Sweet Cherries Grown In Designated Counties in Washington; Establishment of Minimum Size and Maturity Requirements for Rainier Variety Cherries

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 923

[Docket No. FV94-923-1FR]

Sweet Cherries Grown In Designated Counties in Washington;

Establishment of Minimum Size and Maturity Requirements for Rainier

Variety Cherries

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule establishes a minimum size requirement of 11

row size (\61/64\ inch diameter) and a minimum maturity requirement of

17 percent soluble solids for Rainier variety cherries that can be

shipped to fresh market outlets under Marketing Order No. 923. This

final rule ensures that consumers receive cherries of acceptable size

and maturity. This is intended to enhance the quality and image of

Washington Rainier cherries in the fresh market, thereby increasing

sales and improving returns to producers. This final rule was

recommended by the Washington Cherry Marketing Committee (committee),

which works with the Department of Agriculture (Department) in

administering the marketing order covering sweet cherries grown in

designated counties in Washington.

EFFECTIVE DATE: June 21, 1994.

FOR FURTHER INFORMATION CONTACT: Mark J. Kreaggor, Marketing Order

Administration Branch, Fruit and Vegetable Division, Agricultural

Marketing Service, U.S. Department of Agriculture, room 2523-S, P.O.

Box 96456, Washington, DC 20090-6456; telephone: (202) 720-5127; or

Teresa Hutchinson, Northwest Marketing Field Office, Fruit and

Vegetable Division, AMS, USDA, 1220 SW Third Avenue, Room 369,

Portland, OR 97204; telephone: (503) 326-2724.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing

Agreement No. 134 and Marketing Order No. 923 (7 CFR Part 923),

regulating the handling of sweet cherries grown in designated counties

in Washington, 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 final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This final rule is not intended to have

retroactive effect. This final 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 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 a bill in equity is filed

not later than 20 days after the date of the entry of the ruling.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Administrator of the Agricultural Marketing Service

(AMS) has considered the economic impact of this action on small

entities.

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 50 handlers of Washington sweet cherries

that are subject to regulation under the order. In addition, there are

approximately 1,100 producers in the regulated area. Small agricultural

service firms, which include handlers of Washington sweet cherries,

have been defined by the Small Business Administration [13 CFR 121.601]

as those whose annual receipts are less than $5,000,000, and small

agricultural producers are defined as those whose annual receipts are

less than $500,000. A majority of these handlers and producers may be

classified as small entities.

This final rule revises Sec. 923.322 to establish a minimum size

requirement of 11 row (\61/64\ inch diameter) and a minimum maturity

requirement of 17 percent soluble solids for Rainier variety cherries

under the order. The committee recommended these minimum size and

maturity requirements by a vote of 13 to 1.

Section 923.52 of the order authorizes the establishment of grade,

size, quality, maturity, pack and container regulations for any variety

or varieties of cherries grown in the production area. Section 923.53

further authorizes the modification, suspension, or termination of

regulations issued under Sec. 923.52. Section 923.55 provides that

whenever cherries are regulated pursuant to Sec. 923.52 or Sec. 923.53,

such cherries must be inspected by the Federal-State Inspection

Service, and certified as meeting the applicable requirements of such

regulations.

Currently, the regulations require that dark sweet cherries such as

Bing cherries, the predominant variety grown in the production area,

meet certain grade, size, pack and container requirements. Such

cherries are also required to be inspected. Light sweet cherries,

including the Rainier variety, are currently exempt from these

requirements.

The Rainier variety was developed at Washington State University's

Irrigated Agricultural Research and Extension Center in Prosser,

Washington, and was first released to the Northwest cherry industry in

1960. Rainiers were initially used primarily as canning cherries.

However, since the 1980s, production of the Rainier variety for the

fresh market has increased substantially. Less than 600 tons were

marketed fresh in 1987, but that increased to 1,543 tons in 1989 and

1,937 tons in 1992. A record crop of 2,427 tons was marketed in 1993,

about 5 percent of Washington's total sweet cherry crop.

As the Rainier variety gained in importance as a fresh market

cherry, the Washington cherry industry began to consider the need to

establish minimum standards of size and quality for the variety. At its

December 15, 1993, meeting, the committee made its first recommendation

to regulate Rainier cherries. Specifically, the committee recommended

that a minimum size requirement be established at 10\1/2\ row size (1

inch in diameter) for fresh market shipments of Rainier variety

cherries. No minimum maturity requirement was recommended at that time,

although concerns were expressed about ensuring that only ripe cherries

be marketed.

Subsequent to the December meeting, the Department received

correspondence from 19 cherry producers, packers, and marketers

concerning the committee's recommended regulation. The majority (13 of

19) were in favor of the recommendation, and 6 were in opposition to

regulating the Rainier variety.

Comments supporting the proposed minimum size requirement stated

that such a regulation would be in the best interests of producers.

Growing Rainier cherries is more labor intensive and costly than

producing other varieties. Producers need to offer a quality product in

order to recoup these higher production costs. The sale of small,

immature cherries results in buyer dissatisfaction, which reduces

repeat purchases and damages the market for all cherries. Good cultural

practices (e.g., proper pruning) will result in acceptable sizes. Fruit

quality and maturity are enhanced by fruit size.

Those opposed to the recommendation stated that it would reduce the

volume of Rainier cherries permitted to be marketed fresh, thus

reducing returns on the crop. Further, they stated that taste and

appearance are more important to cherry buyers than size. Those in

opposition also claimed that a minimum size requirement would be

detrimental to producers who farm at higher elevations, where fruit

tends to be smaller, but may be sweeter.

Given the lack of industry consensus on this issue, the Department

asked the committee to reconsider the need to regulate Rainier variety

cherries, particularly in light of the concerns raised in the above-

mentioned letters. The committee met again on March 15, 1994, and

rescinded its earlier recommendation. The committee recommended a lower

size requirement--at least 11 row size (\61/64\ inch in diameter)--

coupled with a minimum maturity requirement of 17 percent soluble

solids. The vote on this recommendation was 13 to 1, with the

dissenting voter in favor of a smaller minimum size of 11\1/2\ row

(\57/64\ inch in diameter).

The Rainier cherry is distinct from other cherry varieties marketed

by the Washington cherry industry. It is a yellow-colored cherry, with

some rosy blush. It is considered a specialty item, compared with the

darker colored varieties.

The committee reports the costs of producing and handling Rainier

cherries are higher than those associated with other cherry varieties.

Rainier cherry trees need to be pruned more heavily than other cherry

trees to ensure acceptable sized fruit. Rainier cherry trees are picked

several times during a season, reflecting the fact that not all the

fruit matures at the same time and that the cherries will not ripen

after harvest. Rainier cherries are also fragile and susceptible to

damage during handling. Thus, most Rainier cherries are sorted and

packed by hand.

Rainier cherries are typically marketed from mid-June through July.

AMS Market News data show that prices are highest for the earliest

offerings of these cherries, and that such prices decline as the season

progresses. In 1992, for example, the opening f.o.b. price on June 18

was $35.00 per carton. This declined to $25.00 to $28.00 per carton a

week later, and f.o.b. prices were $22.00 to $28.00 per carton at

season's end. This price trend serves as an incentive for producers to

harvest early, which has resulted in immature, sour Rainier cherries

being marketed.

The committee reports that cherry size and quality are important to

buyers. Consistency and dependability are equally important. Shipments

of immature, low quality, under-sized Rainier cherries in recent

seasons have resulted in disappointment by buyers and consumers. This

reduces repeat purchases, and results in declines in prices and overall

sales volumes. The general consensus of the industry is that some

mandatory quality standards are needed to ensure buyer confidence.

Voluntary standards have been unsuccessful.

Cherry size is related to maturity and other quality factors. That

is, larger sized cherries tend to be sweeter and of higher overall

quality. This is supported by prices received for different sizes of

Bing cherries. Market News data show that f.o.b. prices for 12 row

sized Bings (\54/64\ inch diameter) averaged about $15.00 per carton in

mid-June 1992. At the same time, 10\1/2\ row sized (1 inch diameter)

Bings were selling for about $25.00 per carton. This price relationship

held steady throughout the season. Further, the committee has conducted

research that shows that larger sizes correlate with higher maturity

levels, and that larger sizes are preferred by cherry consumers. While

research results and prices by size specifically for Rainier variety

cherries are currently unavailable, industry consensus is that the same

relationships are true for Rainier cherries.

The Washington cherry industry promotes the sale of Rainier variety

cherries through the Washington State Fruit Commission (WSFC), a State

research and promotion program funded by industry assessments. The WSFC

publicizes the current voluntary 1-inch minimum size standard for

Rainier variety cherries in its promotion efforts. The WSFC has

reported that it receives buyer complaints when such standards are not

upheld. For example, three large retail chains cancelled all of their

in-store promotions of Rainier variety cherries planned for the 1993

season due to the receipt of small, immature Rainier cherries early in

the season. Thus, the industry believes it needs to establish minimum

size and maturity standards to protect its investment in promoting the

crop.

The general consensus of the Washington cherry industry is that the

shipment of poor quality Rainier cherries is disrupting the marketplace

and that some minimum quality standards are needed to maintain the

Rainier cherry market. However, some disagreement was expressed at the

committee meeting as to precisely what those minimum standards should

be.

Some questioned, for example, the 10\1/2\ row size requirement

initially recommended by the committee, saying that this requirement

would result in too many cherries being diverted to processors (an

outlet exempt from regulation). Others stated that the smaller 11 row

cherries have adequate sugar content. Still others opposed any size

requirement, believing that other criteria (e.g., maturity levels) are

more important than size and that size bears no relationship to those

criteria. Additionally, concern was expressed that producers at higher

elevations would be more adversely impacted than other producers by a

minimum size requirement.

In regards to this last concern, the committee concluded that

producers at higher elevations should not be adversely impacted by the

11 row minimum size regulation, since these producers have demonstrated

the ability to produce other varieties at acceptable sizes (e.g., Bing

cherries). Further, a number of producers who farm at higher elevations

attended the meeting, and stated that they would not have a problem

meeting the proposed minimum size requirement, and that proper cultural

practices (including pruning) would ensure that other producers achieve

appropriate sizing.

In an attempt to reach an industry compromise, the committee

rescinded its December recommendation to establish a minimum size

requirement for Rainier cherries at 10\1/2\ row size. It recommended

instead a lower minimum size requirement of 11 row, coupled with a

maturity requirement of at least 17 percent soluble solids. This

recommendation is considered to be conservative, in that most handlers

in the Washington cherry industry pack to higher standards. The

committee intends to conduct research during the 1994 and subsequent

seasons to determine whether further refinements in Rainier variety

cherry standards are needed.

This final rule adds a new provision to Sec. 923.322, Washington

Cherry Regulation 22, to establish a minimum size requirement of \61/

64\ inch in diameter for Rainier variety cherries, which corresponds to

the 11 row size. To provide for variances in packing, a tolerance of 10

percent will be provided for undersized Rainier cherries. Further, the

regulation will provide that not more than 5 percent of the Rainier

cherries in any lot could be less than \57/64\ inch in diameter, which

is 11\1/2\ row size, one size lower than the 11 row size. These

tolerances are comparable to those in effect for other Washington

cherry varieties.

Section 923.322 is also revised by adding a new section to require

that any lot of Rainier cherries would have to contain a minimum of 17

percent soluble solids. The percentage of soluble solids would be

determined by using a refractometer to measure the sugar level in a

composite sample of cherries. This maturity test would be taken at the

time of packing or just prior to shipment, at the option of the

handler.

As previously discussed, Sec. 923.55 of the order provides that

whenever cherries are subject to grade, size, quality, maturity, pack

or container regulations, those cherries must be inspected by the

Federal-State Inspection Service (FSIS). Since this rule would

establish minimum size and maturity requirements for Rainier variety

cherries, such cherries would have to be inspected and certified by the

FSIS as meeting the applicable requirements of the regulation.

A proposed rule concerning this action was published in the Federal

Register on May 19, 1994, (59 FR 26148), which provided a 15 day

comment period ending June 3, 1994. Three comments were received. The

Washington Cherry Committee recommended a modification to the original

minimum maturity requirement. Mr. Mike Hambelton of Stemilt Growers,

Inc. did not support the original minimum maturity requirement, but

supported the committee's recommended modification. Mr. Grady Auvil of

Auvil Fruit Company also supported the modification recommended by the

committee. Both Mr. Hambelton and Mr. Auvil did not support the minimum

size requirement.

The Washington Cherry Committee's comment stated that the

modification to its recommended minimum maturity requirement for

Rainier cherries was to provide more flexibility for handlers. The

proposed rule stated that maturity testing was to be conducted at the

time of packing or shipment only. Since handlers use different methods

of packing Rainier cherries, the committee agreed that it is important

that handlers have the option to determine when the maturity test will

be conducted. This will prevent the unnecessary packing and repacking

of Rainier cherries that do not meet the minimum size requirements. The

new language will accommodate different methods by permitting maturity

inspection, prior to packing, at the time of packing, or just prior to

shipment. The Department believes that the comments concerning

modifying the minimum maturity requirements for Rainier cherries have

merit. Therefore, this final rule is modified to revise Sec. 923.322(c)

of Washington Cherry Regulation 22, to provide more flexibility in

inspection.

Mr. Hambelton and Mr. Auvil also filed comments requesting that the

Department not approve the committee's size recommendation. Mr.

Hambelton suggested that the committee lacked formal research in the

areas of Rainier cherry maturity and size. The committee has done

research concerning cherries showing that size and quality are very

important to buyers. Although no formal research was specifically

conducted on Rainier cherries, there is among growers and handlers a

tremendous amount of knowledge and experience about the marketing of

Rainier cherries. The overwhelming view of the committee, which is made

up of growers and handlers, is that shipments of small, sour Rainier

cherries has been poorly received by consumers. In addition, the

committee gave the issue full and timely consideration, as noted in the

two meetings which were held. The committee in its final decision voted

13 to 1 in favor of its recommendation.

Mr. Auvil also stated that the minimum size requirement would limit

supply, resulting in higher prices. Mr. Hambelton also claimed that the

size regulation would reduce Rainier cherry supplies and result in

grower prices exceeding parity levels. He cited that the 1993 parity

price for sweet cherries was $1,640 per ton, and that Rainier cherry

producers received on average $1,822 per ton. However, the $1,640

figure used by Mr. Hambelton is a national sweet cherry parity figure

from the July 1993 National Agricultural Statistics Service report.

This figure reflects prices for all sweet cherries grown in the United

States, including Rainier cherries and other varieties of sweet

cherries grown in the regulated area. There are no separate official

data on Rainier cherries. The AMS has calculated an equivalent parity

price for Washington sweet cherries of $2,083 per ton, and does not

expect that prices received during the 1994 season will exceed parity

levels.

More importantly, however, the intent of this action is to

establish minimum levels of size and maturity to ensure consumer

satisfaction and maintain current markets. The objective of this action

is not to reduce supplies of Rainier cherries. As previously discussed,

higher prices for earliest offerings of Rainier cherries provide an

incentive for producers to harvest early, which has resulted in

immature, sour Rainier cherries being marketed. The establishment of

minimum size and maturity requirements should reduce this propensity to

harvest prematurely, but should not reduce the overall volume of

Rainier cherries.

Considering complaints received from consumers last season about

immature Rainier cherries, the committee made its recommendation to

make 11 row size the minimum for such cherries. The size recommendation

ensures cherries of a good size will be shipped to market.

For the reasons stated above, the Department is not making any

changes to the size requirements for Rainier cherries.

Based on available information, the Administrator of the AMS has

determined that this action will not have a significant impact on a

substantial number of small entities.

After consideration of all available information, it is found that

establishing minimum size and maturity requirements, as set forth in

this final rule, will tend to effectuate the declared policy of the

Act.

Pursuant to 5 U.S.C. 553, it is also found and determined that good

cause exist for not postponing the effective date of this final rule

until 30 days after publication in the Federal Register because: (1)

The committee held several meetings concerning the need to regulate

Rainier variety cherries and all interested persons were invited to

participate and express their opinions on this issue; (2) the proposed

rule provided a comment period and modifications were made based on the

comments; and (3) to be of maximum benefit to the industry, any

regulation covering Rainier cherries should be in place for the 1994

season which begins in mid-June, and adequate time is needed to advise

producers and shippers.

List of Subjects in 7 CFR Part 923

Cherries, Marketing agreements, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 923 is

amended as follows:

PART 923--SWEET CHERRIES GROWN IN DESIGNATED COUNTIES IN WASHINGTON

1. The authority citation for 7 CFR part 923 continues to read as

follows:

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

2. Section 923.322 is amended by removing the introductory text,

revising paragraph (a), redesignating paragraphs (b), (c), (d), and (e)

as paragraphs (d), (e), (f), and (g) respectively, adding new

paragraphs (b) and (c), and revising paragraphs (d)(2) and (f) to read

as follows:

Sec. 923.322 Washington Cherry Regulation 22.

(a) Grade. No handler shall handle, except as otherwise provided in

this section, any lot of cherries, except cherries of the Rainier,

Royal Anne, and similar varieties, commonly referred to as ``light

sweet cherries'' unless such cherries grade at least Washington No. 1

grade except that the following tolerances, by count, of the cherries

in the lot shall apply in lieu of the tolerances for defects provided

in the Washington State Standards for Grades of Sweet Cherries:

Provided, That a total of 10 percent for defects including in this

amount not more than 5 percent, by count, of the cherries in the lot,

for serious damage, and including in this latter amount not more than

one percent, by count, of the cherries in the lot, for cherries

affected by decay: Provided further, That the contents of individual

packages in the lot are not limited as to the percentage of defects but

the total of the defects of the entire lot shall be within the

tolerances specified.

(b) Size. No handler shall handle, except as otherwise provided in

this section, any lot of cherries, except cherries of the Royal Anne

and similar varieties other than the Rainier variety commonly referred

to as ``light sweet cherries'' unless such cherries meet the following

minimum size requirements:

(1) For the Rainier variety, at least 90 percent, by count, of the

cherries in any lot shall measure not less than \61/64\ inch in

diameter and not more than 5 percent, by count, may be less than \57/

64\ inch in diameter.

(2) For all other varieties, at least 90 percent, by count, of the

cherries in any lot shall measure not less than \54/64\ inch in

diameter and not more than 5 percent, by count, may be less than \52/

64\ inch in diameter.

(i) All shipments handled in such containers shall be under the

supervision of the committee; and

(ii) At least 90 percent, by count, of the cherries in any lot of

such containers shall measure not less than \54/64\ inch in diameter,

and not more than 5 percent, by count, may be less than \52/64\ inch in

diameter.

(c) Maturity. No handler shall handle, except as otherwise provided

in this section, any lot of Rainier cherries unless such cherries meet

a minimum of 17 percent soluble solids as determined from a composite

sample by refractometer prior to packing, at time of packing, or at

time of shipment. Provided, That individual lots shall not be combined

with other lots to meet soluble solids requirements.

(d) * * *

(2) Subject to the provisions of paragraphs (b)(2)(i) and (ii) of

this section, shipments of cherries may be handled in such experimental

containers as have been approved by the Washington Cherry Marketing

Committee.

* * * * *

(f) Exceptions. Any individual shipment of cherries which meets

each of the following requirements may be handled without regard to the

provisions of paragraphs (a), (b), (c), (d), and (e) of this section,

and of Secs. 923.41 and 923.55.

Dated: June 16, 1994.

Robert C. Keeney,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 94-15143 Filed 6-20-94; 8:45 am]

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