Raisins Produced From Grapes Grown In California; Final Free and Reserve Percentages for the 1996-97 Crop Year for Natural (Sun-Dried) Seedless Raisins

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[FV97-989-1IFR]

Raisins Produced From Grapes Grown In California; Final Free and

Reserve Percentages for the 1996-97 Crop Year for Natural (Sun-Dried)

Seedless Raisins

AGENCY: Agricultural Marketing Service, USDA.

[[Page 18030]]

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule establishes final free and reserve

percentages for 1996-97 crop Natural (sun-dried) Seedless raisins. The

percentages are 86 percent free and 14 percent reserve. These

percentages are intended to stabilize supplies and prices, and

strengthen market conditions. This rule was recommended by the Raisin

Administrative Committee (Committee), the body which locally

administers the marketing order.

DATES: This interim final rule becomes effective April 15, 1997, and

applies to all Natural (sun-dried) Seedless raisins acquired from the

beginning of the 1996-97 crop year. Comments received by May 14, 1997

will be considered prior to any finalization of this interim final

rule.

ADDRESSES: Interested persons are invited to submit written comments

concerning this action. 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 faxed to 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:

Richard P. Van Diest, Marketing Specialist, California Marketing Field

Office, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey Street,

suite 102B, Fresno, California 93721; telephone: 209-487-5901 or Mark

A. Slupek, Marketing Specialist, Marketing Order Administration Branch,

Fruit and Vegetable Division, AMS, USDA, room 2523-S, P.O. Box 96456,

Washington, DC 20090-6456; telephone: 202-205-2830. Small businesses

may request information on compliance with this regulation by

contacting: Jay Guerber, Marketing Order Administration Branch, Fruit

and Vegetable Division, AMS, USDA, P.O. Box 96456, room 2525-S,

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

5698.

SUPPLEMENTARY INFORMATION: This rule is issued under marketing

agreement and Order No. 989 (7 CFR part 989), both as amended,

regulating the handling of raisins produced from grapes 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.''

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. Under the marketing order provisions now in effect,

final free and reserve percentages may be established for raisins

acquired by handlers during the crop year. This rule establishes final

free and reserve percentages for Natural (sun-dried) Seedless raisins

for the 1996-97 crop year, beginning August 1, 1996, through July 31,

1997. 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 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 requesting a modification of the order or to be exempt

therefrom. Such 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 an action is filed not

later than 20 days after the date of the entry of the ruling.

The order prescribes procedures for computing trade demands and

preliminary and final percentages that establish the amount of raisins

that can be marketed throughout the season. The regulations apply to

all handlers of California raisins. Raisins in the free percentage

category may be shipped immediately to any market, while reserve

raisins must be held by handlers in a reserve pool for the account of

the Committee, which is responsible for local administration of the

order. Under the order, reserve raisins may be: Sold at a later date by

the Committee to handlers for free use or to replace part of the free

raisins they exported; used in diversion programs; exported to

authorized countries; carried over as a hedge against a short crop the

following year; or disposed of in other outlets noncompetitive with

those for free tonnage raisins.

While this rule may restrict the amount of Natural (sun-dried)

Seedless raisins that enter domestic markets, final free and reserve

percentages are intended to promote stronger marketing conditions, to

stabilize prices and supplies, and to improve grower returns. In

addition to the quantity of raisins released under the preliminary

percentages and the final percentages, the order specifies methods to

make available additional raisins to handlers by requiring sales of

reserve pool raisins for use as free tonnage raisins under ``10 plus

10'' offers, and authorizing sales of reserve raisins under certain

conditions, such as a national emergency, crop failure, change of

economic or marketing conditions, or if free tonnage shipments during

the current crop year exceed shipments of the prior crop year by more

than 5 percent.

The Department's ``Guidelines for Fruit, Vegetable, and Specialty

Crop Marketing Orders'' specify that 110 percent of recent years' sales

should be made available to primary markets each season before

recommendations for volume regulation are approved. This goal is met by

the establishment of a final percentage which releases 100 percent of

the computed trade demand and the additional release of reserve raisins

to handlers under ``10 plus 10'' offers. The ``10 plus 10'' offers are

two simultaneous offers of reserve pool raisins which are made

available to handlers each season. For each such offer, a quantity of

raisins equal to 10 percent of the prior year's shipments is made

available for free use. Approximately 59,000 tons of Natural (sun-

dried) Seedless were purchased by handlers for free use pursuant to

these offers. The quantity available for primary market under this rule

would be about 406,000 tons natural condition raisins or 381,000 tons

packed raisins. This is 129 percent of the quantity shipped in 1995.

Pursuant to section 989.54(a) of the order, the Committee met on

August 15, 1996, to review shipment data, inventory data, and the 1995

crop conditions for raisins of all varietal types. The Committee

computed a trade demand for each varietal type for which a free tonnage

percentage might be recommended. The trade demand is 90 percent of the

prior year's shipments of free tonnage and reserve tonnage raisins sold

for free use for each varietal type into all market outlets, adjusted

by subtracting the carrying of each varietal type on August 1 of the

current crop year and by adding to the trade demand the desirable

carryout for each varietal type at the end of that crop year. As

specified in section 989.154, the desirable carryout for each varietal

type shall be equal to the shipments of free

[[Page 18031]]

tonnage raisins of the prior crop year during the months of August and

September. If the prior year's shipments are limited because of crop

conditions, the total shipments during that period of time during one

of the three years preceding the prior crop year may be used. In

accordance with these provisions, the Committee computed and announced

a 1996-97 trade demand of 232,765 tons for Natural (sun-dried) Seedless

raisins.

As required under section 989.54(b) of the order, the Committee met

on October 3, 1996, and computed and announced a preliminary crop

estimate and preliminary free and reserve percentages for Natural (sun-

dried) Seedless raisins which released 85 percent of the trade demand.

On October 3, 1996, the Committee's crop estimate and preliminary free

and reserve percentages were as follows: 272,034 tons, and 73 percent

free and 27 percent reserve.

Also at that meeting, the Committee computed and announced

preliminary crop estimates and preliminary free and reserve percentages

for Dipped Seedless, Oleate and Related Seedless, Golden Seedless,

Zante Currant, Sultana, Muscat, Monukka, and Other Seedless raisins.

The Committee determined, however, that volume control percentages only

were warranted for Natural (sun-dried) Seedless raisins. It determined

that the supplies of the other varietal types would be less than or

close enough to the computed trade demands for each of these varietal

types. These varietal types are produced in much smaller quantities

than Natural (sun-dried) Seedless raisins. In view of these factors,

volume control percentages either would not be necessary to maintain

market stability or would not be economically practical for the other

variety types.

Pursuant to section 989.54(c), the Committee may adopt interim free

and reserve percentages. Interim percentages may release less than the

computed trade demand for each varietal type. Interim percentages for

Natural (sun-dried) Seedless raisins of 85.75 percent free and 14.25

percent reserve were announced by the Committee on February 3, 1997.

The Committee considered its final estimate of 270,999 tons of 1966-97

production of Natural (sun-dried) Seedless raisins when it established

the interim percentages. That action released most, but not all, of the

computed trade demand for Natural (sun-dried) Seedless raisins.

In addition, under section 989.54(d) of the order, the Committee is

required to recommend to the Secretary, no later than February 15 of

each crop year, final free and reserve percentages which, when applied

to the final production estimate of a varietal type, will tend to

release the full trade demand for any varietal type. The Committee met

on February 3, 1997, for this purpose.

The computed trade demand (232,765 tons) is 90 percent of the prior

year's shipments of free tonnage and reserve tonnage raisins sold for

free use into all market outlets (282,289 tons), adjusted by

subtracting the carrying of each varietal type on August 1 of the

current crop year (113,697 tons) and by adding to the trade demand the

desirable carryout for each varietal type at the end of that crop year

(64,173 tons). No information was presented between the August 15,

1996, meeting and the February 3, 1997, meeting to cause the Committee

to make any change to the computed trade demand. Thus, the Committee

divided the computed trade demand of 232,765 tons by the final

production estimate (270,999 tons) and recommended a final free

percentage of 86 percent and a final reserve percentage of 14 percent.

The free and reserve percentages established by this interim final

rule will apply uniformly to all handlers in the industry, whether

small or large, and there are no known additional costs incurred by

small handlers. Although raisin markets are limited, they are available

to all handlers, regardless of size. The stabilizing effects of the

percentages impact both small and large handlers positively by helping

them maintain and expand markets.

Pursuant to requirements set forth in the Regulatory Flexibility

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

economic impact of this action on small entities. Accordingly, AMS has

prepared this initial 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.

There are approximately 20 handlers of California raisins who are

subject to regulation under the raisin marketing order and

approximately 4,500 producers of raisins in the regulated area. Small

agricultural service firms, which includes handlers, have been denied

by the Small Business Administration (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. No more than 8 handlers, and a majority of producers, of

California raisins may be classified as small entities. Twelve of the

20 handlers subject to regulation have annual sales estimated to be at

least $5,000,000, and the remaining 8 handlers have sales less than

$5,000,000, excluding receipts from any other sources.

Committee and subcommittee meetings are widely publicized in

advance and are held in a location central to the production area. The

meetings are open to all industry members (including small business

entities) and other interested persons--who are encouraged to

participate in the deliberations and voice their opinions on topics

under discussion. Thus, Committee recommendations can be considered to

represent the interests of small business entities in the industry.

Many years of marketing experience led to the development of the

current volume control procedures. These procedures have helped the

industry address its marketing problems by keeping supplies in balance

with domestic and export market needs, and strengthening market

conditions. The current volume control procedures fully supply the

domestic and export markets, provide for market expansion, and help

prevent oversupplies in the domestic market.

In discussing the possibility of marketing percentages for the

1996-97 crop year, the Committee considered: (1) The estimated tonnage

held by producers, handlers, and for the account of the Committee at

the beginning of the crop year (113,697 tons); (2) the estimated

tonnage of standard raisins which will be produced in 1996-97 (270,999

tons); (3) the trade demand for raisins in free tonnage outlets in

1996-97 (232,765 tons); (4) the estimated desirable carryout at the end

of the 1996-97 crop year for free tonnage (64,173 tons); (5) the

estimated world raisin supply and demand situation; (6) the current

prices being received and the probable level of prices to be received

for raisins by producers and handlers; and (7) the trend and level of

consumer income.

The Committee's review of the factors resulted in the computation

and announcement in October 1997 of preliminary free and reserve

percentages for Natural (sun-dried) Seedless raisins. This varietal

type is the major commercial varietal type produced in California.

Although the 1996-97 crop was estimated to be down from previous crop

years, the total supply available for

[[Page 18032]]

marketing (270,999 tons) exceeded the computed trade demand (232,765

tons) by a large enough quantity (38,234 tons) to support limiting the

quantity available for sale in free tonnage markets by placing a

portion of the crop aside to be sold when demand improved in the

current or subsequent season.

This rule establishes free and reserve percentages for Natural

(sun-dried) Seedless raisins in accordance with the volume control

provisions in section 989.54. Raisins in the free percentage category

may be shipped immediately to any market, while reserve raisins must be

held by handlers in a reserve pool for the account of the Committee,

which is responsible for local administration of the order. Under the

order, reserve raisins may be: Sold at a later date by the Committee to

handlers for free use or to replace part of the free use raisins they

exported: used in diversion programs; exported to authorized countries;

carried over as a hedge against a short crop the following year; or

disposed of in other outlets noncompetitive with those for free tonnage

raisins. The percentage releases provide all handlers with the

opportunity to benefit from the most profitable domestic market. That

market is available to all handlers, regardless of handler size.

Raisin variety grapes can be marketed as fresh grapes, crushed for

use in the production of wine or juice concentrate, or dried into

raisins. Annual fluctuations in the fresh grape, wine, and concentrate

markets cause fluctuations in raisin supply. These supply fluctuations

can cause producer price instability and disorderly market conditions.

Volume control is helpful to the raisin industry because it lessens the

impact of such fluctuations and contributes to orderly marketing.

Industry statistics show that Natural (sun-dried) Seedless raisin

receipts have varied widely over the last ten years, from a low of

325,911 tons in 1995 to a high of 395,501 tons in 1989. Average

receipts for the last 10 years have been around 365,000 tons. As crop

size has fluctuated, volume regulations have contributed toward orderly

marketing and market stability, and have helped moderate the variation

in returns for all growers and handlers, both large and small. For

instance, handler receipts in the shortest crop year (1995) were 89

percent of the ten-year average (1986-1995). Handler receipts in the

biggest crop year (1989) were 108 percent of the ten-year average.

Free and reserve percentages are established by variety, and only

in years when the supply exceeds the trade demand by a large enough

margin that the Committee believes volume control is necessary to

maintain market stability. Accordingly, in assessing whether to apply

volume control regulation or, as an alternative, not to apply such

regulation, the Committee recommended only one of the 9 raisin varietal

types defined under the marketing order for volume control regulation

this season.

As mentioned earlier, the Department's ``Guidelines for Fruit,

Vegetable, and Speciality Crop Marketing Orders'' specify that 110

percent of recent years' sales should be made available to primary

markets each season before recommendations for volume regulation are

approved. The quantity available under this rule is 129 percent of the

quantity shipped in 1995.

The free and reserve percentages established by this rule release

the full trade demand and apply uniformly to all handlers in the

industry, regardless of size. There are no known additional costs

incurred by small handlers that are not incurred by large handlers. The

stabilizing effects of the percentages impact all handlers positively

by helping them maintain and expand markets, despite seasonal supply

fluctuations. Likewise, price stability positively impacts all

producers by allowing them to better anticipate the revenues their

raisins will generate.

While the level of benefits of this rulemaking are difficult to

quantify, the stabilizing effects of the volume regulations impact both

small and large handlers positively by helping them maintain markets

even though raisin supplies fluctuate widely from season to season.

There are some reporting, recordkeeping and other compliance

requirements under the marketing order. The reporting and recordkeeping

burdens are necessary for compliance purposes and for developing

statistical data for maintenance of the program. The forms require

information which is readily available from handler records and which

can be provided without data processing equipment or trained

statistical staff. As with other, similar marketing order programs,

reports and forms are periodically studied to reduce or eliminate

duplicate information collection burdens by industry and public sector

agencies. This interim final rule does not change those requirements.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this regulation.

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

respond to this rule. All written comments received within the comment

period regarding this action or its effect on small business entities

will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including

the Committee's recommendation, and other 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 relevant provisions of this part require that

the percentages designated herein for the 1996-97 crop year apply to

all Natural (sun-dried) Seedless raisins acquired from the beginning of

that crop year; (2) handlers are currently marketing 1996-97 crop

raisins of the Natural (sun-dried) Seedless varietal type and this

action should be taken promptly to achieve the intended purpose of

making the full trade demand quantity computed by the Committee

available to handlers; (3) handlers are aware of this action, which the

Committee unanimously recommended at an open meeting, and need no

additional time to comply with these percentages; and (4) this interim

final rule provides a 30-day comment period and any comments received

will be considered prior to finalization of this interim final rule.

List of Subjects in 7 CFR Part 989

Grapes, Marketing agreements, Raisins, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR Part 989 is

amended to read as follows:

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

1. The authority citation for 7 CFR part 989 continues to read as

follows:

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

2. Section 989.250 is added to Subpart--Supplementary Regulations

to read as follows:

Note: This section will not appear in the Code of Federal

Regulations.

Sec. 989.250 Final free and reserve percentages for the 1996-97 crop

year.

The final percentages for standard Natural (sun-dried) Seedless

raisins

[[Page 18033]]

acquired by handlers during the crop year beginning on August 1, 1996,

which shall be free tonnage and reserve tonnage, respectively, are

designated as follows:

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

Free Reserve

Varietal type percentage percentage

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

Natural (sun-dried) Seedless.................... 86 14

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Dated: April 7, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97-9476 Filed 4-11-97; 8:45 am]

BILLING CODE 3410-02-M