[Federal Register Volume 66, Number 209 (Monday, October 29, 2001)]
[Rules and Regulations]
[Pages 54411-54414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27205]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 209 / Monday, October 29, 2001 / 
Rules and Regulations  

[[Page 54411]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV02-920-1 IFR]


Kiwifruit Grown in California; Relaxation of Pack Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule relaxes the pack requirements prescribed under the 
California kiwifruit marketing order. The marketing order regulates the 
handling of kiwifruit grown in California and is administered locally 
by the Kiwifruit Administrative Committee (Committee). This rule allows 
handlers to pack more individual pieces of fruit per 8-pound sample for 
seven size designations, eliminates one size designation, and adds two 
new size designations. These changes were unanimously recommended by 
the Committee and are expected to increase grower returns and enable 
handlers to compete more effectively in the marketplace.

DATES: Effective October 24, 2001. Comments received prior to December 
28, 2001 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 205-8938; 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 or can be viewed at: http//www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Rose M. Aguayo, 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, fax: (202) 205-8938.
    Small businesses may request information on compliance with this 
regulation by contacting Jay Guerber, 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, fax: (202) 
205-8938 or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 920, as amended (7 CFR part 920), regulating the handling of 
kiwifruit 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 (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This 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 USDA 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 USDA 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 to review the USDA 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 allows handlers to pack more individual pieces of fruit 
per 8-pound sample for seven size designations, eliminates one size 
designation, and adds two new size designations. These changes were 
unanimously recommended by the Committee and are expected to increase 
grower returns and enable handlers to compete more effectively in the 
marketplace.
    Under the terms of the order, fresh market shipments of kiwifruit 
grown in California are required to be inspected and meet grade, size, 
maturity, pack, and container requirements. Section 920.52 authorizes 
the establishment of pack requirements. Section 920.302(a)(4) of the 
order's administrative rules and regulations outlines pack requirements 
for fresh shipments of California kiwifruit. Section 920.302(a)(4)(iv) 
establishes a maximum number of fruit per 8-pound sample for each 
numerical count size designation for fruit packed in bags, volume fill, 
or bulk containers.
    The amount of kiwifruit supplied to the domestic market by 
California handlers has declined 40 percent since the 1992-93 season. 
In addition, grower prices have steadily declined in spite of a 
continuous increase in the U.S. per capita consumption of kiwifruit. 
When the order was implemented in 1984, the average Free-on-Board (FOB) 
value was $1.14 per pound. In 1997-1998, the Committee reviewed FOB 
values and determined that the average FOB value for the 1992-93 season 
through the 1997-98 season was $0.55 per pound.
    The Committee met on July 8, 1998, and decided to address the 
confusion in the marketplace and the differences in size designations 
between California kiwifruit and imported kiwifruit, by revising the 
numerical counts per size designation. Section 920.302(a)(iv) of the 
order's administrative rules and regulations was revised by an interim

[[Page 54412]]

final rule issued on September 3, 1998 (63 FR 46861).
    While this rule increased the number of fruit that could be packed 
in size designations 30 through 42, experience has shown that further 
refinement of the California kiwifruit size designations is needed to 
help California handlers compete more effectively with imported fruit 
in the marketplace. Handlers want to better meet buyer preferences and 
buyers generally prefer to purchase containers with a greater number of 
pieces of fruit in the box. This relaxation of pack requirements will 
permit handlers to pack more individual pieces of fruit in an 8-pound 
sample for various size designations, and, thus, better meet buyer 
preferences.
    During the spring of 2001, the production area was hit with a 
severe frost, heavy winds and hail storms. A shortened bloom period in 
late spring reduced the pollination of the crop and resulted in less 
fruit development and growth. Unusually hot temperatures during the 
summer months added further stress to the vines.
    On July 11, 2001, the Committee considered the impact of the severe 
weather conditions, and estimated the 2001-2002 crop would be 6.5 
million tray equivalents. During September the Committee staff 
conducted a pre-harvest check for sizing, quality, and maturity and 
found the crop was not sizing as expected. Based on the more recent 
observations, the field staff estimated that the amount of packable 
fruit would be approximately 5 million tray equivalents, versus the 6.5 
million estimated at the July 11, 2001, meeting.
    Because of these factors, the Committee called an emergency meeting 
on September 19, 2001, to discuss the marketing of the short crop and 
smaller sized fruit. As previously mentioned, the rules and regulations 
specify a maximum number of fruit per 8-pound sample for each numerical 
count size designation for kiwifruit packed in bags, volume fill, or 
bulk containers. To enable the industry to better market the short 2001 
crop, the Committee unanimously recommended relaxing the pack 
regulations under Sec. 920.302(a)(iv) by increasing the maximum number 
of fruit per 8-pound sample for size designations 42 through 25, 
eliminating size designation 21, and adding new size designations 20 
and 23. These changes are shown in the following chart:

------------------------------------------------------------------------
                                                               Maximum
                                                              number of
                      Size designation                        fruit per
                                                               8-pound
                                                                sample
------------------------------------------------------------------------
20.........................................................           27
23.........................................................           29
25.........................................................      27*  32
27/28......................................................      30*  35
30.........................................................      33*  38
33.........................................................      36*  43
36.........................................................      42*  45
39.........................................................      48*  49
42.........................................................      53*  54
45.........................................................          55
------------------------------------------------------------------------
* Prior number of fruit per 8-pound sample. New size designations are in
  bold.

    This chart is commonly referred to as the ``Size Designation 
Chart'' in the industry. Increasing the maximum number of fruit per 8-
pound sample will allow some smaller-sized fruit to be packed into a 
larger-size category. This rule allows one more piece of fruit to be 
packed per 8-pound sample in size designations 42 and 39, three more 
pieces of fruit to be packed in size designation 36, seven more pieces 
of fruit to be packed in size designation 33, and five more pieces of 
fruit to be packed in size designations 27/28 and 25 respectively.
    Additionally, handlers have the option of packing fruit as size 
designations 23, 20, or 45. This rule reduces the percentage of fruit 
packed in the 40 series and increases the percentage of fruit packed in 
the 20 and 30 series. The Committee estimated that increasing the 
maximum number of fruit per 8-pound sample for size designation 39 
would move approximately 600,000 pounds of kiwifruit from the former 
size designation 42 into the new size 39 designation. Increasing the 
maximum number of fruit per 8-pound sample for size designation 33 will 
allow handlers to pack approximately 2,500,000 pounds more kiwifruit 
into the new size 33 designation. Thus, handlers will be better able to 
meet the needs of buyers, because kiwifruit sells by the piece, and 
buyers desire as much fruit in each container as the container can 
comfortably hold. This change does not affect the minimum size and will 
not allow fruit currently considered ``undersized'' to be shipped. The 
Committee further believes that increasing the maximum number of fruit 
in the 8-pound sample will help reduce the sizing differences between 
California and imported kiwifruit. This should help California handlers 
compete more effectively in the marketplace.

Initial 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 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 the 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 50 handlers of California kiwifruit subject 
to regulation under the marketing order and approximately 360 growers 
in the production area. Small agricultural service firms are defined as 
those whose annual receipts are less than $5,000,000, and small 
agricultural growers are defined by the Small Business Administration 
(13 CFR 121.201) as those whose annual receipts are less than $750,000. 
None of the 50 handlers subject to regulation have annual kiwifruit 
sales of at least $5,000,000. In addition, 354 of the 360 growers have 
annual sales less than $500,000. Therefore, a majority of the kiwifruit 
handlers and growers may be classified as small entities.
    This rule allows handlers to pack more individual pieces of fruit 
per 8-pound sample for seven size designations, eliminates one size 
designation, and adds two new size designations. These changes were 
unanimously recommended by the Committee and are expected to increase 
grower returns and enable handlers to compete more effectively in the 
marketplace. Authority for this action is provided in Sec. 920.52 of 
the order.
    The Committee unanimously recommended relaxing the pack 
requirements by increasing the maximum number of fruit per 8-pound 
sample for size designations 42 through 25, eliminating size 
designation 21, and adding size designations 20 and 23 as shown in the 
following chart:

------------------------------------------------------------------------
                                                               Maximum
                                                              number of
                      Size designation                        fruit per
                                                               8-pound
                                                                sample
------------------------------------------------------------------------
20.........................................................           27
23.........................................................           29
25.........................................................      27*  32
27/28......................................................      30*  35

[[Page 54413]]

 
30.........................................................      33*  38
33.........................................................      36*  43
36.........................................................      42*  45
39.........................................................      48*  49
42.........................................................      53*  54
45.........................................................          55
------------------------------------------------------------------------
*Prior number of fruit per 8-pound sample. New size designations are in
  bold.

    This chart is commonly referred to as the ``Size Designation 
Chart'' in the industry. Increasing the maximum number of fruit per 8-
pound sample will allow some smaller-sized fruit to be packed into a 
larger-size category. This rule allows one more piece of fruit to be 
packed per 8-pound sample in size designations 42 and 39, three more 
pieces of fruit to be packed in size designation 36, seven more pieces 
of fruit to be packed in size designation 33, and five more pieces of 
fruit to be packed in size designations 27/28 and 25.
    Additionally, handlers have the option of packing fruit in size 
designations 23 and 20, as well as size designation 45. This rule 
reduces the percentage of fruit packed in the 40 series and increases 
the percentage of fruit packed in the 20 and 30 series. The Committee 
estimated that increasing the maximum number of fruit per 8-pound 
sample for Size 39 would move approximately 600,000 pounds of fruit 
from the former size designation 42 into the new size 39 designation. 
U.S. retailers prefer size 33 kiwifruit. Increasing the maximum number 
of fruit per 8-pound sample for size 33 will allow handlers to pack 
approximately 2,500,000 pounds more kiwifruit into the new size 33 
designation. Thus, handlers will be better able to meet the needs of 
buyers, because kiwifruit sells by the piece, and buyers desire as much 
fruit in each container as the container can comfortably hold. This 
change does not affect the minimum size and will not allow fruit 
currently considered ``undersized'' to be shipped. Imports from Europe 
have increased 1,409 percent since 1992-93. During the 2000-01 season 
approximately 3.2 million tray equivalents were imported from Europe.
    The Committee further believes that relaxing the pack requirements 
to permit more individual pieces of fruit in an 8-pound sample for 
various size designations will reduce the sizing differences between 
California and imported kiwifruit. Reducing the size designation 
differences should help California handlers compete more effectively in 
the marketplace, as buyers apparently choose to purchase containers 
with more pieces of fruit per container, and this relaxation permits 
increases in the number of pieces of fruit in bags, volume-fill, and 
bulk containers. The Committee has estimated that utilizing the new 
size designations will yield the California kiwifruit industry 
$24,407,981 in FOB value versus the $22,442,648 received for the 2000-
2001 season. This is an additional $1.9 million in FOB value for the 
2001-2002 season.
    The Committee wants to maintain the reputation California has 
established for uniformly packed containers of kiwifruit and believe 
that these changes will not significantly impact uniformity. The 
increase in the maximum number of fruit per 8-pound sample is not so 
significant that consumers or retailers will notice a visual size 
difference in the fruit being offered. The California Kiwifruit 
Commission, which administers a State program utilized to promote 
kiwifruit grown in California, conducted kiwifruit-sizing studies 
several years ago. These studies show that there is only an average of 
3/32-inch to 4/32-inch difference in fruit length between sizes, and 2/
32-inch to 3/32-inch difference in fruit width. These differences are 
indistinguishable to the eye.
    These changes address the marketing and shipping needs of the 
kiwifruit industry and are in the interest of growers, handlers, 
buyers, and consumers. The impact of these changes is expected to be 
beneficial to all growers and handlers, regardless of size. There is 
widespread agreement in the industry to relax the pack requirements.
    The Committee considered other alternatives to relaxing packing 
requirements but determined that these suggestions will not adequately 
address the industry problems.
    One suggestion was to change the minimum size. The Committee did 
not adopt this suggestion because it believes that lowering the minimum 
size will diminish the quality image of California kiwifruit.
    Another suggestion presented was to leave the size designation 
chart unchanged. The Committee did not adopt this suggestion because it 
believes that handlers would benefit from the size designation changes.
    After considering these alternatives, the Committee recommended 
relaxing the pack requirements for seven size designations, eliminating 
one size designation, and adding two new size designations. Small and 
large growers and handlers are expected to benefit from this 
relaxation. It is estimated that grower returns will increase by 
approximately $1.00 per box.
    This rule will not impose any additional reporting or recordkeeping 
requirements on either small or large kiwifruit handlers. As with all 
Federal marketing order programs, reports and forms are periodically 
reviewed to reduce information requirements and duplication by industry 
and public sectors.
    In addition, the USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    Further, the Committee's meeting was widely publicized throughout 
the kiwifruit industry and all interested persons were invited to 
attend the meeting and participate in Committee deliberations. Like all 
Committee meetings, the September 19, 2001, meeting was a public 
meeting and all entities, both large and small, were able to express 
their views on this issue. Finally, 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 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.
    This rule invites comments on relaxing a pack requirement currently 
prescribed under the California marketing order. Any comments received 
prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim final 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 and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule relaxes pack requirements; (2) the 2001-02 
harvest is expected to begin during October and this relaxation should 
cover as much of the harvest as possible; (3) the Committee unanimously 
recommended these changes to provide handlers more marketing 
flexibility at a public meeting

[[Page 54414]]

and interested parties had an opportunity to provide input; and (4) 
this rule provides a 60-day comment period and any comments received 
will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 920 is 
amended as follows:

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 920 continues to read as 
follows:

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

    2. In Sec. 920.302 the table at the end of paragraph (a)(4)(iv) is 
revised to read as follows:


Sec. 920.302  Grade, size, pack, and container regulations.

    (a) * * *
    (4) * * *
    (iv) * * *

------------------------------------------------------------------------
                                                               Maximum
                                                              number of
                      Size designation                        fruit per
                                                               8-pound
                                                                sample
------------------------------------------------------------------------
20.........................................................           27
23.........................................................           29
25.........................................................           32
27/28......................................................           35
30.........................................................           38
33.........................................................           43
36.........................................................           45
39.........................................................           49
42.........................................................           54
45.........................................................           55
------------------------------------------------------------------------

* * * * *

    Dated: October 24, 2001.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 01-27205 Filed 10-25-01; 1:46 pm]
BILLING CODE 3410-02-P