[Federal Register Volume 73, Number 219 (Wednesday, November 12, 2008)]
[Rules and Regulations]
[Pages 66715-66719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26855]



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  Federal Register / Vol. 73, No. 219 / Wednesday, November 12, 2008 / 
Rules and Regulations  

[[Page 66715]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 915

[Docket No. AMS-FV-08-0022; FV08-915-1 FR]


Avocados Grown in South Florida; Revisions to Grade and Container 
Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule changes the grade and container requirements 
currently prescribed under the marketing order for avocados grown in 
South Florida (order). The order regulates the handling of avocados 
grown in South Florida and is administered locally by the Avocado 
Administrative Committee (Committee). This change establishes a minimum 
grade of a U.S. No. 2 for shipments within the production area, 
requiring these shipments to meet the same grade as currently 
prescribed for shipments leaving the production area. This rule also 
makes changes to the container and container marking requirements under 
the order. These changes provide a grade and a pack to meet consumer 
demand and improve the identification and traceability of avocado 
shipments.

DATES: Effective Date: November 13, 2008.

FOR FURTHER INFORMATION CONTACT: William G. Pimental, Marketing 
Specialist, or Christian D. Nissen, Regional Manager, Southeast 
Marketing Field Office, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA; Telephone: (863) 324-3375, Fax: 
(863) 325-8793 or E-mail: [email protected] or 
[email protected].
    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 final rule is issued under Marketing 
Order No. 915, as amended (7 CFR part 915), regulating the handling of 
avocados grown in South 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.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This final 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 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 grade and container requirements 
currently prescribed under the order. This rule establishes a minimum 
grade of a U.S. No. 2 for shipments within the production area, 
requiring these shipments to meet the same grade as currently 
prescribed for shipments leaving the production area. This final rule 
also makes changes to the container and container marking requirements 
established under the order. These changes provide a grade and pack to 
meet consumer demand and improve the identification and traceability of 
avocado shipments. These changes were unanimously recommended by the 
Committee during a number of meetings over the past several months.
    Section 915.51 of the order provides, in part, the authority to 
issue regulations establishing specific grade and container 
requirements for avocados. Section 915.52 of the order provides the 
authority for the modification, suspension or termination of 
established regulations. The requisite grade and container requirements 
are specified under Sec. Sec.  915.305 and 915.306. These sections 
specify, in part, the grade, container, and container marking 
requirements for fresh shipments of avocados grown in South Florida.
    Standard containers refer to those containers specifically 
authorized in Sec.  915.305(a), which can be used for shipments both 
inside and outside of the production area. Nonstandard containers refer 
to containers other than those authorized in Sec.  915.305(a), and can 
only be used when shipping avocados within the production area.
    This final rule makes several changes to the grade and container 
provisions established under the order. This rule establishes a minimum 
grade of a U.S. No. 2 for all avocados sold within the production area. 
It also requires that all nonstandard containers used for shipments 
within the production area be one bushel in size and that these 
containers be marked with the registered handler number or the name and 
address of the handler. This final rule also requires that all avocados 
sold be packed in new containers and that the containers be marked with 
the grade packed.
    The first change establishes a minimum grade of a U.S. No. 2 for 
all avocados sold within the production area. Prior to this change, 
only avocados handled in standard containers had to meet the grade 
requirement of a U.S. No. 2. Avocados sold within the production area 
in nonstandard containers were not required to meet a minimum grade. 
This rule modifies Sec.  915.306 so that all avocados sold to the fresh 
market in the production area, regardless of what type of container, 
must meet the minimum grade requirement of a U.S. No. 2.

[[Page 66716]]

    In 1992, Hurricane Andrew decimated the Florida avocado production 
area leaving both avocados and containers in short supply. The industry 
recommended that the grade requirement be suspended for avocados sold 
within the production area in containers other than the standard 
containers defined in Sec.  915.305. This change made more fruit 
available for shipment and allowed handlers to pack fruit in any 
obtainable container for shipment within the production area.
    The industry has since recovered from the devastation caused by the 
hurricane. Production for the 2007-08 season was approximately 1.1 
million bushels of avocados, nearly matching the level of production 
prior to Hurricane Andrew. However, since the grade change made 
following the hurricane, avocados shipped within the production area in 
nonstandard containers have not had to meet any specific grade 
requirements.
    At the time of Hurricane Andrew, avocado shipments to production 
area markets accounted for around 12 percent of total shipments. Since 
that time, shipments to the production area have nearly doubled. For 
the last five seasons, shipments to the production area have accounted 
for around 23 percent of total shipments, making the production area 
one of the largest markets for Florida avocados.
    In discussing this issue, Committee members stated that the absence 
of a grade requirement has resulted in poor quality avocados being 
offered for sale inside the production area. The past few seasons, the 
Committee office and members of the industry have been receiving an 
increasing number of negative comments regarding the quality of fruit 
sold in the production area. These comments indicate there is an 
increasing demand for higher quality fruit within the production area.
    Production area produce buyers and brokers are looking for higher 
quality fruit to meet the demands of production area consumers. 
However, buyers have expressed that without a minimum grade requirement 
it is difficult to know the quality of the avocados being purchased. 
The level of quality received varies between good and poor quality. In 
an effort to address this issue, several handlers have already begun 
packing to meet a U.S. No. 2 for all their production area shipments. 
Still, absent a minimum grade requirement, avocados that would not meet 
a U.S. No. 2 are still making it to production area fresh market 
channels.
    The Committee believes these poor quality avocados have depressed 
prices for better quality avocados and resulted in lower overall 
returns to producers. Poor quality fruit normally returns the lowest 
price when compared to quality fruit. Because there is no minimum grade 
requirement for nonstandard containers, buyers are often unsure of the 
level of quality they are purchasing. This tends to drive the price 
offered towards the lowest level for all avocados. Further, when a 
consumer purchases a poor piece of fruit, it can affect repurchases, 
reducing demand. Reduced demand also has a negative effect on price.
    The Committee believes eliminating lower grade avocados from the 
marketplace addresses consumer demand, and helps ensure the industry is 
providing all their customers with a quality product. This encourages 
repeat purchases, which helps increase returns to producers and 
handlers. The Committee agreed this change will strengthen market 
conditions for shipments within the production area. Therefore, the 
Committee recommended establishing a minimum grade of a U.S. No. 2 for 
all avocados sold to markets within the production area.
    This rule also makes changes to the container marking requirements 
established under the order. Prior to this action, the only container 
marking requirement for nonstandard containers was that the containers 
be marked with a Federal State Inspection Service (FSIS) lot stamp 
number, which is applied to an adhesive tape seal affixed to the 
container. While the lot stamp indicates the date the product was 
inspected, it does not provide any information that would identify the 
handler. Some handlers pay to have the adhesive tape seal preprinted 
with their registered handler number, and this number can be used to 
identify the handler. However, this is not the case for all handlers.
    The Committee is concerned that the use of containers with no 
identifying markings poses problems with the positive identification 
and traceability of avocados. Such containers are almost impossible to 
trace back to the original handler. In cases such as marketing order 
compliance, it is important to be able to identify the source of 
avocados which are found to be in violation of order requirements. 
Committee members agreed that the ability to positively identify 
product and trace its origin is a necessity in today's marketplace. 
Proper handler identification on a container is an important part of 
this traceability.
    In discussing this issue, the Committee agreed that an adhesive 
tape seal that is pre-printed with the registered handler number is 
sufficient to indicate the identity of the handler and to provide trace 
back. In cases where the tape seal is not printed with a registered 
handler number, the Committee concurred that the name and address of 
the handler should appear on the container. The Committee believes 
requiring all containers handled within the production area to be 
marked with a registered handler number or the name and address of the 
handler improve the identification and traceability of Florida 
avocados.
    The Committee also recommended that all nonstandard containers be 
marked with the grade packed. Prior to this action, only standard 
containers were required to be marked with the grade and only from the 
first Monday after July 15 until the first Monday after January 1. In 
its discussion of this change, the Committee agreed that for 
nonstandard containers the grade should be marked in letters at least 3 
inches in height, rather than match the 1 inch requirement for standard 
containers. Nonstandard containers tend to be oversized, and as such, 
Committee members believe the grade markings need to be in larger 
letters, which is more in scale with the larger containers. Also, in 
the production area, avocados are often displayed in the container in 
which they were packed. Having recommended that all avocados packed be 
required to meet a U.S. No. 2 to address the concerns of their 
customers, Committee members thought it was important that the grade be 
clearly displayed on the container.
    Further, the Committee also agreed it was important to have the 
grade marked on all containers throughout the season. Therefore, the 
Committee recommended that the language in the rules and regulations 
stating that the grade only needs to appear on standard containers from 
the first Monday after July 15 until the first Monday after January 1 
be removed, and that the grade packed be required to appear on all 
standard and nonstandard containers for the entire shipping season.
    This rule also makes two changes to the container requirements 
specified under Sec.  915.305. Before this change, there were no 
specific container requirements for weight and dimension for 
nonstandard containers, except that handlers are prohibited from using 
20 bushel plastic field bins to ship avocados to markets inside the 
production area. As such, many different containers have been used for 
shipments within the production area. However, the vast majority of 
nonstandard containers used in the production area are new one bushel 
containers or used one bushel

[[Page 66717]]

containers that were previously packed with bananas.
    The use of used banana boxes for shipping avocados within the 
production area increased dramatically following Hurricane Andrew, when 
containers were in short supply. Now, with many of the avocados sold in 
the production area displayed in the container in which they were 
packed, the Committee is concerned that the practice of packing in used 
containers has had a negative effect on the sale of production area 
avocados. These containers often have marks and stains from their 
previous use, and can be in poor condition. The Committee is concerned 
that the condition of the boxes is affecting the perception of the 
avocados packed inside.
    With production area shipments accounting for 23 percent of total 
shipments, the Committee believes it is important to provide production 
area markets with a quality pack. The Committee believes requiring 
avocados to be packed in new containers is more sanitary, improves the 
appearance of the overall pack, and could increase sales. Consequently, 
the Committee recommended that all containers used to pack avocados be 
required to be new.
    The other container change the Committee recommended was that all 
nonstandard containers be required to be one bushel containers. Most 
nonstandard containers in use are used banana boxes or new containers 
with dimensions similar to banana boxes. These containers hold 
approximately one bushel of avocados, which the industry has found to 
be a useful size for shipments within the production area. Rather than 
permitting the use of any size container within the production area, 
the Committee believes requiring the use of a one bushel container 
provides some additional uniformity to the pack.
    With many handlers already utilizing the one bushel container for 
production area shipments, this sized container is readily available 
throughout the production area. Also, because all containers to be used 
are now required to be new, and handlers will be purchasing containers, 
the Committee believes this is a good time to establish requirements 
for nonstandard containers. Requiring all nonstandard containers to be 
one bushel provides for a uniform pack that is attractive to the 
consumer. Therefore, the Committee recommended that one bushel 
containers be used for all shipments within the production area.
    These changes to the grade and container requirements improve the 
overall quality and pack, which meets the demands of production area 
customers. Responding to market preferences is expected to benefit 
producers and handlers of Florida avocados. Further, requiring 
container marking requirements improves the identification and 
traceability of production area avocados. Consequently, the Committee 
recommended the above changes to the rules and regulations under the 
order.
    This final rule also makes a minor correction to Sec.  
915.306(a)(1). This change removes language which only pertained to the 
period November 2, 1992, through March 31, 1993. This language is 
obsolete, and as such is no longer necessary.
    Section 8e of the Act provides that when certain domestically 
produced commodities, including avocados, are regulated under a Federal 
marketing order, imports of that commodity must meet the same or 
comparable grade, size, quality, and maturity requirements. This final 
rule does not change the minimum grade of a U.S. No. 2 established for 
avocados shipped outside the production area or the maturity 
requirements established under the order. This rule just requires all 
avocados shipped within the production area to meet the same minimum 
grade of a U.S. No. 2, and changes the container requirements under the 
domestic handling regulation. Consequently, no corresponding changes to 
the import regulations are required.

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.
    There are approximately 35 handlers of Florida avocados subject to 
regulation under the order and approximately 300 producers of avocados 
in the production area. Small agricultural service firms, which include 
avocado handlers, are defined by the Small Business Administration 
(SBA) as those whose annual receipts are less than $7,000,000, and 
small agricultural producers are defined as those having annual 
receipts of less than $750,000 (13 CFR 121.201).
    According to Committee data, the average price for Florida avocados 
during the 2007-08 season was around $12.00 per 55-pound bushel 
container, and total shipments were near 1.1 million 55-pound bushels. 
Using the average price and shipment information provided by the 
Committee, the majority of avocado handlers could be considered small 
businesses under SBA's definition. In addition, based on avocado 
production, producer prices, and the total number of Florida avocado 
producers, the average annual producer revenue is less than $750,000. 
Consequently, the majority of avocado handlers and producers may be 
classified as small entities.
    This final rule revises the grade and container requirements 
currently prescribed under the order. This rule establishes a minimum 
grade of a U.S. No. 2 for shipments within the production area, 
requiring these shipments to meet the same grade as currently 
prescribed for shipments leaving the production area. It also requires 
that all nonstandard containers used for shipments within the 
production area be one bushel in size and that these containers be 
marked with the registered handler number or the name and address of 
the handler. This final rule also requires that all avocados sold be 
packed in new containers and that the containers be marked with the 
grade packed. These changes provide a grade and pack to meet consumer 
demand, which will increase producer returns. This rule also improves 
the identification and traceability of production area avocados. This 
rule revises Sec. Sec.  915.305 and 915.306, which specify the 
requisite grade and container requirements. Authority for these actions 
is provided in Sec. Sec.  915.51 and 915.52 of the order. These changes 
were unanimously recommended by the Committee during a number of 
meetings over the past several months.
    This final rule could result in some additional costs. These 
potential costs stem primarily from the application of the minimum 
grade to nonstandard containers, the new container marking 
requirements, and the requirement that all containers packed be new 
containers.
    The grade requirement for nonstandard containers could result in 
the loss of some sales, as handlers will no longer be able to sell 
fruit not meeting a U.S. No. 2 inside the production area. However, 
these losses are expected to be minimal. Several handlers have already 
started packing their nonstandard containers to meet a

[[Page 66718]]

U.S. No. 2 in response to consumer demand. Further, the volume of fruit 
failing to meet a U.S. No. 2 represents only a small percentage of 
production area shipments. The Committee estimates lower grade avocados 
account for only around 6 percent of production area shipments. Last 
year, the industry shipped nearly 264,000 55-pound containers to 
production area markets. Using these numbers, lower grade avocados 
accounted for only 15,840 of the containers shipped to the production 
area last year, or 1 percent of total industry shipments. Consequently, 
this rule is not expected to appreciably impact the total number of 
shipments.
    Further, the grade change is not expected to result in perceptibly 
higher inspection costs. Currently, all avocados shipped in the 
production area must meet maturity requirements regardless of the 
container in which they are packed. Consequently, all avocados are 
already inspected, so any increase in inspection costs will be minimal.
    The costs associated with the recommended changes in marking 
requirements are also expected to be nominal. Larger operations use 
automated stamping, and already print necessary information on standard 
containers. A small reconfiguration would allow them to meet this 
requirement. Some operations order their containers preprinted with the 
needed information. As this rule requires the use of new containers, 
handlers will be purchasing containers. The added cost of the 
additional marking requirements for preprinted containers should be 
minor. Smaller operations stamp the containers by hand. These 
operations will be able to meet the new requirements with a one-time 
purchase of a grade stamp and a name and address stamp.
    This rule could also result in a slight increase in cost for 
handlers that were using used containers. However, Committee members 
stated that plain, one bushel containers are readily available on the 
market at reasonable prices. Also, dealers collect and sell the used 
containers, so used containers are not cost free. Further, the 
available quantities of used containers are not sufficient to handle 
all production area shipments; so many new nonstandard containers are 
already being purchased. Consequently, the cost associated with this 
change should also be minimal.
    While this rule could result in some additional costs, the changes 
are expected to have a positive effect in the marketplace. The 
production area is an important market for the industry, accounting for 
nearly 23 percent of shipments for the last five seasons. The 
availability of poor quality avocados has had a price depressing effect 
on the market. Without change, there could be a continued erosion of 
market confidence and producer returns.
    Requiring nonstandard containers to meet the minimum grade of a 
U.S. No. 2 addresses consumer demand and helps protect the production 
area market from the price depressing effects of poor quality avocados. 
In addition, requiring all production area avocados to be packed in new 
containers clearly marked with the grade packed also improves the 
overall avocado pack sold in the production area. These new 
requirements allow handlers to respond to market preferences which are 
expected to benefit producers and handlers of Florida avocados. 
Consumers also benefit as a result of the higher quality pack available 
in the marketplace. This rule also provides improved traceability and 
identification of Florida avocados. Consequently, the benefits of this 
rule outweigh the potential costs associated with these changes. The 
costs and benefits of this rule are not expected to be 
disproportionately different for small or large entities.
    The Committee discussed alternatives to these changes. One 
alternative considered was to not make any changes to the rules and 
regulations. However, the Committee agreed making these changes makes 
the industry more responsive to consumer demand. It also provides for 
better identification and traceability of production area avocados. 
Therefore, this alternative was rejected. The Committee also considered 
the alternative of requiring the grade to be stamped on nonstandard 
containers in letters and numbers at least 1 inch in height as is 
required for standard containers. However, with nonstandard containers 
being larger in size and with production area avocados sold in the 
container, the Committee determined that the grade should be clearly 
visible, and that 1 inch was not large enough. Therefore, this 
alternative was also rejected.
    This final rule revises the grade and container requirements 
currently prescribed under the avocado marketing order. Accordingly, 
this action will not impose any additional reporting or recordkeeping 
requirements on either small or large avocado 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.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    As noted in the initial regulatory flexibility analysis, USDA has 
not identified any relevant Federal rules that duplicate, overlap or 
conflict with this final rule. In addition, the Committee's meetings 
were widely publicized throughout the avocado industry and all 
interested persons were invited to attend the meetings and participate 
in Committee deliberations on all issues. Like all Committee meetings, 
the August 8, 2007, September 9, 2007, January 9, 2008, and February 
13, 2008, meetings were public meetings and all entities, both large 
and small, were able to express views on these issues.
    A proposed rule concerning this action was published in the Federal 
Register on September 23, 2008 (73 FR 54740). Copies of the rule were 
mailed or sent via facsimile to all Committee members and avocado 
handlers. Finally, the rule was made available through the Internet by 
USDA and the Office of the Federal Register. A 15-day comment period 
ending October 8, 2008, was provided to allow interested persons to 
respond to the proposal. 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/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBusinessGuide. 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 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.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because handlers are already shipping 
Florida avocadoes from the 2008-2009 crop. Further, handlers are aware 
of this rule, which was recommended at a public meeting. Also, a 15-day 
comment period was provided for in the proposed rule.

[[Page 66719]]

List of Subjects in 7 CFR Part 915

    Avocados, Reporting and recordkeeping requirements.

0
For the reasons set forth in the preamble, 7 CFR part 915 is amended as 
follows:

PART 915--AVOCADOS GROWN IN SOUTH FLORIDA

0
1. The authority citation for 7 CFR part 915 continues to read as 
follows:

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


0
2. Two new paragraphs (d) and (e) are added to Sec.  915.305 to read as 
follows:


Sec.  915.305  Florida Avocado Container Regulation 5.

* * * * *
    (d) Avocados handled for the fresh market in containers other than 
those authorized under Sec.  915.305(a) and shipped to destinations 
within the production area must be packed in 1-bushel containers.
    (e) All containers in which the avocados are packed must be new, 
and clean in appearance, without marks, stains, or other evidence of 
previous use.

    3. In Sec.  915.306, paragraphs (a)(1), (a)(6) and (a)(7) are 
revised to read as follows:


Sec.  915.306  Florida avocado grade, pack, and container marking 
regulation.

    (a) * * *
    (1) Such avocados grade at least U.S. No. 2, except that avocados 
handled to destinations within the production area may be placed in 
containers with avocados of dissimilar varietal characteristics.
* * * * *
    (6) Such avocados when handled in containers authorized under Sec.  
915.305, except for those to export destinations, are marked once with 
the grade of fruit in letters and numbers at least 1 inch in height on 
the top or one side of the container, not to include the bottom.
    (7) Such avocados when handled in containers other than those 
authorized under Sec.  915.305(a) for shipment to destinations within 
the production area are marked once with the grade of fruit in letters 
and numbers at least 3 inches in height on the top or one side of the 
container, not to include the bottom. Each such container is also to be 
marked at least once with either the registered handler number assigned 
to the handler at the time of certification as a registered handler or 
with the name and address of the handler.
* * * * *

    Dated: November 5, 2008.
David R. Shipman,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. E8-26855 Filed 11-10-08; 8:45 am]
BILLING CODE 3410-02-P