or sides of
the containers. The cards are easily inserted and removed and further
contribute to the efficient use of the container. Because of their
unique portability, the industry and inspection service are concerned
that the cards on pallets of inspected containers could easily be moved
to pallets of uninspected containers, enabling a handler to avoid
inspection on a lot or lots of kiwifruit.
The industry experimented last season with round adhesive labels on
RPCs. The lot stamp number was stamped on the round adhesive label and
placed on the RPCs; however, manufacturers found that it was difficult
to remove the adhesive label in the wash cycle. Additionally, handlers
found that increased labor was needed to affix the adhesive labels and
lot stamp number to the plastic containers. Handler members calculated
that affixing adhesive labels to RPCs and one-way plastic containers
cost the kiwifruit industry approximately $0.10 per container in
materials and labor. The inspection service and the Committee have
presented their concerns to the manufacturers of these types of
containers. One manufacturer has indicated a willingness to address the
problem by offering an area on the principal display panel where the
container markings will adhere to the plastic container. However, this
change may not be feasible in the near future.
To address the additional time and cost of affixing adhesive labels
to containers, the Committee unanimously recommended that handlers be
allowed to use any method of PLI in accordance with Federal or Federal-
State Inspection Service (inspection service) procedures. The Committee
estimated that allowing handlers to use any method of PLI acceptable to
the inspection service will reduce handler costs by $8,700, and will
make handler operations more efficient. This action will not affect
import requirements.
The Committee discussed alternatives to this change including not
changing the lot stamp requirements for plastic containers. After
considering this
[[Page 70145]]
alternative, the Committee recommended and the USDA approved relaxing
the container marking requirements provided that plastic containers
meet any approved method of PLI (67 FR 54327, August 22, 2002). The
Committee believes that handlers and growers will benefit from such a
relaxation. This change is expected to help handlers compete more
effectively in the marketplace and to improve grower returns, and will
not affect import requirements.
Standard Packaging for Volume Filled Containers Designated by Weight
Section 920.302(a)(4) of the order's administrative rules and
regulations outlines pack requirements for fresh shipments of
California kiwifruit.
Prior to issuance of the interim final rule (67 FR 54327, August
22, 2002), Sec. 920.302(a)(4)(v) required all volume filled containers
of kiwifruit designated by weight to hold 22-pounds (10-kilograms) net
weight of kiwifruit unless such containers hold less than 10-pounds or
more than 35-pounds net weight of kiwifruit.
In a volume filled container, fairly uniform size kiwifruit are
loosely packed without cell compartments, cardboard fillers or molded
trays. Handlers may ship volume filled containers marked by either the
appropriate count or net weight of kiwifruit. Handler shipments are
based upon the preference of the receiver.
In 1994, the Committee unanimously recommended, and USDA
established standard packaging for certain volume filled containers
packed by weight. At that time, 52 percent of the total crop was packed
into volume filled containers. The percentage of the total crop packed
into volume filled containers increased to 85 percent during the 2001-
02 season. In 2001-02, imports from the Northern Hemisphere (Greece,
Italy, and France) totaled approximately 17 percent of the U.S. market
share. The majority of imported kiwifruit was shipped in 19.8-pound (9-
kilogram) volume filled containers, whereas the order limits California
handlers to 22-pound (10-kilogram) net weight volume filled containers.
Retailers do not differentiate between an imported 19.8-pound (9-
kilogram) and 22-pound (10-kilogram) net weight volume filled container
from California. Because buyers pay the same price for each container,
the effect is not favorable for California handlers.
Prior to publication of the interim final rule (67 FR 54237, August
22, 2002), Sec. 920.302(a)(4)(v) required handlers to utilize a
standard 22-pound (10-kilogram) net weight standard for packaging
volume filled containers that were over 10-pounds or less than 35-
pounds net weight. This restriction limited California kiwifruit
handlers in meeting buyer's demands for other types of packaging.
Therefore, at its April 9, 2002, meeting, the Committee unanimously
recommended and the USDA approved suspending the standard 22-pounds
(10-kilograms) net weight packaging requirement for volume filled
containers designated by weight for the 2002-03 season (67 FR 54327,
August 22, 2002). The Committee expects that this suspension will
enable California handlers to meet packaging demands of retailers for
volume filled containers; make California kiwifruit more competitive
with imports by allowing handlers to pack similar to imports; and
reduce handlers' packaging costs. This change will not impact import
requirements.
The Committee discussed alternatives at the April 9, 2002, meeting.
One Committee member suggested leaving the standard packaging
requirement unchanged. However, the Committee believes that relaxing
the standard packaging requirement of 22-pounds (10-kilograms) net
weight for volume filled containers designated by weight will allow
handlers the flexibility to meet buyer container preferences and to
increase sales.
The Committee considered other alternatives to revising packing and
container requirements, but determined that these suggestions will not
adequately address the industry problems.
Removal of Obsolete Language
Paragraphs (a) and (b) of Sec. 920.60 authorize reporting
requirements for kiwifruit handlers under the marketing order.
Section 920.160 requires each handler who ships kiwifruit to file a
report of shipment and inventory data to the Committee no later than
the fifth day of the month following such shipment. Handlers who ship
less than 10,000 trays or the equivalent thereof, per fiscal year, and
who have qualified with the Committee are only required to furnish such
report of shipment and inventory data twice each year. Prior to
publication of the interim final rule (67 FR 54327, August 22, 2002),
paragraphs (a)(1) through (a)(6) of Sec. 920.160 specified the types
of information to be provided on the shipment report. Paragraph (a)(4)
required handlers to report inventory at the end of the reporting
period by container; paragraph (a)(5) required handlers to report the
amount of kiwifruit lost in repack; and paragraph (a)(6) required
handlers to report the amount of fruit set aside for processing.
The Committee had not been collecting this information from
handlers since the early 1990's. Therefore, the Committee unanimously
recommended removing these obsolete reporting requirements from Sec.
920.160 of the order's rules and regulations at the April 9, 2002,
meeting. It is estimated that the handler burden will not be impacted,
as the current shipment report form approved by the Office of
Management and Budget (OMB) under OMB No. 0581-0189 does not contain
these data elements.
This rule will continue to relax pack and container requirements
under the kiwifruit order. Accordingly, this action will not impose any
additional reporting or recordkeeping requirements on either small or
large kiwifruit handlers. As with all Federal marketing order programs,
reports and forms are periodically reviewed to reduce information
requirements and duplication by industry and public sectors.
In addition, as noted in the initial regulatory flexibility
analysis, USDA has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this rule.
Further, the Committee's meeting was widely publicized throughout
the kiwifruit industry and all interested persons were invited to
attend the meeting and participate in Committee deliberations. Like all
Committee meetings, the April 9, 2002, meeting was a public meeting and
all entities, both large and small, were able to express their views on
this issue.
An interim final rule concerning this action was published in the
Federal Register on August 22, 2002. Copies of the rule were mailed by
the Committee Staff to all Committee members and kiwifruit handlers. In
addition, the rule was made available through the Internet by the
Office of the Federal Register and USDA. The rule provided for a 60-day
comment period which ended October 21, 2002. 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
[[Page 70146]]
change, as published in the Federal Register (67 FR 54327, August 22,
2002) will tend to effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 920
Kiwifruit, Marketing agreements, Reporting and recordkeeping
requirements.
PART 920--KIWIFRUIT GROWN IN CALIFORNIA
Accordingly, the interim final rule amending 7 CFR part 920 which
was published at 67 FR 54327, August 22, 2002, is adopted as a final
rule without change.
Dated: November 13, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-29530 Filed 11-20-02; 8:45 am]
BILLING CODE 3410-02-P
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