[Federal Register Volume 62, Number 115 (Monday, June 16, 1997)]
[Rules and Regulations]
[Pages 32473-32476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15669]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[FV97-989-1 FIR]


Raisins Produced From Grapes Grown In California; Final Free and 
Reserve Percentages for the 1996-97 Crop Year for Natural (Sun-Dried) 
Seedless Raisins

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
which established final free and reserve percentages for 1996-97 crop 
Natural (sun-dried) Seedless raisins. The percentages are 86 percent 
free and 14 percent reserve. These percentages are intended to 
stabilize supplies and prices, and strengthen market conditions. This 
rule was recommended by the Raisin Administrative Committee 
(Committee), the body which locally administers the marketing order.

EFFECTIVE DATE: July 16, 1997.

FOR FURTHER INFORMATION CONTACT: Maureen Pello, Marketing Specialist, 
California Marketing Field Office, Fruit and Vegetable Division, AMS, 
USDA, 2202 Monterey Street, suite 102B, Fresno, California 93721; 
telephone: 209-487-5901, Fax (209) 487-5906; or Mark A. Slupek, 
Marketing Specialist, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, room 2523-S, P.O. Box 96456, Washington, 
DC 20090-6456; telephone: 202-205-2830. Small businesses may request 
information on compliance with this regulation by contacting: Jay 
Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, room 2525-S, Washington, DC 20090-
6456; telephone (202) 720-2491; Fax # (202) 720-5698.

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 marketing 
agreement and order are

[[Page 32474]]

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 (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order provisions now in effect, 
final free and reserve percentages may be established for raisins 
acquired by handlers during the crop year. This rule finalizes an 
interim final rule which established final free and reserve percentages 
for Natural (sun-dried) Seedless raisins for the 1996-97 crop year, 
beginning August 1, 1996, through July 31, 1997. This rule will not 
preempt any State or local laws, regulations, or policies, unless they 
present an irreconcilable conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and requesting a modification of the order or to be exempt 
therefrom. Such handler is afforded the opportunity for a hearing on 
the petition. After the hearing, the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has his or 
her principal place of business, has jurisdiction in equity to review 
the Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.
    The order prescribes procedures for computing trade demands and 
preliminary and final percentages that establish the amount of raisins 
that can be marketed throughout the season. The regulations apply to 
all handlers of California raisins. Raisins in the free percentage 
category may be shipped immediately to any market, while reserve 
raisins must be held by handlers in a reserve pool for the account of 
the Committee, which is responsible for local administration of the 
order. Under the order, reserve raisins may be: Sold at a later date by 
the Committee to handlers for free use or to replace part of the free 
raisins they exported; used in diversion programs; exported to 
authorized countries; carried over as a hedge against a short crop the 
following year; or disposed of in other outlets noncompetitive with 
those for free tonnage raisins.
    While this rule may restrict the amount of Natural (sun-dried) 
Seedless raisins that enter domestic markets, final free and reserve 
percentages are intended to promote stronger marketing conditions, to 
stabilize prices and supplies, and to improve grower returns. In 
addition to the quantity of raisins released under the preliminary 
percentages and the final percentages, the order specifies methods to 
make available additional raisins to handlers by requiring sales of 
reserve pool raisins for use as free tonnage raisins under ``10 plus 
10'' offers, and authorizing sales of reserve raisins under certain 
conditions, such as a national emergency, crop failure, change of 
economic or marketing conditions, or if free tonnage shipments during 
the current crop year exceed shipments of the prior crop year by more 
than 5 percent.
    The Department's ``Guidelines for Fruit, Vegetable, and Specialty 
Crop Marketing Orders'' specify that 110 percent of recent years' sales 
should be made available to primary markets each season before 
recommendations for volume regulation are approved. This goal is met by 
the establishment of a final percentage which releases 100 percent of 
the computed trade demand and the additional release of reserve raisins 
to handlers under ``10 plus 10'' offers. The ``10 plus 10'' offers are 
two simultaneous 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. Approximately 59,000 tons of Natural (sun-
dried) Seedless were purchased by handlers for free use pursuant to 
these offers. The quantity available under this rule would be about 
406,000 tons natural condition raisins or 381,000 tons packed raisins. 
This is 129 percent of the quantity shipped in 1995.
    Pursuant to section 989.54(a) of the order, the Committee met on 
August 15, 1996, to review shipment data, inventory data, and the 1995 
crop conditions for raisins of all varietal types. The Committee 
computed a trade demand for each varietal type for which a free tonnage 
percentage might be recommended. The trade demand is 90 percent of the 
prior year's shipments of free tonnage and reserve tonnage raisins sold 
for free use for each varietal type into all market outlets, adjusted 
by subtracting the carryin of each varietal type on August 1 of the 
current crop year and by adding to the trade demand the desirable 
carryout for each varietal type at the end of that crop year. As 
specified in section 989.154, the desirable carryout for each varietal 
type shall be equal to the shipments of free tonnage raisins of the 
prior crop year during the months of August and September. If the prior 
year's shipments are limited because of crop conditions, the total 
shipments during that period of time during one of the three years 
preceding the prior crop year may be used. In accordance with these 
provisions, the Committee computed and announced a 1996-97 trade demand 
of 232,765 tons for Natural (sun-dried) Seedless raisins.
    As required under section 989.54(b) of the order, the Committee met 
on October 3, 1996, and computed and announced a preliminary crop 
estimate and preliminary free and reserve percentages for Natural (sun-
dried) Seedless raisins which released 85 percent of the trade demand. 
On October 3, 1996, the Committee's crop estimate and preliminary free 
and reserve percentages were as follows: 272,034 tons, and 73 percent 
free and 27 percent reserve.
    Also at that meeting, the Committee computed and announced 
preliminary crop estimates and preliminary free and reserve percentages 
for Dipped Seedless, Oleate and Related Seedless, Golden Seedless, 
Zante Currant, Sultana, Muscat, Monukka, and Other Seedless raisins. 
The Committee determined, however, that volume control percentages only 
were warranted for Natural (sun-dried) Seedless raisins. It determined 
that the supplies of the other varietal types would be less than or 
close enough to the computed trade demands for each of these varietal 
types. These varietal types are produced in much smaller quantities 
than Natural (sun-dried) Seedless raisins. In view of these factors, 
volume control percentages either would not be necessary to maintain 
market stability or would not be economically practical for the other 
varietal types.
    Pursuant to section 989.54(c), the Committee may adopt interim free 
and reserve percentages. Interim percentages may release less than the 
computed trade demand for each varietal type. Interim percentages for 
Natural (sun-dried) Seedless raisins of 85.75 percent free and 14.25 
percent reserve were announced by the Committee on February 3, 1997. 
The Committee considered its final estimate of 270,999 tons of 1996-97 
production of Natural (sun-dried) Seedless raisins when it established 
the interim percentages. That action released most, but not all, of the 
computed trade demand for Natural (sun-dried) Seedless raisins.

[[Page 32475]]

    In addition, under section 989.54(d) of the order, the Committee is 
required to recommend to the Secretary, no later than February 15 of 
each crop year, final free and reserve percentages which, when applied 
to the final production estimate of a varietal type, will tend to 
release the full trade demand for any varietal type. The Committee met 
on February 3, 1997, for this purpose.
    The computed trade demand (232,765 tons) is 90 percent of the prior 
year's shipments of free tonnage and reserve tonnage raisins sold for 
free use into all market outlets (282,289 tons), adjusted by 
subtracting the carryin of each varietal type on August 1 of the 
current crop year (113,697 tons) and by adding to the trade demand the 
desirable carryout for each varietal type at the end of that crop year 
(64,173 tons). No information was presented between the August 15, 
1996, meeting and the February 3, 1997, meeting to cause the Committee 
to make any change to the computed trade demand. Thus, the Committee 
divided the computed trade demand of 232,765 tons by the final 
production estimate (270,999 tons) and recommended a final free 
percentage of 86 percent and a final reserve percentage of 14 percent.
    The free and reserve percentages established by the interim final 
rule finalized herein apply uniformly to all handlers in the industry, 
whether small or large, and there are no known additional costs 
incurred by small handlers. Although raisin markets are limited, they 
are available to all handlers, regardless of size. The stabilizing 
effects of the percentages impact both small and large handlers 
positively by helping them maintain and expand markets.
    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.
    There are approximately 20 handlers of California raisins who are 
subject to regulation under the raisin marketing order and 
approximately 4,500 producers of raisins in the regulated area. Small 
agricultural service firms, which includes handlers, have been defined 
by the Small Business Administration (13 CFR 121.601) as those having 
annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$500,000. No more than 8 handlers, and a majority of producers, of 
California raisins may be classified as small entities. Twelve of the 
20 handlers subject to regulation have annual sales estimated to be at 
least $5,000,000, and the remaining 8 handlers have sales less than 
$5,000,000, excluding receipts from any other sources.
    Committee and subcommittee meetings are widely publicized in 
advance and are held in a location central to the production area. The 
meetings are open to all industry members (including small business 
entities) and other interested persons--who are encouraged to 
participate in the deliberations and voice their opinions on topics 
under discussion. Thus, Committee recommendations can be considered to 
represent the interests of small business entities in the industry.
    Many years of marketing experience led to the development of the 
current volume control procedures. These procedures have helped the 
industry address its marketing problems by keeping supplies in balance 
with domestic and export market needs, and strengthening market 
conditions. The current volume control procedures fully supply the 
domestic and export markets, provide for market expansion, and help 
prevent oversupplies in the domestic market.
    In discussing the possibility of marketing percentages for the 
1996-97 crop year, the Committee considered: (1) The estimated tonnage 
held by producers, handlers, and for the account of the Committee at 
the beginning of the crop year (113,697 tons); (2) the estimated 
tonnage of standard raisins which will be produced in 1996-97 (270,999 
tons); (3) the trade demand for raisins in free tonnage outlets in 
1996-97 (232,765 tons); (4) the estimated desirable carryout at the end 
of the 1996-97 crop year for free tonnage (64,173 tons); (5) the 
estimated world raisin supply and demand situation; (6) the current 
prices being received and the probable level of prices to be received 
for raisins by producers and handlers; and (7) the trend and level of 
consumer income.
    The Committee's review of the factors resulted in the computation 
and announcement in October 1996 of preliminary free and reserve 
percentages for Natural (sun-dried) Seedless raisins. This varietal 
type is the major commercial varietal type produced in California. 
Although the 1996-97 crop was estimated to be down from previous crop 
years, the total supply available for marketing (270,999 tons) exceeded 
the computed trade demand (232,765 tons) by a large enough quantity 
(38,234 tons) to support limiting the quantity available for sale in 
free tonnage markets by placing a portion of the crop aside to be sold 
when demand improved in the current or subsequent season.
    This rule finalizes an interim final rule which established free 
and reserve percentages for Natural (sun-dried) Seedless raisins in 
accordance with the volume control provisions in section 989.54. 
Raisins in the free percentage category may be shipped immediately to 
any market, while reserve raisins must be held by handlers in a reserve 
pool for the account of the Committee, which is responsible for local 
administration of the order. Under the order, reserve raisins may be: 
Sold at a later date by the Committee to handlers for free use or to 
replace part of the free use raisins they exported; used in diversion 
programs; exported to authorized countries; carried over as a hedge 
against a short crop the following year; or disposed of in other 
outlets noncompetitive with those for free tonnage raisins. The 
percentage releases provide all handlers with the opportunity to 
benefit from the most profitable domestic market. That market is 
available to all handlers, regardless of handler size.
    Raisin variety grapes can be marketed as fresh grapes, crushed for 
use in the production of wine or juice concentrate, or dried into 
raisins. Annual fluctuations in the fresh grape, wine, and concentrate 
markets cause fluctuations in raisin supply. These supply fluctuations 
can cause producer price instability and disorderly market conditions. 
Volume control is helpful to the raisin industry because it lessens the 
impact of such fluctuations and contributes to orderly marketing. 
Industry statistics show that Natural (sun-dried) Seedless raisin 
receipts have varied widely over the last ten years, from a low of 
325,911 tons in 1995 to a high of 395,501 tons in 1989. Average 
receipts for the last 10 years have been around 365,000 tons. As crop 
size has fluctuated, volume regulations have contributed toward orderly 
marketing and market stability, and have helped moderate the variation 
in returns for all growers and handlers, both large and small. For 
instance, handler receipts in the shortest crop year (1995) were 89 
percent of the ten-year average (1986-1995). Handler receipts in the 
biggest crop year (1989) were 108 percent of the ten-year average.
    Free and reserve percentages are established by variety, and only 
in years when the supply exceeds the trade demand by a large enough 
margin that the Committee believes volume control is necessary to 
maintain market stability. Accordingly, in assessing whether to apply 
volume control regulation or, as an alternative, not to

[[Page 32476]]

apply such regulation, the Committee recommended only one of the 9 
raisin varietal types defined under the marketing order for volume 
control regulation this season.
    As mentioned earlier, the Department's ``Guidelines for Fruit, 
Vegetable, and Specialty Crop Marketing Orders'' specify that 110 
percent of recent years' sales should be made available to primary 
markets each season before recommendations for volume regulation are 
approved. The quantity available under this rule is 129 percent of the 
quantity shipped in 1995.
    The free and reserve percentages established by the interim final 
rule released the full trade demand and apply uniformly to all handlers 
in the industry, regardless of size. There are no known additional 
costs incurred by small handlers that are not incurred by large 
handlers. The stabilizing effects of the percentages impact all 
handlers positively by helping them maintain and expand markets, 
despite seasonal supply fluctuations. Likewise, price stability 
positively impacts all producers by allowing them to better anticipate 
the revenues their raisins will generate.
    While the level of benefits of this rulemaking are difficult to 
quantify, the stabilizing effects of the volume regulations impact both 
small and large handlers positively by helping them maintain markets 
even though raisin supplies fluctuate widely from season to season.
    This rule will not impose any 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 sectors. In addition, as noted in the initial regulatory 
flexibility analysis, the Department has not identified any relevant 
Federal rules that duplicate, overlap, or conflict with this rule.
    An interim final rule concerning this action was issued by the 
Department on April 7, 1997, put on display at the Office of the 
Federal Register on April 11, 1997, and published in the Federal 
Register on April 14, 1997. Copies of the rule were mailed by the 
Committee's staff to all Committee members, raisin handlers, and 
dehydrators. Finally, the rule was made available through the Internet 
by the Office of the Federal Register. That rule provided for a 30-day 
comment period which ended May 14, 1997. No comments were received.
    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 change, as published in the 
Federal Register (62 FR 18029, April 14, 1997) will tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 989

    Grapes, Marketing agreements, Raisins, Reporting and recordkeeping 
requirements.

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 989 which 
was published at 62 FR 18029 on April 14, 1997, is adopted as a final 
rule without change.

    Dated: June 6, 1997.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-15669 Filed 6-13-97; 8:45 am]
BILLING CODE 3410-02-P