[Federal Register Volume 65, Number 20 (Monday, January 31, 2000)]
[Unknown Section]
[Pages 4583-4585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2039]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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  Federal Register / Vol. 65, No. 20 / Monday, January 31, 2000 / 
Proposed Rules

[[Page 4583]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV00-989-3 PR]


Raisins Produced From Grapes Grown In California; Increase in 
Desirable Carryout Used to Compute Trade Demand

AGENCY:  Agricultural Marketing Service, USDA.

ACTION:  Proposed rule.

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

SUMMARY:  This rule invites comments on increasing the desirable 
carryout used to compute the yearly trade demand for raisins covered 
under the Federal marketing order for California raisins (order). The 
order regulates the handling of raisins produced from grapes grown in 
California and is administered locally by the Raisin Administrative 
Committee (Committee). This action would ultimately make more raisins 
available to handlers, especially for immediate use early in the 
season, and would allow desirable carryout to more accurately reflect 
actual carryout inventory.

DATES:  Comments must be received by March 31, 2000.

ADDRESSES:  Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail: 
[email protected]. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register and will be made available for public inspection in the Office 
of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT:  Maureen T. Pello, 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, P.O. 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 by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone (202) 720-2491; Fax: (202) 
720-5698; or E-mail: [email protected].

SUPPLEMENTARY INFORMATION:  This proposal is issued under Marketing 
Agreement and Order No. 989 (7 CFR part 989), both as amended, 
regulating the handling of raisins produced from grapes grown in 
California, hereinafter referred to as the ``order.'' The order is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This proposal 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 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 invites comments on increasing the desirable carryout 
used to compute the yearly trade demand for raisins regulated under the 
order. Trade demand is computed based on a formula specified in the 
order, and is used to determine volume regulation percentages for each 
crop year, if necessary. Desirable carryout, one factor in this 
formula, is the amount of tonnage from the prior crop year needed 
during the first part of the next crop year to meet market needs, 
before new crop raisins are available. This rule would increase the 
desirable carryout from 2\1/2\ months (August, September, and one-half 
of October) of prior year's shipments to a rolling average of 3 months 
(August, September, and October) of shipments over the past 5 years, 
dropping the high and low figures. This action was recommended by the 
Committee at a meeting on November 10, 1999.
    The order provides authority for volume regulation designed to 
promote orderly marketing conditions, stabilize prices and supplies, 
and improve producer returns. When volume regulation is in effect, a 
certain percentage of the California raisin crop may be sold by 
handlers to any market (free tonnage) while the remaining percentage 
must be held by handlers in a reserve pool (reserve) for the account of 
the Committee. Reserve raisins are disposed of through certain programs 
authorized under the order. For instance, reserve raisins may be sold 
by the Committee to handlers for free use or to replace part of the 
free tonnage raisins they exported; used in diversion programs; carried 
over as a hedge against a short crop the following year; or disposed of 
in other outlets not competitive with those for free tonnage raisins, 
such as government purchase, distilleries, or animal feed. Funds 
generated from sales of reserve raisins are also used to support 
handler sales to export markets. Net proceeds from sales of reserve 
raisins are ultimately distributed to the reserve pool's equity 
holders, primarily producers.
    Section 989.54 of the order prescribes procedures to be followed in 
establishing volume regulation and includes methodology used to 
calculate volume regulation percentages. Trade

[[Page 4584]]

demand is based on a computed formula specified in this section, and is 
also part of the formula used to determine volume regulation 
percentages. Trade demand is equal to 90 percent of the prior year's 
shipments, adjusted by the carryin and desirable carryout inventories.
    At one time, Sec. 989.54(a) also specified actual tonnages for 
desirable carryout for each varietal type regulated. However, in 1989, 
these tonnages were suspended from the order, and flexibility was added 
so that the Committee could adopt a formula for desirable carryout in 
the order's rules and regulations. The formula has allowed the 
Committee to periodically adjust the desirable carryout to better 
reflect changes in each season's marketing conditions.
    The formula for desirable carryout has been specified since 1989 in 
Sec. 989.154. Initially, the formula was established so that desirable 
carryout was based on shipments for the first 3 months of the prior 
crop year--August, September, and October (the crop year runs from 
August 1 through July 31). This amount was gradually reduced to 2\1/2\ 
months in 1991-92, 2\1/4\ months in 1995-96, and to 2 months in 1996-
97. The Committee reduced the desirable carryout between 1991-1997 
because it believed that an excessive supply of raisins was available 
early in a new crop year creating unstable market conditions.
    In 1998, the Committee determined that, because of the reduced 
desirable carryout, not enough raisins were being made available for 
growth. Thus, the desirable carryout was increased to 2\1/2\ months of 
prior year's shipments to allow for a higher trade demand figure and, 
thus, a higher free tonnage percentage, making more raisins available 
to handlers, especially for immediate use early in the season when 
supplies are often tight. This action also allowed desirable carryout 
to move towards what handlers actually hold in inventory at the end of 
a crop year, or about 100,000 tons.
    The Committee would like to continue to bring the desirable 
carryout in line with handlers' actual inventory at the end of a crop 
year. Desirable carryout has averaged 63,364 tons at 2 months, 71,203 
tons at 2\1/4\ months, and 80,248 tons at 2\1/2\ months. For the past 5 
years, an average of 102,452 tons has been held in inventory by all 
handlers at the end of a crop year. Increasing the desirable carryout 
would also bring this factor more in line with early-season shipments 
while providing some raisins for market expansion. For the past 5 
years, an average of 94,147 tons of raisins has been shipped during the 
first 3 months of the crop year (August, September, and October).
    Thus, the Committee met on November 10, 1999, and recommended 
increasing the desirable carryout to a rolling average of 3 months of 
shipments (August, September, and October) over the past 5 years, 
dropping the high and low figures. If this formula would have been used 
for the current crop year (1999-2000), the desirable carryout would 
have equaled 94,083 tons as compared to the current 73,809 tons. The 
94,083-ton figure would have thus been much closer to the actual 
inventory of 102,452 tons, and closer to the 5-year average level of 
shipments for August, September, and October of 94,147 tons. The 
following table illustrates this computation.

                            Table 1.--Computation of Proposed New Desirable Carryout
----------------------------------------------------------------------------------------------------------------
                                                                            Crop Years
                                                ----------------------------------------------------------------
                                                  A  1998-99   B  1997-98   C  1996-97   D  1995-96   E  1994-95
----------------------------------------------------------------------------------------------------------------
Total of free tonnage shipments during August,        91,015       89,756       98,731       96,109       95,125
 September, and October (Natural condition
 tons).........................................
Total of 3-months of shipments over the past 5       94,083
 years, dropping the high and low figures, and
 dividing the remaining sum by 3 (Natural
 condition tons) \1\...........................
----------------------------------------------------------------------------------------------------------------
\1\ (Columns A+D+E)/3.

    Finally, as with the 1998-99 increase in the formula, this action 
would result in a higher free tonnage percentage which would make more 
raisins available to handlers, especially for immediate use early in 
the season when supplies can be tight. A higher free tonnage percentage 
may also improve early season returns to producers (producers are paid 
an established field price for their free tonnage).
    Much of the discussion at the Committee's meeting concerned the 
desirable carryout of Natural (sun-dried) Seedless raisins (Naturals). 
Naturals are the major commercial varietal type of raisin produced in 
California. With the exception of the 1998-99 crop year, volume 
regulation has been implemented for Naturals for the past several 
seasons. However, the Committee also believes that the increase in 
desirable carryout should apply to the other varietal types of raisins 
covered under the order.
    The Committee's vote on this action was 24 in favor and 13 opposed. 
The no votes were primarily from members who favored a higher desirable 
carryout.
    After much deliberation, the majority of Committee members 
supported basing desirable carryout on a rolling average of 3 months of 
shipments over the past 5 years, dropping the high and low figures. 
Thus, paragraph (a) in Sec. 989.154 is proposed to be modified 
accordingly.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 20 handlers of California raisins who are 
subject to regulation under the order and approximately 4,500 raisin 
producers in the regulated area. Small agricultural service firms 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. 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

[[Page 4585]]

than $5,000,000, excluding receipts from any other sources. No more 
than 7 handlers, and a majority of producers, of California raisins may 
be classified as small entities.
    This proposal would increase the desirable carryout used to compute 
the yearly trade demand for raisins regulated under the order. Trade 
demand is computed based on a formula specified under Sec. 989.54(a) of 
the order. It is also part of another formula used to determine volume 
regulation percentages for each crop year, if necessary. Desirable 
carryout, one factor in this formula, is the amount of tonnage from the 
prior crop year needed during the first part of the succeeding crop 
year to meet market needs, before new crop raisins are available for 
shipment. This rule would increase the desirable carryout specified in 
paragraph (a) of Sec. 989.154 from 2\1/2\ months (August, September, 
and one-half of October) of prior year's shipments to a rolling average 
of 3 months (August, September, and October) of shipments for the past 
5 years, dropping the high and low figures.
    The proposed desirable carryout level would apply uniformly to all 
handlers in the industry, whether small or large, and there would be no 
known additional costs incurred by small handlers. As previously 
mentioned, increasing the desirable carryout would increase the trade 
demand and free tonnage percentage which would make more raisins 
available to handlers early in the season. A higher free tonnage 
percentage may also improve early season returns to producers 
(producers are paid an established field price for their free tonnage).
    The Committee considered a number of alternatives to the 3-month 
rolling shipment average in the desirable carryout level. The Committee 
has an appointed subcommittee which periodically holds public meetings 
to discuss changes to the order and other issues. The subcommittee met 
on November 9, 1999, and discussed desirable carryout. All of the 
subcommittee members agreed with increasing the desirable carryout and 
considered a number of alternatives. Options considered include: Basing 
desirable carryout on a 5-year rolling average of actual carryout 
inventory; an average of 3 months of prior year's shipments; or a 
rolling average of 3 months of shipments over the past 5 years, 
dropping the high and low figures. The subcommittee ultimately 
recommended to the full Committee that desirable carryout be based on a 
5-year rolling average of actual carryout inventory.
    At the Committee meeting on November 10, 1999, these options were 
again reviewed. After much discussion, the majority of Committee 
members agreed that desirable carryout should be based on shipments, 
not actual carryout inventory. Most Committee members concurred that 
basing desirable carryout on actual carryout inventory could create 
problems if handlers carried out large inventories. In addition, most 
members believed that shipments are driven by market demand, and should 
thus continue to be the basis for desirable carryout. The Committee 
ultimately recommended that the desirable carryout be based on a 
rolling average of 3 months of shipments for the past 5 years, dropping 
the high and low figures.
    This rule would 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 sector agencies. Finally, the 
Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this rule.
    In addition, the Committee's subcommittee meeting on November 9, 
1999, and the Committee meeting on November 10, 1999, where this action 
was deliberated, were public meetings widely publicized throughout the 
raisin industry. All interested persons were invited to attend the 
meetings and participate in the industry's deliberations. Finally, all 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in theFOR FURTHER INFORMATION CONTACT 
section.
    A 60-day comment period is provided to allow interested persons to 
respond to this proposal. All written comments timely received will be 
considered before a final determination is made on this matter.

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 
proposed to be amended as follows:

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 989 continues to read as 
follows:

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

    2. Section 989.154 is amended by revising paragraph (a) to read as 
follows:


Sec. 989.154  Marketing policy computations.

    (a) Desirable carryout levels. The desirable carryout levels to be 
used in computing and announcing a crop year's marketing policy shall 
be equal to the total shipments of free tonnage during August, 
September, and October for each of the past 5 crop years, for each 
varietal type, converted to a natural condition basis, dropping the 
high and low figures, and dividing the remaining sum by three.
* * * * *

    Dated: January 24, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-2039 Filed 1-28-00; 8:45 am]
BILLING CODE 3410-02-P