[Federal Register Volume 63, Number 104 (Monday, June 1, 1998)]
[Rules and Regulations]
[Pages 29531-29535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14422]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[FV98-989-1 FIR]


Raisins Produced From Grapes Grown in California; Final Free and 
Reserve Percentages for 1997-98 Crop Natural (Sun-Dried) Seedless and 
Zante Currant Raisins

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
which established final volume regulation percentages for 1997-98 crop 
Natural (sun-dried) Seedless (Naturals) and Zante Currant (Zantes) 
raisins covered under the Federal marketing order for California 
raisins. The order regulates the handling of raisins produced from 
grapes grown in California and is administered locally by the Raisin 
Administrative Committee (Committee). The volume regulation percentages 
are 66 percent free and 34 percent reserve for Naturals and 44 percent 
free and 56 percent reserve for Zantes. Free tonnage raisins may be 
sold by handlers to any market. Reserve raisins must be held in a pool 
for the account of the Committee and are disposed of through various 
programs authorized under the order. The volume regulation percentages 
are intended to help stabilize raisin supplies and prices and 
strengthen market conditions.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Marketing 
Specialist, California Marketing Field Office, Fruit and Vegetable 
Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno, 
California 93721; telephone: (209) 487-5901, Fax: (209) 487-5906; or 
George Kelhart, Technical Advisor, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456; telephone: (202) 720-2491, or Fax: 
(202) 205-6632. Small businesses may request information on compliance 
with this regulation by contacting Jay Guerber, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. 
Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 720-
2491; Fax: (202) 205-6632.

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 is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the order provisions now in effect, final free 
and reserve percentages may be established for raisins acquired by 
handlers during the crop year. This rule establishes final free and 
reserve percentages for Natural and Zante raisins for the 1997-98 crop 
year, which began August 1, 1997, and ends July 31, 1998. This rule 
will not

[[Page 29532]]

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 the Secretary 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, the Secretary 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 the 
Secretary'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 the provisions of an interim final 
rule which established final volume regulation percentages for 1997-98 
crop Natural and Zante raisins covered under the order. The volume 
regulation percentages are 66 percent free and 34 percent reserve for 
Naturals and 44 percent free and 56 percent reserve for Zantes. Free 
tonnage raisins may be sold by handlers to any market. Reserve raisins 
must be held in a pool for the account of the Committee and are 
disposed of through various programs authorized under the order. For 
example, 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. The volume regulation 
percentages are intended to help stabilize raisin supplies and prices 
and strengthen market conditions. Final percentages were recommended by 
the Committee at a meeting on February 12, 1998.
    Section 989.54 of the order prescribes the procedures and time 
frames to be followed in establishing volume regulation. This includes 
methodology used to calculate percentages. Pursuant to Sec. 989.54(a) 
of the order, the Committee met on August 14, 1997, to review shipment 
and inventory data, and other matters relating to the supplies of 
raisins of all varietal types. The Committee computed a trade demand 
for each varietal type for which a free tonnage percentage might be 
recommended. Trade demand is a computed formula specified in the order 
and, for each varietal type, is equal to 90 percent of the prior year's 
shipments of free tonnage and reserve tonnage raisins sold for free use 
into all market outlets, adjusted by subtracting the carryin on August 
1 of the current crop year and by adding the desirable carryout at the 
end of that crop year. As specified in Sec. 989.154, the desirable 
carryout for each varietal type is equal to the shipments of free 
tonnage raisins of the prior crop year during the months of August and 
September. In accordance with these provisions, the Committee computed 
and announced 1997-98 trade demands for Naturals and Zantes at 252,398 
and 2,058 tons, respectively, as shown below.

                         Computed Trade Demands                         
                        [Natural condition tons]                        
------------------------------------------------------------------------
                                                  Naturals      Zantes  
------------------------------------------------------------------------
Prior year's shipments........................      314,013        3,277
Multiplied by 90 percent......................         0.90         0.90
Equals adjusted base..........................      282,612        2,949
Minus carryin inventory.......................       92,769        1,679
Plus desirable carryout.......................       62,555          788
Equals computed trade demand..................      252,398        2,058
------------------------------------------------------------------------

    As required under Sec. 989.54(b) of the order, the Committee met on 
October 2, 1997, and announced a preliminary crop estimate of 353,583 
tons for Naturals. With the crop estimate much higher than the trade 
demand of 252,398 tons, the Committee determined that volume regulation 
was warranted. The Committee announced preliminary free and reserve 
percentages for Naturals which released 65 percent of the computed 
trade demand since the field price had not yet been established. The 
preliminary percentages were 46 percent free and 54 percent reserve. 
The Committee authorized its staff to modify the preliminary 
percentages to release 85 percent of the trade demand when the field 
price was established. The field price was established on October 17, 
1997, and the preliminary percentages were thus modified to 61 percent 
free and 39 percent reserve. As discussed later in this rule, the 
353,583 ton crop estimate was subsequently revised to 381,484 tons, the 
largest crop since 1993-94. The production of Naturals has exceeded 
market needs during the current crop year, as in most seasons. Volume 
regulation in such a large crop year should help stabilize prices and 
improve market conditions.
    Also at its October 2, 1997, meeting, the Committee announced a 
preliminary crop estimate for Zantes at 4,812 tons. This compared to 
the trade demand of 2,058 tons. It was determined that a Zante reserve 
pool was warranted because estimated production exceeded the trade 
demand by a significant amount. The Committee computed preliminary 
percentages for Zantes at 36 percent free and 64 percent reserve which 
would have released 85 percent of the computed trade demand. However, 
as authorized under Sec. 989.54(c), the Committee modified the computed 
preliminary percentages and established interim percentages to release 
slightly less than the full trade demand (98.8 percent) at 42.5 percent 
free and 57.5 percent reserve. Volume regulation for Zantes should also 
help stabilize prices and improve market conditions.
    Also at that meeting, the Committee computed and announced 
preliminary crop estimates for Dipped Seedless, Oleate and Related 
Seedless, Golden Seedless, Sultana, Muscat, Monukka, and Other Seedless 
raisins. The Committee computed preliminary volume regulation 
percentages for these varieties, but determined that such regulation 
was only warranted for Naturals and Zantes. It determined that the 
supplies of the other varietal types would be less than or close enough 
to the computed trade demands for each of these varietal types. As in 
past seasons, the Committee submitted its marketing policy to the 
Department for review.

[[Page 29533]]

    The Committee met on February 12, 1998, and revised its crop 
estimates for both Naturals and Zantes as follows: for Naturals, the 
estimate was increased from 353,583 to 381,484 tons; and for Zantes, 
the estimate was increased from 4,812 to 4,955 tons. The Committee also 
announced interim percentages for Naturals at 65.75 percent free and 
34.25 percent reserve. Regarding Zantes, the Committee modified its 
trade demand figure from 2,058 to 2,200 tons at an earlier meeting in 
November 1997. At its February meeting, the Committee revised its 
interim percentages for Zantes to 43.75 percent free and 56.25 percent 
reserve. As required under Sec. 989.54(d) of the order, the Committee 
also recommended to the Secretary at its February meeting final free 
and reserve percentages which, when applied to the final production 
estimate of a varietal type, will tend to release the full trade demand 
for any varietal type. The Committee's calculations to arrive at final 
percentages for Naturals and Zantes are shown in the table below.

                   Final Volume Regulation Percentages                  
                  [Tonnage as natural condition weight]                 
------------------------------------------------------------------------
                                                  Naturals      Zantes  
------------------------------------------------------------------------
Trade demand..................................      252,398        2,200
Divided by crop estimate......................      381,384        4,955
Equals free percentage........................           66           44
100 minus free percentage equals reserve                                
 percentage...................................           34           56
------------------------------------------------------------------------

    In addition, the Department's ``Guidelines for Fruit, Vegetable, 
and Speciality Crop Marketing Orders'' (Guidelines) specify that 110 
percent of recent years' sales should be made available to primary 
markets each season for marketing orders utilizing reserve pool 
authority. This goal was met for Naturals and Zantes by the 
establishment of final percentages which released 100 percent of the 
trade demand and the offers of additional reserve raisins for sale to 
handlers under the ``10 plus 10 offers.'' As specified in 
Sec. 989.54(g), the 10 plus 10 offers are two offers of reserve pool 
raisins which are made available to handlers during each season. 
Handlers may sell their 10 plus 10 raisins to any market. For each such 
offer, a quantity of reserve raisins equal to 10 percent of the prior 
year's shipments is made available for free use.
    For Naturals, the first 10 plus 10 offer was made available in 
December 1997 and about 31,000 tons of raisins were purchased by 
handlers. The second 10 plus 10 offer was made available to handlers in 
May 1998 at which time about another 31,000 tons of reserve Naturals 
were offered for sale to handlers. Adding the 62,000 tons of 10 plus 10 
raisins to the 252,398 ton trade demand figure, plus 92,769 tons of 
1996-97 carryin inventory equates to about 407,170 tons natural 
condition raisins or 381,750 tons packed raisins made available for 
free use, or to the primary market. This is 130 percent of the quantity 
of Naturals shipped in 1997 (314,013 natural condition tons or 294,406 
packed tons).
    For Zantes, both Zante 10 plus 10 offers were made available 
simultaneously in November 1997 and 656 tons of raisins were purchased 
by handlers. Adding the 656 tons of 10 plus 10 raisins to the 2,200 ton 
trade demand figure, plus 1,679 tons of 1996-97 carryin inventory 
equates to 4,535 tons natural condition raisins or about 3,970 tons 
packed raisins made available for free use, or to the primary market. 
This is 138 percent of the quantity of Zantes shipped in 1997 (3,277 
natural condition tons or 2,868 packed tons).
    In addition to the 10 plus 10 offers, Sec. 989.67(j) of the order 
provides authority for sales of reserve raisins to handlers under 
certain conditions such as a national emergency, crop failure, change 
in economic or marketing conditions, or if free tonnage shipments in 
the current crop year exceed shipments of a comparable period of the 
prior crop year. Such reserve raisins may be sold by handlers to any 
market. These additional offers of reserve raisins would thus make even 
more raisins available to primary markets which is consistent with the 
Department's Guidelines.
    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 have 
been defined by the Small Business Administration (13 CFR 121.601) 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 $500,000. No more than 7 handlers, and a majority of 
producers, of California raisins may be classified as small entities. 
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, excluding receipts from any other sources.
    Pursuant to Sec. 989.54(d) of the order, this rule continues in 
effect the provisions of an interim final rule which established final 
volume regulation percentages for 1997-98 crop Natural and Zante 
raisins. The volume regulation percentages are 66 percent free and 34 
percent reserve for Naturals and 44 percent free and 56 percent reserve 
for Zantes. Free tonnage raisins may be sold by handlers to any market. 
Reserve raisins must be held in a pool for the account of the Committee 
and are disposed of through certain programs authorized under the 
order. The volume regulation percentages are intended to help stabilize 
raisin supplies and prices and strengthen market conditions.
    Many years of marketing experience led to the development of the 
current volume regulation procedures. These procedures have helped the 
industry address its marketing problems by keeping supplies in balance 
with domestic and export market needs, and strengthening market 
conditions. The current volume regulation procedures fully supply the 
domestic and export markets, provide for market expansion, and help 
prevent oversupplies in the domestic market.

[[Page 29534]]

    In discussing the possibility of volume regulation for the 1997-98 
crop year, the Committee considered the following factors:

------------------------------------------------------------------------
                                                 Naturals*     Zantes*  
------------------------------------------------------------------------
Estimated tonnage held by producers, handlers,                          
 and for the account of the Committee at the                            
 beginning of the crop year...................       92,769        1,679
Estimated tonnage of standard raisins which                             
 will be produced in 1997-98..................      381,484        4,955
Trade demand for raisins in free tonnage                                
 outlets for 1997-98..........................      252,398        2,200
Estimated desirable carryout at the end of the                          
 1997-98 crop year for free tonnage...........       58,875         545 
------------------------------------------------------------------------
*Natural condition tons.                                                

    The Committee also considered the estimated world raisin supply and 
demand situation; the current prices being received and the probable 
level of prices to be received for raisins by producers and handlers; 
and the trend and level of consumer income.
    The Committee's review resulted in the computation and announcement 
in October 1997 of volume regulation percentages for Naturals and 
Zantes. Naturals are the major commercial varietal type of raisin 
produced in California. Volume regulation has been implemented under 
the order for Naturals for the past several seasons. With the crop 
estimate of 381,484 tons, much higher than the computed trade demand of 
252,398 tons, the Committee determined that volume regulation was 
warranted.
    In comparison, Zante production is much smaller than that of 
Naturals. Volume regulation was last implemented for Zantes during the 
1995-96 crop year. Volume regulation was warranted for Zantes this 
season because the crop estimate of 4,955 tons exceeded the trade 
demand of 2,200 tons by a significant amount.
    Raisin variety grapes can be marketed as fresh grapes, crushed for 
use 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. These supply fluctuations can cause 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 returns for Naturals have remained fairly steady over the last 
5 crop years although production has varied. As shown in the table 
below, production over the last 5 years has varied from a low of 
272,063 tons in 1996-97 and to a high of 387,007 tons in 1993-94, or 42 
percent. According to Committee data, total producer return per ton, 
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.

                    Natural Seedless Producer Returns                   
------------------------------------------------------------------------
                                                 Production             
                                                  (natural     Producer 
                   Crop year                     condition     returns  
                                                   tons)                
------------------------------------------------------------------------
1996-97.......................................      272,063       $1,049
1995-96.......................................      325,911        1,007
1994-95.......................................      378,427          928
1993-94.......................................      387,007          904
1992-93.......................................      371,516          901
------------------------------------------------------------------------

    Free and reserve percentages are established by variety, and only 
in years when the supply exceeds the trade demand by a large enough 
margin that the Committee believes volume regulation is necessary to 
maintain market stability. Accordingly, in assessing whether to apply 
volume regulation or, as an alternative, not to apply such regulation, 
the Committee recommended only two of the nine raisin varieties defined 
under the order for volume regulation this season.
    The free and reserve percentages release the full trade demand and 
apply uniformly to all handlers in the industry, regardless of size. 
Small and large raisin producers and handlers have been operating under 
volume regulation percentages every year since 1983-84. There are no 
known additional costs incurred by small handlers that are not incurred 
by large handlers. All handlers are regulated based on the quantity of 
raisins which they acquire from producers. While the level of benefits 
of this rulemaking are difficult to quantify, the stabilizing effects 
of the volume regulations impact both 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.
    There are some reporting, recordkeeping and other compliance 
requirements under the order. The reporting and recordkeeping burdens 
are necessary for compliance purposes and for developing statistical 
data for maintenance of the program. The requirements are the same as 
those applied last season. Thus, this action will not impose any 
additional reporting or recordkeeping burdens on either small or large 
handlers. The forms require information which is readily available from 
handler records and which can be provided without data processing 
equipment or trained statistical staff. The information collection and 
recordkeeping requirements have been previously approved by the Office 
of Management and Budget under OMB Control No. 0581-0178. As with 
other, similar marketing order programs, reports and forms are 
periodically studied to reduce or eliminate duplicate information 
collection burdens by industry and public sector agencies. In addition, 
the Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    Further, Committee and subcommittee meetings are widely publicized 
in advance and are held in a location central to the production area. 
The meetings are open to all industry members, including small business 
entities, and other interested persons who are encouraged to 
participate in the deliberations and voice their opinions on topics 
under discussion. Thus, Committee recommendations can be considered to 
represent the interests of small business entities in the industry.
    An interim final rule concerning this action was published in the 
Federal Register on March 10, 1998. Copies of the rule were mailed by 
the Committee's staff to all raisin handlers. In addition, the rule was 
made available through the Internet by the Office of the Federal 
Register. That rule provided for a 60-day comment period which ended on 
May 11, 1998. Interested persons were also invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses. No comments were received.
    After consideration of all relevant material presented, including 
the

[[Page 29535]]

Committee's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (63 FR 11585; March 10, 1998) 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 63 FR 11585 on March 10, 1998, is adopted as a final 
rule without change.

    Dated: May 26, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-14422 Filed 5-29-98; 8:45 am]
BILLING CODE 3410-02-P