[Federal Register Volume 67, Number 91 (Friday, May 10, 2002)]
[Rules and Regulations]
[Pages 31717-31722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11675]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 993

[Docket No. FV02-993-1 FR]


Dried Prunes Produced in California; Undersized Regulation for 
the 2002-03 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule changes the undersized regulation for dried prunes 
received by handlers from producers and dehydrators under Marketing 
Order No. 993 for the 2002-03 crop year. The marketing order regulates 
the handling of dried prunes produced in California and is administered 
locally by the Prune Marketing Committee (Committee). This rule removes 
the smallest, least desirable of the marketable size dried prunes 
produced in California from human consumption outlets and allows 
handlers to dispose of the undersized prunes in such outlets as 
livestock feed. The Committee estimated that this rule will reduce the 
excess of dried prunes by approximately 3,800 tons while leaving 
sufficient prunes to fill foreign and domestic trade demand.

EFFECTIVE DATE: August 1, 2002. This final rule applies to undersized 
dried prunes received by handlers during the 2002-03 crop year until 
the prunes are disposed of as required under the marketing order.

FOR FURTHER INFORMATION CONTACT: Richard P. Van Diest, 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) 720-8938.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW STOP 0237, 20250-0237; telephone: (202) 720-2491, Fax: (202) 
720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 993, both as amended (7 CFR part 993), 
regulating the handling of dried prunes produced in California, 
hereinafter referred to as the ``order.'' The marketing agreement and 
order are 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 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 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

[[Page 31718]]

or her principal place of business, has jurisdiction to review 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 final rule changes the undersized regulation in Sec. 993.49(c) 
of the prune marketing order for the 2002-03 crop year for volume 
control purposes. The regulation removes prunes passing through 
specified screen openings. For French prunes, the screen opening will 
be increased from \23/32\ to \24/32\ of an inch in diameter; and for 
non-French prunes, the opening will be increased from \28/32\ to \30/
32\ of an inch in diameter. This rule removes the smallest, least 
desirable of the marketable size dried prunes produced in California 
from human consumption outlets. This rule will be in effect from August 
1, 2002, through July 31, 2003, and was unanimously recommended by the 
Committee at a November 29, 2001, meeting.

Authority for Undersized Regulations as a Volume Control

    Section 993.19b of the prune marketing order defines undersized 
prunes as prunes, which pass freely through a round opening of a 
specified diameter.
    Section 993.49(c) of the prune marketing order establishes an 
undersized regulation of \23/32\ of an inch for French prunes and \28/
32\ of an inch for non-French prunes. These diameter openings have been 
in effect for quality control purposes. Section 993.49(c) also provides 
that the USDA upon a recommendation of the Committee may establish 
larger openings for undersized dried prunes whenever it is determined 
that supply conditions for a crop year warrant such regulation.
    Section 993.50(g) states in part: ``No handler shall ship or 
otherwise dispose of, for human consumption, the quantity of prunes 
determined by the inspection service pursuant to Sec. 993.49(c) to be 
undersized prunes.'' * * * Pursuant to Sec. 993.52 minimum standards, 
pack specifications, including the openings prescribed in 
Sec. 993.49(c), may be modified by the USDA on the basis of a 
recommendation of the Committee or other information.
    Pursuant to the authority in Sec. 993.52 of the order, Sec. 993.400 
modifies the undersized prune openings prescribed in Sec. 993.49(c) to 
permit undersized regulations using openings of \23/32\ or \24/32\ of 
an inch for French prunes and \28/32\ or \30/32\ of an inch for non-
French prunes.

History of Undersized Regulations Used as a Volume Control

    During the 1974-75 and 1977-78 crop years, USDA established the 
undersized prune regulation at \23/32\ of an inch in diameter for 
French prunes and \28/32\ of an inch in diameter for non-French prunes. 
These diameter openings were established in Secs. 993.401 and 993.404, 
respectively (39 FR 32733, September 11, 1974; and 42 FR 49802, 
September 28, 1977). In addition, the Committee recommended and USDA 
established volume regulation percentages during the 1974-75 crop year 
with an undersized regulation at the aforementioned \23/32\ and \28/32\ 
inch diameter screen sizes. During the 1975-76 and 1976-77 crop years, 
the undersized prune regulation was established at \24/32\ of an inch 
for French prunes and \30/32\ of an inch for non-French prunes. These 
diameter openings were established in Secs. 993.402 and 993.403 
respectively (40 FR 42530, September 15 1975; and 41 FR 37306, 
September 3, 1976). The prune industry had an excess supply of prunes--
particularly small-sized prunes. Rather than recommending volume 
regulation percentages for the 1975-76, 1976-77, and 1977-78 crop 
years, the Committee recommended the establishment of an undersized 
prune regulation applicable to all prunes received by handlers from 
producers and dehydrators during each of those crop years.
    The objective of the undersized prune regulations during each of 
those crop years was to preclude the use of small prunes in 
manufactured prune products such as juice and concentrate. Handlers 
could not market undersized prunes for human consumption, but could 
dispose of them in nonhuman outlets such as livestock feed.
    With these experiences as a basis, the marketing order was amended 
on August 1, 1982, establishing the continuing quality-related 
regulation for undersized French and non-French prunes under 
Sec. 993.49(c). That regulation has removed from the marketable supply 
those prunes which are not desirable for use in prune products.
    As in the 1970's, the prune industry is currently experiencing an 
excess supply of prunes. During the 1998-99 crop year, an undersized 
prune regulation was established at \24/32\ of an inch for French 
prunes, and \30/32\ of an inch for non-French prunes. These diameter 
openings were established in Sec. 993.405 (63 FR 20058, April 23, 
1998). With larger than desired carryin inventories and a 1999-2000 
prune crop of about 172,000 natural condition tons, the Committee 
unanimously recommended continuing with an undersized prune regulation 
at \24/32\ of an inch in diameter for French prunes and \30/32\ of an 
inch in diameter for non-French prunes. These diameter openings were 
established in Sec. 993.406 (64 FR 23759, May 4, 1999) and made 
effective from August 1, 1999, through July 31, 2000, or until the 
undersized prunes from that crop were disposed of as required. Because 
carryin inventories were larger than desired and the 2000-01 prune crop 
was expected to be about 203,000 natural condition tons, the Committee 
unanimously recommended continuing with an undersized prune regulation 
at \24/32\ of an inch in diameter for French prunes and \30/32\ of an 
inch in diameter for non-French prunes. These diameter openings were 
established in Sec. 993.407 (65 FR 29945, May 10, 2000) and made 
effective from August 1, 2000, through July 31, 2001, or until the 
undersized prunes were properly disposed of as required. Because 
supplies were expected to remain excessive in 2001-02, the Committee 
again unanimously recommended continuing with an undersized prune 
regulation at \24/32\ of an inch in diameter for French prunes and \30/
32\ of an inch in diameter for non-French prunes. These diameter 
openings were established in Sec. 993.408 (66 FR 30642, June 7, 2001) 
and made effective from August 1, 2001, through July 31, 2002, or until 
the undersize prunes are disposed of under the marketing order.
    For the 1998-99 crop year, the carryin inventory level reached a 
record high of 126,485 natural conditions tons. Excessive inventories 
tend to dampen producer returns, and cause weak marketing conditions. 
The carryin for the 1999-2000 crop year was reduced to 59,944 natural 
condition tons. This reduction was due to the low level of salable 
production in 1998-99 (about 102,521 natural condition tons and 50 
percent of a normal size crop) and the undersized prune regulation. The 
carryin for the 2000-01 crop increased to 65,131 natural condition 
tons. This increase was due to a larger crop size of about 178,000 
natural condition tons and reduced shipments during the 1999-2000 crop 
year. The carryin for the 2001-02 crop increased to 100,829 natural 
condition tons. This increase was due to a larger crop size of about 
219,000 natural condition tons and a modest increase in shipments from 
a severely reduced shipment base during the 2001-02 crop year. 
According to the Committee, the desired inventory level to keep trade 
distribution channels full

[[Page 31719]]

while awaiting the new crop has ranged between 35,353 and 42,071 
natural condition tons since the 1996-97 crop year, while the actual 
inventory has ranged between 59,944 and 126,485 natural condition tons 
since that year. The desired inventory level for early season shipments 
fluctuates from year-to-year depending on market conditions.
    At its meeting on November 29, 2001, the Committee unanimously 
recommended continuing an undersized prune regulation at \24/32\ of an 
inch in diameter for French prunes and \30/32\ of an inch in diameter 
for non-French prunes during the 2002-03 crop year for supply 
management purposes. This regulation will be in effect from August 1, 
2002, through July 31, 2003, or until the undersized prunes from 2002-
03 are properly disposed of as required under the marketing order.
    The Committee estimated that there will be an excess of about 
15,422 natural condition tons of dried prunes as of July 31, 2002. This 
rule will continue to remove primarily small-sized prunes from human 
consumption channels, consistent with the undersized prune regulations 
that were implemented for the 1998-99, 1999-2000, 2000-01, and 2001-02 
crop years. It is estimated that approximately 3,800 natural condition 
tons of small prunes will be removed from human consumption channels 
during the 2002-03 crop year as a result of this rule. This will leave 
sufficient prunes to fill domestic and foreign trade demand during the 
2002-03 crop year, and provide an adequate carryout on July 31, 2003, 
for early season shipments until the new crop is available for 
shipment. According to the Committee, the desired inventory level to 
keep trade distribution channels full while awaiting the 2002-03 crop 
is about 41,000 natural condition tons.
    In its deliberations, the Committee reviewed statistics reflecting: 
(1) A worldwide prune demand which has been relatively stable at about 
260,000 tons; (2) a worldwide oversupply that is expected to continue 
growing for several more years (estimated at 317,628 natural condition 
tons by the year 2006); (3) a continuing oversupply situation in 
California caused by increased production from increased plantings and 
higher yields per acre (between the 1990-91 and 2000-01 crop years, the 
yields ranged from 1.2 to 2.6 versus a 10-year average of 2.1 tons per 
acre); (4) California's continued excess inventory situation; and (5) 
extremely low producer prices. The production of these small sizes 
ranged from 1,335 to 8,778 natural condition tons during the 1990-91 
through the 1999-2000 crop years. The Committee concluded that it has 
to continue utilizing all available supply management techniques to 
accelerate the return to a balanced supply/demand situation in the 
interest of the California dried prune industry. To facilitate this 
management, the Committee has also supported other efforts to reduce 
burdensome supplies, including an industry-funded tree removal program 
that was initiated in the fall of 2001. Through this program, about 
3,500 bearing acres of prune plum trees were removed. The Committee 
also recommended removal of prune plum trees through a USDA funded 
program, wherein growers would be encouraged to remove up to 20,000 
bearing acres of prune plum trees. The final rule was published in the 
March 14, 2002, Federal Register (67 FR 11384). The changes to the 
undersized regulation for the 2002-03 crop year and the expected 
removal of prune plum trees are intended to bring supplies in line with 
market needs.
    Despite these supply management efforts, the industry's oversupply 
situation may continue over the next few years due to new prune 
plantings in recent years with higher yields per acre. These plantings 
have a higher tree density per acre than the older prune plantings. 
During the 1990-91 crop year, the non-bearing acreage totaled 5,900 
acres; but by 1998-99, the non-bearing acreage had quadrupled to more 
than 26,000 acres. The non-bearing acreage has subsequently been 
reduced to 15,000 acres during the 2000-01 crop year. The 1996-97 
through 2000-01 yields have ranged from 1.2 to 2.6 tons per acre. Over 
the last 10-years, the average was 2.1 tons per acre.
    The 2001-02 dried prune crop is expected to be 141,000 natural 
condition tons. Another large crop as high as 200,000 natural condition 
tons is expected for the 2002-03 crop year, partly because of an 
anticipated increase in new bearing acreage coming into production and 
high yields.
    The 1997-98 crop year producer prices for the 24/size French prunes 
have been about $40-$50 per ton, about $260-$270 per ton below the cost 
of production. During the 2001-02 crop year, feedlot prices are 
expected to be about $20 to $40 per ton for the \24/32\ size French 
prunes, which is about $270-290 per ton below the cost of production. 
The lower producer prices are expected to continue until the prune 
supply and demand come more closely into alignment.
    The intent of this final rule is to eliminate small sizes that have 
limited economic value, help reduce excess prune inventories, and to 
improve producer returns. Average producer returns currently are below 
the cost of production and the final rule is expected to assist in 
enhancing returns.
    The 1998-99, 1999-2000, 2000-01, and 2001-02 undersized prune rules 
of \24/32\ of an inch for French prunes and \30/32\ of an inch for non-
French prunes have expedited the reduction of small prune inventories, 
but more needs to be done to bring supplies into balance with market 
demand. The excess inventory on July 31, 2001, was 100,829 natural 
condition tons, and only about 3,800 natural condition tons of dried 
prunes are expected to be removed from the 2001-02 marketable supply by 
the current undersized regulation. The Committee believes that the same 
undersized regulation also should be implemented during the 2002-03 
crop year to continue reducing the inventories of small prunes, to help 
reduce the expected large 2002-03 prune crop, and more quickly bring 
supplies in line with demand. Attainment of this goal will benefit all 
of the producers and handlers of California prunes.
    The recommended decision of June 1, 1981 (46 FR 29271) regarding 
undersized prunes states that the undersized prune regulation at the 
\23/32\ and \28/32\ inch diameter size openings will be continuous for 
the purposes of quality control even in above parity situations. 
Congress intended marketing orders to foster income equity for 
agricultural producers with non-agricultural producers, and used parity 
as a means of comparison. Parity compares agricultural producer prices 
against those for non-agricultural producers during the early 1900's, 
when incomes for agricultural and non-agricultural producers were 
generally thought to be fair. It further states that any change (i.e. 
increase) in the size of those openings will not be for the purpose of 
establishing a new quality-related minimum. Larger openings would only 
be applicable when supply conditions warranted the regulation of a 
larger quantity of prunes as undersized prunes. Thus, any regulation 
prescribing openings larger than those in Sec. 993.49(c) should not be 
implemented when the grower average price is expected to be above 
parity. The season average price received by prune growers ranged from 
39 percent to 62 percent of parity during the 1994 through 1999 
seasons. As discussed later, the average grower price for prunes during 
the 2002-03 crop year is not expected to be above parity, and 
implementation of this more restrictive undersized regulation will be 
appropriate in reference to parity.
    Section 8e of the Act requires that when certain domestically 
produced

[[Page 31720]]

commodities, including prunes, are regulated under a Federal marketing 
order, imports of that commodity must meet the same or comparable 
grade, size, quality, or maturity requirements for the domestically 
produced commodity. This action does not impact the dried prune import 
regulation because this action is for inventory management, not quality 
control. The smaller diameter openings of \23/32\ of an inch for French 
prunes and \28/32\ of an inch for non-French prunes were implemented to 
improve product quality. The increases to \24/32\ of an inch in 
diameter for French prunes and \30/32\ of an inch in diameter for non-
French prunes are for purposes of inventory management. Therefore, the 
increased diameters will not be applied to imported prunes.

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 rule 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 1,205 producers of dried prunes in the 
production area and approximately 24 handlers subject to regulation 
under the marketing order. Small agricultural producers have been 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts of less than $750,000, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000.
    An updated industry profile shows that 9 out of 24 handlers (37.5 
percent) shipped over $5,000,000 worth of dried prunes and could be 
considered large handlers by the Small Business Administration. Fifteen 
of the 24 handlers (62.5 percent) shipped under $5,000,000 worth of 
prunes and could be considered small handlers. An estimated 32 
producers, or less than 3 percent of the 1,205 total producers, could 
be considered large growers with annual incomes over $750,000. The 
majority of handlers and producers of California dried prunes may be 
classified as small entities.
    As recommended by the Committee, this final rule will establish an 
undersized prune regulation of \24/32\ of an inch in diameter for 
French prunes and \30/32\ of an inch in diameter for non-French prunes 
for the 2002-03 crop year for inventory management. This change in 
regulation will result in more of the smaller sized prunes being 
classified as undersized prunes and is expected to benefit producers, 
handlers, and consumers. The larger screen openings currently in place 
for 2001-02 are the same as those for 2002-03 and are expected to 
remove only 3,806 tons of dried prunes from the excess marketable 
supply. Implementation of the larger openings in 2002-03 is expected to 
remove approximately 3,800 tons from the marketable production.
    The Committee estimates carryout inventories at July 31, 2002, to 
be 56,195 tons. This is 15,422 tons greater than desirable carryout 
inventories. This amount of inventory reflects a serious supply-demand 
imbalance in the industry. In addition, grower prices are reported at 
an average of $763 per ton for the 2001-02 crop year. This compares to 
$845 per ton for the 2000-01 season, or a decrease of 9.7 percent. The 
$763 average grower price is substantially below the total cost of 
production of $1,724 per ton and the total variable cost of production 
of $985 estimated for 2001-2002, meaning that most producers may not be 
earning sufficient returns to cover fixed costs. Some producers will 
continue to operate in the short run as long as prices are above 
variable costs, but others will begin to cease production in the longer 
run if prices do not recover to levels above the total cost of 
production.
    A tree removal program funded by the industry and a USDA-funded 
program are in various stages of implementation. If these programs are 
successful in removing 20,000 bearing acres from production, marketable 
production will be reduced. Even with these tree removal programs, 
total available supply is estimated at 242,195 tons for the 2002-03 
crop year (marketable production estimated at 186,000 tons and 56,195 
tons of carryin inventories). Total demand is estimated at 167,591 
tons, resulting in carryout inventories of 74,604 tons. With this large 
estimated crop size, inventories will increase and remain in excess of 
desirable inventories of 40,000 tons.
    Inventories of this magnitude have a significant depressing impact 
on grower payments. Growers do not receive payments until inventories 
are completely sold. The costs of maintaining these inventories are 
deducted from grower payments.
    An undersized prune regulation for 2002-03 will result in an 
additional 3,800 tons being removed from the total available supply. An 
econometric model shows that an undersized prune regulation resulting 
in eliminating 3,800 tons from marketable production will strengthen 
growers' prices modestly by $11 per ton. This price is still expected 
to be less than the cost of production for 2002-2003 estimated at 
$1,032 per ton.
    Because the benefits and costs of the action will be directly 
proportional to the quantity of \24/32\ screen French prunes and \30/
32\ screen non-French prunes produced or handled, small businesses 
should not be disproportionately affected by the action. While 
variation in sugar content, prune density, and dry-away ratio vary from 
county to county, they also vary from orchard to orchard and season to 
season. In the major producing areas of the Sacramento and San Joaquin 
Valleys (which account for over 99 percent of the State's production), 
the prunes produced are homogeneous enough that this action will not be 
viewed as inequitable by large and small producers in any area of the 
State.
    The quantity of small prunes in a lot is not dependent on whether a 
producer or handler is small or large, but is primarily dependent on 
cultural practices, soil composition, and water costs. The cost to 
minimize the quantity of small prunes is similar for small and large 
entities. The anticipated benefits of this rule are not expected to be 
disproportionately greater or smaller for small handlers or producers 
than for large entities. The only additional costs on producers and 
handlers expected from the increased openings will be the disposal of 
additional tonnage (now estimated to be about 3,800 tons) to nonhuman 
consumption outlets. These costs are expected to be minimal and will be 
offset by the benefits derived by the elimination of some of the excess 
supply of small-sized prunes.
    At the November 29, 2001, meeting, the Committee discussed the 
financial impact of this change on handlers and producers. Handlers and 
producers receive higher returns for the larger size prunes. Prunes 
eliminated through the implementation of this rule have very little 
value. As mentioned earlier, the current situation for producers is 
quite bleak with producers losing about $270-$290 on every ton of 
small-sized prunes delivered to handlers. During the 2002-03 crop year, 
the feedlot prices for \24/32\ screen French prunes are expected to be 
about $20 to $40 per ton. This price is similar to the $20-$40 price 
received

[[Page 31721]]

during the 2001-02 crop year. The cost of drying a ton of such prunes 
is $260 per ton at a 4 to 1 dry-away ratio, transportation is at least 
$20 per ton, and the producer assessment paid to the California Prune 
Board (a body which administers the State marketing order for 
promotion) is $30 per ton for a total cost of about $310 per ton. This 
equates to a loss of about $270-$290 per ton for every ton of \24/32\ 
screen French prunes produced and delivered to handlers.
    Utilizing data provided by the Committee, USDA has evaluated the 
impact of the proposed undersized regulation change upon producers and 
handlers in the industry. The analysis shows that a reduction in the 
marketable production and handler inventories could result in higher 
season-average prices, which would benefit all producers. The removal 
of the smallest, least desirable of the marketable dried prunes 
produced in California from human consumption outlets would eliminate 
an estimated 3,800 tons of small-sized dried prunes during the 2002-03 
crop year from the marketplace. This would help lessen the negative 
marketing and pricing effects resulting from the excess inventory 
situation facing the industry. California prune handlers reported that 
they held 100,829 tons of natural condition prunes on July 31, 2001, 
the end of the 2000-01 crop year. The 100,829 ton year-end inventory is 
larger than what is desired for early season shipments by the prune 
industry. The desired inventory level is based on an average 12-week 
supply to keep trade distribution channels full while awaiting new 
crop. Currently, it is about 41,000 natural condition tons. This leaves 
a 2001-02 inventory surplus of about 60,000 tons. The undersized 
regulation will help reduce the surplus, but the anticipated large 
2002-03 prune crop is expected to continue the supply imbalance.
    As the marketable dried prune production and surplus prune 
inventories are reduced through this rule, and producers continue to 
implement improved cultural and thinning practices to produce larger-
sized prunes, continued improvement in producer returns is expected.
    For the 1991-92 through the 1999-2000 crop years, the season 
average price received by the producers ranged from a high of $1,140 
per ton to a low of $764 per ton during the 1998-99 crop year. The 
season average price received by producers during that 9-year period 
ranged from 39 percent to 68 percent of parity. Based on available data 
and estimates of prices, production, and other economic factors, the 
season average producer price for 2001-02 season is expected to be 
about the same as the 2000-01 season average producer price of $809 per 
ton, or about 36 percent of parity.
    The Committee discussed alternatives to this change, including 
making no changes to the undersized prune regulation and allowing 
market dynamics to foster prune inventory adjustments through lower 
prices on the smaller prunes. While reduced grower prices for small 
prunes are expected to contribute toward a slow reduction in dried 
prune inventories, the Committee believed that the undersized rule 
change is needed to expedite that reduction. The Committee also 
considered the potential impact of tree removals through the industry 
funded program which removed about 3,500 acres, and the tree removal 
program funded through USDA (California Prune/Plum Diversion Program), 
but concluded that these efforts alone were not likely to reduce the 
oversupply of small dried prunes sufficiently. With the excess tonnage 
of dried prunes, the Committee also considered establishing a reserve 
pool and diversion program to reduce the oversupply situation during 
the 2001-02 crop year. This alternative was not widely supported for a 
number of reasons. Reserve pools for prunes have historically been 
implemented ``across the board'' as far as sizes are concerned. While 
there is an exchange provision that allows handlers to remove larger 
prunes from the pool by replacing them with smaller prunes and the 
value difference in cash, this would be a cumbersome, expensive-to-
administer alternative to implementing this undersized regulation. A 
third alternative discussed was to advance to a \25/32\ screen 
undersized regulation for French prunes. However, handlers expressed 
concern that this will reduce the amount of manufacturing prunes 
(approximately 6,000 tons) available for the manufacture of prune juice 
and concentrate. This will increase the prices of these products.
    Section 8e of the Act requires that when certain domestically 
produced commodities, including prunes, are regulated under a Federal 
marketing order, imports of that commodity must meet the same or 
comparable grade, size, quality, or maturity requirements for the 
domestically produced commodity. This action does not impact the dried 
prune import regulation because the action to be implemented is for 
inventory management, not quality control purposes. The smaller 
diameter openings of \23/32\ of an inch for French prunes and \28/32\ 
of an inch for non-French prunes were implemented for the purpose of 
improving product quality. The increases to \24/32\ of an inch in 
diameter for French prunes and \30/32\ of an inch in diameter for non-
French prunes are for purposes of inventory management. Therefore, the 
increased diameters will not be applied to imported prunes.
    This action will not impose any additional reporting or 
recordkeeping requirements on either small or large California dried 
prune 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.
    The Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this rule.
    In addition, the Committee's meeting was widely publicized 
throughout the prune industry and all interested persons were invited 
to attend the meeting and participate in Committee deliberations on all 
issues. Like all Committee meetings, the November 29, 2001, meeting was 
a public meeting and all entities, both large and small, were able to 
express views on this issue. The Committee itself is composed of 
twenty-two members. Seven are handlers, fourteen are producers, and one 
is a public member. Moreover, the Committee and its Supply Management 
Subcommittee have been monitoring the supply situation, and this rule 
reflects their deliberations completely.
    A proposed rule concerning this action was published in the Federal 
Register on Friday, March 15, 2002, (67 FR 11625). Copies of this rule 
were mailed or sent via facsimile to all Committee members, alternates 
and dried prune handlers. Finally, the Office of the Federal Register 
and USDA made the rule available through the Internet. The rule 
provided a comment period that ended April 15, 2002. No comments were 
received. Accordingly, no changes will be made to the rule as proposed.
    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 matter presented, including the 
information and recommendation by the Committee and other available 
information, it is hereby found that this rule, as hereinafter set 
forth, will tend

[[Page 31722]]

to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 993

    Marketing agreements, Plums, Prunes, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 993 is 
amended as follows:

PART 993--DRIED PRUNES PRODUCED IN CALIFORNIA

    1. The authority citation for 7 CFR part 993 continues to read as 
follows:

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


    2. A new Sec. 993.409 is added to read as follows:


Sec. 993.409  Undersized prune regulation for the 2002-03 crop year.

    Pursuant to Secs. 993.49(c) and 993.52, an undersized prune 
regulation for the 2002-03 crop year is hereby established. Undersized 
prunes are prunes which pass through openings as follows: for French 
prunes, \24/32\ of an inch in diameter; for non-French prunes, \30/32\ 
of an inch in diameter.

    Dated: May 3, 2002.
Barry L. Carpenter,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 02-11675 Filed 5-9-02; 8:45 am]
BILLING CODE 3410-02-P