[Federal Register Volume 67, Number 50 (Thursday, March 14, 2002)]
[Rules and Regulations]
[Pages 11396-11399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6138]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 920

[Docket No. FV02-920-1 FIR]


Kiwifruit Grown in California; Relaxation of Pack Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, a corrected interim final rule which relaxed 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 continues to allow handlers to pack more 
individual pieces of fruit per 8-pound sample for seven size 
designations, continues the elimination of one size designation, and 
the addition of 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.

EFFECTIVE DATE: April 15, 2002.

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, 1400 
Independence Avenue, SW STOP 0237, Washington, DC 20250-0237; 
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, 1400 Independence 
Avenue, SW STOP 0237, Washington, DC 20250-0237; 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.''
    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 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 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's ruling on the 
petition, provided an action is filed not later than 20 days after the 
date of the entry of the ruling.
    This rule continues to allow handlers to pack more individual 
pieces of fruit per 8-pound sample for seven size designations, 
continues the elimination of one size designation, and the addition of 
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)(iii) 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

[[Page 11397]]

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)(4)(iv) of the 
order's administrative rules and regulations was revised by an interim 
final rule issued on September 3, 1998 (63 FR 46861). A final rule 
published on July 30, 2001, redesignated Sec. 920.302(a)(4)(iv) as 
(a)(4)(iii)(66 FR 39267).
    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 was 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. The continued 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)(4)(iii) 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 fruit per
             Size designation                      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 continues to allow 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 
designation 23, 20, or 45. This rule continues to reduce the percentage 
of fruit packed in the 40 series and continues to increase 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 new size designation 33. 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.

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 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 by 
the Small Business Administration 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 subject to regulation have annual 
sales less than $750,000. Therefore, a majority of the kiwifruit 
handlers and growers may be classified as small entities.
    This rule continues to allow handlers to pack more individual 
pieces of fruit per 8-pound sample for seven size designations, 
continues the elimination of one size designation, and the addition of 
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

[[Page 11398]]

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 fruit per
             Size designation                      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 continues to allow 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 as size 
designation 23, 20, or size designation 45. This rule continues to 
reduce the percentage of fruit packed in the 40 series and continues to 
increase 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. U.S. retailers prefer size 33 kiwifruit. 
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 new size designation 33. 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-
1993. 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 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 $2.0 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 believes 
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 continue to 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 sector agencies.
    In addition, as noted in the initial regulatory flexibility 
analysis, 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.
    An interim final rule concerning this action was published in the 
Federal Register on October 29, 2001 (66 FR 54411). Copies of the rule 
were mailed by the Committee staff to all Committee members and 
kiwifruit handlers. In addition, the rule was made available through 
the internet by the Office of the Federal Register and USDA. That rule 
provided a 60-day comment period which ended December 28, 2001. No 
comments were received. A correction concerning this action was 
published in the Federal Register on January 11, 2002. (67 FR 1413). 
The interim final rule, as published, contained an error in the 
amendatory instructions affecting 7 CFR part 920. The amendatory 
instructions incorrectly indicated that the revised table in 
Sec. 920.302 appears at the end of paragraph (a)(4)(iv). The revised 
table actually appears at the end of paragraph (a)(4)(iii) of that 
section and appropriate corrections were made to the interim final 
rule.
    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

[[Page 11399]]

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 
finalizing the interim final rule, which was published in the Federal 
Register (66 FR 54411, October 29, 2001) and corrected in the Federal 
Register (67 FR 1413, January 11, 2002) will tend to effectuate the 
declared policy of the Act.

List of Subjects in 7 CFR Part 920

    Kiwifruit, Marketing agreements, Reporting and recordkeeping 
requirements.

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 920 which 
was published at 66 FR 54411, October 29, 2001, and corrected at 67 FR 
1413 on January 11, 2002, is adopted as a final rule without change.

    Dated: March 11, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-6138 Filed 3-13-02; 8:45 am]
BILLING CODE 3410-02-P