[Federal Register Volume 59, Number 170 (Friday, September 2, 1994)]
[Rules and Regulations]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21713]


[[Page Unknown]]

[Federal Register: September 2, 1994]


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 Rules and Regulations
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  Federal Register / Vol. 59, No. 170 / Friday, September 2, 1994 / 
Rules and Regulations  
DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 920 and 944

[Docket No. FV94-920-1FR]

 

Kiwifruit Grown in California and Imported Kiwifruit; Increase in 
Minimum Size Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule increases the current minimum size 
requirements for kiwifruit grown in California and for kiwifruit 
imported into the United States that are shipped to the fresh market. 
The minimum size requirement is increasing from Size 49, which is 
defined as 60 pieces of fruit per 8-pound sample, to Size 45, which is 
defined as 55 pieces of fruit per 8-pound sample. This rule will 
prevent shipments of low-quality, undersized kiwifruit from having a 
negative effect on the market.

EFFECTIVE DATE: This final rule becomes effective September 6, 1994.

FOR FURTHER INFORMATION CONTACT: Mark Hessel, Marketing Order 
Administration Branch, AMS, USDA, P.O. Box 96456, Room 2526-S, 
Washington, D.C. 20090-6456; telephone (202) 720-5127; or Rose Aguayo, 
California Marketing Field Office, AMS, USDA, 2202 Monterey Street, 
Suite 102 B, Fresno, California 93721; telephone (209) 487-5901.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Order No. 920 [7 CFR Part 920], as amended, 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.
    This final rule is also issued under section 8e of the Act, which 
provides that whenever certain specified commodities, including 
kiwifruit, are regulated under a Federal marketing order, imports of 
these commodities into the United States are prohibited unless they 
meet the same or comparable grade, size, quality, and maturity 
requirements as those in effect for the domestically produced 
commodities.
    The Department of Agriculture (Department) is issuing this final 
rule in conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This final 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 a bill in equity is filed 
not later than 20 days after date of the entry of the ruling.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Administrator of the Agricultural Marketing 
Service (AMS) has considered the economic impact of this final rule on 
small entities.
    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. Import regulations issued under 
the Act are based on those established under Federal marketing orders.
    There are approximately 65 handlers subject to regulation under the 
order and about 600 producers of California kiwifruit. There are 
approximately 75 importers of kiwifruit. Small agricultural service 
firms, which include kiwifruit handlers and importers, have been 
defined by the Small Business Administration [13 CFR 121.601] as those 
whose annual receipts are less than $5,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$500,000. A majority of these handlers, importers, and producers may be 
classified as small entities.
    Under the terms of the marketing order, fresh market shipments of 
California kiwifruit are required to be inspected and are subject to 
grade, size, maturity, pack, and container requirements. Current 
requirements include specifications that such shipments be at least 
Size 49, grade at least KAC No. 1 quality, and contain a minimum of 6.5 
percent soluble solids.
    The production of California kiwifruit for the 1993 season was 
approximately 12.3 million tray equivalents, compared to the 1992 
season production of 13.3 million tray equivalents. This represents an 
8 percent decrease in California kiwifruit production from 1992 to 
1993.
    The Kiwifruit Administrative Committee (committee), the agency 
responsible for local administration of the marketing order, met on 
February 10, 1994, and recommended increasing the minimum size 
requirement from Size 49, which is defined as 60 pieces of fruit per 8-
pound sample, to Size 45, which is defined as 55 pieces of fruit per 8-
pound sample.
    The marketing order authorizes under Sec. 920.52(a)(2) the 
establishment of minimum size requirements. Sec. 920.302(a)(2) of the 
rules and regulations outlines the minimum size requirements for fresh 
shipments of California kiwifruit. Section 920.302(a)(4)(ii) includes a 
table that specifies numerical size designations that are used to 
determine kiwifruit sizes. These size designations are defined by 
numerical counts, which establish the maximum number of fruit per 8-
pound sample for each of the established sizes. The size designation 
table defines ten different sizes, beginning with Size 21 (the largest 
size) and ending with Size 49 (the smallest size). The committee 
recommended eliminating the Size 49 designation (60 pieces of fruit per 
8-pound sample) and redefining the Size 45/46 designation (57 pieces of 
fruit per 8-pound sample) as a Size 45 designation (55 pieces of fruit 
per 8-pound sample).
    The committee recommended increasing the minimum size requirement 
because of the blending and packing of undersized fruit into containers 
using the Size 49 designation. Current pack requirements specify that 
kiwifruit designated as Size 45/46 or below must be packed within a \1/
4\ inch size tolerance. Undersized fruit (Size 49 kiwifruit near or 
below the lower limit of the size tolerance) is often blended into the 
Size 49 designation. It is a common practice throughout the industry to 
blend and pack kiwifruit that could be designated as either undersized 
fruit, Size 49, or Size 45/46 into a Size 49 container.
    Blending occurs because adjoining size designations have size 
tolerances that partially overlap and kiwifruit within either size 
tolerance may be packed in either size designation. For example, the 
current Size 49 designation and the current Size 45/46 designation have 
only a 3-count difference per 8-pound sample. This amounts to only a 
0.12 ounce difference per individual fruit. The equipment and time 
needed to detect such a difference when packing individual fruit would 
be cost prohibitive, so instead, handlers choose to blend sizes.
    Blending has become more prevalent in recent years because a 
greater percentage of kiwifruit is being packed in volume-fill or bulk 
containers in which the fruit is packed ``loosely'' instead of in 
containers with molded trays. Without the constraints of a molded tray, 
there is more freedom to blend sizes.
    The committee's intention in recommending this increase in the 
minimum size requirement is to eliminate shipments of undersized fruit 
that is blended into the Size 49 designation. This undersized kiwifruit 
tends to soften more rapidly during storage than larger fruit and 
becomes more susceptible to decay. This tendency for undersized fruit 
to soften more rapidly than larger fruit becomes more pronounced once 
it leaves a controlled environment and enters an uncontrolled one such 
as a retail shelf. The end result is that the consumer is more likely 
to encounter quality defects with undersized fruit then with larger 
fruit.
    Eliminating fresh shipments of undersized fruit by increasing the 
minimum size requirement improves overall quality and increases 
uniformity of pack size. The consumer benefits by being offered a 
higher quality kiwifruit that ripens properly without prematurely 
shriveling or softening. Also, grower returns are expected to increase 
due to less repack loss, better kiwifruit movement, and higher prices 
because of a better quality product.
    There is also ample evidence to show that the market is adverse to 
smaller sizes. The California Kiwifruit Commission (commission) funded 
an independent survey titled ``Fresh Kiwifruit: Views from the Trade,'' 
in 1993. This survey indicated that 30% of the trade rejects small 
sizes and that 86.1% of the trade prefers Size 42 (defined as 50 pieces 
of fruit per 8-pound sample) or larger. Also, 92.1% of the 
merchandisers and produce managers claim that their customers reject 
small sizes.
    An example of how consumers reject smaller sizes is when kiwifruit 
is sold at the retail level out of 125 pound bulk bins. Consumers 
initially pick out the largest and higher quality kiwifruit, and 
displays are left with undersized and low quality kiwifruit that is 
rejected by later consumers.
    The committee's recommendation that the minimum size requirement be 
set at Size 45 will not significantly lower the volume of kiwifruit 
available in the fresh market. Although the committee reports that 
12.1% of the California kiwifruit packout for the 1993/94 season was 
designated as Size 49, most of this total could be blended into the 
Size 45 designation because of the small difference between the two 
size designations. The practice of blending sizes makes it difficult to 
predict how much fruit will be eliminated by this rule, however, the 
committee estimates that the total packout will be reduced by only 1%. 
In addition, growers could adjust pruning, thinning, fertilizing, and 
irrigation techniques so that a larger percentage of kiwifruit will 
meet the higher size requirement.
    There is general agreement in the industry for the need to 
eliminate the packing of undersize fruit. Other alternatives have been 
suggested to eliminate shipments of low quality, undersized fruit, but 
would not adequately address the problem. One suggestion was to 
eliminate the blending of sizes by eliminating the size tolerances. 
This is not a realistic alternative, because as mentioned earlier, it 
would be cost prohibitive and impossible to achieve using today's 
packing methods.
    Another suggestion was to measure size by passing a fruit through a 
template with an opening large enough for an undersized fruit to fall 
through, but too small for a kiwifruit that meets the minimum size 
requirement to fall through. This template would be used to determine 
whether a fruit was undersized. However, this alternative does not take 
into consideration that kiwifruit grows in different shapes so that a 
heavier fruit that is short and broad could fall through a template 
while a lighter fruit that is long and narrow would not. Weight is 
currently used to measure size and is the most accurate measure of a 
kiwifruit's size.
    Another alternative presented at the meeting was to tighten the 
maturity requirements rather than the size standards so that 
undersized, immature fruit would not be shipped. However, not all 
undersized fruit is immature, but undersized fruit does tend to be more 
susceptible to quality problems. Thus, this alternative would not fully 
address the problem of blending in undersized fruit of inferior 
quality.
    Finally, another alternative presented at the meeting was to 
establish Size 45 as the minimum size, but continue to define it as 57 
pieces of fruit instead of 55 pieces of fruit per 8-pound sample as 
recommended by the committee. However, because of the approximately 
0.12 ounce difference between a Size 45 kiwifruit defined as 57 pieces 
of fruit per 8-pound sample and a Size 49 kiwifruit defined as 60 
pieces of fruit per 8-pound sample, this alternative would not go far 
enough to prevent the blending of undersized fruit.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including kiwifruit, are regulated under a 
Federal marketing order, imports of that commodity must meet the same 
or comparable grade, size, quality, and maturity requirements. Since 
this rule increases the minimum size requirement under the domestic 
handling regulations, a corresponding change to the import regulations 
must also be implemented.
    Minimum grade, size, quality, and maturity requirements for 
kiwifruit imported into the United States are currently in effect under 
Sec. 944.550 (7 CFR 944.550). The minimum size requirement is specified 
in paragraph (a) of Sec. 944.550. This rule increases the minimum size 
requirement for imported kiwifruit from Size 49, which is defined as 60 
pieces of fruit per 8-pound sample, to Size 45, which is defined as 55 
pieces of fruit per 8-pound sample.
    The increase in the minimum size requirement for importers of 
kiwifruit will also have a beneficial impact. This rule eliminates 
quality problems associated with undersized imported kiwifruit as it 
will for undersized domestic kiwifruit. In addition, the domestic 
trade's preference for larger size kiwifruit applies to imported 
kiwifruit as well as domestic kiwifruit. Thus, importers will benefit 
by improving the overall quality of kiwifruit shipments and increasing 
sales.
    The proposed rule concerning this action was published in the June 
29, 1994, Federal Register [59 FR 33451], with a 30-day comment period 
ending July 29, 1994. Two comments were received, one in favor and the 
other in opposition to the proposed rule.
    The comment in favor of implementing the change set forth in the 
proposed rule was submitted by the Kiwifruit Administrative Committee 
and reiterated the arguments made in the proposed rule.
    The second comment was submitted by a grower, Gregory W. Davis, who 
opposed the proposed rule. Mr Davis commented that in his view the rule 
is a volume control measure that forces growers to dump marketable 
kiwifruit. This rule is not a volume control measure. Its intention is 
to eliminate the blending of undersized fruit. In addition, growers 
retain the option of adjusting their cultural practices so that a 
larger percentage of kiwifruit will meet the new size requirement. 
Also, the order does not force growers or handlers to dump fruit. The 
following outlets are exempt from grade, size, maturity, quality, 
inspection, and container requirements including: (1) Shipments of less 
than 200 pounds per day; (2) roadside stands; (3) Certified Farmers 
Markets; (4) charitable institutions; (5) relief agencies; and (6) 
commercial processors.
    Mr. Davis also commented that growers in his district (District 7) 
are against increasing the minimum size requirement and that District 
7, which includes Tulare and Inyo counties in Central California, 
represents almost one-third of California kiwifruit production. 
However, some District 7 committee members and alternates, who like all 
members of the committee were elected by growers from their District, 
voted in favor of increasing the minimum size requirement in the 
various subcommittee and committee meetings that took place this past 
year. A committee member from District 7 reported at the February 10, 
1994, meeting that a majority of growers were against increasing the 
minimum size requirement, but almost all growers were in favor of 
eliminating the blending of undersize fruit. After a long, thorough, 
and publicized debate, the committee determined that increasing the 
minimum size to Size 45 from Size 49 is the best way to eliminate the 
blending of undersize fruit.
    Mr. Davis also commented that a redistricting scheduled for next 
year might change the vote on the minimum size requirement. The 
Department has yet to receive a formal recommendation from the 
committee on this issue. It is premature to assume that any 
redistricting will take place or that a newly seated committee would 
vote any differently on a minimum size requirement. The present 
committee was nominated by growers and appointed by the Secretary 
according to marketing order procedures. If a redistricting plan is 
recommended and approved, and if a new committee is selected, then that 
committee may recommend revisions to the minimum size requirement.
    Mr. Davis' comment further stated that since the recommendation was 
made on February 10, 1994, he and other growers did not have sufficient 
time to adjust their cultural practices so that a higher percentage of 
the 1994 crop will meet the higher size requirement. However, Mr. Davis 
indicates that he was present at the subcommittee meeting held in 
Modesto, California on December 8, 1993, in which the subcommittee 
initially recommended increasing the minimum size requirement. In 
addition, the January 1994 bulletin of California Kiwifruit, which is 
jointly produced by the commission and the committee, announced the 
December 8, 1993, subcommittee's preliminary recommendation to increase 
the minimum size requirement. This publication is mailed to all known 
kiwifruit growers. Finally, other kiwifruit growers indicate that 
cultural practices, such as thinning, are available during February or 
later to increase kiwifruit size so that a larger percentage of 
kiwifruit meet the new size requirement.
    Mr. Davis' comment went on to question the wisdom of preventing 
shipments of kiwifruit that he considers to be of good quality. 
However, quality is a term that is often defined by changing consumers 
preferences. The independent survey funded by the commission is an 
attempt to identify current consumer preferences and clearly shows that 
many consumers are adverse to smaller sizes. It is reasonable to 
require kiwifruit shipments to meet customer preferences for larger 
sizes. Otherwise, California kiwifruit will not be as marketable as 
kiwifruit from international competitors who meet customer preferences.
    Finally, Mr. Davis suggested that the committee lacked formal 
research that shows Size 49 or smaller kiwifruit is not of good 
quality. As mentioned earlier, the independent market survey does show 
an overwhelming trade preference for sizes 42 or larger. Although no 
formal research was specifically conducted on customer preference for 
Size 49 kiwifruit or smaller kiwifruit, there is a tremendous amount of 
knowledge and experience among growers about the marketing of 
kiwifruit. It is the view of a majority of committee members, which is 
made up of growers, that shipments of undersized kiwifruit have been 
poorly received by consumers.
    After thoroughly analyzing the comments received and other 
available information, the Department has concluded that this final 
rule is appropriate.
    In accordance with section 8e of the Act, the United States Trade 
Representative has concurred with the issuance of this final rule.
    Based on the above, the Administrator of the AMS has determined 
that this action will not have a significant economic impact on a 
substantial number of small entities.
    After consideration of all relevant matter presented, including the 
information and recommendations 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.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because this rule should be implemented 
prior to the beginning of the shipping season in mid-September. 
Further, handlers are aware of this rule, which was recommended at 
public meetings. Also, a 30-day comment period was provided for in the 
proposed rule.

List of Subjects

7 CFR Part 920

    Kiwifruit, Marketing agreements.

7 CFR Part 944

    Avocados, Food grades and standards, Grapefruit, Grapes, Imports, 
Kiwifruit, Limes, Olives, Oranges.

    For the reasons set forth above, 7 CFR Parts 920 and 944 are 
amended as follows:
    1. The authority citation for 7 CFR Parts 920 and 944 continues to 
read as follows:

    Authority: 7 U.S.C. 601-674.

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    2. In Sec. 920.302, paragraphs (a)(2) and (a)(4)(ii) are revised to 
read as follows:


Sec. 920.302  Grade, size, pack, and container regulations.

    (a) * * *
    (2) Size requirements. Such kiwifruit shall be at least a minimum 
Size 45.
* * * * *
    (4) * * *
    (ii)(A) Kiwifruit packed in bags, volume fill or bulk containers 
may not vary more than \1/2\-inch (12.7 mm) in diameter if Size 30 or 
larger; not more than \3/8\-inch (9.5 mm) in diameter if Size 33, 36, 
39, or 42; and not more than \1/4\-inch in diameter (6.4 mm) if Size 
45. Not more than 10 percent, by count, of the containers in any lot 
and not more than 5 percent, by count, of kiwifruit in any container 
may fail to meet the requirements of this paragraph. The following 
table specifies the numerical size designation to be used in packing 
such containers as shown in Column 1, and the maximum number of fruit 
per 8-pound sample as shown in Column 2.

------------------------------------------------------------------------
                                                                 Column 
                                                                   2,   
                                                                 maximum
                                                                 number 
          Column 1, numerical count size designation            of fruit
                                                                 per 8- 
                                                                  pound 
                                                                 sample 
------------------------------------------------------------------------
21............................................................        22
25............................................................        27
27/28.........................................................        30
30............................................................        32
33............................................................        35
36............................................................        40
39............................................................        45
42............................................................        50
45............................................................        55
------------------------------------------------------------------------

    (B) The average weight of all sample units in a lot must weigh at 
least 8 pounds, but no sample unit may be more than 4 ounces less than 
8 pounds.
* * * * *

PART 944--FRUITS; IMPORT REGULATIONS

    3. In Sec. 944.550, paragraph (a) is revised to read as follows:


Sec. 944.550  Kiwifruit import regulation.

    (a) Pursuant to section 8e of the Agricultural Marketing Agreement 
Act of 1937, as amended, the importation into the United States of any 
kiwifruit is prohibited unless such kiwifruit meets all the 
requirements of a U.S. No. 1 grade as defined in the United States 
Standards for Grades of Kiwifruit (7 CFR 51.2335 through 51.2340), 
except that the kiwifruit shall be ``not badly misshapen,'' and an 
additional tolerance of 7 percent is provided for kiwifruit that is 
``badly misshapen.'' Such fruit shall be at least Size 45, which means 
there shall be a maximum of 55 pieces of fruit and the average weight 
of all samples in a specific lot must weigh at least 8 pounds, provided 
that no individual sample may be less than 7 pounds 12 ounces.
* * * * *
    Dated: August 29, 1994.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 94-21713 Filed 9-1-94; 8:45 am]
BILLING CODE 3410-02-P