Source: https://www.federalregister.gov/documents/2003/09/09/03-23045/oranges-grapefruit-tangerines-and-tangelos-grown-in-florida-limiting-the-volume-of-small-red
Timestamp: 2017-09-25 08:20:11
Document Index: 536122551

Matched Legal Cases: ['§\u2009905', '§\u2009905', '§\u2009905', '§\u2009905', '§\u2009905', '§\u2009905']

53015-53021 (7 pages)
03-23045
https://www.federalregister.gov/d/03-23045 https://www.federalregister.gov/d/03-23045
Section 905.153 of the regulations provides procedures for limiting the volume of small red seedless grapefruit entering the fresh market. The procedures specify that the Committee may recommend that only a certain percentage of sizes 48 and 56 red seedless grapefruit be made available for shipment into fresh market channels for any week or weeks during the regulatory period. The regulation period is 22 weeks long and begins the third Monday in September. Under such a limitation, the quantity of sizes 48 and 56 red seedless grapefruit that may be shipped by a handler during a regulated week is calculated using the recommended percentage. By taking the recommended Start Printed Page 53016weekly percentage times the average weekly volume of red seedless grapefruit handled by such handler in the previous five seasons, handlers can calculate the total volume of sizes 48 and 56 they may ship in a regulated week.
This rule limits the volume of sizes 48 (39/16 inches minimum diameter) and 56 (35/16 inches minimum diameter) red seedless grapefruit entering the fresh market by instituting weekly percentages for the first 22 weeks of the 2003-04 season. This rule establishes weekly percentages at 45 percent for weeks 1 and 2 (September 15 through September 28, 2003), 35 percent for weeks 3 through 19 (September 29, 2003, through January 25, 2004), and 40 percent for weeks 20, 21, and 22 (January 26 through February 15, 2004). The Committee recommended this action unanimously at a meeting on July 1, 2003. This action is similar to those taken the previous six seasons.
The Committee believes the over shipment of smaller-sized red seedless grapefruit contributed to these poor returns for growers and to lower prices. Based on available statistical information, Committee members concluded that once shipments of sizes 48 and 56 reached levels above 250,000 cartons per week, prices declined on those and most other sizes of red seedless grapefruit. The Committee believed if shipments of small sizes were maintained at around or below 250,000 cartons a week, prices would stabilize and demand for larger, more profitable sizes would increase. Consequently, in 1996, the Committee recommended changing their rules and regulations to establish the procedures in § 905.153 to limit the volume of small red seedless grapefruit entering the market. The Committee has successfully used the provisions of § 905.153 to address the problems associated with the over shipment of small red seedless grapefruit, recommending percentage of size regulation during the first 11 weeks of the 1997-98, 1998-99, 1999-2000, and 2000-01 seasons, and for the first 22 weeks of the 2001-02 and 2002-03 seasons. Under percentage of size regulation, prices increased and movement stabilized when compared to seasons without regulation.
The Committee believes for the 2003-04 season small sized red seedless grapefruit would again negatively impact the market for all grapefruit if not regulated. By regulating the volume of small sizes entering the fresh market for the first 22 weeks of the season, shipments of sizes 48 and 56 can be maintained near the 250,000-carton level. To address the volume of small-sized red seedless grapefruit available and to prevent the over shipment of small sizes, the Committee voted to utilize the provisions of § 905.153 and establish percentage of size regulation for each of the 22 weeks of the regulatory period for the 2003-04 season.
The University of Florida, Citrus Research and Education Center published an estimated cost of production for grapefruit for the 2001-2002 season. The cost to produce grapefruit for the fresh market was estimated at $1,008.77 per acre for the Indian River area, the major grapefruit production area in Florida. Indian River grapefruit production has averaged around 417 boxes per acre. Based on the cost of production, and the average boxes per acre, growers need to earn a total on-tree value (fruit going both to the fresh market and to processing) of approximately $2.42 per box in order to break even. For the three seasons prior to percentage of size regulation, the total on-tree value averaged $1.78 per box. Comparatively, for the seasons with Start Printed Page 53017regulation, 1997-98 through 2001-02, the on-tree value has averaged $2.45 per box for Indian River grapefruit.
Statistics from the Florida Department of Citrus show there is currently a 40-week inventory of red seedless grapefruit juice from last season. By the start of the season, it is projected that over 35 weeks worth of juice will remain in inventory. Due to current inventories, on-tree prices for processed red seedless grapefruit for the 2003-04 season will most likely mirror prices from past seasons and remain below a dollar. A fair percentage of red seedless grapefruit shipped for processing are smaller sizes. With limited returns for processed grapefruit, an additional Start Printed Page 53018volume of small sizes could be shifted toward the fresh market, further aggravating problems with excessive volumes of small sizes.
Under § 905.153, the quantity of sizes 48 and 56 red seedless grapefruit a handler may ship during a regulated week is calculated using the set weekly percentage. Handlers can fill their allotment with size 56, size 48, or a combination of the two sizes such that the total of these shipments is within the established limits. The Committee staff performs the specified calculations and provides them to each handler. The regulatory period begins the third Monday in September, September 15, 2003. Each regulation week begins Monday at 12 a.m. and ends at 11:59 p.m. the following Sunday.
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 the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own Start Printed Page 53019behalf. Thus, both statutes have small entity orientation and compatibility.
Based on industry and Committee data, the average annual f.o.b. price for fresh Florida red seedless grapefruit during the 2002-03 season was approximately $7.24 per 4/5 bushel carton, and total fresh shipments for the 2002-03 season are estimated at 22.9 million cartons of red grapefruit. Approximately 25 percent of all handlers handled 75 percent of Florida's grapefruit shipments. Using the average f.o.b. price, at least 75 percent of the grapefruit handlers could be considered small businesses under SBA's definition. Therefore, the majority of Florida grapefruit handlers may be classified as small entities. The majority of Florida grapefruit producers may also be classified as small entities.
The over shipment of small-sized red seedless grapefruit contributes to poor returns and lower on-tree values. This rule limits the volume of sizes 48 and 56 red seedless grapefruit shipped during the first 22 weeks of the 2003-04 season by establishing weekly percentages for each of the 22 weeks, beginning September 15, 2003. This rule sets the weekly percentages at 45 percent for weeks 1 and 2, 35 percent for week 3 through week 19, and at 40 percent for weeks 20, 21, and 22. The quantity of sizes 48 and 56 red seedless grapefruit that may be shipped by a handler during a particular week is calculated using the percentages set. This action supplies enough small red seedless grapefruit, without saturating all markets with small sizes. This action will help stabilize the market and improve grower returns. This rule uses the provisions of § 905.153. Authority for this action is provided in § 905.52 of the order. The Committee unanimously recommended this action at a meeting on July 1, 2003.
The Barber study stated that prices rose anywhere from 12.9 percent or $.72 to 17.5 percent or $1.00 per 4/5 bushel carton during percentage of size regulation. Even if this action were only successful in raising returns by $.10 per carton, this increase in combination with the substantial number of shipments generally made during this 22-week period, would represent an increased return of nearly $1.4 million. Consequently, any increased returns generated by this action should more than offset any additional costs associated with this regulation.
This rule provides a supply of small-sized red seedless grapefruit sufficient to meet market demand, without saturating all markets with these small sizes. This action is not expected to decrease the overall consumption of red seedless grapefruit. With supply in excess of demand, this rule is not expected to impact consumer prices or demand. The benefits of this rule are expected to be available to all red Start Printed Page 53020seedless grapefruit growers and handlers regardless of their size of operation. This rule will likely help small under-capitalized growers who need additional weekly revenues to meet operating costs.
(a) 9/15/03 through 9/21/03 45
(b) 9/22/03 through 9/28/03 45
(c) 9/29/03 through 10/5/03 35
(d) 10/6/03 through 10/12/03 35
(e) 10/13/03 through 10/19/03 35
(f) 10/20/03 through 10/26/03 35
(g) 10/27/03 through 11/2/03 35
(h) 11/3/03 through 11/9/03 35
(i) 11/10/03 through 11/16/03 35
(j) 11/17/03 through 11/23/03 35
(k) 11/24/03 through 11/30/03 35
(l) 12/1/03 through 12/7/03 35
(m) 12/8/03 through 12/14/03 35
(n) 12/15/03 through 12/21/03 35
(o) 12/22/03 through 12/28/03 35
(p) 12/29/03 through 1/4/04 35
(q) 1/5/04 through 1/11/04 35
(r) 1/12/04 through 1/18/04 35
(s) 1/19/04 through 1/25/04 35
(t) 1/26/04 through 2/1/04 40
(u) 2/2/04 through 2/8/04 40
(v) 2/9/04 through 2/15/04 40