Tomatoes Grown in Florida and Imported Tomatoes; Final Rule to Change Minimum Size and Size Designation Requirements

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 966 and 980

[Docket No. FV97-966-1 FR]

Tomatoes Grown in Florida and Imported Tomatoes; Final Rule to

Change Minimum Size and Size Designation Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule increases minimum diameter size requirements

for Florida and imported tomatoes. For Florida tomatoes alone, the rule

also changes size designations from Medium, Large, and Extra Large to

numeric size designations of 6 x 7, 6 x 6, and 5 x 6. Also, the rule

slightly increases the diameter size ranges for the designated sizes.

The marketing order regulates the handling of tomatoes grown in

Florida, and is administered locally by the Florida Tomato Committee

(Committee). This final rule will help the Florida tomato industry and

importers meet domestic market and industry demands. Also, this rule

will help provide handlers more marketing flexibility and increase

returns to producers, as well as provide consumers with slightly

larger, more mature tomatoes. Application of the size requirement

increase to imported tomatoes is required under section 8e of the

Agricultural Marketing Agreement Act of 1937.

EFFECTIVE DATE: This final rule becomes effective February 4, 1998.

FOR FURTHER INFORMATION CONTACT: Christian Nissen, Southeast Marketing

Field Office, Marketing Order Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, 301 Third Street, NW., Suite 206, Winter

Haven, Florida 33881; telephone: (941) 299-4770, Fax: (941) 299-5169;

or George Kelhart, Marketing Order Administration Branch, Fruit and

Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box 96456, Washington,

DC 20090-6456; telephone (202) 720-2491, Fax: (202) 205-6632. Small

businesses may request information on compliance with this regulation

by contacting Jay Guerber, Marketing Order Administration Branch, Fruit

and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 205-

6632.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing

Agreement No. 125 and Marketing Order No. 966, both as amended (7 CFR

part 966), regulating the handling of tomatoes grown in certain

designated counties in Florida, hereinafter referred to as the

``order.'' The marketing agreement and order are 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 (Department) is issuing this rule in

conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This 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 to review the Secretary's

ruling on the petition, provided an action is filed not later than 20

days after the date of the entry of the ruling.

Section 8e of the Act specifies that whenever certain specified

commodities, including tomatoes, are regulated under a Federal

marketing order, imports of those commodities must meet the same or

comparable grade, size, quality, and maturity requirements as those in

effect for the domestically produced commodity. 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.

Under the order, tomatoes produced in the production area and

shipped to fresh market channels outside the regulated area are

required to meet grade, size, inspection, and container requirements.

These requirements are specified in Sec. 966.323 of the handling

regulations issued under the order. These requirements apply during the

period October 10 through June 15 each year. The regulated area is the

entire State of Florida, except the panhandle. The production area is

part of the regulated area. Specialty packed red ripe tomatoes, yellow

meated tomatoes, and single and double-layer place-packed tomatoes are

exempt from container net weight requirements.

Under Sec. 966.323, all tomatoes, except for pear shaped, paste,

cherry, hydroponic, and greenhouse tomatoes, must be inspected as

specified in the United States Standards for Grades of Fresh Tomatoes

(7 CFR part 51.1855 through 51.1877; standards). Such tomatoes also

must be at least 2\8/32\ inches in diameter, and sized with proper

equipment in one or more of the following ranges of diameters. In the

proposal, the reference to the number 2\8/32\ was incorrectly published

in the Federal Register as \28/32\ (62 FR 52047; October 6, 1997;

column three; paragraph three; line eight).

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

Inches Inches

Size designation minimum maximum

diameter diameter

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

Medium.............................................. 2\8/32\ 2\17/32\

Large............................................... 2\16/32\ 2\25/32\

Extra Large......................................... 2\24/32\

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These size designations and diameter ranges are the same as those

specified in Sec. 51.1859 of the standards. All tomatoes in the Medium

size designation are required to grade at least a U.S. No. 2, while

tomatoes in the larger size

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designations are required to grade at least a U.S. No. 3. Section

966.52 of the order provides authority for the establishment and

modification of regulations applicable to the handling of particular

sizes and size designations of tomatoes.

This rule increases the minimum diameter size requirement for

Florida tomatoes from 2\8/32\ inches to 2\9/32\ inches and makes

conforming changes to container marking requirements and the regulation

for special packed tomatoes. This rule also changes the size

designations Medium, Large, and Extra Large to numeric size

designations of 6 x 7, 6 x 6, and 5 x 6 (respectively), and increases

the diameter size ranges for the designated sizes. These size ranges

are different from those specified in Sec. 51.1859 of the standards. On

September 5, 1997, the Committee met and unanimously recommended these

changes. At the same meeting, the Committee recommended by a vote of 10

to 2 to eliminate shipments of U.S. No. 3 grade tomatoes from the

regulated area. That recommendation is being addressed in a separate

rulemaking action.

Based on an analysis of markets and demands of buyers, the

Committee believes that the increase in the minimum size will improve

the marketing of Florida tomatoes. By increasing the minimum size, the

tomatoes will be slightly larger and, thus, more mature when packed.

This follows recent industry trends to ship larger and more mature

tomatoes. New commercial tomato varieties also have resulted in larger

sized tomatoes being shipped in response to a strong consumer demand.

Because of this demand, production of larger tomatoes has been a

popular method of improving returns among producers as it also

increases total yields.

Also, the Committee recommended the increase in minimum size

requirements to improve the uniformity and appearance of tomato packs.

The slightly smaller tomatoes in the Medium packs increase the size

variability of the pack, and are more likely to be immature and have

less taste. The current minimum size of 2\8/32\ inches allows these

smaller tomatoes to be combined with more mature tomatoes, which lowers

the overall quality and, subsequently, the price of the pack. This has

resulted in complaints from buyers throughout the market.

In the mid-1980's, Dr. Jeffrey K. Brecht, at the University of

Florida, did a study of smaller tomatoes. According to his findings,

fully mature green tomatoes begin coloring within a few days of

harvesting. Since tomatoes are not easily identified by a surface

indicator (color) of full maturity in green fruit, pickers are forced

to rely on size rather than maturity when harvesting tomatoes. The

result is that tomatoes at the 2\8/32\ of an inch minimum diameter may

require two weeks or more to begin ripening. Attainment of the full

ripe stage requires on average a week to 10 days additional time.

Hence, the full ripening process can take as long as four weeks.

Tomatoes that take this long to ripen after harvest have been shown to

have poor taste. Increasing the minimum size to 2\9/32\ inches for

Medium tomatoes is expected to help reduce this problem. Also,

consumers are demanding a slightly larger tomato. Smaller tomatoes with

a less uniform pack have poor consumer acceptance, especially in chain

stores.

The increase in the minimum size from 2\8/32\ inches to 2\9/32\

inches is not expected to significantly affect the total number of

containers shipped. During the 1996-1997 season, of the 47,879,084

containers of 25 pound-equivalent-shipments, approximately 15 percent

or about 7,023,239 shipments of 25-pound-equivalents from Florida were

of the Medium size designation. The Medium size currently covers a

range of 2\8/32\ to 2\17/32\ inches or a range of about \9/32\ of an

inch. Increasing the minimum size to 2\9/32\ inch removes all tomatoes

that would have met the 2\8/32\ minimum size designation. The Medium

size designation currently covers a range of 2\8/32\ to 2\17/32\ inches

or a range of about \9/32\ of an inch. Removing \1/32\ inch from the

\9/32\ size range would eliminate about 10 percent of the size range.

Thus, if the size increase had been applied during the previous season,

about 700,000 25-pound equivalents would have been eliminated. Thus,

the size increase is expected to reduce total shipments by about 1.5

percent (700,000 25-pound equivalents divided by 47,879,084 25-pound

equivalents). Any of the tomatoes failing to meet the minimum size

requirements may be sold within the production area or shipped for

processing. In the proposed rule, the references in this paragraph to

25-pound equivalents were incorrectly printed in the Federal Register

as 25,000 pound equivalents (62 FR 52048; October 6, 1997; column two;

paragraph two; lines six and eight).

The Committee also recommended the following new designations and

tomato diameter size ranges:

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

Inches Inches

Size designation minimum maximum

diameter diameter

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

6 x 7 (Currently Medium).......................... 2\9/32\ 2\19/32\

6 x 6 (Currently Large)........................... 2\17/32\ 2\27/32\

5 x 6 (Currently Extra Large)..................... 2\25/32\ ........

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

Prior to 1991, numeric size designations were used by Florida

handlers and marketers from other growing areas, both domestic and

foreign. The current standards and nomenclature size designations were

implemented in 1991, and were designed to provide a uniform basis for

marketing tomatoes. However, numeric size designation terminology has

continued to be used by Florida handlers and sellers from other

domestic and foreign growing areas in negotiating price and other terms

of trade, and buyers in the marketplace still routinely refer to the

size of tomatoes in a 25-pound bulk (loose pack) box by using the 6 x

7, 6 x 6, and 5 x 6 size designations, even though the box may be

marked Medium, Large, or Extra Large. Florida tomato handlers have

found that the difference in terminology has hindered their

negotiations with buyers, and adversely affected handler and producer

returns. Handlers believe that buyers tend to discount Florida tomatoes

because the buyers do not have confidence that the Medium, Large, and

Extra Large designations correctly correspond with the size

designations of 6 x 7, 6 x 6, and 5 x 6 currently used by other

tomato growing areas.

Florida handlers compete directly with tomatoes from Mexico.

Mexican packers generally market their smaller sized tomatoes in 3-

layer place-packs marked 6 x 6 or 6 x 7 (each box weighs about 30

pounds), and bulk (loose pack) boxes with the same numeric size

designations (each box weighs about 25 pounds). The larger sizes of

tomatoes from Mexico are generally marketed in 2-layer place-packs

marked as 5 x 6, 5 x 5, 4 x 5, or 4 x 4, each weighing between

21 and 24 pounds.

Many buyers in the marketplace purchase tomatoes from both Florida

and Mexico, depending on size availability and price, and the preferred

language in discussing price and other terms of sale and delivery is

numeric size or count, not nomenclature size designations. Reverting

back to a previously used numeric system will allow Florida handlers to

use numeric size designations that are familiar to both handlers and

buyers of Florida tomatoes, facilitate buyer negotiations,

[[Page 141]]

and allow Florida handlers to more effectively market their crop.

In spite of the harmonized marketing goals of 1991, each of the

growing areas have continued to market their tomatoes a bit

differently. The size designation change will enable the Florida tomato

industry to better meet marketplace needs.

This rule also increases the minimum and maximum diameter ranges of

the three size designations. The net increase for the maximum diameters

for the Medium (6 x 7) and Large (6 X 6) size designations will be 1/

32 inch.

This will result in a 2/3 x 's overlap in the maximum diameters in

these size designations to the next larger size. According to the

Committee, this will provide a more even distribution of tomato

shipments throughout the three size designations, which will enable

handlers to make better decisions on which size of tomatoes to pack.

For instance, tomatoes that measure at the very top end of the Medium

(6 x 7) size can either be packed with Medium (6 x 7) size tomatoes

or as a smaller tomato with Large (6 x 6) size tomatoes. The same

increased flexibility will exist for Large (6 x 6) size tomatoes

packed with Extra Large (5 x 6) size tomatoes. Such packing decisions

could depend on specific buyer or market demands, on general crop size,

and on condition of the tomatoes and prices on each day of packing.

Currently, Florida producers are growing tomato varieties which

tend to size larger and tend to be oblong. The new diameter size ranges

for the three size designations also are intended to accommodate the

sizing of these varieties of tomatoes and foster the shipment of larger

tomatoes, which the marketplace desires.

Due to strong consumer demand during the 1996-1997 season,

approximately 80 percent of the Florida tomatoes sold were in the Extra

Large (5 x 6) size designation. This rule will increase the minimum

diameter of the Extra Large (5 x 6) size designation to 2-25/32

inches from 2\24/32\ inches with no maximum size limit. Increasing the

minimum diameter size of this designation by \1/32\ inch for Extra

Large (5 x 6) size packs will reduce the number of smaller sized

tomatoes packed in that size designation. Hence, this is expected to

decrease size variability and improve uniformity of this premium pack.

Thus, improvements in this size category are expected to further

enhance consumer demand, resulting in increased returns to producers.

Also, a study conducted by Dr. John J. VanSickle at the University

of Florida estimates that increases in the minimum diameters for each

size category would result in an increase in the overall prices

received for Florida tomatoes. The study indicates that if increasing

the size minimums shifted 1 percent of the smallest Extra Large (5 x

6) size tomatoes into the smaller size categories, then prices for

Extra Large (5 x 6) size would increase by .25 percent, the price of

Large (6 x 6) size tomatoes by .15 percent, and the price of Medium

(6 x 7) size tomatoes by .07 percent. The increase in price would

occur because of the redistribution of larger sized tomatoes into the

smaller size designations, which is a response to consumer demand for a

more consistent pack and slightly larger tomatoes.

These changes are expected to increase returns to producers by

improving size consistency, quality, and maturity; and, thus, encourage

repeat purchases from consumers. The new size designations will allow

handlers to respond better to market preferences, which is expected to

benefit producers and handlers of Florida tomatoes.

This rule also makes conforming changes to two paragraphs in

Sec. 966.323. The first change in Sec. 966.323 (a)(2)(iii) concerns

container marking requirements. The references to the nomenclature

(Medium, Large, and Extra Large) size designations are replaced with

the new numeric size designations. The second change is in Sec. 966.323

(d)(3) for special packed tomatoes. The reference to the 2-8/32 inch

minimum size is replaced with the new 2-9/32 inch minimum size.

Mexico is the largest exporter of tomatoes into the United States.

Small quantities are imported from the Caribbean Basin. On average,

Mexico represents over 99 percent of all tomato imports during the

period (October 10 through June 15) when Florida and import

requirements apply.

Section 8e of the Act requires that when certain domestically

produced commodities, including tomatoes, are regulated under a Federal

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

comparable grade, size, quality, or maturity requirements for the

domestically produced commodity. The current import regulations are

specified in 7 CFR 980.212. Similar to the order, the regulations apply

during the period October 10 through June 15 when the Florida handling

requirements are in effect. Because this rule increases the minimum

size for domestic tomato shipments, this increase will be applicable to

imported tomatoes beginning with the effective date of this rule.

Florida tomatoes must be packed in accordance with three specified

size designations, and tomatoes falling into different size

designations may not be commingled in a single container. These pack

restrictions do not apply to imported tomatoes. Because pack

requirements do not apply, different sizes of imported tomatoes may be

commingled in the same container.

However, the Florida handling requirements also specify that

tomatoes that are designated as Medium (6 X 7) size must meet a U.S.

No. 2 grade, while the larger sizes are required to meet a U.S. No. 3

grade. The more stringent grade requirements are applied to the Medium

(6 X 7) size designation because of quality problems with smaller

tomatoes.

Similarly, current import requirements specify that all lots with a

minimum diameter of 2-17/32 inches and larger shall meet at least a

U.S. No. 3 grade. All other tomatoes shall meet at least a U.S. No. 2

grade. Any lot with more than 10 percent of its tomatoes less than 2-

17/32 inches in diameter is required to grade at least U.S. No. 2. This

rule will change these requirements to reflect the changes to the

Florida handling requirements by requiring that all lots with a minimum

diameter of 2-19/32 inches and larger meet at least a U.S. No. 3 grade.

All other tomatoes will need to meet at least a U.S. No. 2 grade. Any

lot with more than 10 percent of its tomatoes less than 2-19/32 inches

in diameter will have to grade at least U.S. No. 2.

These changes are expected to benefit the marketers of both Florida

and imported tomatoes by providing consumers with better quality,

higher maturity, and slightly larger tomatoes. Prior to the issuance of

the proposed rule, the Department had contacted a few tomato importers

concerning imports. The importers indicated that they are importing

larger sizes of tomatoes. The Department believes that the increase in

minimum size would not limit the quantity of imported tomatoes or place

an undue burden on importers of Mexican tomatoes. The expected increase

in customer satisfaction is expected to benefit all tomato importers

regardless of the size of their operation or business. The size

increase is the only requirement implemented for Florida which applies

to imported tomatoes. The exporters and importers of foreign produced

tomatoes will be able to continue marketing their tomatoes as they have

in all other respects, and in meeting buyer needs.

Pursuant to requirements set forth in the Regulatory Flexibility

Act (RFA), the Agricultural Marketing Service (AMS)

[[Page 142]]

has considered the economic impact of this action on small entities.

Accordingly, the 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. Import regulations issued under

the Act are based on those established under Federal marketing orders

which regulate the handling of domestically produced products.

There are approximately 65 handlers of Florida tomatoes who are

subject to regulation under the order and approximately 75 tomato

producers in the regulated area. In addition, at least 170 importers of

tomatoes are subject to import regulations and will be affected by this

rule. Small agricultural service firms have been defined by the Small

Business Administration (SBA)(13 CFR 121.601) as those having annual

receipts of less than $5,000,000, and small agricultural producers are

defined as those having annual receipts of less than $500,000.

Committee data indicates that approximately 30 percent of the

Florida handlers handle over 90 percent of the total volume of Florida

fresh tomatoes marketed. Based on this information, shipment

information for the 1996-97 season, and the 1996-97 season average

price of $7.97 per 25-pound equivalent carton, the majority of handlers

would be classified as small entities as defined by the SBA. The

majority of producers of Florida tomatoes may be classified as small

entities. The Department also believes that most importers may be

classified as small entities. In the proposed rule, the reference to

25-pound equivalent carton referred to in this paragraph was

incorrectly printed in the Federal Register as 25,000 pound equivalent

carton (62 FR 52049; October 6, 1997; column three; paragraph two; line

seven).

Under Sec. 966.52 of the Florida tomato marketing order, the

Committee has authority to recommend increases in the minimum size

requirement and changes in the size designations for Florida tomatoes

grown in the defined production area and handled under the order. This

rule, unanimously recommended by the Committee at its September 5,

1997, meeting, will increase the minimum size, change size designations

and corresponding diameter size ranges. As provided under section 8e of

the Act, the increase in the minimum size diameter requirement applies

to imported tomatoes.

Based on analysis of markets and demands of buyers, the Committee

recommended increasing the minimum size from 2-\8/32\ inches to 2-\9/

32\ inches in diameter and the corresponding minimum sizes for the

other two size designations. The Committee believes these size

increases will improve the marketing of Florida tomatoes. By increasing

the minimum sizes, the tomatoes in each size range will be slightly

larger and, thus, more mature when packed. This follows recent industry

trends to ship larger and more mature tomatoes. Current trends in

cultural practices and new commercial tomato varieties also have

resulted in larger sized tomatoes being shipped in response to consumer

demand for such tomatoes. Because of this demand, production of larger

tomatoes has been a popular method of improving returns among producers

as it also increases total yields and total pounds. While yields

increase with larger fruit, the labor costs associated with picking

these tomatoes remains fairly constant because producers pick

relatively the same number of fruit.

The change in the minimum size was recommended because demand for

larger tomatoes has increased over the last five years. This in part is

due to the fact that size continues to be a major influence on price.

According to Dr. John J. VanSickle of the University of Florida, the

percent of Extra Large (5 x 6) size tomatoes shipped from Florida has

increased steadily from 43.2 percent of total shipments since 1992-93

to 50 percent of total shipments in 1996-1997 for mature green

tomatoes. Mature green tomatoes are green but are fully developed and

will continue to ripen fully. Meanwhile, the percent of tomatoes from

Florida marketed in the Extra Large (5 x 6) size for vine ripe tomatoes

has increased from 66.6 percent to 79.2 percent of total shipments.

Vine ripe tomatoes have started to break in color from green to

tannish-yellow, pink, or red.

The increase in the minimum size from 2-\8/32\ inches to 2-\9/32\

inches is not expected to affect significantly the total number of

Florida shipments. During the 1996-1997 season, of the 47,879,084

shipments of 25-pound equivalents, approximately 15 percent or about

7,023,239 shipments of 25-pound equivalents from Florida were in the

minimum size designation of Medium. The Medium size currently covers a

range of 2-\8/32\ to 2-\17/32\ inches or a range of about \9/32\ inch.

Increasing the minimum size to 2-\9/32\ inch removes tomatoes that

would have met the 2-\8/32\ inch minimum size designation. Removing \1/

32\ inch from the \9/32\ inch size range decreases the size range by

about 10 percent. If the size increase had applied during the previous

season, shipments from that range would have been reduced by about

700,000 25-pound equivalents. Thus, the size increase is expected to

reduce total shipments by approximately 1.5 percent (700,000 25-pound

equivalents divided by 47,879,084 25-pound equivalents). Because

Florida tomatoes are sizing larger than in the past, the increase in

size requirements is expected to have a minimal impact on total

shipments. Also, any of these smaller tomatoes may be sold within the

production area or shipped for processing. In the proposed rule, the

references to 25-pound equivalents in this paragraph were incorrectly

printed as 25,000 pound equivalents (62 FR 52050; October 6, 1997;

column one; paragraph two; lines six and eight).

Also, this rule changes the size designations from Medium, Large,

and Extra Large to numeric size designations of 6 x 7, 6 x 6, and

5 x 6. In addition, the rule slightly increases the diameter size

ranges for these designated sizes.

The Committee stated that, absent a change in the regulations, an

erosion of market confidence could occur from not meeting buyer needs.

This could result in reduced shipments and reduced producer income.

Direct costs associated with this rule will be the purchase of new

sizing belts. Sizing belts convey and size fruit during the packing

process. Depending on the amount of use, sizing belts can last a season

or may need to be replaced two to three times a season. Estimated

prices associated with these purchases could range from $450.00 for a

small handler to $19,000 for very large handlers. While there are

short-term costs associated with the new sizing designations, the

benefits are expected to outweigh the costs. Moreover, changing sizing

belts is a routine action since they have to be regularly replaced

depending on use.

A study conducted by Dr. John J. VanSickle at the University of

Florida estimates that size increases in the minimum diameters for each

size category would result in an increase in the overall prices

received for Florida tomatoes and better returns to producers. The

study indicates that increasing the size minimums would shift some of

the smallest Extra Large (5 x 6) size tomatoes into the smaller size

categories. A shift of 1 percent into the

[[Page 143]]

smaller size categories would increase the prices for Extra Large

(5 x 6) size tomatoes by .25 percent, the price of Large (6 x 6) size

tomatoes by .15 percent, and the price of Medium (6 x 7) size tomatoes

by .07 percent. The increase in price would occur in response to

consumer demand for packs with slightly larger tomatoes. The costs to

the industry associated with the minimum size and size designation

changes would include purchases of new equipment and adjustments to

operate under the new requirements. These costs are expected to be

minimal relative to the benefits expected, and in relation to normal

operating costs and procedures.

The new numeric size designations should not have a negative impact

on any handler regardless of size. This is expected to help Florida

handlers respond to market and consumer demand for larger sized

tomatoes. The Committee believes that these designations are the only

practical means available to the Florida industry for identifying its

larger sized tomatoes. The standards specify dimensions for each of the

nomenclature designations currently used, but they are smaller than the

Committee desires. Hence, the nomenclature designations are not as

useful to Florida handlers as the new size designations. The new size

designations should benefit both small and large businesses in the

industry by helping the Florida industry more effectively satisfy buyer

needs for larger tomatoes.

This rule may impose some additional costs on handlers, and

producers. However, these costs are expected to be minimal, and would

be offset by the benefits of the final rule. This rule is expected to

impact similarly importers of tomatoes, as far as the slight increase

in minimum size is concerned. The Committee believes that these

modifications will benefit consumers, producers, handlers, and

importers. The benefits of this rule are not expected to be

disproportionately greater or lesser for small entities than for large

entities.

The Committee discussed alternatives to this recommendation,

including leaving the regulations as currently issued. All Committee

members agreed that some change to the size designations was necessary

to improve pack appearance and compete in the present market. The

amount of change became the main concern, with a portion of the

Committee favoring a larger size increase and another portion favoring

small incremental moves over a period of time. The Committee

recommended a compromise to allow individual packing houses leeway to

implement the amount of change through a \2/32\ inch overlap in sizes.

The information on imports and shipments contained in the following

two paragraphs is from AMS Market New Branch data.

Mexico is the largest exporter of tomatoes to the United States.

Over the last 10 years, Mexican exports to the United States averaged

32,527 containers of 25,000-pound equivalents per season (October 5-

July 5) and comprised about 99 percent of all imported tomatoes to the

United States during that time. Total imports during that period

averaged 32,752 containers of 25,000-pound equivalents (October 5-July

5). Some of the imports from Mexico may have been transhipped to

Canada.

Domestic shipments for the past 10 years averaged 108,577

containers of 25,000-pound equivalents (October 5-July 5). Florida

shipments averaged 52,977 containers of 25,000-pound equivalents or

approximately 48 percent of the total shipments for the same period. In

the proposed rule, the reference to 25,000 pound equivalents in this

paragraph was incorrectly printed as 25 pound equivalents (62 FR 52050;

October 6, 1997; column three; paragraph one; line nineteen).

These changes are expected to benefit the marketers of both Florida

and imported tomatoes by providing consumers with better quality,

higher maturity, and slightly larger tomatoes. Prior to the issuance of

the proposed rule, the Department had contacted a few tomato importers

concerning imports. The importers indicated that they were importing

larger sizes of tomatoes. The Department believes that the size

increase would not limit the quantity of imported tomatoes or place an

undue burden on importers of Mexican tomatoes. The improvement in

customer satisfaction is expected to benefit all tomato importers

regardless of size.

This action will not impose any additional reporting or record

keeping requirements on either small or large handlers. As with all

Federal marketing order programs, reports and forms are reviewed

periodically to reduce information requirements and duplication by

industry and public sector agencies.

As noted in the initial regulatory flexibility analysis, the

Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this final rule.

In addition, the Committee's September 5, 1997, meeting was

publicized widely throughout the Florida tomato industry and all

interested persons were invited to attend the meeting and participate

in Committee deliberations on all issues. The Committee also discussed

these issues in May of 1997 and buyers and sellers of Florida tomatoes

were in attendance. Like all Committee meetings, the May and September

5, 1997, meetings were public meetings and all entities, both large and

small, were able to express views on this issue. Finally, interested

persons were invited to submit information on the regulatory and

informational impacts of this action on small businesses. No such

comments were received.

The proposed rule regarding this action was published in the

Federal Register on October 6, 1997 (62 FR 52047). Interested persons

were invited to submit written comments until October 16, 1997. Copies

of the proposed rule were faxed and mailed to all known interested

parties. Also, the rule was made available through the Internet by the

Office of the Federal Register.

A notice reopening the comment period until November 5, 1997, was

published in the October 22, 1997, issue of the Federal Register (62 FR

54809).

A total of 24 comments were received. Of this total, two comments

requested that the original comment period for the proposed rule be

reopened.

Seven favorable comments were received. Two of these comments were

from a voluntary agricultural cooperative association of Florida tomato

producers representing about 90 percent of the total volume of tomatoes

produced under the marketing order each year. Individual comments also

were received from an agricultural trade organization representing

growers and handlers of commercial varieties of tomatoes throughout the

State; and an association representing about 220 tomato and other

winter vegetable growers and agricultural suppliers in the State of

Florida. Two favorable comments were submitted by the Committee. One of

the two Committee comments reaffirmed the need for the proposed

changes, and pointed out several typographical errors in the

supplementary information section of the proposed rule that needed

correction. The corrections have been made in the final rule. The

second Committee comment, in addition to reaffirming the need for the

proposed changes, commented on assertions made by two opponents and a

comment requesting more time to comment. In its second comment, the

Committee contended that the claims of the opponents and the request

for more time to comment did not have merit. A

[[Page 144]]

comment was received from The Commissioner of the Florida Department of

Agriculture and Consumer Services which supported the proposed changes

and requested that the typographical errors pointed out by the

Committee be corrected.

Fifteen opposition comments were received. These comments were from

a trade association representing over 100 distributors, shippers,

brokers and affiliated companies which are directly involved with the

receipt, handling, and sale of perishable agricultural commodities

grown in Mexico; growers and shippers of Mexican tomatoes; firms

involved in the distribution and shipment of Mexican tomatoes; and a

customs broker. Other opposition commenters included a grower, handler,

and shipper of domestic and imported tomatoes, a national confederation

of Mexican vegetable growers, and a law firm representing a

confederation of Mexican producers and packers (its members account for

the majority of tomatoes imported into the United States from Mexico).

Most of the opposition comments expressed support for the efforts

of the Florida Tomato Committee to improve quality in U.S. markets.

These commenters indicated that they opposed the proposed rule unless

certain modifications were made. While they were opposed to those parts

of the proposal concerning size designations, they requested inclusion

of a 60-day period from publication of the final rule to its effective

date for the changes to the minimum size requirements.

All of the negative comments opposed the use of the proposed new

numeric size designations. The commenters indicated that the new size

designations are different than size designations used in the industry.

Several commenters stated that Mexico generally ships its larger

tomatoes in place packs and that the boxes are marked with 5 x 5,

5 x 4, 4 x 4, or 3 x 4 size designations, while the largest size

designation proposed for Florida tomatoes was 5 x 6 with a minimum

diameter of 2 \25/32\ inch and no maximum diameter. The commenters

believed this would lead to confusion in the marketplace.

A comment from a grower, handler, and shipper of domestic and

imported tomatoes objected to the use of numeric size designations in

shipping tomatoes in 25-pound bulk packs. The commenter believed that

nomenclature designations (i.e., Medium, Large, and Extra Large),

should be used for bulk packages as defined in the current standards.

The commenter indicated that numeric designations were more appropriate

for place-packed tomatoes.

Several of the opposing commenters explained that handlers and

repackers of imported tomatoes use numeric terms like 6 x 7, 6 x 6,

5 x 6, 5 x 5, 4 x 5, 4 x 4, and 3 x 4 to describe the configuration

(rows) of place-packed tomatoes in the boxes used. A box of 6 x 6

tomatoes includes 36 tomatoes in each layer, while a box of 4 x 's

includes 16 tomatoes in each layer. There are slight size variations to

assure a tight fit.

According to two of the opposing commenters, about 62.4 percent of

Mexican place-packed tomatoes shipped this past season were larger than

the largest Florida proposed size diameter; i.e., larger than 2 \25/32\

inch minimum diameter. The commenters further contended that if the

proposal is implemented, Mexican growers will be forced to label their

larger tomato packs with a 5 6 size designation in addition to their

own designations; i.e., 3 x 4, 4 x 4, 4 x 5, and 5 x 5.

The commenters stated that such dual markings would be needed to

distinguish Mexico's premium packs from Florida's proposed 5 x 6 pack.

The commenters contended that these markings will confuse customers and

will dilute the value Mexican growers receive currently for their

largest sizes.

The Department has thoroughly analyzed all of these comments in the

context of how tomatoes are marketed in the United States. Most

tomatoes from Florida are marketed as mature greens in 25-pound bulk

(loose pack) boxes. Florida handlers negotiate price and other terms of

sale and delivery using both nomenclature size designations (Medium,

Large, and Extra Large) and numeric size designations. Many buyers in

the marketplace still routinely refer to the size in a 25-pound bulk

(loose pack) box of tomatoes by using 5 x 6, 6 x 6, and 6 x 7

designations. Even when the boxes are marked with the Medium, Large, or

Extra Large size designations, buyers frequently use the numeric size

information in negotiating the purchase of tomatoes. The proposed

numeric size designations will allow the Florida industry to adopt

trading terminology that is in general use by handlers and buyers of

Florida tomatoes.

Some mature green tomatoes are shipped out of Mexico, but most of

the shipments are vine ripe tomatoes. Mexican packers generally market

smaller sized tomatoes in 3-layer place-packs marked 6 x 6 or 6 x 7 in

boxes weighing about 30 pounds. The larger sizes of tomatoes from

Mexico generally are marketed in 2-layer place-packs marked as 5 x 6,

5 x 5, 4 x 5, and 4 x 4, weighing between 21 and 24 pounds. Some

Mexican packers use the Medium, Large, and Extra Large size

designations in describing the size of the tomatoes in bulk boxes,

while others use numeric size designations for both packs. Buyers in

the marketplace understand these marketing practices, and use this

information in making their purchase decisions.

Many buyers in the marketplace purchase tomatoes from both Florida

and Mexico to meet their needs depending on size availability and

price. These buyers customarily use numeric size designations in making

their purchase decisions.

Thus, the Department believes that the buyers of Florida and

Mexican tomatoes understand the differences in tomato size designations

between shipments from Florida and Mexico, and that the proposed

designations should not result in marketplace confusion or problems

with market pricing.

The different tomato growing areas have been marketing their

tomatoes in the way they believe helps them best market their product.

These differing marketing schemes are not harmonized even within a

particular growing area. The proposed numeric size designations are

defined in terms of specific minimum and maximum diameter ranges and

should not result in marketplace confusion. Further, the new numeric

size designations do not have to be adopted by importers of Mexican

tomatoes. These importers can continue to use whatever size designation

markings they believe are needed to help them more effectively compete

in the marketplace. Any such markings should be consistent with

applicable laws or regulations including those that apply to accuracy

in description of product.

Also, the proposed numeric size designations do not affect packers

or repackers of imported tomatoes. Packers and repackers of imported

tomatoes are free to market their tomatoes as they may believe

appropriate, to segregate their larger-sized tomatoes into as many

subsizes as they desire to satisfy their customers, and to

differentiate their sizes from Florida packs as they do now. Again,

such markings of tomatoes should be consistent with applicable laws and

regulations.

Commenters also stated that, if packers in Mexico or packers in

wholesale markets wished to place-pack tomatoes according to the

traditional place-pack-count designations using the proposed size

ranges, the tomatoes would be too large to fit into the boxes currently

used. The commenters asserted that as a result, new boxes would need to

be designed for place-packed tomatoes if other segments of the

[[Page 145]]

industry wished to harmonize with the new Florida sizes.

This action increases the minimum diameter for each of the size

designations by only \1/32\ of an inch and continues the 10 percent

tolerance for undersize and oversize tomatoes. Given the diameter range

of sizes allowable in each specific size designation (i.e., 6 x 7,

6 x 6, 5 x 6), packers and repackers of tomatoes should not have any

problems packing tomatoes in the box sizes currently used.

Some commenters also contended that the proposed \2/32\ inch

overlap between sizes (currently \1/32\ inch) will allow Florida

handlers to pack smaller-sized tomatoes in the next bigger size

designation in search of a better market price. The Committee

recommended increases in the minimum and maximum diameters for each of

the three recommended size designations. For the 6 X 7 (currently

Medium) size, the minimum diameter was increased from 2 \8/32\ to 2 \9/

32\ inches, and the maximum diameter was increased from 2 \17/32\ to 2

\19/32\ inches; for the 6 x 6 (currently Large) size, the minimum

diameter was increased from 2 \16/32\ to 2 \17/32\ inches, and the

maximum diameter was increased from 2 \25/32\ to 2 \27/32\ inches; and

for the 5 x 6 (currently Extra Large) size, the minimum diameter was

increased from 2 \24/32\ to 2 \25/32\ inches, with no maximum diameter

specified. These changes and the \2/32\'s inch overlap are intended to

facilitate the placement of slightly larger tomatoes into the next

smaller-size designation, and the placement of slightly larger sizes

into the next bigger-size designation.

As indicated earlier, the Committee believes that the \2/32\ inch

overlap will provide a more even distribution of tomato shipments

throughout the three size designations, and that this will enable

handlers to make better decisions on which size of tomatoes to pack.

For instance, tomatoes at the high end of the Medium (6 x 7) size can

either be packed with Medium (6 x 7) sized tomatoes or with Large

(6 x 6) sized tomatoes. The same increased flexibility would exist for

tomatoes packed at the high end of the Large (6 x 6) size. Such

tomatoes could be packed as Large (6 x 6) sized or packed as Extra

Large (5 x 6) sized tomatoes. The end result, however, should be

slightly larger tomatoes in each of the size categories.

Another commenter contended that a proposed numeric size

designation means nothing when tomatoes are ``loose packed;'' i.e., in

25-pound bulk boxes. This is not correct. Under the proposal, minimum

and maximum diameters for each numeric size designation are specified

and thus, apply to volume filled or ``loose packed'' tomatoes. The

diameter ranges provide handlers with flexibility to meet the needs of

each of their buyers.

One of the opposing commenters suggested that if Florida wished to

use non-standard size designations and size dimensions (i.e.,

designations and dimensions different than those specified in the U.S.

standards) for tomatoes, it should use other descriptive terms like

Regular, Jumbo, and Colossal to replace Medium, Large, and Extra Large.

While alternative size designations were considered, the Committee's

best possible recommendation was to adopt the proposed numeric system.

In discussing this issue, the Committee was of the view that this

change to the size designations was necessary to improve pack

appearance and compete in the present marketplace.

Two opposition commenters complained about the lack of time

provided to the Mexican industry to examine the packing and marketing

effects of the proposed size increase. They indicated that if the new

sizes no longer fit in the boxes used for place packing tomatoes,

Mexican growers will be forced to incur very large expenses. These

expenses will be both from the loss of existing inventory of boxes and

from having to invest in all new boxes. The commenters further stated

that, over the past several years, the industry largely has succeeded

in standardizing the size of boxes to best fit them on pallets.

According to the commenters, increasing the size of the boxes would

undermine this effort, resulting in lost space on every pallet and

increased transportation costs for every grower. As explained earlier,

Mexican packers market a vast array of pack sizes in several different

boxes with different net weights. Hence, the \1/32\ inch increase in

the minimum size requirement is not expected to require new boxes for

place packing.

Although the changes to the size designations for Florida tomatoes

will not apply to imported tomatoes, the following is intended to

clarify how the new requirements might be used by Florida handlers.

Under the proposal, each of the minimum diameters for each size

designation are increased by only \1/32\ inch and the maximum diameters

for each size designation are increased by only \2/32\ inch. Thus, it

appears that there is enough flexibility within each size designation

to avoid the need for changing boxes. For example, if a buyer desires a

certain number of tomatoes in each 25-pound box, the diameter size

ranges within each of the numeric sizes are broad enough so that the

handler could meet that buyer's needs. Moreover, the current tolerance

of 10 percent for offsize within each size designation will continue in

effect and provide handlers additional flexibility in meeting buyer

needs, and in avoiding the need for new boxes.

Two commenters objected to the \1/32\ inch size increase because

Mexican growers and handlers will have to change their sizing belts and

incur an unanticipated expense for new belts. Florida growers and

handlers also will incur such costs. However, the Florida industry

believes that the expected improvement in quality in the marketplace

will result in benefits far in excess of the costs for new sizing

belts. Moreover, changing sizing belts is a routine action since they

have to be replaced on a regular basis depending on the amount of

usage. Obviously, the sizing belts last longer with limited use.

Only the minimum size requirement will apply to importers of

Mexican tomatoes. Thus, the packers of imported tomatoes only will need

to buy enough sizing belts to ensure that their tomatoes meet the

minimum size and not the ranges specified in the Florida size

designations. The Department understands that, in most cases, this will

require only one belt per packing line to be purchased.

One commenter also requested that an additional 60 days be added to

the comment period to allow the parties most affected by the rule to

comment completely on the impact it will have. A total of 30 days has

been provided. The Department believes that there has been sufficient

time to comment, especially in view of the positions and views

discussed in the comments received, whether in favor or opposed to the

proposed rule.

The Committee made its recommendations for change at a meeting held

on September 5, 1997. These changes were unanimously recommended. As

stated earlier, the proposed size rule appeared in the Federal Register

on October 6, 1997, with a comment period ending on October 16, 1997.

Two comments were received requesting that the original comment period

for the proposed rule be reopened. They were of the view that more time

was needed to review and analyze the proposed changes and also raised

NAFTA concerns. The Department did extend the comment period to

November 5, 1997, in accordance with NAFTA and to allow more time for

review and evaluation.

Many commenters also requested a 60-day delay in the effective date

of the import regulation change to allow

[[Page 146]]

adequate time for all foreign producers and handlers of foreign

tomatoes to comply with the minimum size increase. One commenter

requested that Mexican growers be given until the beginning of the

1998-99 season to comply if the minimum sizes are changed. The

Department has carefully reviewed this issue.

While both Florida tomato handlers and importers will need time to

order new sizing belts and adjust their equipment to meet the increased

minimum size requirements, we understand that many of the Florida

handlers are or will be ready to comply with the increased minimum size

requirement. However, we further understand that many of the packers of

Mexican tomatoes may need more time to comply with the size

requirement. Most of the opposition comments requested an additional 60

days after the publication of the final rule to comply with the minimum

size requirement.

The Department has decided to provide sufficient time for the

Florida and import tomato industries to comply with the minimum size

requirements. While a 60-day period would not be reasonable for the

domestic industry especially since the Florida shipping season is

already underway, a 30-day effective date from publication of the final

rule is reasonable and consistent with the provisions of the Act. A 30-

day period will allow both the domestic and imported tomato industries

sufficient time to purchase sizing belts and also ship commodity that

is already picked and packed.

The Department has contacted the three belt manufacturers to

determine belt availability and delivery schedules. Based on this

information, the Department has decided to postpone the effective date

of this action to give Florida tomato handlers and Mexican tomato

packers additional time to obtain sizing belts. The effective date is

February 4, 1998.

In view of all the foregoing, the Department has concluded that the

changes as proposed will advance the interests of the Florida, other

domestic, and foreign tomato industries and should be implemented.

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

Representative has concurred with the issuance of this final rule.

After consideration of all relevant matter presented, including the

information and recommendation submitted by the Committee and other

available information, the comments received, it is hereby found that

this rule, as hereinafter set forth, will tend to effectuate the

declared policy of the Act.

List of Subjects in 7 CFR Parts 966 and 980

Marketing agreements, Reporting and record keeping requirements,

Tomatoes.

For the reasons set forth in the preamble, 7 CFR parts 966 and 980

are amended as follows:

PART 966--TOMATOES GROWN IN FLORIDA

1. The authority citation for 7 CFR part 966 continues to read as

follows:

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

2. Section 966.323 is amended by revising paragraphs

(a)(1),(a)(2)(i) and the table immediately following it, (a)(2)(iii),

and (d)(3) to read as follows:

Sec. 966.323 Handling regulation.

* * * * *

(a) Grade, size, container, and inspection requirements. (1) Grade.

Tomatoes shall be graded and meet the requirements specified for U.S.

No. 1, U.S. Combination, U.S. No. 2, or U.S. No. 3, of the U.S.

Standards for Grades of Fresh Tomatoes, except that all shipments of 6

x 7 size tomatoes must grade U.S. No. 2 or better. When not more than

15 percent of the tomatoes in any lot fail to meet the requirements of

U.S. No. 1 grade and not more than one-third of this 15 percent (or 5

percent) are comprised of defects causing very serious damage including

not more than 1 percent of tomatoes which are soft or affected by

decay, such tomatoes may be shipped and designated as at least 85

percent U.S. No. 1 grade.

(2) Size. (i) All tomatoes packed by a registered handler shall be

at least 2\9/32\ inches in diameter and shall be sized with proper

equipment in one or more of the following ranges of diameters. Tomatoes

shipped outside the regulated area shall also be sized with proper

equipment in one or more of the following ranges of diameters.

Measurements of diameters shall be in accordance with the methods

prescribed in Sec. 51.1859 of the U.S. Standards for Grades of Fresh

Tomatoes.

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

Inches Inches

Size designation minimum maximum

diameter diameter

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

6 X 7............................................... 2\9/32\ 2\19/32\

6 X 6............................................... 2\17/32\ 2\27/32\

5 X 6............................................... 2\25/32\

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

* * * * *

(iii) Only 6 x 7, 6 x 6, or 5 x 6, may be used to indicate

the above listed size designations or containers of tomatoes.

* * * * *

(d) * * *

(3) For special packed tomatoes. Tomatoes which met the inspection

requirements of paragraph (a)(4) of this section which are resorted,

regraded, and repacked by a handler who has been designated as a

``Certified Tomato Repacker'' by the committee are exempt from:

(i) The tomato grade classifications of paragraph (a)(1) of this

section;

(ii) The size classifications of paragraph (a)(2) of this section,

except that the tomatoes shall be at least 2-9/32 inches in diameter;

and

(iii) The container weight requirements of paragraph (a)(3) of this

section.

* * * * *

PART 980--VEGETABLES; IMPORT REGULATIONS

3. Section 980.212 is amended by revising paragraph (b)(1) to read

as follows:

Sec. 980.212 Import regulations; tomatoes.

* * * * *

(b) * * *

(1) From October 10 through June 15 of each season, tomatoes

offered for importation shall be at least 2-9/32 inches in diameter.

Not more than 10 percent, by count, in any lot may be smaller than the

minimum specified diameter. All lots with a minimum diameter of 2\19/

32\ inches and larger shall be at least U.S. No. 3 grade. All other

tomatoes shall be at least U.S. No. 2 grade. Any lot with more than 10

percent of its tomatoes less than 2\19/32\ inches in diameter shall

grade at least U.S. No. 2.

* * * * *

Dated: December 30, 1997.

Sharon Bomer Lauritsen,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 97-34231 Filed 12-31-97; 8:45 am]

BILLING CODE 3410-02-P