[Federal Register Volume 65, Number 138 (Tuesday, July 18, 2000)]
[Rules and Regulations]
[Pages 44405-44408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18073]



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  Federal Register / Vol. 65, No. 138 / Tuesday, July 18, 2000 / Rules 
and Regulations  

[[Page 44405]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV00-989-3 FR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule increases 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 
will ultimately make more raisins available to handlers, especially for 
immediate use early in the season, and will allow desirable carryout to 
more accurately reflect actual carryout inventory.

EFFECTIVE DATE: August 1, 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 final 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.''

Question and Answer Overview

What Are Marketing Orders?

    Marketing orders are rules which are authorized under the 
Agricultural Marketing Agreement Act of 1937. They are based on 
evidence developed at a formal hearing. Marketing orders help fruit and 
vegetable growers work together to solve marketing problems that cannot 
be solved individually. Industries voluntarily implement these programs 
and choose to have Federal oversight of certain aspects of their 
operations.
    The California raisin industry has operated under a marketing order 
since 1949. The order authorizes implementation of volume control for 
the various varietal types grown. Preliminary and interim free and 
reserve percentages are computed and announced by the Committee and 
final percentages are established by the Department of Agriculture. 
When volume controls are implemented for a particular varietal type, a 
portion of the crop can be sold by handlers to any market (free 
tonnage), and the remaining portion (reserve tonnage) is required to be 
held by handlers for the account of the Committee. Reserve raisins are 
disposed of through programs authorized under the marketing order. 
Under the order, reporting and recordkeeping requirements for gathering 
statistical information and supporting volume control activities are 
implemented. Quality controls, and marketing research and development, 
and promotional activities also are implemented in the interest of 
growers, handlers, and consumers.

What Is Desirable Carryout?

    Desirable carryout is the amount of raisins from one season needed 
during the first part of the next season for market needs, and is one 
of the factors used in computing yearly trade demand. When computed 
trade demand is less than the quantity of raisins produced, volume 
controls are implemented under the order.

Why Did the Committee Recommend This Action?

    The Committee recommended the increase in the desirable carryout to 
make more raisins available to handlers for immediate use early in the 
season when supplies are often tight, and to bring desirable carryout 
more in line with actual carryout inventory and early season shipments. 
The increase is expected to more accurately reflect the marketing 
conditions currently facing the industry.

Who Will Be Affected by This Action?

    Growers and handlers of raisins produced in California will be 
affected by this action. Volume controls implemented under the order 
are designed to promote orderly marketing conditions, stabilize prices 
and supplies, and improve grower returns.

Were Any Comments Received on This Action?

    One comment was received. The commenter supports the increase in 
desirable carryout, but expressed concern over the impact of the change 
on the Committee's program to promote California raisin sales in 
foreign markets. The increase in desirable carryout would make more 
raisins available to handlers as free tonnage, and might reduce the 
amount of reserve raisins purchased to meet their market needs. 
However, Committee sponsored promotional activities are not expected to 
be negatively impacted by the amount of the desirable carryout, because 
those activities are planned and implemented later in the season when 
carrying inventories and size of the new crop are known. Additionally, 
those promotional activities are planned by the Committee with the most 
recent information available, and approved by the Department.

[[Page 44406]]

When Will This Action Be Effective?

    This action will be effective August 1, 2000, the beginning of the 
2000/2001 crop year, and the increased desirable carryout will be used 
to compute trade demand for that year.

Executive Orders 12866 and 12998

    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule 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.

Discussion of the Increase in Desirable Carryout

    This final rule increases 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 one crop year needed during the first part of 
the next crop year to meet market needs, before new crop raisins are 
available. This rule increases 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 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 
will 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.

[[Page 44407]]



                       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            91,015        89,756        98,731        96,109        95,125
 August, September, and October (Natural
 condition tons)..........................
Total of 3-months of shipments over the          94,083
 past 5 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 
will result in a higher free tonnage percentage which will 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 modified accordingly.

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 have 
been defined by the Small Business Administration (13 CFR 121.201) 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 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 final rule increases 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 one 
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 will 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 new desirable carryout level will apply uniformly to all 
handlers in the industry, whether small or large, with no known 
additional costs incurred by small handlers. As previously mentioned, 
increasing the desirable carryout will increase the trade demand and 
free tonnage percentage, making 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 included: 
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 imposes no 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

[[Page 44408]]

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.
    A proposed rule concerning this action was published in the Federal 
Register on January 31, 2000 (65 FR 4583). Copies of the rule were 
mailed by the Committee's 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 March 31, 2000. One comment was 
received.
    The commenter supports the change in desirable carryout, but 
expressed concern over the impact of the change on the Committee's 
program to promote California raisin sales in foreign markets. The 
purpose of this rulemaking action is to change the desirable carryout 
to more accurately reflect actual carryout inventory and early-season 
shipments. Desirable carryout is the amount of tonnage from a specific 
crop year needed during the first part of the succeeding crop year to 
meet market needs. Failure to provide adequate raisins for market needs 
during the first part of the crop year would likely have a negative 
impact on prices and sales later in the season. Such an impact would 
likely be felt in domestic and foreign markets. The increase in 
desirable carryout would make more raisins available to handlers as 
free tonnage, and might reduce the amount of reserve raisins handlers 
purchase to meet their market needs. However, Committee sponsored 
promotional activities are not expected to be negatively impacted by 
this action. Those promotional activities are planned and implemented 
later in the season, when carryin inventories and the size of the new 
crop are known. Additionally, those promotional activities are planned 
by the Committee with the most recent information available, and 
approved by the Department.
    Accordingly, no changes will be made to the rule, as proposed, 
based on the comment received.
    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 the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Committee, the comment 
received, and other available information, it is hereby found that this 
rule, as hereinafter set forth, will tend to effectuate the declared 
policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found that good cause exists 
for not postponing the effective date of this action until 30 days 
after publication in the Federal Register because: (1) The 2000-2001 
crop year begins on August 1, 2000, and this rule should be effective 
promptly because the order provides that the Committee meet on or 
before August 15 to compute and announce the trade demand, and the 
desirable carryout level is a necessary item in that calculation; (2) 
this action is a relaxation in that it will make more raisins available 
to handlers especially for use early in the season; (3) producers and 
handlers are aware of this action which was unanimously recommended by 
the Committee at a public meeting; and (4) a 60-day comment period was 
provided for in the proposed rule, and the comment received is 
addressed in this final rule.

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 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: July 11, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-18073 Filed 7-17-00; 8:45 am]
BILLING CODE 3410-02-P