[Federal Register Volume 64, Number 108 (Monday, June 7, 1999)]
[Rules and Regulations]
[Pages 30233-30236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14311]



[[Page 30233]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV99-989-3 FIR]


Raisins Produced From Grapes Grown In California; Final Free and 
Reserve Percentages for 1998-99 Zante Currant Raisins

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule without change, the provisions of an interim final rule 
which established final volume regulation percentages for 1998-99 Zante 
Currant 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). The volume regulation 
percentages are 85 percent free and 15 percent reserve. Free tonnage 
raisins may be sold by handlers to any market. Reserve raisins must be 
held in a pool for the account of the Committee and are disposed of 
through various programs authorized under the order. The volume 
regulation percentages are intended to help the industry manage its 
supply of Zante Currant raisins and strengthen market conditions.

EFFECTIVE DATE: July 7, 1999.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing 
Specialist, California Marketing Field Office, Fruit and Vegetable 
Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno, 
California 93721; telephone: (559) 487-5901, Fax: (559) 487-5906; or 
George Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, PO Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, or Fax: 
(202) 720-5698. Small businesses may request information on complying 
with this regulation, or obtain a guide on complying with fruit, 
vegetable, and specialty crop marketing agreements and orders by 
contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, PO Box 96456, room 2525-S, 
Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-
5698, or E-mail: Jay.G[email protected]. You may view the marketing 
agreement and order small business compliance guide at the following 
web site: http://www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 989 (7 CFR part 989), both as amended, 
regulating the handling of raisins produced from grapes grown in 
California, hereinafter referred to as the ``order.'' The order is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the order provisions now in effect, final free 
and reserve percentages may be established for raisins acquired by 
handlers during the crop year. This rule continues to establish final 
free and reserve percentages for Zante Currant raisins for the 1998-99 
crop year, which began August 1, 1998, and ends July 31, 1999. 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 request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing, the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.
    This rule continues to establish final volume regulation 
percentages for 1998-99 crop Zante Currant raisins covered under the 
order. The volume regulation percentages are 85 percent free and 15 
percent reserve. Free tonnage raisins may be sold by handlers to any 
market. Reserve raisins must be held in a pool for the account of the 
Committee and are disposed of through various programs authorized under 
the order. For example, reserve raisins may be sold by the Committee to 
handlers for free use or to replace part of the free tonnage raisins 
they exported; used in diversion programs; carried over as a hedge 
against a short crop the following year; or disposed of in other 
outlets not competitive with those for free tonnage raisins, such as 
government purchase, distilleries, or animal feed. The volume 
regulation percentages are intended to help the industry manage its 
supply of Zante Currant raisins and strengthen market conditions. Final 
percentages were recommended by the Committee at a meeting on February 
11, 1999.
    Section 989.54 of the order prescribes the procedures and time 
frames to be followed in establishing volume regulation. This includes 
methodology used to calculate percentages. Pursuant to Sec. 989.54(a) 
of the order, the Committee met on August 13, 1998, to review shipment 
and inventory data, and other matters relating to the supplies of 
raisins of all varietal types. The Committee computed a trade demand 
for each varietal type for which a free tonnage percentage might be 
recommended. Trade demand is computed using a formula specified in the 
order and, for each varietal type, is equal to 90 percent of the prior 
year's shipments of free tonnage and reserve tonnage raisins sold for 
free use into all market outlets, adjusted by subtracting the carrying 
on August 1 of the current crop year and by adding the desirable 
carryout at the end of that crop year. As specified in Sec. 989.154, 
the desirable carryout for each varietal type is equal to the shipments 
of free tonnage raisins of the prior crop year during the months of 
August, September, and one-half of October. In accordance with these 
provisions, the Committee computed and announced a 1998-99 trade demand 
for Zante Currant raisins at 3,215 tons as shown below.

                          Computed Trade Demand
                        [Natural condition tons]
------------------------------------------------------------------------
                                                                Zante
                                                               currant
                                                               raisins
------------------------------------------------------------------------
Prior year's shipments.....................................        4,121
Multiplied by 90 percent...................................         0.90
Equals adjusted base.......................................        3,709
Minus carryin inventory....................................        1,188
Plus desirable carryout....................................          694
Equals computed trade demand                                       3,215
------------------------------------------------------------------------

    Section 989.54(b) of the order requires that the Committee 
announce, on or before October 5, preliminary crop estimates and 
determine whether volume regulation is warranted for the varietal types 
for which it computed a trade demand. That section allows the Committee 
to extend the October 5 date

[[Page 30234]]

up to 5 business days if warranted by a late crop.
    The 1998-99 crop was unusually late because of the combined effect 
of adverse crop conditions during the spring of 1998 created by the 
weather phenomenon known as El Nino, scattered rain during the fall 
harvest, and a shortage of labor once the grapes were ready for 
harvest. The crop is normally harvested during late August and early 
September; this season's crop was harvested about 3-4 weeks later.
    Because of the late crop, the Committee met on October 8, 1998, and 
announced preliminary crop estimates for all nine varietal types of 
raisins covered under the order. To guard against an underestimation of 
the crop, the Committee computed preliminary volume regulation 
percentages for five of the nine varietal types of raisins covered 
under the order--Dipped Seedless, Natural (sun-dried) Seedless 
(Naturals), Oleate and Related Seedless, Other Seedless, and Zante 
Currant raisins. The total crop was initially estimated at 321,486 
tons.
    As more information became available during the following months, 
the Committee determined that volume regulation was only warranted for 
Zante Currant raisins. The other varietal types of raisins for which 
preliminary percentages were computed are produced from grapes that 
mature later than Zante Currants, and thus the crop sizes for these 
varietal types were more adversely affected by the poor weather 
conditions and labor problems. The Committee ultimately determined that 
the supplies of these other varietal types would be less than or close 
to their computed trade demands, and that volume regulation percentages 
were not needed. Based on the most recent information available, the 
total crop estimate was reduced from 321,486 to 276,510 tons. This is 
the first time in 16 years that volume regulation was not implemented 
for Naturals, the major varietal type of California raisin (crop 
estimate reduced from 280,092 to 235,000 tons, about 35 percent lower 
than the 10-year average of 360,183 tons). As in past seasons, the 
Committee submitted its marketing policy to the Department for review.
    Regarding Zante Currant raisins, the Committee announced its 
preliminary crop estimate at its October 1998 meeting at 3,684 tons. As 
indicated in the preceding paragraph, Zante Currants mature earlier 
than the other varietal types of raisins covered under the order. Thus, 
producers were able to harvest their Zante Currants before it rained in 
the production area and before labor was in short supply. With the 
preliminary crop estimate (3,684 tons), 1997-98 carryin inventory 
(1,188 tons), and reserve raisins released for free use through an 
export program (483 tons) totaling to a supply of 5,355 tons, about 66 
percent higher than trade demand (3,215 tons), and the 1997-98 carryin 
inventory (1,188 tons) about 71 percent higher than the desirable 
inventory (694 tons), the Committee determined that volume regulation 
for Zante Currant raisins was warranted.
    At the October meeting, the Committee also computed preliminary 
free and reserve percentages for Zante Currants which released 65 
percent of the computed trade demand since the field price had not been 
established. The preliminary percentages were 57 percent free and 43 
percent reserve. These percentages were modified to release 85 percent 
of the trade demand on October 16, 1998, when the Zante Currant field 
price was established. The Zante Currant preliminary percentages were 
thus modified to 74 percent free and 26 percent reserve. The Committee 
met on November 13, 1998, and announced interim percentages for Zante 
Currant raisins at 85 percent free and 15 percent reserve which, based 
on the 3,684 ton crop estimate, released less than the computed trade 
demand. On January 15, 1999, the Committee revised its crop estimate 
for Zante Currants from 3,684 to 3,801 tons.
    Various programs to utilize reserve Zante Currant raisins were 
implemented when volume regulation was in effect during the 1994-95, 
1995-96, and 1997-98 seasons to help reduce inventories, and help 
strengthen total producer prices (which includes proceeds from both 
free tonnage plus reserve pool Zante Currants) from $412.56 per ton in 
1994-95 to an estimated high of $730 per ton in 1997-98. The Committee 
is implementing a reserve program this year which is expected to help 
the industry export more Zante Currants, thereby reducing the 
industry's oversupply, helping to build export markets, and ultimately 
improving producer returns.
    Without such programs, the Committee estimates that its export 
shipments would be reduced, thereby reducing overall Zante Currant 
shipments for the crop year. Reduced shipments for the current year 
would create a high carryin inventory which would result in a lower 
computed trade demand for next year, a lower free tonnage percentage, 
should volume regulation be implemented, and likely reduced returns to 
1999-2000 crop raisin producers. The implementation of volume 
regulation for 1998-99 Zante Currant raisins is expected to help manage 
supply and strengthen market conditions.
    As required under Sec. 989.54(d) of the order, the Committee 
recommended to the Secretary at its meeting on February 11, 1999, final 
free and reserve percentages for Zante Currant raisins which, when 
applied to the final production estimate, will tend to release the full 
trade demand for Zante Currants. With the increased crop estimate of 
3,801 tons, final percentages computed to the same figures as the 
interim percentages--85 percent free and 15 percent reserve. The 
Committee's calculations to arrive at final percentages are shown in 
the table below.

                   Final Volume Regulation Percentages
                  [Tonnage as natural condition weight]
------------------------------------------------------------------------
                                                                Zante
                                                               currant
                                                               raisins
------------------------------------------------------------------------
Trade demand...............................................        3,215
Divided by crop estimate...................................        3,801
Equals free percentage.....................................           85
100 minus free percentage equals reserve percentage........           15
------------------------------------------------------------------------

    In addition, the Department's ``Guidelines for Fruit, Vegetable, 
and Speciality Crop Marketing Orders'' (Guidelines) specify that 110 
percent of recent years' sales should be made available to primary 
markets each season for marketing orders utilizing reserve pool 
authority. This goal has been met for Zante Currants by the 
establishment of final percentages which released 100 percent of the 
trade demand and the offer of additional reserve raisins for sale to 
handlers under the ``10 plus 10 offers.'' As specified in 
Sec. 989.54(g), the 10 plus 10 offers are two offers of reserve pool 
raisins which are made available to handlers during each season. 
Handlers may sell their 10 plus 10 raisins to any market. For each such 
offer, a quantity of reserve raisins equal to 10 percent of the prior 
year's shipments is made available for free use.
    About 824 tons of raisins were made available in the 10 plus 10 
offers (which included 423 tons of remaining 1997 reserve Zante 
Currants), or 412 tons per offer. Both offers were held simultaneously 
in March 1999. Adding the 824 tons of 10 plus 10 raisins to the 3,215 
ton trade demand figure, plus 1,188 tons of 1997-98 carryin inventory 
equates to about 5,227 tons natural condition raisins or 4,645 tons 
packed raisins that were made available for free use, or to the primary 
market. This is 127 percent of the quantity of Zante Currants shipped 
in 1997 (4,121 tons

[[Page 30235]]

natural condition tons or 3,662 packed tons).
    In addition to the 10 plus 10 offers, Sec. 989.67(j) of the order 
provides authority for sales of reserve raisins to handlers under 
certain conditions such as a national emergency, crop failure, change 
in economic or marketing conditions, or if free tonnage shipments in 
the current crop year exceed shipments of a comparable period of the 
prior crop year. Such reserve raisins may be sold by handlers to any 
market. These additional offers of reserve raisins would thus make even 
more raisins available to primary markets which is consistent with the 
Department's Guidelines.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 20 handlers of California raisins who are 
subject to regulation under the order and approximately 4,500 raisin 
producers in the regulated area. Almost all of the 20 handlers handled, 
and about 130 of the 4,500 raisin producers produced Zante Currants 
during the 1998-99 crop year. Small agricultural service firms have 
been defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $500,000. No more than 7 handlers, and a majority of 
producers, of California raisins may be classified as small entities. 
Thirteen of the 20 handlers subject to regulation have annual sales 
estimated to be at least $5,000,000, and the remaining 7 handlers have 
sales less than $5,000,000, excluding receipts from any other sources.
    Pursuant to Sec. 989.54(d) of the order, this rule continues to 
establish final volume regulation percentages for 1998-99 crop Zante 
Currant raisins. The volume regulation percentages are 85 percent free 
and 15 percent reserve. Free tonnage raisins may be sold by handlers to 
any market. Reserve raisins must be held in a pool for the account of 
the Committee and are disposed of through certain programs authorized 
under the order. Volume regulation is warranted for Zante Currants this 
season because the crop estimate of 3,801 tons combined with the 1997-
98 carryin inventory of 1,188 tons, plus 483 tons of reserve raisins 
released for free use through an export program, results in a supply of 
5,472 tons which exceeds the trade demand of 3,215 tons by about 70 
percent. The volume regulation percentages are intended to help the 
industry manage its supply of Zante Currant raisins and strengthen 
market conditions.
    Many years of marketing experience led to the development of the 
current volume regulation procedures. These procedures have helped the 
industry address its marketing problems by keeping supplies in balance 
with domestic and export market needs, and strengthening market 
conditions. The current volume regulation procedures fully supply the 
domestic and export markets, provide for market expansion, and help 
prevent oversupplies in the domestic market.
    The free and reserve percentages established by this rule release 
the full trade demand and apply uniformly to all handlers in the 
industry, regardless of size. With the exception of the 1996-97 season, 
small and large Zante Currant raisin producers and handlers have been 
operating under volume regulation percentages every year since 1994-95. 
There are no known additional costs incurred by small handlers that are 
not incurred by large handlers. All handlers are regulated based on the 
quantity of raisins which they acquire from producers. While the level 
of benefits of this rulemaking are difficult to quantify, the 
stabilizing effects of volume regulation impact both small and large 
handlers positively by helping them maintain orderly marketing 
conditions by managing supply.
    Various programs to utilize reserve Zante Currant raisins were 
implemented when volume regulation was in effect during the 1994-95, 
1995-96, and 1997-98 seasons. As shown in the table following this 
paragraph, although production varied during those years, volume 
regulation helped to reduce inventories, and helped to strengthen total 
producer prices (which includes proceeds from both free tonnage plus 
reserve pool Zante Currants) from $412.56 per ton in 1994-95 to an 
estimated high of $730 per ton in 1997-98. The Committee is 
implementing a reserve program this year which is expected to help the 
industry export more Zante Currants, thereby reducing the industry's 
oversupply, helping to build export markets, and ultimately improving 
producer returns.

                 Zante Currant Inventories and Producer Prices During Years of Volume Regulation
                                            [*Natural condition tons]
----------------------------------------------------------------------------------------------------------------
                                                                               Inventory*          Total season
                                                                       --------------------------     average
                        Crop year                          Production*                               producer
                                                                         Desirable     Physical     prices (per
                                                                                                       ton)
----------------------------------------------------------------------------------------------------------------
1994-95..................................................        5,377          837        4,364         $412.56
1995-96..................................................        3,294          782        2,890          711.32
1996-97..................................................        4,491          987          549    \1\ 1,150.00
1997-98..................................................        4,826          694        1,188         730.00
----------------------------------------------------------------------------------------------------------------
\1\ No volume regulation.

    Free and reserve percentages are established by variety, and only 
in years when the supply exceeds the trade demand by a large enough 
margin that the Committee believes volume regulation is necessary to 
maintain market stability. Accordingly, in assessing whether to apply 
volume regulation or, as an alternative, not to apply such regulation, 
the Committee recommended that volume regulation was only warranted for 
Zante Currant raisins this season. Preliminary volume regulation 
percentages were computed and announced in October 1998 for four other 
varietal types of California raisins. As more information became 
available in the following months, the Committee

[[Page 30236]]

determined that the supplies of these other varietal types would be 
less than or close to their computed trade demands; thus, the Committee 
determined that volume regulation was not warranted.
    There are some reporting, recordkeeping and other compliance 
requirements under the order. The reporting and recordkeeping burdens 
are necessary for compliance purposes and for developing statistical 
data for maintenance of the program. The requirements are the same as 
those applied last season. Thus, this action imposes no additional 
reporting or recordkeeping burdens on either small or large handlers. 
The forms require information which is readily available from handler 
records and which can be provided without data processing equipment or 
trained statistical staff. The information and recordkeeping 
requirements have been previously approved by the Office of Management 
and Budget (OMB) under OMB Control No. 0581-0178. As with other, 
similar marketing order programs, reports and forms are periodically 
studied to reduce or eliminate duplicate information collection burdens 
by industry and public sector agencies.
    In addition, the Department has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this rule. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    Further, Committee and subcommittee meetings are widely publicized 
in advance and are held in a location central to the production area. 
The meetings are open to all industry members, including small business 
entities, and other interested persons who are encouraged to 
participate in the deliberations and voice their opinions on topics 
under discussion. Thus, Committee recommendations can be considered to 
represent the interests of small business entities in the industry.
    An interim final rule concerning this action was published in the 
Federal Register on March 8, 1999. Copies of the rule were mailed to 
all Committee members and alternates, the Raisin Bargaining 
Association, handlers and dehydrators. In addition, the rule was made 
available through the Internet by the Office of the Federal Register. 
That rule provided for a 60-day comment period which ended May 7, 1999 
(64 FR 10919). No comments were received.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this rule, as hereinafter set forth, 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.

    For the reasons set forth in the preamble, 7 CFR part 989 is 
amended to read as follows:

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 989 which 
was published at 64 FR 10919 on March 8, 1999, is adopted as a final 
rule without change.

    Dated: June 1, 1999.
Bernadine M. Baker,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-14311 Filed 6-4-99; 8:45 am]
BILLING CODE 3410-02-P