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[Federal Register Volume 76, Number 137 (Monday, July 18, 2011)]
[Rules and Regulations]
[Pages 42006-42009]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17788]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. AMS-FV-11-0013; FV11-989-1 FR]

Raisins Produced From Grapes Grown In California; Increase in 
Desirable Carryout Used To Compute Trade Demand

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule increases the desirable carryout used to compute the 
yearly trade demand for Natural (sun-dried) Seedless (NS) raisins 
covered under the Federal marketing order for California raisins 
(order). The order regulates the handling of raisins produced from 
grapes grown in California and is administered locally by the Raisin 
Administrative Committee (committee). This rule increases the amount of 
tonnage available early in the season when volume regulation is 
implemented, and is expected to help the industry meet its market 
needs.

DATES: Effective Date: July 19, 2011.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Senior Marketing 
Specialist, or Kurt J. Kimmel, Regional Manager, 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 E-mail: Terry.Vawter@ams.usda.gov or 
Kurt.Kimmel@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Laurel May, 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: Laurel.May@ams.usda.gov.

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.

[[Page 42007]]

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect.
    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 increases the desirable carryout used to compute the 
yearly trade demand for NS 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 component of this formula, is 
the amount of tonnage carried in from the prior crop year which is 
considered necessary to meet market needs, before raisins from the new 
crop year are available.
    Currently, the desirable carryout for NS raisins is defined as: The 
total shipments of free tonnage during August and September of each of 
the past 5 crop years, converted to a natural condition basis, dropping 
the high and low figures, and dividing the remaining sum by three, or 
60,000 natural condition tons, whichever is higher. This rule increases 
the desirable carryout to 85,000 natural condition tons, with no 
further calculations required. This action was unanimously recommended 
by the committee at a meeting held on February 23, 2011.
    It should be noted that the desirable carryout for raisin varieties 
other than NS are not impacted by this change.
    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 
carrying 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 other methods for arriving at a 
desirable carryout in the order's rules and regulations. The current 
formula has allowed the committee to periodically adjust the desirable 
carryout to better reflect changes in marketing conditions, as they 
have since 1989, most recently in 2000 and 2002.
    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). The formula has been changed over the years 
because the committee believed that an excessive supply of raisins was 
available early in a new crop year, which contributed to unstable 
market conditions.
    However, given recent worldwide shortages of NS raisins, a 
favorable monetary exchange rate, and the extremely low inventory 
carried in by the industry at the beginning of the 2010-11 crop year, 
the committee determined that the current trade demand formula would 
not provide enough raisins to meet market demands when volume 
regulation is implemented, especially in the early part of the crop 
year when supplies can be tight. Thus, the committee recommended 
increasing the desirable carryout component of the formula. This change 
also allows desirable carryout of NS raisins to more accurately reflect 
the amount of NS raisins that handlers actually hold in inventory at 
the end of a crop year, or about 100,000 tons.

The Committee's Recommendation

    At a meeting on February 23, 2011, the committee reviewed the 
desirable carryout level. Most committee members believe that the 
supply of free tonnage raisins on the market has become tight, and the 
carryout balance has resulted in market shortages and missed marketing 
opportunities in the early part of the season. The following table 
illustrates handler inventories for NS raisins have generally been 
declining in recent years, with the exception of 2009-10.

                  Carryout Inventory Over Past 6 Years
                        [Natural condition tons]
------------------------------------------------------------------------
                                                            NS carryout
                        Crop year                            inventory
------------------------------------------------------------------------
2010-11.................................................          83,143
2009-10.................................................         126,824
2008-09.................................................         106,249
2007-08.................................................         105,430
2006-07.................................................         111,444
2005-06.................................................         114,792
------------------------------------------------------------------------

    Committee staff estimated that this change to the desirable 
carryout level would increase the 2011-12 trade demand for NS raisins 
by 15,000 tons. Increasing the trade demand will increase the free 
tonnage percentage, making more free tonnage available to handlers for 
immediate use. The effect of increased free tonnage would be to 
decrease any reserve pool which might be established.
    NS raisins are the major commercial varietal type of raisin 
produced in California. With the exception of the 1998-99, 2003-04, and 
2010-11 crop years, volume regulation has been implemented for NS 
raisins every year since 1983.

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.

[[Page 42008]]

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 28 handlers of California raisins who are 
subject to regulation under the order and approximately 3,000 raisin 
producers in the regulated area. The Small Business Administration (13 
CFR 121.201) defines small agricultural service firms as those having 
annual receipts of less than $7,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000.
    Based upon shipment data and other information provided by the 
committee, it may be concluded that a majority of producers and 
approximately 18 handlers of California raisins may be classified as 
small entities.
    This rule increases 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 component of 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. Currently, the desirable carryout for Natural (sun-dried) 
Seedless (NS) raisins is defined as: The total shipments of free 
tonnage during August and September of each of the past 5 crop years, 
converted to a natural condition basis, dropping the high and low 
figures, and dividing the remaining sum by three, or 60,000 natural 
condition tons, whichever is higher.
    This rule increases the desirable carryout to 85,000 natural 
condition tons, with no calculations required. This action was 
unanimously recommended by the committee at a meeting held on February 
23, 2011.
    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, increasing 
the desirable carryout will increase the trade demand and free tonnage 
percentage, thus making more raisins available to handlers early in the 
season. This action is expected to provide more raisins at the 
beginning of each crop year to meet early demand, thereby improving 
market conditions at a time period when optimum shipments are 
advantageous--in time for the holidays. Holiday shipments begin in 
August, before new-crop raisins are available, and continue through 
October, and have traditionally been the highest shipment period, as 
buyers prepare for increased holiday sales of raisins and goods 
containing raisins.
    The committee has an appointed subcommittee, the Administrative 
Issues Subcommittee (subcommittee), which periodically holds public 
meetings to discuss changes to the order and other issues. The 
subcommittee met on February 1, 2011, and discussed desirable carryout, 
considering a number of alternative levels of desirable carryout. While 
there was no opposition to increasing the desirable carryout, some 
industry members supported making the NS desirable carryout 90,000 
natural condition tons, while some suggested that 80,000 natural 
condition tons was a good alternative. Still others suggested that the 
ideal number might be closer to 100,000 natural condition tons, in 
keeping with the average of the last several years' actual inventory 
carried in at the beginning of the crop year, 106,000 natural condition 
tons. The 85,000 natural condition tons ultimately recommended was a 
compromise reached during subcommittee deliberations of the 
alternatives.
    On February 23, 2011, the subcommittee met again and further 
discussed desirable carryout before recommending to the full committee 
that the desirable carryout be increased for NS raisins from the 
current formula or 60,000 natural condition tons, whichever is greater, 
to simply 85,000 natural condition tons. Ultimately, the full committee 
adopted the subcommittee's recommendation, and unanimously recommended 
the change to USDA.
    This final rule would impose 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. USDA has not 
identified any relevant Federal rules that duplicate, overlap or 
conflict with this rule.
    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.
    In addition, the subcommittee's meetings on February 1, 2011, and 
February 23, 2011; and the committee's meeting on February 23, 2011, 
were public meetings, widely publicized throughout the raisin industry. 
All interested persons were invited to attend the meetings and 
encouraged to participate in the industry's deliberations.
    A proposed rule concerning this action was published in the Federal 
Register on May 13, 2011 (76 FR 27921). Copies of the rule were 
provided to all committee members and raisin handlers. Finally, the 
rule was made available through the Internet by USDA and the Office of 
the Federal Register. A 30-day comment period ending June 13, 2011, was 
provided to allow interested persons to respond to the proposal. There 
were two comments received during the comment period, both in support 
of the proposed rule. Accordingly, no changes will be made to the rule 
as proposed.
    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/MarketingOrdersSmallBusinessGuide Any questions about the compliance 
guide should be sent to Laurel May at the previously-mentioned address 
in the FOR FURTHER INFORMATION CONTACT section.
    After consideration of all relevant matters presented, including 
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 aware of this 
change, which was unanimously recommended at at least one public 
meeting. In addition, this rule needs to be in effect in time for the 
beginning of the new crop year, which is August 1, 2011.

List of Subjects in 7 CFR Part 989

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

[[Page 42009]]

    For the reasons set forth in the preamble, 7 CFR part 989 is 
amended as follows:

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 989 continues to read as 
follows:

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

0
2. In Sec.  989.154, the first sentence of paragraph (a) is revised to 
read as follows:

Sec.  989.154  Marketing policy computations.

    (a) Desirable carryout levels. The desirable carryout level to be 
used in computing and announcing a crop year's marketing policy for 
Natural (sun-dried) Seedless raisins shall be 85,000 natural condition 
tons.
* * * * *

    Dated: July 11, 2011.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. 2011-17788 Filed 7-15-11; 8:45 am]
BILLING CODE 3410-02-P
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