Kiwifruit Grown in California and Imported Kiwifruit; Proposed Increase in Minimum Size Requirements

SUMMARY: This proposed rule would increase the current minimum size

requirements for kiwifruit grown in California and for kiwifruit

imported into the United States that are shipped to the fresh market.

The minimum size requirements would be increased from Size 49, which is

defined as 60 pieces of fruit per 8-pound sample, to Size 45, which

would be defined as 55 pieces of fruit per 8-pound sample. This rule

would prevent shipments of low-quality, undersized kiwifruit from

having a negative effect on the market.

DATES: Comments must be received by July 29, 1994.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments should be sent in triplicate to the

Docket Clerk, Fruit and Vegetable Division, AMS, USDA, Room 2525-S,

P.O. Box 96456, Washington, DC 20090-6456 or by FAX at (202) 720-5698.

All comments should reference the docket number and the date and page

number of this issue of the Federal Register and will be available for

public inspection in the office of the Docket Clerk during regular

business hours.

FOR FURTHER INFORMATION CONTACT: Mark Hessel, Marketing Order

Administration Branch, AMS, USDA, P.O. Box 96456, Room 2526-S,

Washington, DC 20090-6456; telephone (202) 720-5127; or Rose Aguayo,

California Marketing Field Office, AMS, USDA, 2202 Monterey Street,

Suite 102 B, Fresno, California 93721; telephone (209) 487-5901.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing

Order No. 920 [7 CFR Part 920], as amended, regulating the handling of

kiwifruit 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.

This proposed rule is also issued under section 8e of the Act,

which provides that whenever certain specified commodities, including

kiwifruit, are regulated under a Federal marketing order, imports of

these commodities into the United States are prohibited unless they

meet the same or comparable grade, size, quality, or maturity

requirements as those in effect for the domestically produced

commodities.

The Department of Agriculture (Department) is issuing this proposed

rule in conformance with Executive Order 12866.

This proposed rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This action is not intended to have retroactive

effect. This proposed 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 date of the entry of the ruling.

There are no administrative procedures which must be exhausted

prior to any judicial challenge to the provisions of import regulations

issued under section 8e of the Act.

Pursuant to the requirements set forth in the Regulatory

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

Service (AMS) has considered the economic impact of this proposed rule

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. Import regulations issued under

the Act are based on those established under Federal marketing orders.

There are approximately 65 handlers subject to regulation under the

order and about 600 producers of California kiwifruit. There are

approximately 75 importers of kiwifruit. Small agricultural service

firms, which include kiwifruit handlers and importers, have been

defined by the Small Business Administration [13 CFR 121.601] as those

whose annual receipts are less than $3,500,000, and small agricultural

producers are defined as those whose annual receipts are less than

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

classified as small entities.

Under the terms of the marketing order, fresh market shipments of

California kiwifruit are required to be inspected and are subject to

grade, size, maturity, pack, and container requirements. Current

requirements include specifications that such shipments be at least

Size 49, grade at least KAC No. 1 quality, and contain a minimum of 6.5

percent soluble solids.

The production of California kiwifruit for the 1993 season was

approximately 12.3 million tray equivalents, compared to the 1992

season production of 13.3 million tray equivalents. This represents an

8 percent decrease in California kiwifruit production from 1992 to

1993.

The Kiwifruit Administrative Committee (committee), the agency

responsible for local administration of the marketing order, met on

February 10, 1993, and recommended increasing the minimum size

requirement from Size 49, which is defined as 60 pieces of fruit per 8-

pound sample, to Size 45, which would be defined as 55 pieces of fruit

per 8-pound sample.

The marketing order authorizes under Sec. 920.52(a)(2) the

establishment of minimum size requirements. Sec. 920.302(a)(2) of the

rules and regulations outlines the minimum size requirements for fresh

shipments of California kiwifruit. Section 920.302(a)(4)(ii) includes a

table that specifies numerical size designations that are used to

determine kiwifruit sizes. These size designations are defined by

numerical counts, which establish the maximum number of fruit per 8-

pound sample for each of the established sizes. The size designation

table defines ten different sizes, beginning with Size 21 (the largest

size) and ending with Size 49 (the smallest size). The committee

recommended eliminating the Size 49 designation (60 pieces of fruit per

8-pound sample) and redefining the Size 45/46 designation (57 pieces of

fruit per 8-pound sample) as a Size 45 designation (55 pieces of fruit

per 8-pound sample).

The committee recommended increasing the minimum size requirement

because of the blending and packing of undersized fruit into containers

using the Size 49 designation. Current pack requirements specify that

kiwifruit designated as Size 45/46 or below must be packed within a \1/

4\ inch size tolerance. Undersized fruit (Size 49 kiwifruit near or

below the lower limit of the size tolerance) is often blended into the

Size 49 designation. It is a common practice throughout the industry to

blend and pack kiwifruit that could be designated as either undersized

fruit, Size 49, or Size 45/46 into a Size 49 container.

Blending occurs because adjoining size designations have size

tolerances that partially overlap and kiwifruit within either size

tolerance may be packed in either size designation. For example, the

current Size 49 designation and the current Size 45/46 designation have

only a 3-count difference per 8-pound sample. This amounts to only a

0.12 ounce difference per individual fruit. The equipment and time

needed to detect such a difference when packing individual fruit would

be cost prohibitive, so instead, handlers choose to blend sizes.

Blending has become more prevalent in recent years because a

greater percentage of kiwifruit is being packed in volume-fill or bulk

containers in which the fruit is packed ``loosely'' instead of in

containers with molded trays. Without the constraints of a molded tray,

there is more freedom to blend sizes.

The committee's intention in recommending this increase in the

minimum size requirement is to eliminate shipments of undersized fruit

that is blended into the Size 49 designation. This undersized kiwifruit

tends to soften more rapidly during storage than larger fruit and

becomes more susceptible to decay. This tendency for undersized fruit

to soften more rapidly than larger fruit becomes more pronounced once

it leaves a controlled environment and enters an uncontrolled one such

as a retail shelf. The end result is that the consumer is more likely

to encounter quality defects with undersized fruit then with larger

fruit.

Eliminating fresh shipments of undersized fruit by increasing the

minimum size requirement would improve overall quality and increase

uniformity of pack size. The consumer would benefit by being offered a

higher quality kiwifruit that would ripen properly without prematurely

shriveling or softening. Also, grower returns are expected to increase

due to less repack loss, better kiwifruit movement, and higher prices

because of a better quality product.

There is also ample evidence to show that the market is adverse to

smaller sizes. The California Kiwifruit Commission funded an

independent survey titled ``Fresh Kiwifruit: Views from the Trade,'' in

1993. This survey indicated that 30% of the trade rejects small sizes

and that 86.1% of the trade prefers Size 42 (defined as 50 pieces of

fruit per 8-pound sample) or larger. Also, 92.1% of the merchandisers

and produce managers claim that their customers reject small sizes.

An example of how consumers reject smaller sizes is when kiwifruit

is sold at the retail level out of 125 pound bulk bins. Consumers

initially pick out the largest and higher quality kiwifruit, and

displays are left with undersized and low quality kiwifruit that is

rejected by later consumers.

The committee's recommendation that the minimum size requirement be

set at Size 45 would not significantly lower the volume of kiwifruit

available in the fresh market. Although the committee reports that

12.1% of the California kiwifruit packout for the 1993/94 season was

designated as Size 49, most of this total could be blended into the

proposed Size 45 designation because of the small difference between

the two size designations. The practice of blending sizes makes it

difficult to predict how much fruit would be eliminated by this

proposal, however, the committee estimates that the total packout would

be reduced by only 1%. In addition, growers could adjust pruning,

thinning, fertilizing, and irrigation techniques so that a larger

percentage of kiwifruit would meet the higher size requirement.

There is general agreement in the industry for the need to

eliminate the packing of undersize fruit. Other alternatives have been

suggested to eliminate shipments of low quality, undersized fruit, but

would not adequately address the problem. One suggestion was to

eliminate the blending of sizes by eliminating the size tolerances.

This is not a realistic alternative, because as mentioned earlier, it

would be cost prohibitive and impossible to achieve using today's

packing methods.

Another suggestion was to measure size by passing a fruit through a

template with an opening large enough for an undersized fruit to fall

through, but too small for a kiwifruit that meets the minimum size

requirement to fall through. This template would be used to determine

whether a fruit was undersized. However, this alternative does not take

into consideration that kiwifruit grows in different shapes so that a

heavier fruit that is short and broad could fall through a template

while a lighter fruit that is long and narrow would not. Weight is

currently used to measure size and is the most accurate measure of a

kiwifruit's size.

Another alternative presented at the meeting was to tighten the

maturity requirements rather than the size standards so that

undersized, immature fruit would not be shipped. However, not all

undersized fruit is immature, but all undersized fruit is more

susceptible to quality problems. Thus, this alternative would not fully

address the problem of blending in undersized fruit of inferior

quality.

Finally, another alternative presented in the meeting was to

establish Size 45 as the minimum size, but continue to define it as 57

pieces of fruit instead of 55 pieces of fruit per 8-pound sample as

recommended by the committee. However, because of the approximately

0.12 ounce difference between a Size 45 kiwifruit defined as 57 pieces

of fruit per 8-pound sample and a Size 49 kiwifruit defined as 60

pieces of fruit per 8-pound sample, this alternative would not go far

enough to prevent the blending of undersized fruit.

Section 8e of the Act provides that when certain domestically

produced commodities, including kiwifruit, are regulated under a

Federal marketing order, imports of that commodity must meet the same

or comparable grade, size, quality, and maturity requirements. Since

this rule would increase the minimum size requirement under the

domestic handling regulations, a corresponding change to the import

regulations must also be considered.

Minimum grade, size, quality, and maturity requirements for

kiwifruit imported into the United States are currently in effect under

Sec. 944.550 [7 CFR 944.550]. The minimum size requirement is specified

in paragraph (a) of Sec. 944.550. This proposal would increase the

minimum size requirement for imported kiwifruit from Size 49, which is

defined as 60 pieces of fruit per 8-pound sample, to Size 45, which

would be defined as 55 pieces of fruit per 8-pound sample.

The increase in the minimum size requirement for importers of

kiwifruit would also have a beneficial impact. This rule would

eliminate quality problems associated with undersized imported

kiwifruit as it would for undersized domestic kiwifruit. In addition,

the domestic trade's preference for larger size kiwifruit applies to

imported kiwifruit as well as domestic kiwifruit. Thus, importers would

benefit by improving the overall quality of kiwifruit shipments and

increasing sales.

In accordance with section 8e of the Act, the United States Trade

Representative has concurred with the issuance of this proposed rule.

Based on the above, the Administrator of the AMS has determined

that this action would not have a significant economic impact on a

substantial number of small entities.

A 30-day comment period is provided to allow interested persons to

respond to this proposal. All written comments timely received will be

considered before a final determination is made on this matter.

List of Subjects

7 CFR Part 920

Kiwifruit, Marketing agreements.

7 CFR Part 944

Avocados, Food grades and standards, Grapefruit, Grapes, Imports,

Kiwifruit, Limes, Olives, Oranges.

For the reasons set forth above, 7 CFR Parts 920 and 944 are

proposed to be amended as follows:

1. The authority citation for 7 CFR Parts 920 and 944 continues to

read as follows:

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

PART 920--KIWIFRUIT GROWN IN CALIFORNIA

2. In Sec. 920.302, paragraphs (a)(2) and (a)(4)(ii) are revised to

read as follows:

Sec. 920.302 Grade, size, pack, and container regulations.

(a) * * *

(2) Size Requirements. Such kiwifruit shall be at least a minimum

Size 45.

* * * * *

(4) * * *

(ii)(A) Kiwifruit packed in bags, volume fill or bulk containers

may not vary more than \1/2\ inch (12.7 mm) in diameter if Size 30 or

larger; not more than \3/8\ inch (9.5 mm) in diameter if Size 33, 36,

39, or 42; and not more than \1/4\ inch in diameter (6.4 mm) if Size

45. Not more than 10 percent, by count, of the containers in any lot

and not more than 5 percent, by count, of kiwifruit in any container

may fail to meet the requirements of this paragraph. The following

table specifies the numerical size designation to be used in packing

such containers as shown in Column 1, and the maximum number of fruit

per 8-pound sample as shown in Column 2.

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

Column 2,

maximum

number of

Column 1, numerical count size designation fruit per 8-

pound

sample

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

21......................................................... 22

25......................................................... 27

27/28...................................................... 30

30......................................................... 32

33......................................................... 35

36......................................................... 40

39......................................................... 45

42......................................................... 50

45......................................................... 55

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

(B) The average weight of all sample units in a lot must weigh at

least 8 pounds, but no sample unit may be more than 4 ounces less than

8 pounds.

* * * * *

PART 944--FRUITS; IMPORT REGULATIONS

3. In Sec. 944.550, paragraph (a) is revised to read as follows:

Sec. 944.550 Kiwifruit import regulation.

(a) Pursuant to section 8e of the Agricultural Marketing Agreement

Act of 1937, as amended, the importation into the United States of any

kiwifruit is prohibited unless such kiwifruit meets all the

requirements of a U.S. No. 1 grade as defined in the United States

Standards for Grades of Kiwifruit (7 CFR 51.2335 through 51.2340),

except that the kiwifruit shall be ``not badly misshapen,'' and an

additional tolerance of 7 percent is provided for kiwifruit that is

``badly misshapen.'' Such fruit shall be at least Size 45, which means

there shall be a maximum of 55 pieces of fruit and the average weight

of all samples in a specific lot must weigh at least 8 pounds, provided

that no individual sample may be less than 7 pounds 12 ounces.

* * * * *

Dated: June 23, 1994.

Eric M. Forman,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 94-15721 Filed 6-28-94; 8:45 am]

BILLING CODE 3410-02-P