[Federal Register Volume 67, Number 155 (Monday, August 12, 2002)]
[Rules and Regulations]
[Pages 52390-52393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20440]



[[Page 52390]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV02-989-6 IFR]


Raisins Produced From Grapes Grown In California; Decrease in 
Desirable Carryout Used to Compute Trade Demand

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule decreases 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 rule 
decreases the amount of tonnage available early in the season and is 
expected to help the industry reduce an oversupply of California 
raisins.

DATES: Effective August 13, 2002. Comments must be received by August 
22, 2002.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, Fruit 
and Vegetable Programs, AMS, USDA, 1400 Independence Avenue SW., STOP 
0237, Washington, DC 20250-0237; Fax: (202) 720-8938; 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.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing 
Specialist, California Marketing Field Office, 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, or 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, Washington, DC 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. 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.''
    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 or her principal place of 
business, has jurisdiction in equity 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 rule decreases 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 the prior crop year needed during the first part 
of the next crop year to meet market needs, before new crop raisins are 
available. This rule decreases the desirable carryout for Natural (sun-
dried) Seedless (NS) raisins from a rolling average of 3 to 2 months of 
prior year's shipments over the past 5 years, dropping the high and low 
figures, and dividing the remaining sum by three, or 60,000 natural 
condition tons, whichever is higher. This rule also decreases the 
desirable carryout for all other varietal types of raisins covered 
under the order from a rolling average of 3 to 2-1/2 months of prior 
year's shipments over the past 5 years, dropping the high and low 
figures, and dividing the remaining sum by three. These actions were 
recommended by the Committee at meetings held on June 27 and July 24, 
2002.
    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

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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 continued this 
practice and, in 2000, desirable carryout was changed to equal a 
rolling average of 3 months of prior year's shipments (August, 
September, and October) over the past 5 years, dropping the high and 
low figures.

June 27, 2002, Recommendation

    At a meeting on June 27, 2002, the Committee reviewed the desirable 
carryout level. Most Committee members believe that the supply of free 
tonnage raisins on the market has once again become excessive and is 
contributing to unstable market conditions. The following table 
illustrates how handler inventories for NS raisins have been building 
in recent years:

                  Carryout Inventory Over Past 5 Years
------------------------------------------------------------------------
                        Crop years                               \1\
--------------------------------------------------------------Inventory-
2001-02...................................................  \2\ 133,815
2000-01...................................................      116,131
1999-2000.................................................      101,946
1998-99...................................................       98,291
1997-98...................................................      92,769
------------------------------------------------------------------------
\1\ Carryout inventory (natural condition tons).
\2\ Estimated.

    To moderate the oversupply of marketable tonnage early in the crop 
year, the Committee recommended reducing the desirable carryout level 
for all varietal types of raisins from a rolling average of 3 months 
(August, September, and October) to 2\1/2\ months (August, September, 
and one-half of October) of prior year's shipments over the past 5 
years, dropping the high and low figures. Committee staff estimated 
that this change to the desirable carryout level would reduce the 2002 
trade demand for NS raisins by 15,000 tons. Decreasing the trade demand 
will reduce the free tonnage percentage, thus, making less free tonnage 
available to handlers for immediate use.
    The Committee's vote on this action was 41 in favor and 5 opposed. 
Two of the members voting no commented that the large carryout at the 
end of the current crop year was due mainly to an extra 32,000 tons of 
reserve raisins that were purchased by handlers in September 2001. They 
believe that the carryout problem will correct itself next season. 
Other members commented that this action would create a hardship on 
producers by reducing the free tonnage percentage, thereby reducing 
producer payments. After much deliberation, the majority of Committee 
members supported reducing the desirable carryout from a rolling 
average of 3 to 2\1/2\ months of shipments over the past 5 years, 
dropping the high and low figures.
    Most of the discussion at the Committee's meeting concerned the 
desirable carryout level for NS raisins. NS raisins 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 NS raisins for the past several seasons. However, the 
Committee also believes that the decrease in desirable carryout should 
apply to the other varietal types of raisins covered under the order.

July 24, 2002, Revised Recommendation for NS Raisins

    The raisin industry continued to explore other avenues to reduce 
the oversupply of California raisins, including implementing a 
``surplus pool and non-harvest'' program for the 2002 crop year. 
However, rulemaking would be required as appropriate.
    The Committee met on July 24, 2002, and revisited its oversupply 
situation and the desirable carryout issue. As a result, the Committee 
voted to further reduce the NS supply by decreasing the NS desirable 
carryout to a rolling average of 2 months (August and September) of 
prior year's shipments over the past 5 years, dropping the high and low 
figures, or 60,000 natural condition tons, whichever is higher. 
Committee staff estimated that this would reduce the 2002 trade demand 
for NS raisins by another 15,000 tons, or a total of 30,000 tons. The 
desirable carryout for all other varietal types would remain at the 
2\1/2\ month level recommended in June 2002.
    The Committee's vote on this action was 32 in favor, 10 opposed, 
and 2 abstentions. The members voting no were primarily concerned that 
this action would reduce the free tonnage percentage and producer 
payments.
    Although this action will tighten the supply of raisins available 
early in the season, handlers will still be provided an opportunity to 
increase their inventories, if necessary, by purchasing raisins from 
the reserve pool under order-mandated 10 plus 10 offers and other 
releases of reserve raisins available under the order. The 10 plus 10 
offers are two offers of reserve pool raisins, which are made available 
to handlers each season. For each such offer, a quantity of raisins 
equal to 10 percent of the prior year's shipments is made available for 
free use. Although this rule tends to tighten the supply of raisins 
early in the season, handlers will still have the opportunity to obtain 
additional raisins from the 10 plus 10 offers. Thus, paragraph (a) in 
Sec. 989.154 is modified accordingly.

Initial Regulatory Flexibility Act

    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 rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 20 handlers of California raisins who are 
subject to regulation under the order and approximately 4,500 raisin 
producers in the regulated area. Small agricultural service firms are 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000. Thirteen of the 20 handlers subject to regulation have annual 
sales estimated to be at least $5,000,000, and

[[Page 52392]]

the remaining 7 handlers have sales less than $5,000,000. No more than 
7 handlers, and a majority of producers, of California raisins may be 
classified as small entities.
    This rule reduces 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 the 
prior crop year needed during the first part of the next crop year to 
meet market needs, before new crop raisins are available. This rule 
reduces the desirable carryout specified in paragraph (a) of 
Sec. 989.154 for NS raisins from a rolling average of 3 months (August, 
September, and October) to 2 months (August and September) of prior 
year's shipments for the past 5 years, dropping the high and low 
figures, and dividing the remaining sum by three, or 60,000 natural 
condition tons, whichever is higher. This rule also reduces the 
desirable carryout for all other varietal types covered under the order 
from 3 months (August, September, and October) to 2\1/2\ months 
(August, September, and one-half of October) of prior year's shipments 
for the past 5 years, dropping the high and low figures, and dividing 
the remaining sum by three.
    The desirable carryout level applies uniformly to all handlers in 
the industry, whether small or large, and there are no known additional 
costs incurred by small handlers. As previously mentioned, reducing the 
desirable carryout will reduce the trade demand and free tonnage 
percentage, thus making less raisins available to handlers early in the 
season. This action is expected to help reduce the burdensome supply of 
California raisins, thereby improving market conditions. Handlers will 
be provided opportunities throughout the crop year to purchase raisins 
from the reserve pool to increase their inventories.
    The Committee considered a number of alternative levels of 
desirable carryout. The Committee has an appointed subcommittee, which 
periodically holds public meetings to discuss changes to the order and 
other issues. The subcommittee met on June 26, 2002, and discussed 
desirable carryout. Some industry members supported maintaining the 
status quo. Others supported an incremental reduction to the desirable 
carryout, reducing the level to a rolling average of 2\3/4\ months in 
2002, and to a rolling average of 2\1/2\ months in 2003. The 
subcommittee ultimately recommended to the full Committee in June that 
the desirable carryout be reduced for all varietal types to a rolling 
average of 2\1/2\ months of prior year's shipments for the past 5 
years, dropping the high and low figures, and dividing the remaining 
sum by three. The full Committee adopted the subcommittee's June 
recommendation.
    As mentioned earlier, the raisin industry continued to explore 
other avenues to reduce the oversupply of California raisins, including 
implementing a ``surplus pool and non-harvest'' program for the 2002 
crop year. However, rulemaking would be required as appropriate.
    The Committee revisited the desirable carryout issue on July 24, 
2002. At that meeting, the Committee reviewed an alternative proposal 
that would revise the trade demand formula by eliminating the 
adjustment for carryin and carryout inventory. The Committee also 
reviewed the merits of reducing the desirable carryout for NS raisins 
to a rolling average of 2 months of prior year's shipments over the 
past 5 years, dropping the high and low figures, and dividing the 
remaining sum by three, or 60,000 natural condition tons, whichever is 
higher. After much discussion, the majority of Committee members 
supported further reducing the desirable carryout for NS raisins to 
this level. Committee staff estimated that this would reduce the 2002 
trade demand for NS raisins by another 15,000 tons, or a total of 
30,000 tons. The desirable carryout for all other varietal types would 
remain at the 2\1/2\ month level recommended in June 2002.
    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 information requirements and duplication by industry 
and public sector agencies. Finally, USDA has not identified any 
relevant Federal rules that duplicate, overlap or conflict with this 
rule.
    In addition, the Committee's subcommittee meeting on June 26, 2002, 
and the Committee's meetings on June 27 and July 24, 2002, 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. 
Finally, all 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 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.
    This rule invites comments on reducing the desirable carryout level 
specified under the order's regulations. Any comments received will be 
considered prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee 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 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 needs to be in effect as soon as 
possible because the order specifies that the Committee must meet and 
compute trade demand on or before August 15 each year; (2) this action 
was recommended by more than two-thirds of the Committee members; (3) 
producers and handlers are aware of this action which was recommended 
by the Committee at a public meeting; and (4) this interim final rule 
provides a comment period for written comments and all comments timely 
received will be considered prior to finalization of this rule. 
Further, in view of the above, a ten-day comment period is deemed 
appropriate.

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.


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    2. In Sec. 989.154, paragraph (a) is revised to read as follows:


989.154  Marketing policy computations.

    (a) Desirable carryout levels. The desirable carryout level to be 
used in computing and announcing a crop year's marketing policy for 
Natural (sun-dried) Seedless raisins shall be equal to the total 
shipments of free tonnage during August and September for each of the 
past 5 crop years, converted to a natural condition basis, dropping the 
high and low figures, and dividing the remaining sum by three, or 
60,000 natural condition tons, whichever is higher. The desirable 
carryout level to be used in computing and announcing a crop year's 
marketing policy for all other varietal types of raisins specified in 
Sec. 989.110 shall be equal to the total shipments of free tonnage 
during August, September, and one-half of October for each of the past 
5 crop years, for each such varietal type, converted to a natural 
condition basis, dropping the high and low figures, and dividing the 
remaining sum by three.
* * * * *

    Dated: August 8, 2002.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-20440 Filed 8-8-02; 12:46 pm]
BILLING CODE 3410-02-P