[Federal Register Volume 65, Number 128 (Monday, July 3, 2000)]
[Rules and Regulations]
[Pages 40975-40979]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16739]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV00-989-4 FIR]


Raisins Produced From Grapes Grown In California; Final Free and 
Reserve Percentages for 1999-2000 Crop Natural (Sun-Dried) Seedless and 
Zante Currant 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 
that established final volume regulation percentages for 1999-2000 crop 
Natural (sun-dried) Seedless raisins (Naturals) and Zante Currant 
raisins (Zantes) covered under the Federal marketing order for 
California raisins (order). The volume regulation percentages are 85 
percent free and 15 percent reserve for Naturals and 51 percent free 
and 49 percent reserve for Zantes. 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 intended to help stabilize raisin supplies 
and prices, and strengthen market conditions.

EFFECTIVE DATE: August 2, 2000.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing 
Specialist, California Marketing Field Office, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 
Monterey Street, suite 102B, Fresno, California 93721; telephone: (559) 
487-5901, Fax: (559) 487-5906; or George Kelhart, Technical Advisor, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 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 rule is issued under Marketing 
Agreement and Order No. 989 (7 CFR part 989),

[[Page 40976]]

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 in effect final free 
and reserve percentages for Naturals and Zantes for the 1999-2000 crop 
year, which began August 1, 1999, and ends July 31, 2000. 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 in effect final volume regulation percentages 
for 1999-2000 crop Naturals and Zantes covered under the order. The 
volume regulation percentages are 85 percent free and 15 percent 
reserve for Naturals and 51 percent free and 49 percent reserve for 
Zantes. 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 stabilize 
raisin supplies and prices, and strengthen market conditions. Final 
percentages for Zantes were recommended by the Committee on January 13, 
2000, and for Naturals on February 11, 2000.

Computation of Trade Demands

    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 12, 1999, 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 carryin 
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(a), 
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 1999-2000 trade 
demands for Naturals and Zantes at 254,475 and 1,855 tons, 
respectively, as shown below.

                         Computed Trade Demands
                        [Natural condition tons]
------------------------------------------------------------------------
                                             Naturals         Zantes
------------------------------------------------------------------------
Prior year's shipments..................     \1\ 314,013           3,542
Multiplied by 90 percent................            0.90            0.90
Equals adjusted base....................         282,612           3,188
Minus carryin inventory.................         101,946           1,906
Plus desirable carryout.................          73,809             573
Equals computed trade demand............         254,475          1,855
------------------------------------------------------------------------
\1\Pursuant to Sec.  989.54(a), 1996-97 shipments were utilized to
  compute trade demand because 1998-99 shipments were limited.

Computation of Preliminary Volume Regulation Percentages

    As required under Sec. 989.54(b) of the order, the Committee met on 
October 1, 1999, and announced a preliminary crop estimate of 294,519 
tons for Naturals. This estimate was almost 15 percent lower than the 
10-year average of 346,325 tons. Naturals are the major varietal type 
of California raisins. Combining the carryin inventory of 101,946 tons 
with the 294,519-ton crop estimate resulted in a total available supply 
of 396,465 tons, which was much higher than the 254,475-ton trade 
demand. Thus, the Committee determined that volume regulation for 
Naturals was warranted. The Committee announced preliminary free and 
reserve percentages for Naturals which released 65 percent of the 
computed trade demand since the field price had not yet been 
established. The preliminary percentages were 56 percent free and 44 
percent reserve. The Committee authorized its staff to modify the 
preliminary percentages to release 85 percent of the trade demand once 
the field price was established. The field price was established on 
October 22, 1999, and the preliminary percentages were thus modified to 
73 percent free and 27 percent reserve.
    Also at its October 1, 1999, meeting, the Committee announced a 
preliminary crop estimate for Zantes at 4,187 tons, which is comparable 
to the 10-year average of 4,463 tons. Combining the carryin inventory 
of 1,906 tons with the 4,187-ton crop estimate resulted in a total 
available supply of 6,093 tons, which is significantly greater the 
1,855-ton trade demand. Thus, the Committee determined that volume 
regulation for Zantes was warranted. The Committee

[[Page 40977]]

announced preliminary free and reserve percentages for Zantes which 
released 65 percent of the computed trade demand since field price had 
not yet been established. The preliminary percentages were 29 percent 
free and 71 percent reserve. Like Naturals, the Committee authorized 
its staff to modify the preliminary percentages to release 85 percent 
of the trade demand once the field price was established. The field 
price was established on October 12, 1999, and the preliminary 
percentages were thus modified to 38 percent free and 62 percent 
reserve. As in past seasons, the Committee submitted its marketing 
policy to the Department for review. In addition, the Committee 
determined that volume regulation was not warranted for the other 
varietal types of raisins covered under the order.

Computation of Final Volume Regulation Percentages

    Pursuant to 989.54(c) and (d) of the order, the Committee met on 
January 12, 2000, and announced interim percentages for Zantes at 50.75 
percent free and 49.25 percent reserve. These interim percentages were 
based on a revised Zante crop estimate of 3,650 tons. At that meeting, 
the Committee also computed final percentages for Zantes which, when 
applied to the final 3,650-ton crop estimate, tend to release the full 
Zante trade demand. Final percentages compute to 51 percent free and 49 
percent reserve.
    The Committee met on February 11, 2000, and announced interim 
percentages for Naturals at 84.75 percent free and 15.25 percent 
reserve. These interim percentages were based on a revised crop 
estimate of 298,477 tons. The Committee also computed final percentages 
for Naturals which, when applied to the final 298,477-ton crop 
estimate, tend to release the full trade demand. Final percentages 
compute to 85 percent free and 15 percent reserve. The Committee's 
calculations to arrive at final percentages for Naturals and Zantes are 
shown in the table below.

                   Final Volume Regulation Percentages
                  [Tonnage as natural condition weight]
------------------------------------------------------------------------
                                             Naturals         Zantes
------------------------------------------------------------------------
Trade demand............................         254,475           1,855
Divided by crop estimate................         298,477           3,650
Equals free percentage..................              85              51
100 minus free percentage equals reserve              15              49
 percentage.............................
------------------------------------------------------------------------

    In addition, the Department's ``Guidelines for Fruit, Vegetable, 
and Specialty 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 was met for Naturals and Zantes by the 
establishment of final percentages that 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 that are made available to handlers during each season. 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. Handlers may 
sell their 10 plus 10 raisins to any market.
    For Naturals, both 10 plus 10 offers were held in May 2000 where a 
total of about 44,000 tons of raisins were made available to handlers. 
This quantity is less than the amount specified in the order. As 
previously stated, the Committee utilized 1996-97 shipments of 314,013 
tons as a base to compute trade demand because 1998-99 shipments were 
limited. Similarly, as specified in Sec. 989.54(g), 1996-97 shipments 
were used as a base to compute the amount of tonnage to be made 
available in the 10 plus 10 offers. Thus, 31,402 tons should have been 
made available in each of the 10 plus 10 offers (62,804 tons total). 
However, this amount was not available in the reserve. Thus, all of the 
reserve pool raisins were made available to handlers for free use 
through the 10 plus 10 offers. A total of 265 tons of reserve Naturals 
were purchased in the offers.
    Adding the 265 tons of 10 plus 10 raisins to the 254,475-ton trade 
demand figure, plus 101,946 tons of 1998-99 carryin inventory equates 
to about 356,686 tons natural condition raisins, or 334,835 tons packed 
raisins, made available for free use, or to the primary market thus far 
this season. This is 121 percent of the quantity of Naturals shipped 
during the 1998-99 crop year (295,401 natural condition tons or 277,305 
packed tons).
    For Zantes, both Zante 10 plus 10 offers were made available 
simultaneously in early February 2000 and 708 tons of raisins were 
purchased by handlers. Adding the 708 tons of 10 plus 10 raisins to the 
1,855 ton trade demand figure, plus 1,906 tons of 1998-99 carryin 
inventory equates to 4,469 tons natural condition raisins, or about 
3,985 tons packed raisins, made available for free use, or to the 
primary market. This is 126 percent of the quantity of Zantes shipped 
during the 1998-99 crop year (3,542 natural condition tons or 3,158 
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. When implemented, these additional offers of reserve raisins 
make even more raisins available to primary markets, which is 
consistent with the Department's Guidelines.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and 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 are 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts

[[Page 40978]]

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 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, excluding receipts from other sources.
    Pursuant to Sec. 989.54(d) of the order, this rule continues in 
effect final volume regulation percentages for 1999-2000 crop Natural 
and Zante raisins. The volume regulation percentages are 85 percent 
free and 15 percent reserve for Naturals and 51 percent free and 49 
percent reserve for Zantes. 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 this season for Naturals because the 
final crop estimate of 298,477 tons combined with the carryin inventory 
of 101,946 tons results in a total available supply of 400,423 tons, 
which is about 57 percent higher than the 254,475-ton trade demand. 
Volume regulation is warranted for Zantes this season because the crop 
estimate of 3,650 tons combined with the carryin inventory of 1,906 
tons results in a total available supply of 5,556 tons which is about 
200 percent higher than the 1,855-ton trade demand. The volume 
regulation percentages are intended to help stabilize raisin supplies 
and prices, 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.
    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, as well as weather-related factors, cause fluctuations in 
raisin supply. These supply fluctuations can cause producer price 
instability and disorderly market conditions. Volume regulation is 
helpful to the raisin industry because it lessens the impact of such 
fluctuations and contributes to orderly marketing. For example, 
excluding the 1997-98 season for which complete data is not yet 
available, producer prices for Naturals have remained fairly steady 
between the 1992-93 through the 1998-99 seasons, although production 
has varied. As shown in the table below, production has varied from a 
low of 240,469 tons in 1998-99 to a high of 387,007 tons in 1993-94, or 
61 percent. According to Committee data, during years of Natural volume 
regulation, the total producer return per ton, which includes proceeds 
from both free tonnage plus reserve pool raisins, has varied from a low 
of $901 in 1992-93 to a high of $1,049 in 1996-97, or 16 percent.

                    Natural Seedless Producer Prices
------------------------------------------------------------------------
                                        Production
             Crop year                   (natural       Producer prices
                                     condition tons)
------------------------------------------------------------------------
1998-99...........................            240,469         \1\ $1,290
1997-98...........................            382,448         \2\ 925.50
1996-97...........................            272,063              1,049
1995-96...........................            325,911              1,007
1994-95...........................            378,427                928
1993-94...........................            387,007                904
1992-93...........................            371,516               901
------------------------------------------------------------------------
\1\ No volume regulation.
\2\ Return to date, reserve pool still open.

    In addition, the Committee is implementing an export program for 
Naturals. Through this program, the Committee hopes to export more 
Naturals thereby helping to build and maintain export markets, and 
ultimately improve producer returns. Volume regulation helps the 
industry not only to manage its supply of raisins, but also maintain 
market stability.
    Regarding Zantes, Zante production is much smaller than that of 
Naturals. Volume regulation has been implemented for Zantes during the 
1994-95, 1995-96, 1997-98, and 1998-99 seasons. Various programs to 
utilize reserve Zantes were implemented when volume regulation was in 
effect during those 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 (free tonnage plus reserve Zantes) from $412.56 per ton 
in 1994-95 to an estimated high of $730 per ton in 1997-98. The 
Committee is implementing an export program for Zantes, in addition to 
Naturals. Through this program, the Committee hopes to export more 
Zantes, thereby continuing to reduce the industry's oversupply, helping 
to build export markets, and ultimately improve producer returns. 
Volume regulation helps the industry not only to manage oversupplies of 
raisins, but also maintain market stability.

                 Zante Currant Inventories and Producer Prices During Years of Volume Regulation
                                            [*Natural condition tons]
----------------------------------------------------------------------------------------------------------------
                                                                            Inventory*             Total season
                                                                 --------------------------------     average
                    Crop year                       Production*                                   producer price
                                                                     Desirable       Physical        (per ton)
----------------------------------------------------------------------------------------------------------------
1998-99.........................................           3,880             573           1,906           (\1\)

[[Page 40979]]

 
1997-98.........................................           4,826             694           1,188     \2\ $730.00
1996-97.........................................           4,491             987             549    \3\ 1,150.00
1995-96.........................................           3,294             782           2,890          711.32
1994-95.........................................           5,377             837           4,364         412.56
----------------------------------------------------------------------------------------------------------------
\1\ Data not yet available, reserve pool open.
\2\ Estimate.
\3\ No volume regulation.

    Free and reserve percentages are established by variety, and 
usually 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. However, volume regulation may 
also be utilized in short crop years so that the industry may utilize 
its export program as described to maintain its export markets and 
provide stability in the domestic market. Accordingly, in assessing 
whether to apply volume regulation or, as an alternative, not to apply 
such regulation, the Committee recommended only two of the nine raisin 
varieties defined under the order for volume regulation this season.
    The free and reserve percentages release the full trade demands and 
apply uniformly to all handlers in the industry, regardless of size. 
For Naturals, with the exception of the 1998-99 crop year, small and 
large raisin producers and handlers have been operating under volume 
regulation percentages every year since 1983-84. 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 that they acquire from producers. 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 and expand markets even though 
raisin supplies fluctuate widely from season to season. Likewise, price 
stability positively impacts small and large producers by allowing them 
to better anticipate the revenues their raisins will generate.
    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 in past seasons. Thus, this action will not impose any 
additional reporting or recordkeeping burdens on either small or large 
handlers. The forms require information that is readily available from 
handler records and which can be provided without data processing 
equipment or trained statistical staff. The information collection 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.
    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.
    An interim final rule concerning this action was published in the 
Federal Register on April 10, 2000 (65 FR 18871). Copies of the rule 
were mailed by the Committee staff 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 June 9, 2000. No comments were 
received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab/html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this final 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.

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 989 which 
was published at 69 FR 18871 on April 10, 2000, is adopted as a final 
rule without change.

    Dated: June 27, 2000
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-16739 Filed 6-30-00; 8:45 am]
BILLING CODE 3410-02-P