[Federal Register Volume 67, Number 232 (Tuesday, December 3, 2002)]
[Rules and Regulations]
[Pages 71803-71808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30583]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV02-989-6 FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final 
rule, without change, an interim final rule that decreased the 
desirable carryout used to compute the yearly trade demand for raisins 
covered under the Federal marketing order for California raisins 
(order). The order regulates the handling of raisins produced from 
grapes grown in California and is administered locally by the Raisin 
Administrative Committee (Committee). This action continues to decrease 
the amount of tonnage available early in the season and is expected to 
help the industry reduce an oversupply of California raisins.

EFFECTIVE DATE: January 2, 2003.

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 continues to decrease 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

[[Page 71804]]

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 action continues to 
decrease 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 action also continues to decrease 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 
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
------------------------------------------------------------------------
                                                    Carryout inventory
                   Crop years                       (Natural condition
                                                          tons)
------------------------------------------------------------------------
2001-02........................................      133,815 (estimated)
2000-01........................................                  116,131
1999-2000......................................                  101,946
1998-99........................................                   98,291
1997-98........................................                   92,769
------------------------------------------------------------------------

    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

[[Page 71805]]

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 tightens 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.

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 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 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 continues to reduce 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 continues to reduce 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 continues to reduce 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

[[Page 71806]]

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 were invited to submit information on 
the regulatory and informational impacts of this action on small 
businesses.
    Comments were received addressing the interim final rule including 
its initial regulatory flexibility analysis. These comments are 
addressed in the following discussion of comments received.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following Web site: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    An interim final rule concerning this action was published in the 
Federal Register on August 12, 2002 (67 FR 52390). Copies of the rule 
were mailed by Committee staff to all Committee members and alternates, 
the Raisin Bargaining Association, handlers and dehydrators. In 
addition, the rule was made available through the Internet by the 
Office of the Federal Register and USDA. That rule provided for a 10-
day comment period that ended on August 22, 2002. Two comments were 
received. One favored the action. The other opposed the action.
    The comment in favor stated that reducing the amount of NS raisins 
available to processors in terms of trade demand will not short the 
availability of raisins to the handler community because reserve 
raisins for free use can be made available to handlers under the 
marketing order. According to this commenter, producers need handlers 
to purchase their raisins and handlers need a marketing environment to 
sell those raisins in the most productive and efficient manner 
possible, and the reduction in desirable carryover appears to address 
both these needs.
    The commenter opposed to the action stated that the reduction in 
desirable carryout is designed solely to protect the existing unsold 
inventory of weaker handlers. This action, however, is intended to 
decrease the amount of tonnage available early in the season and to 
help the industry reduce an oversupply of California raisins.
    The commenter alleges that the decrease in desirable carryout, and 
eventually trade demand, first to 2.5 months and then to 2 months for 
NS raisins is entirely arbitrary and capricious. The commenter states 
that neither the Committee nor USDA have supplied price, revenue, or 
grower income responses to the formula change. Previous adjustments in 
desirable carryover were similarly lacking such analysis, according to 
the commenter.
    The commenter states that the admitted effect of reducing carryout 
is to reduce trade demand by 30,000 tons, and, therefore, the total 
amount of free tonnage. The commenter contends that this would have a 
disproportionate impact on both growers and handlers based upon their 
relative sizes. According to the commenter, since one of the main 
effects of the proposal is price protection for existing inventory, 
those handlers with greater unsold inventories will experience more net 
gain compared to those handlers who hold less remaining inventory, thus 
creating a wealth transfer (from both growers and more efficient 
handlers) to those handlers less capable of effective marketing. The 
commenter further contends that the regulatory flexibility analysis is 
inadequate and defective and fails to take account of the net adverse 
effect on all growers and handlers of the lost revenue from reducing 
trade demand by 30,000 tons, and its addition to the unprofitable 
reserve.
    The commenter further contends that the Committee and USDA have 
increasingly mismanaged the volume control program under the marketing 
order to produce a dynamically unstable condition of simultaneous 
oversupply and under-marketing. The commenter also contends that the 
volume control and various disposition programs for reserve raisins 
implemented under the order have prevented a normal and orderly supply 
response to changes in domestic and world demand and have contributed 
to unreasonable fluctuations in supplies and prices contrary to the 
Act.
    The commenter states that the volume control program is careening 
out of control in terms of regulatory complexity, misallocation of 
resources, and distortions of supply, demand, and price signals. The 
Committee is losing consensus, has no strategic plan for the long-run 
future of the industry, and volume control should be stopped 
immediately. Only then, the commenter states, will supply, demand, and 
price balance be restored to long-term equilibrium. According to the 
commenter, wasting half the crop is simply absurd, and the raisin order 
was never intended as a prorate program or as an excuse to accumulate 
increasingly large price depressing surpluses. The commenter states 
that domestic price and supply manipulation is unwise, if not 
impossible, in an increasingly competitive world market.
    The intent of volume control under the marketing order is to help 
stabilize raisin supplies and prices, strengthen market conditions, and 
improve producer returns. The marketing order has been quite successful 
in achieving these goals over the years. From the mid-1980's to the 
late 1990's producer prices were strong, demand in export was growing, 
and demand domestically was holding steady, due in part to the volume 
control programs implemented under the marketing order.
    It is true that the industry has been experiencing an oversupply of 
raisins and weak marketing conditions since 1999. However, an immediate 
stop to volume regulation could result in an even worse situation and 
more than one-half of the expected 2002-03 crop probably would have to 
be disposed of in low return outlets.
    The raisin industry has more raisins than it can sell, is faced 
with low prices, and weak domestic and export demand. It needs some 
means to help improve the situation. Most of the raisins produced are 
made from the Thompson Seedless grape, and the predominant raisin 
varietal is Natural (sun-dried) Seedless, comprising about 90 percent 
of the California crop. In previous seasons, producers earned as much 
as $1,425 a ton on raisins. Last season, the price dropped to about 
$880 per ton. This year's price has yet to be set, but is expected to 
be about the same or lower. Producers are having difficulty covering 
their production costs at such prices. Further, possible foreclosures 
on grower loans could add to the existing difficult situation.
    Handlers are carrying in an aggregate of about 150,000 tons of 2001 
NS crop inventory (about 45,000 tons higher than usual). With the large 
carryin, additional NS raisins available through a raisin-back export 
program (about 18,000 tons) and the 2002 diversion program (about 
51,000 tons), and a 2002-03 bumper NS crop of about 400,000 tons, the 
available supply of NS raisins could exceed 600,000 tons. The industry 
ships about 310,000 tons of raisins annually. Thus, with no volume 
regulation the industry could have an excess of over 300,000 tons of 
raisins. This has made it difficult for handlers

[[Page 71807]]

and producers to agree on a field price, and handlers are continuing to 
have difficulty selling their raisins at competitive prices. Without a 
mechanism in place to withhold the excess from the market, much of the 
crop might be wasted, and weak marketing conditions would continue for 
both producers and handlers. This would be disastrous for both 
producers and handlers. On October 8, 2002, preliminary volume 
regulation percentages were computed and announced for 2002-03 by the 
Committee. For NS, Oleate Seedless, Zante Currant, and Other Seedless 
raisins, a percentage of the crop will be held in reserve, which is 
expected to help balance supply with demand, and help alleviate the 
economic pressures caused by oversupply, low prices, and weak demand.
    USDA disagrees with the commenter's views concerning this 
rulemaking and the operation of the marketing order program. This 
action is intended to help the raisin industry alleviate the oversupply 
problem it is facing and as the commenter in favor of the action 
states, it should meet the marketing needs of both growers and 
handlers. This action is consistent with the Agricultural Marketing 
Agreement Act of 1937 and the marketing order as well as other 
applicable law.
    The current volume regulation procedures are intended to fully 
supply the domestic and export markets, provide for market expansion, 
and help prevent oversupplies in the domestic market, and have been 
used in previous years to help the industry. These procedures have been 
used carefully in an attempt to help the industry consistent with the 
Act.
    Before the 1975-76 crop year, more than 50 percent of the raisins 
were packed and sold directly to consumers. Now, over 60 percent of 
raisins are sold in bulk. This means that raisins are now sold to 
consumers mostly as an ingredient in another product such as cereal and 
baked goods. In addition, for a few years in the early 1970's, over 50 
percent of the raisin grapes were sold to the wine market for crushing. 
Since then, the percent of raisin-variety grapes sold to the wine 
industry has decreased.
    California's grapes are classified into three groups--table grapes, 
wine grapes, and raisin-variety grapes. Raisin-variety grapes are the 
most versatile of the three types. They can be marketed as fresh 
grapes, crushed for juice in the production of wine or juice 
concentrate, or dried into raisins. Annual fluctuations in the fresh 
grape, wine, and concentrate markets, as well as weather-related 
factors, cause fluctuations in raisin supply. This type of situation 
introduces a certain amount of variability into the raisin market. 
Although the size of the crop for raisin-variety grapes may be known, 
the amount dried for raisins depends on the demand for crushing. This 
makes the marketing of raisins a more difficult task. These supply 
fluctuations can result in producer price instability and disorderly 
market conditions.
    Volume regulation is helpful to the raisin industry because it 
lessens the impact of such fluctuations and contributes to orderly 
marketing. For example, producer prices for NS raisins have remained 
fairly steady between the 1992-93 through the 1997-98 seasons, although 
production has varied. As shown in the table below, during those years, 
production varied from a low of 272,063 tons in 1996-97 to a high of 
387,007 tons in 1993-94, or about 42 percent. According to Committee 
data, the total producer return per ton during those years, which 
includes proceeds from both free tonnage plus reserve pool raisins, has 
varied from a low of $901 in 1992-93 to a high of $1,049 in 1996-97, or 
16 percent. Total producer prices for the 1998-99 and 1999-2000 season 
increased significantly due to back-to-back short crops during those 
years.

                    Natural Seedless Producer Prices
------------------------------------------------------------------------
                                                 Production
                                                  (natural     Producer
                   Crop year                     condition      prices
                                                   tons)
------------------------------------------------------------------------
2000-2001.....................................      432,616  \1\ $570.82
1999-2000.....................................      299,910     1,211.25
1998-99.......................................      240,469          \2\
                                                                1,290.00
1997-98.......................................      382,448       946.52
1996-97.......................................      272,063     1,049.20
1995-96.......................................      325,911     1,007.19
1994-95.......................................      378,427       928.27
1993-94.......................................      387,007       904.60
1992-93.......................................      371,516      901.41
------------------------------------------------------------------------
\1\ Return to date, reserve pool still open.
\2\ No volume regulation.

    There are essentially two broad markets for raisins--domestic and 
export. In recent years, both export and domestic shipments have been 
decreasing. Domestic shipments decreased from a high of 204,805 packed 
tons during the 1990-91 crop year to a low of 156,325 packed tons in 
1999-2000. In addition, exports decreased from 114,576 packed tons in 
1991-92 to 91,600 packed tons in the 1999-2000 crop year.
    In addition, the per capita consumption of raisins has declined 
from 2.07 pounds in 1988 to 1.55 pounds in 2000. This decrease is 
consistent with the decrease in the per capita consumption of dried 
fruits in general, which is due to the increasing availability of most 
types of fresh fruit throughout the year.
    While the overall demand for raisins has been decreasing (as 
reflected in decline in commercial shipments), production has been 
increasing. The production of dried raisins reached an all-time high of 
an estimated 432,616 tons in the 2000-01 crop year. This large crop was 
preceded by two short crop years; production was 240,469 tons in 1998-
99 and 299,910 tons in 1999-2000. Production for the 2000-01 crop year 
soared to a record level because of increased bearing acreage and 
yields. Estimated production is more moderate at 372,499 tons in 2001-
02. However, with 2001-02 carryin inventory totaling 116,131 tons, 
total available supply is quite large.
    The order permits the industry to exercise supply control 
provisions, which allow for the establishment of

[[Page 71808]]

free and reserve percentages, and establishment of a reserve pool. One 
of the primary purposes of establishing free and reserve percentages is 
to equilibrate supply and demand. If raisin markets are over-supplied 
with product, grower prices will decline.
    Raisins are generally marketed at relatively lower price levels in 
the more elastic export market than in the more inelastic domestic 
market. This results in a larger volume of raisins being marketed and 
enhances grower returns. In addition, this system allows the U.S. 
raisin industry to be more competitive in export markets. crop year.
    There are no known additional costs incurred by small handlers that 
are not incurred by large handlers. While the level of benefits of this 
rulemaking are difficult to quantify, the stabilizing effects of the 
volume regulations impact small and large handlers positively by 
helping them maintain and expand markets even though raisin supplies 
fluctuate widely from season to season. Likewise, price stability 
positively impacts small and large producers by allowing them to better 
anticipate the revenues their raisins will generate.
    After consideration of all relevant material presented, including 
the information and recommendation submitted by the Committee, the 
comments received, and other available information, it is hereby found 
that this rule, as hereinafter set forth, will tend to effectuate the 
declared policy of the Act.

List of Subjects in 7 CFR Part 989

    Grapes, Marketing agreements, Raisins, Reporting and recordkeeping 
requirements.

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 989 which 
was published at 67 FR 52390 on August 12, 2002, is adopted as a final 
rule without change.

    Dated: November 26, 2002.
A. J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 02-30583 Filed 12-2-02; 8:45 am]
BILLING CODE 3410-02-P