[Federal Register Volume 69, Number 215 (Monday, November 8, 2004)]
[Rules and Regulations]
[Pages 64641-64644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24825]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 905

[Docket No. FV04-905-2 FIR]


Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida; 
Exemption for Shipments of Tree Run Citrus

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture is adopting, as a final rule, 
without change, an interim final rule that established an exemption for 
shipments of small quantities of tree run citrus from the rules and 
regulations under the Florida citrus marketing order(order). The order 
regulates the handling of oranges, grapefruit, tangerines, and tangelos 
grown in Florida and is administered locally by the Citrus 
Administrative Committee (Committee). Under rule, shipments of tree run 
citrus continue to be exempt from grade, size, and assessment 
requirements under the order. Producers can ship 150 1\3/5\ bushel 
boxes, per variety, per shipment of their own citrus free from order 
regulations, not to exceed 3,000 boxes per variety season. The 
Committee believes this action may be a way to increase fresh market 
shipments, develop new markets, and improve grower returns.

EFFECTIVE DATE: December 8, 2004.

FOR FURTHER INFORMATION CONTACT: Cathy Harding, SoutheastMarketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 799 Overlook Drive, Suite A, Winter 
Haven,Florida 33884-1671; telephone: (863) 324-3375. Fax:(863) 325-
8793; 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,Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax:(202) 720-8938, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued underMarketing Agreement 
No. 84 and Marketing Order No. 905, both as amended (7 CFR part 905), 
regulating the handling of oranges, grapefruit, tangerines, and 
tangelos grown in Florida, hereinafter referred to as the ``order.''The 
order is effective under the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    USDA is issuing this rule in conformance with Executive Order 
12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to 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, provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review 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 in effect an exemption for shipments of small 
quantities of tree run citrus from the grade, size, and assessment 
requirements under the order. Tree run fruit is quality citrus picked 
and boxed in the field and taken directly to market without being 
graded or sized. By providing this exemption, producers can ship 150 
1\3/5\ bushel boxes per variety, per shipment, of their own citrus free 
from order regulations. Total shipments cannot exceed 3,000 boxes per 
variety, per season. The Committee believes this action may be a way to 
increase fresh market shipments, develop new markets, and improve 
grower returns. This action was recommended unanimously by the 
Committee at its meeting on June 15, 2004.
    Section 905.80 of the order provides authority for the Committee to 
exempt certain types of shipments from regulation. Exemptions can be 
implemented for types of shipments of any variety in such minimum 
quantities, or for such purposes as the Committee, with the approval of 
USDA, may specify. No assessment is levied on fruit so shipped. The 
Committee shall, with the approval of USDA, prescribe such rules, 
regulations, or safeguards as it deems necessary to prevent varieties 
handled under the provisions of this section from entering channels of 
trade for other than the purposes authorized by this section.
    Section 905.149 of the order's rules and regulations defines grower 
tree run citrus and outlines the procedures to be used for growers to 
apply to the Committee to ship their own tree run citrus exempt from 
grade, size, and assessment requirements. The provisions were 
originally established just for the 2002-03 season, then extended for 
the 2003-04 season. During the 2003-04 season, growers were allowed to 
ship a maximum of 150 1\3/5\ bushel boxes per variety, per shipment, up 
to a seasonal total of 3,000 boxes per variety of their tree run fruit 
free from order requirements.
    For the past two seasons, the Committee has utilized the provisions 
of Sec.  905.149 on an annual basis. Rather than making this 
recommendation each year, the Committee recommended that the provisions 
of Sec.  905.149 be established on a continuous basis. However, growers 
must receive approval from the Committee before they can utilize this 
exemption.
    According to Florida Department of Citrus (FDOC) regulation 20-
35.006, ``Tree run grade is that grade of naturally occurring sound and 
wholesome citrus fruit which has not been separated either as to grade 
or size after severance from the tree.'' Also, (FDOC) regulation 20-
62.002 defines wholesomeness as fruit free from rot, decay sponginess, 
unsoundness, leakage, staleness, or other conditions showing physical 
defects of the fruit. By definition, this fruit is handled by the 
grower and bypasses normal handler operations. Prior to implementation 
of the exemption, all tree run citrus had to meet all requirements of 
the marketing order, as well as State of Florida Statutes and Florida 
Department of Citrus regulations. Even with this rule, tree run citrus 
must continue to meet applicable State of Florida Statutes and Florida 
Department of Citrus

[[Page 64642]]

regulations, including inspection and any container marking 
requirements. However, growers will be able to pick, box, ship directly 
to buyers, and avoid the costs incurred when citrus is handled by 
packinghouses.
    During the season prior to the utilization ofSec.  905.149, small 
producers of Florida citrus expressed concerns about problems incurred 
when trying to sell their citrus. costs, These concerns included 
increasing production costs, limited returns, and the availability of 
markets. For some growers, there is limited demand for the variety of 
citrus they produce or they do not produce much volume. Consequently, 
they have difficulty getting packinghouses to pack their fruit. These 
problems, along with market conditions, have driven a fair number of 
small citrus growers out of the citrus industry.
    According to the Florida Agricultural Statistics Service, from 
1998-99 to 2002-03, fresh grapefruit sales have dropped 22 percent and 
fresh orange shipments are down 11 percent. This means fewer cartons 
are being packed. This can cause problems for varieties that may be out 
of favor with handlers and consumers, or for a particular variety of 
fruit where there may be a glut on the market. As a result, 
packinghouses do not wish to become over stocked with fruit which is 
difficult to market and therefore, will not pack less popular minor 
varieties of fruit or fruit that is in oversupply. Packinghouses do not 
want to pack what they cannot sell. These factors have caused wholesome 
fruit to be shipped to processing plants or left on the tree.
    When citrus cannot be sold into the fresh market, it can be sold to 
the processing plants. However, the prices received are considerably 
lower. During the last seven seasons, only the 1999-2000 season 
produced on-tree returns for processed grapefruit that exceeded one 
dollar per box. Over the period from 1998-99 through 2002-03, the 
differential between fresh prices and processed prices has averaged 
$4.43 per box for grapefruit and $2.20 per box for oranges. Hence, many 
growers would prefer to ship to the fresh market.
    In addition, the costs associated with growing for the fresh market 
are greater than the costs for growing for processed market. While the 
costs of growing for the fresh market have been increasing, in many 
cases the returns to the grower have been decreasing. The cost of 
picking, packing, hauling, and associated handling costs for fresh 
fruit is sometimes greater than the grower's return on the fruit. In 
some cases, where the cost of harvesting exceeds the returns to the 
grower or the grower cannot find a buyer for the fruit, economic 
abandonment can occur. According to information from the National 
Agricultural Statistics Service, the seasons of 1995-96, 1996-97, 1997-
98, and 2000-01 had an average economic abandonment of two million 
boxes or more of red seedless grapefruit alone.
    As a result, growers are looking for other outlets for their fruit 
in an effort to increase returns. Some growers believe secondary 
markets exist which are not currently being supplied that would provide 
additional outlets for their citrus. They think niche markets exist 
that could be profitable and want the opportunity to continue servicing 
them. They believe they can ship quality fruit directly to out-of-state 
markets and that it would be well received.
    These growers contend tree run citrus does not need a minimum grade 
and size to be marketable, and that they can supply quality fruit to 
secondary markets not served by packed fruit. However, they believe 
they need to bypass normal handler operations and the associated costs 
for it to be profitable.
    To address these concerns, the Committee recommended for the past 
two seasons that producers be allowed to ship small quantities of their 
own production directly to the market exempt from order requirements. 
The exemption was established on an annual basis for the 2002-03 season 
[68 FR 4361, January 29, 2003] and for the 2003-04 season [68 FR 68717, 
December 10, 2003]. The exemption for the 2003-04 season expired July 
31, 2004.
    The Committee recommended this exemption on a yearly basis for the 
past two seasons to determine its affect and how fruit shipped under 
the exemption was received on market. The Committee was interested in 
whether markets existed that packed fruit was not supplying. They also 
wanted an indication of the number of growers interested in utilizing 
the exemption and the volume of citrus shipped under the exemption. In 
addition, the Committee wanted information regarding any compliance 
issues or any impact on competitive outlets.
    During the 2003-04 season, 101 growers were approved to ship under 
the exemption. Approximately 40 growers actually used the exemption, 
shipping a total of nearly 16,000 1\3/5\ bushel boxes of oranges, 
grapefruit, tangerines, and tangelos. This is an increase from 23 
growers shipping approximately 4,500 boxes during the 2002-03 season. 
Those producers who took advantage of the exemption believe that the 
program was successful. They were able to sell their fruit and supply 
markets not already supplied by traditional packers. Growers also 
believe more markets exist. They think with time, they can identify 
additional markets. Thus, growers want to continue to have the 
opportunity to supply these markets.
    The Committee had agreed that following the 2003-04 season, it 
would review the information provided by growers who applied for and 
used the tree run exemption to determine if the exemption should be 
continued. In the June 15, 2004, meeting, the Committee discussed this 
issue, and considered the impact and benefits of the exemption.
    The Committee also reviewed a letter in support of the exemption 
from Florida Citrus Mutual, a large grower organization. The Committee 
believes that markets have been developed and that tree run fruit will 
continue to be sold primarily to non-competitive, niche markets, such 
as farmers' markets, flea markets, roadside stands, and similar outlets 
and will not compete with non-exempt fruit shipped under the order. 
Fruit is sold in similar markets within the State, and such markets 
have been successful. Continuing this exemption allows growers to sell 
directly to similar markets outside of the State, supplying markets 
that might not otherwise be supplied. The Committee believes this 
action will allow the industry to service more non-traditional markets 
and may be a way to increase fresh market shipments and to develop new 
markets. Consequently, the Committee voted unanimously to extend the 
tree run exemption on a continuous basis.
    Growers will continue to be required to apply to the Committee, on 
the ``Grower Tree Run Certificate Application'' form provided by the 
Committee, for an exemption to ship tree run citrus fruit to interstate 
markets. On this form, the grower must provide their name; address; 
phone number; legal description of the grove; variety of citrus to be 
shipped; and the approximate number of boxes produced in the specified 
grove. The grower must also certify that fruit to be shipped comes from 
the grove owned by the grower applicant. The application form will be 
submitted to the Committee manager and reviewed for completeness and 
accuracy. The manager will also verify the information provided. After 
the application has been reviewed, the manager will notify the grower 
applicant in writing whether the application is approved or denied.
    Once the grower has received approval for their application for

[[Page 64643]]

exemption and begins shipping fruit, a ``Report of Shipments Under 
Grower Tree Run Certificate'' form, also provided by the Committee, 
must be completed for each shipment. On this form, the grower will 
provide location of the grove, the amount of fruit shipped, the 
shipping date, and the type of transportation used to ship the fruit, 
along with the vehicle license number. The grower must supply the Road 
Guard Station with a copy of the grower certificate report for each 
shipment, and provide a copy of the report to the Committee. This 
report will enable the Committee to maintain compliance. Failure to 
comply with these requirements may result in the cancellation of a 
grower's certificate.
    This rule does not affect the provision that handlers may ship up 
to 15 standard packed cartons (12 bushels) of fruit per day exempt from 
regulatory requirements. Fruit shipped in gift packages that are 
individually addressed and not for resale, and fruit shipped for animal 
feed are also exempt from handling requirements under specific 
conditions. Also, fruit shipped to commercial processors for conversion 
into canned or frozen products or into a beverage base are not subject 
to the handling requirements under the order.
    Section 8e of the Act requires that whenever grade, quality, or 
maturity requirements are in effect for certain commodities under a 
domestic marketing order, including citrus, imports of that commodity 
must meet the same or comparable requirements. This rule does not 
change the minimum grade and size requirements under the order. 
Therefore, no change is necessary in the citrus import regulations as a 
result of this action.

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 11,000 producers of Florida citrus in the 
production area and approximately 75 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (SBA) 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 (13 CFR 
121.201).
    Based on industry and Committee data, the average annual f.o.b. 
price for fresh Florida oranges, grapefruit, tangerines, and tangelos 
during the 2003-04 season was approximately $8.69 per 4/5 bushel 
carton, and total fresh shipments for the 2003-04 season were around 52 
million cartons of oranges, grapefruit, tangerines, and tangelos. 
Twenty handlers handled approximately 66 percent of Florida's citrus 
shipments in 2003-04. Considering the average f.o.b. price, at least 55 
percent of the orange grapefruit, tangerine, and tangelo handlers could 
be considered small businesses under SBA's definition. Therefore, the 
majority of Florida citrus handlers may be classified as small 
entities. The majority of Florida citrus producers may also be 
classified as small entities.
    This rule establishes the provisions of Sec.  905.149 of the rules 
and regulations on a continuous basis. This rule continues in effect an 
exemption for shipments of small quantities of tree run citrus from the 
grade, size, assessment requirements under the order. Growers must 
receive approval from the Committee before they can use this exemption. 
The Committee believes this action may be a way to increase fresh 
market shipments, develop new markets, and improve grower returns. 
Authority for this action is provided in Sec.  905.80(e).
    According to a study by the University of Florida--Institute of 
Food and Agricultural Sciences, production costs for the 2001-02 season 
ranged from $1.71 per box for processed oranges to $2.41 per box for 
grapefruit grown for the fresh market. The average packing charge for 
oranges is approximately $6.50 per box, for grapefruit the charge is 
approximately $5.75 per box, and for tangerines the charge can be as 
high as $9 per box. Sending fruit to a packinghouse can be cost 
prohibitive, especially for the small grower. This rule may provide an 
additional outlet for fruit that might otherwise be forced into the 
processing market or left on the tree altogether. For the 2003-04 
season, this exemption accounted for additional fresh shipments 
totaling over 32,000 cartons.
    This rule will not impose any additional costs on the grower. It 
will have the opposite effect of providing growers the opportunity to 
reduce the costs associated with having fruit handled by a 
packinghouse. This action will continue to allow growers to ship small 
quantities of their tree run citrus directly into interstate commerce 
exempt from the order's grade, size, and assessment requirements and 
their related costs. With this action, growers will be able to reduce 
handling costs and use those savings toward developing additional 
markets not serviced by the traditional packinghouses. This regulation 
will help growers by providing another outlet for their fruit. This 
will benefit all growers regardless of size, but it is expected to have 
a particular benefit for small growers who need additional revenue to 
meet operating costs.
    The Committee considered one alternative to this action. The 
possible alternative was to not continue the exemption. However, the 
Committee believes the exemption provides other possible outlets for 
fruit and may help increase returns to growers. Therefore, this 
alternative was rejected.
    In accordance with the Paperwork Reduction Act of 1995 44 U.S.C. 
Chapter 35), the information collection requirements contained in this 
rule have been previously approved by the Office of Management and 
Budget (OMB) and assigned OMB No. 0581-0189. USDA has not identified 
any relevant Federal rules that duplicate, overlap or conflict with 
this rule. 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 Committee's meeting was widely publicized throughout the citrus 
industry and all interested persons were invited to attend the meeting 
and participate in Committee deliberations. Like all Committee 
meetings, the June 15, 2004, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue.
    An interim final rule concerning this action was published in the 
Federal Register on August 16, 2004. Copies of the rule were mailed, e-
mailed or faxed by the Committee staff to all Committee members and 
tree run citrus growers. In addition, the rule was made available 
through the Internet by the Office of the Federal Register and USDA. 
That rule provided for a 60-day comment period that ended October 15, 
2004. No comments were received.
    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

[[Page 64644]]

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 material presented, including 
the Committee's recommendation, and other available information, it is 
hereby found that finalizing the interim final rule, without change, as 
published in the Federal Register (69 FR 50265, August 16, 2004) will 
tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 905

    Grapefruit, Marketing agreements, Oranges, Reporting and 
recordkeeping requirements, Tangelos, Tangerines.

PART 905--ORANGES, GRAPEFRUIT, TANGERINES, AND TANGELOS GROWN IN 
FLORIDA

0
Accordingly, the interim final rule amending 7 CFR part 905 which was 
published at 69 FR 50265 on August 16, 2004, is adopted as a final rule 
without change.

    Dated: November 2, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-24825 Filed 11-5-04; 8:45 am]
BILLING CODE 3410-02-P