Olives Grown in California and Imported Olives; Establishment of Limited Use Olive Requirements During the 1994-95 Crop Year

DEPARTMENT OF AGRICULTURE

7 CFR Parts 932 and 944

[Docket No. FV94-932-1IFR]

Olives Grown in California and Imported Olives; Establishment of

Limited Use Olive Requirements During the 1994-95 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule authorizes the use of smaller sized

olives in the production of limited use styles for California olives

during the 1994-95 crop year. This action is intended to allow more

olives into fresh market channels and is consistent with current market

demand for olives. As required under section 8e of the Agricultural

Marketing Agreement Act of 1937, this action also changes the import

regulation so that it conforms with the requirements established under

the California olive marketing order.

DATES: Effective September 16, 1994; comments received by October 13,

1994 will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must 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 facsimile 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 made available

for public inspection in the Office of the Docket Clerk during regular

business hours.

FOR FURTHER INFORMATION CONTACT: Caroline C. Thorpe, Marketing Order

Administration Branch, Fruit and Vegetable Division, AMS, USDA, P.O.

Box 96456, Room 2523-S, Washington, D.C. 20090-6456; telephone (202)

720-5127, or Terry Vawter, California Marketing Field Office, Fruit and

Vegetable Division, AMS, USDA, 2202 Monterey Street, Suite 102-B,

Fresno, CA 93721, telephone (209) 487-5901.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing

Agreement No. 148 and Order No. 932 [7 CFR Part 932], as amended,

regulating the handling of olives 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 rule is also issued under section 8e of the Act, which

requires the Secretary of Agriculture to issue grade, size, quality, or

maturity requirements for certain listed commodities, including olives,

imported into the United States that are the same as, or comparable to,

those imposed upon the domestic commodities regulated under the Federal

marketing orders.

The Department of Agriculture (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. This rule is not intended to have retroactive effect.

This 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 608(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 requesting 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 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. Import regulations issued under

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

There are 5 handlers of California olives that will be subject to

regulation under the order during the current season, and there are

about 1,200 olive producers in California. There are approximately 25

importers of olives subject to the olive import regulation. Small

agricultural producers have been defined by the Small Business

Administration [13 CFR Sec. 121.601] as those whose annual receipts are

less than $500,000, and small agricultural service firms, which include

handlers and importers, have been defined by the Small Business

Administration as those having annual receipts of less than $5,000,000.

None of the domestic olive handlers may be classified as small

entities. The majority of olive producers and importers may be

classified as small entities.

Nearly all of the olives grown in the United States are produced in

California. The growing areas are scattered throughout California with

most of the commercial production coming from inland valleys. The

majority of olives are produced in central California. California

olives are primarily used for canned ripe whole and whole pitted olives

which are eaten out of hand as hors d'oeuvres or used as an ingredient

in cooking and in salads. The canned ripe olive market is essentially a

domestic market. A few shipments of California olives are exported.

Olive production has fluctuated from a low of 24,200 tons during

the 1972-73 crop year to a high of 163,023 tons during the 1992-93 crop

year. The California Olive Committee (committee) indicated that 1993-94

production totalled about 120,049 tons. Total production for the 1994-

95 crop year is estimated to be 95,000 tons. Because olive trees need

to restore their nutrients from one season to the next, various

varieties of olives produced in California have alternate bearing

tendencies. This results in high production one year and low the next,

which usually causes the total crop to vary greatly from year to year.

This crop year's estimated production is expected to be smaller than

last year due to weather conditions early in the season which resulted

in poor fruit pollination. However, based on past production and

marketing experience, the committee believes that handlers will need

smaller sized olives during the 1994-95 crop year to meet market demand

for limited use styles of canned olives. Limited use olives are too

small to meet the minimum size requirements established for whole and

whole pitted canned ripe olives. However, they are large enough to be

suitable for processing into limited use styles such as wedges, halves,

slices, or segments. Absent this action, olives which are smaller than

those authorized for whole and whole pitted canning uses would have to

be disposed of by handlers into non-canning uses such as crushing into

oil.

Paragraph (a)(3) of Sec. 932.52 of the order provides that

processed olives smaller than the sizes prescribed for whole and whole

pitted styles may be used for limited uses if recommended by the

committee and approved by the Secretary. Until October 1, 1991,

paragraph (a)(3) also prescribed minimum sizes, by variety group, which

could be authorized for use in the production of limited use styles by

the Secretary.

Effective October 1, 1991, certain non-canning size disposition

requirements specified in Sec. 932.51(a)(3) and minimum sizes

authorized for limited use specified in Sec. 932.52(a)(3) of the

marketing order were suspended. The committee may now recommend the use

of olives for limited uses that are smaller than those previously

permitted under the order. Minimum size and grade requirements may be

recommended annually by the committee and approved by the Secretary.

During the past three crop years, 1991-92, 1992-93, and 1993-94, the

committee recommended sizes smaller than those previously authorized.

The minimum sizes which could previously be authorized for limited

uses were established in a 1971 amendment to the marketing order.

Olives smaller than the prescribed minimum sizes which could be

authorized for limited uses had to be disposed of through less

profitable non-canning uses such as crushing for oil. Returns to

producers are lower on fruit used for such purposes. The use of smaller

sized olives for limited use styles has been authorized in all but two

crop years since the order was promulgated in 1965.

This action will help growers and handlers to meet the growing

market demand for limited use style olives based upon current

conditions. The limited use size requirements allow the use of sizes

which would otherwise have to be disposed of for less profitable, non-

canning uses. Permitting the use of such smaller olives for limited use

styles would therefore improve grower returns.

On July 13, 1994, the committee recommended by a vote of 15-1, to

establish grade and size regulations for limited use size olives during

the 1994-95 crop year pursuant to paragraph (a)(3) of Sec. 932.52 of

the order. The one handler member who dissented was concerned that

approval of limited use size olives would be detrimental to handlers,

due to already large inventories of such olives from the two previous

seasons. The recommended grade and size requirements are the same as

those established during the 1990-91 crop year, which means slightly

larger minimum sizes than were in effect during the 1991-92, 1992-93,

and 1993-94 crop years.

The specified sizes for the different olive variety groups are the

minimum sizes which are deemed desirable for use in the production of

limited use styles at this time. As in past years, permitting the use

of the smaller olives in the production of limited use styles allowed

handlers to take advantage of the strong market for halved, segmented,

sliced, and chopped canned ripe olives. Handlers will be able to market

more olives than would be permitted in the absence of this relaxation

in size requirements.

The committee also based its decision on certain production and

market factors. The last three crop years were the first crop years

that limited use olives were authorized at sizes below the 1990-91 crop

year minimum size requirements. Prior to the 1990-91 crop year, the

committee investigated limited use olives that were below permitted

minimum sizes. From investigations and surveys within the industry, the

committee determined that limited use olives below 1990-91 minimum

sizes could be efficiently sliced using current technology. However,

consumer interest in and need for such olives also had to be

determined, specifically for smaller sliced olive rings. Thus, minimum

size requirements below the 1990-91 crop year were recommended and

became effective for limited use olives.

During the following three seasons, the industry experienced a

higher percentage of broken pieces in the smaller olives than with the

slightly larger sizes. The U.S. Standards for Grades of Canned Ripe

Olives (Standards) define a broken piece as any piece of olive that is

less than three quarters of a full unit. This situation had a negative

impact on the California olive market as the extra broken pieces caused

customers to complain about the lack of uniformity and poorer quality

of product from these smaller sizes. Such olives also had to compete

with imported sliced olives that had fewer broken pieces. Therefore,

the committee recommended slightly larger minimum size requirements for

limited use olives in order to improve the quality of and enhance the

market for California limited use olives.

Also, the committee estimates that production for this crop year is

expected to be at 95,000 tons, which is smaller than the previous two

seasons. Weather conditions early in the crop year caused poor

pollination resulting in a smaller crop with an uneven distribution of

sizes. The 1992-93 and 1993-94 crop years produced large crops of

163,023 tons and 120,049 tons, respectively. During years with large

olive crops, the ratio of limited use olives to other sizes tends to be

higher; there are more limited use size olives in proportion to the

other sizes. During years with small olive crops, the ratio of smaller

olives to other sizes is smaller; there tends to be fewer limited use

size olives in proportion to the other sizes. The increased

availability of limited use sized fruit could be reflected in handler

processing for the last three seasons. For example, during the 1992-93

crop year, 19 percent of the olives (163,024 tons) processed by

handlers were limited use, and during the 1991-92 crop year, 11 percent

of total olives (63,259 tons) processed by handlers were limited use.

Although limited use minimum sizes were larger during the 1990-91

season, limited use olive processed by handlers were 16 percent of

total olives (126,879 tons) purchased by handlers. Thus, unlike the two

previous seasons, fewer small limited use olives are expected to be

harvested this season. The percentage of limited use olives is expected

to be smaller. The slight increase in minimum limited use size

requirements being established for the 1994-95 season is therefore not

expected to greatly impact available supplies.

Thus, it is found that permitting limited use olives as recommended

by the committee is expected to improve market conditions, and grower

returns, and meet market needs for limited use style olives.

Section 8(e) of the Act requires that whenever grade, size,

quality, or maturity requirements are in effect for olives under a

domestic marketing order, imported olives must meet the same or

comparable requirements. This action allows smaller olives for limited

use styles under the marketing order. Therefore, a corresponding change

is needed in the olive import regulation.

Canned ripe olives, and bulk olives for processing into canned ripe

olives, imported into the United States must meet certain minimum grade

and size requirements specified in Olive Regulation 1 [7 CFR

Sec. 944.401]. All canned ripe olives are required to be inspected and

certified prior to importation (release from custody of the United

States Custom Service), and all bulk olives for processing into canned

ripe olives must be inspected and certified prior to canning. ``Canned

ripe olives'' means olives in hermetically sealed containers and heat

sterilized under pressure, of two distinct types, ``ripe'' and ``green-

ripe'', as defined in the Standards. The term does not include Spanish-

style green olives.

Any lot of olives failing to meet the import requirements may be

exported, disposed of, or shipped for exempt uses. Exportation or

disposal of such olives would be accomplished under the supervision of

the Processed Products Branch of the Fruit and Vegetable Division, with

the costs of certifying the disposal of the olives borne by the

importer. Exempt olives are those imported for processing into oil or

donation to charity. Any person may also import up to 100 pounds

(drained weight) of canned ripe olives or bulk olives exempt from these

grade and size requirements.

This interim final rule modifies paragraph (b)(12) of the olive

import regulation to authorize the importation of bulk olives which do

not meet the minimum size requirements established for olives for whole

and whole pitted uses to be used in the production of limited use

styles during the 1994-1995 crop year. This rule also establishes size

regulations for such olives in paragraph (b)(12).

The committee recommended to authorize establishment of minimum

sizes for use in the production of limited use styles during the 1994-

95 crop year. The sizes are specified in terms of minimum weights for

individual olives in various variety groups and are the same for both

domestic and imported olives. An extra category is continued in the

import regulation to apply comparable requirements for varieties not

grown domestically. The minimum sizes for import requirements are as

follows:

Variety Group 1, except the Ascolano, Barouni, or St. \1/90\ pound.

Agostino varieties.

Variety Group 1 of the Ascolano, Barouni, or St. \1/140\ pound.

Agostino varieties.

Variety Group 2, except the Obliza variety............ \1/180\ pound.

Variety Group 2 of the Obliza variety................. \1/140\ pound.

Olives not identifiable as to variety or variety group \1/180\ pound.

Each of the categories includes a 35 percent tolerance for olives

weighing less than the specified minimum size.

Permitting the use of smaller olives in the production of limited

use styles will allow importers to take better advantage of the strong

market for halved, segmented, sliced, and chopped canned ripe olives.

Importers will be able to import and market more olives than would be

permitted in the absence of this relaxation in size requirements. This

additional opportunity is provided to maximize the use of the available

olive supply and facilitate market expansion. In the absence of this

action, the smaller fruit could not be imported for limited uses, and

would have to be disposed of through less profitable, non-canning uses

under the supervision of the inspection service, exported, or utilized

in exempt outlets.

Based on these considerations, the Administrator of the AMS has

determined that this action will not have a significant economic impact

on a substantial number of small entities.

In accordance with section 8e of the Act, the U.S. Trade

Representative has concurred with the issuance of this interim final

rule.

After consideration of all relevant material presented, including

the committee's recommendation, and other available information, it is

found that this interim final rule, as hereinafter set forth, will tend

to effectuate the declared policy of the Act.

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

cause that it is impracticable, unnecessary, and contrary to the public

interest to give preliminary notice prior to putting this rule into

effect and that good cause exists for not postponing the effective date

of this rule until 30 days after publication in the Federal Register

because: (1) The 1994-95 crop year began August 1, 1994; (2) this rule

relaxes minimum size requirements; (3) California olive handlers are

aware of this rule as it was discussed and recommended at a public

meeting; and (4) this rule provides a 30-day comment period and any

comments received will be considered prior to finalization of this

rule.

List of Subjects

7 CFR Part 932

Marketing agreements, Olives, Reporting and recordkeeping

requirements.

7 CFR Part 944

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

Kiwifruit, Limes, Olives, Oranges.

For the reasons set forth in the preamble 7 CFR Parts 932 and 944

are amended as follows:

1. The authority citation for 7 CFR Parts 932 and 944 continue to

read as follows:

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

PART 932--OLIVES GROWN IN CALIFORNIA

2. Table II of Sec. 932.152 is revised to read as follows:

Sec. 932.152 Outgoing Regulations.

* * * * *

(g) * * *

(1) * * *

Table II.--Limited Use Size Olives

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Average count range (per

Variety pound)

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Group 1, except Ascolano, Barouni, and St. 76-90, inclusive.

Agostino.

Group 1, Ascolano, Barouni, and St. 106-140, inclusive.

Agostino.

Group 2, except Obliza..................... 141-180, inclusive.

Group 2, Obliza............................ 128-140, inclusive.

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3. Section 932.153 is revised to read as follows:

Sec. 932.153 Establishment of grade and size requirements for

processed 1994-95 crop year olives for limited uses.

(a) Grade. On and after August 1, 1994, any handler may use

processed olives of the respective variety group in the production of

limited use styles of canned ripe olives if such olives were processed

after July 31, 1994, and meet the grade requirements specified in

paragraph (a)(1) of Sec. 932.52 as modified by Sec. 932.149.

(b) Sizes. On and after August 1, 1994, any handler may use

processed olives in the production of limited use styles of canned ripe

olives if such olives were harvested during the period August 1, 1994,

through July 31, 1995, and meet the following requirements:

(1) The processed olives shall be identified and kept separate and

apart from any olives harvested before August 1, 1994, or after July

31, 1995.

(2) Variety Group 1 olives, except the Ascolano, Barouni, or St.

Agostino varieties, shall be of a size which individually weigh at

least \1/90\ pound: Provided, That no more than 35 percent of the

olives in any lot or sublot may be smaller than \1/90\ pound.

(3) Variety Group 1 olives of the Ascolano, Barouni, or St.

Agostino varieties shall be of a size which individually weigh at least

\1/140\ pound: Provided, That no more than 35 percent of the olives in

any lot or sublot may be smaller than \1/140\ pound.

(4) Variety Group 2 olives, except the Obliza variety, shall be of

a size which individually weigh at least \1/180\ pound: Provided, That

not to exceed 35 percent of the olives in any lot or sublot may be

smaller than \1/180\ pound.

(5) Variety Group 2 olives of the Obliza variety shall be of a size

which individually weigh at least \1/140\ pound: Provided, That not to

exceed 35 percent of the olives in any lot or sublot may be smaller

than \1/140\ pound.

PART 944--FRUITS; IMPORT REGULATIONS

4. Section 944.401 is amended by revising paragraph (b)(12) to read

as follows:

Sec. 944.401 Olive Regulation 1.

* * * * *

(b) * * *

(12) Imported bulk olives when used in the production of canned

ripe olives must be inspected and certified as prescribed in this

section. Imported bulk olives which do not meet the applicable minimum

size requirements specified in paragraphs (b)(2) through (b)(11) of

this section may be imported during the period August 1, 1994, through

July 31, 1995, for limited use, but any such olives so used shall not

be smaller than the following applicable minimum size:

(i) Whole ripe olives of Variety Group 1, except the Ascolano,

Barouni, or St. Agostino varieties, of a size that not more than 35

percent of the olives, by count, may be smaller than \1/90\ pound (5

grams) each.

(ii) Whole ripe olives of Variety Group 1 of the Ascolano, Barouni,

or St. Agostino varieties, of a size that not more than 35 percent of

the olives, by count, may be smaller than \1/140\ pound (3.2 grams)

each.

(iii) Whole ripe olives of Variety Group 2, except the Obliza

variety, of a size that not more than 35 percent of the olives, by

count, may be smaller than \1/180\ pound (2.5 grams) each.

(iv) Whole ripe olives of Variety Group 2 of the Obliza variety of

a size that not more than 35 percent of the olives, by count, may be

smaller that \1/140\ pound (3.2 grams) each.

(v) Whole ripe olives not identifiable as to variety or variety

group of size that not more than 35 percent of olives, by count, may be

smaller than \1/180\ pound (2.5 grams) each.

* * * * *

Dated: September 8, 1994.

Eric M. Forman,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 94-22616 Filed 9-12-94; 8:45 am]

BILLING CODE 3410-02-P