Raisins Produced From Grapes Grown in California; Final Free and Reserve Percentages for 1997-98 Crop Natural (Sun-Dried) Seedless and Zante Currant Raisins

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[FV98-989-1 IFR]

Raisins Produced From Grapes Grown in California; Final Free and

Reserve Percentages for 1997-98 Crop Natural (Sun-Dried) Seedless and

Zante Currant Raisins

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule establishes final volume regulation percentages for

1997-98 crop Natural (sun-dried) Seedless (Naturals) and Zante Currant

(Zantes) raisins covered under the Federal marketing order for

California raisins. The order regulates the handling of raisins

produced from grapes grown in California and is administered locally by

the Raisin Administrative Committee (Committee). The volume regulation

percentages are 66 percent free and 34 percent reserve for Naturals and

44 percent free and 56 percent reserve for Zantes. Free tonnage raisins

may be sold by handlers to any market. Reserve raisins must be held in

a pool for the account of the Committee and are disposed of through

various programs authorized under the order. The volume regulation

percentages are intended to help stabilize raisin supplies and prices

and strengthen market conditions.

DATES: Effective August 1, 1997, through July 31, 1998. Comments

received by May 11, 1998, 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 to the Docket Clerk, Fruit

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

Washington, DC 20090-6456; Fax: (202) 205-6632. 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: Maureen T. Pello, Marketing

Specialist, California Marketing Field Office, Fruit and Vegetable

Programs, AMS, USDA, 2202 Monterey Street, suite 102B, Fresno,

California 93721; telephone: (209) 487-5901, Fax: (209) 487-5906; or

George Kelhart, Technical Advisor, 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, or 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, P.O.

Box 96456, room 2525-S, Washington, DC 20090-6456; telephone (202) 720-

2491; Fax: (202) 205-6632.

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 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 and Zante raisins for the 1997-98 crop

year, which began August 1, 1997, and ends July 31, 1998. 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 request a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for

[[Page 11586]]

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.

This rule establishes final volume regulation percentages for 1997-

98 crop Natural and Zante raisins covered under the order. The volume

regulation percentages are 66 percent free and 34 percent reserve for

Naturals and 44 percent free and 56 percent reserve for Zantes. Free

tonnage raisins may be sold by handlers to any market. Reserve raisins

must be held in a pool for the account of the Committee and are

disposed of through various programs authorized under the order. For

example, reserve raisins may be sold by the Committee to handlers for

free use or to replace part of the free tonnage raisins they exported;

used in diversion programs; carried over as a hedge against a short

crop the following year; or disposed of in other outlets not

competitive with those for free tonnage raisins, such as government

purchase, distilleries, or animal feed. The volume regulation

percentages are intended to help stabilize raisin supplies and prices

and strengthen market conditions. Final percentages were recommended by

the Committee at a meeting on February 12, 1998.

Section 989.54 of the order prescribes the procedures and time

frames to be followed in establishing volume regulation. This includes

methodology used to calculate percentages. Pursuant to Sec. 989.54(a)

of the order, the Committee met on August 14, 1997, to review shipment

and inventory data, and other matters relating to the supplies of

raisins of all varietal types. The Committee computed a trade demand

for each varietal type for which a free tonnage percentage might be

recommended. Trade demand is a computed formula specified in the order

and, for each varietal type, is equal to 90 percent of the prior year's

shipments of free tonnage and reserve tonnage raisins sold for free use

into all market outlets, adjusted by subtracting the carryin on August

1 of the current crop year and by adding the desirable carryout at the

end of that crop year. As specified in Sec. 989.154, the desirable

carryout for each varietal type is equal to the shipments of free

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

September. In accordance with these provisions, the Committee computed

and announced 1997-98 trade demands for Naturals and Zantes at 252,398

and 2,058 tons, respectively, as shown below.

Computed Trade Demands

[Natural condition tons]

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

Naturals Zantes

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

Prior year's shipments........................ 314,013 3,277

Multiplied by 90 percent...................... 0.90 0.90

Equals adjusted base.......................... 282,612 2,949

Minus carryin inventory....................... 92,769 1,679

Plus desirable carryout....................... 62,555 788

Equals computed trade demand.................. 252,398 2,058

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

As required under Sec. 989.54(b) of the order, the Committee met on

October 2, 1997, and announced a preliminary crop estimate of 353,583

tons for Naturals. With the crop estimate much higher than the trade

demand of 252,398 tons, the Committee determined that volume regulation

was warranted. The Committee announced preliminary free and reserve

percentages for Naturals which released 65 percent of the computed

trade demand since the field price had not yet been established. The

preliminary percentages were 46 percent free and 54 percent reserve.

The Committee authorized its staff to modify the preliminary

percentages to release 85 percent of the trade demand when the field

price was established. The field price was established on October 17,

1997, and the preliminary percentages were thus modified to 61 percent

free and 39 percent reserve. As discussed later in this rule, the

353,583 ton crop estimate was subsequently revised to 381,484 tons, the

largest crop since 1993-94. The production of Naturals has exceeded

market needs during the current crop year, as in most seasons. Volume

regulation in such a large crop year should help stabilize prices and

improve market conditions.

Also at its October 2, 1997, meeting, the Committee announced a

preliminary crop estimate for Zantes at 4,812 tons. This compared to

the trade demand of 2,058 tons. It was determined that a Zante reserve

pool was warranted because estimated production exceeded the trade

demand by a significant amount. The Committee computed preliminary

percentages for Zantes at 36 percent free and 64 percent reserve which

would have released 85 percent of the computed trade demand. However,

as authorized under Sec. 989.54(c), the Committee modified the computer

preliminary percentages and established interim percentages to release

slightly less than the full trade demand (98.8 percent) at 42.5 percent

free and 57.5 reserve. Volume regulation for Zantes should also help

stabilize prices and improve market conditions.

Also at that meeting, the Committee computed and announced

preliminary crop estimates for Dipped Seedless, Oleate and Related

Seedless, Golden Seedless, Sultana, Muscat, Monukka, and Other Seedless

raisins. The Committee computed preliminary volume regulation

percentages for these varieties, but determined that such regulation

was only warranted for Naturals and Zantes. 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. As in

past seasons, the Committee submitted its marketing policy to the

Department for review.

The Committee met on February 12, 1998, and revised its crop

estimates for both Naturals and Zantes as follows: for Naturals, the

estimate was increased from 353,583 to 381,484 tons; and for Zantes,

the estimate was increased from 4,812 to 4,955 tons. The Committee also

announced interim percentages for Naturals at 65.75 percent free and

34.25 percent reserve. Regarding Zantes, the Committee modified its

trade demand figure from 2,058 to 2,200 tons at an earlier meeting in

November 1997. At its February meeting, the Committee revised its

interim percentages for Zantes to 43.75 percent free and 56.25 percent

reserve. As required under Sec. 989.54(d) of the order, the Committee

also recommended to the Secretary at its

[[Page 11587]]

February meeting 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's

calculations to arrive at final percentages for Naturals and Zantes are

shown in the table below.

Final Volume Regulation Percentages

[Tonnage as natural condition weight]

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

Naturals Zantes

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

Trade demand.................................. 252,398 2,200

Divided by crop estimate...................... 381,384 4,955

Equals free percentage........................ 66 44

100 minus free percentage equals reserve

percentage................................... 34 56

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

In addition, the Department's ``Guidelines for Fruit, Vegetable,

and Speciality Crop Marketing Orders'' (Guidelines) specify that 110

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

markets each season for marketing orders utilizing reserve pool

authority. This goal will be met for Naturals and Zantes by the

establishment of final percentages which release 100 percent of the

trade demand and the offer of additional reserve raisins for sale to

handlers under the ``10 plus 10 offers.'' As specified in

Sec. 989.54(g), the 10 plus 10 offers are two offers of reserve pool

raisins which are made available to handlers during each season.

Handlers may sell their 10 plus 10 raisins to any market. For each such

offer, a quantity of reserve raisins equal to 10 percent of the prior

year's shipments is made available for free use.

For Naturals, the first 10 plus 10 offer was made available in

December 1997 and about 31,000 tons of raisins were purchased by

handlers. The second 10 plus 10 offer will be made available to

handlers later in 1998 at which time about another 31,000 tons of

reserve Naturals will be offered for sale to handlers. Adding the

62,000 tons of 10 plus 10 raisins to the 252,398 ton trade demand

figure, plus 92,769 tons of 1996-97 carryin inventory equates to about

407,170 tons natural condition raisins or 381,750 tons packed raisins

made available for free use, or to the primary market. This is 130

percent of the quantity of Naturals shipped in 1997 (314,013 natural

condition tons or 294,406 packed tons).

For Zantes, both Zante 10 plus 10 offers were made available

simultaneously in November 1997 and 656 tons of raisins were purchased

by handlers. Adding the 656 tons of 10 plus 10 raisins to the 2,200 ton

trade demand figure, plus 1,679 tons of 1996-97 carryin inventory

equates to 4,535 tons natural condition raisins or about 3,970 tons

packed raisins made available for free use, or to the primary market.

This is 138 percent of the quantity of Zantes shipped in 1997 (3,277

natural condition tons or 2,868 packed tons).

In addition to the 10 plus 10 offers, Sec. 989.67(j) of the order

provides authority for sales of reserve raisins to handlers under

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

in economic or marketing conditions, or if free tonnage shipments in

the current crop year exceed shipments of a comparable period of the

prior crop year. Such reserve raisins may be sold by handlers to any

market. These additional offers of reserve raisins would thus make even

more raisins available to primary markets which is consistent with the

Department's Guidelines.

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 order and approximately 4,500 raisin

producers in the regulated area. Small agricultural service firms have

been defined 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 7 handlers, and a majority of

producers, of California raisins may be classified as small entities.

Thirteen of the 20 handlers subject to regulation have annual sales

estimated to be at least $5,000,000, and the remaining 7 handlers have

sales less than $5,000,000, excluding receipts from any other sources.

Pursuant to Sec. 989.54(d) of the order, this rule establishes

final volume regulation percentages for 1997-98 crop Natural and Zante

raisins. The volume regulation percentages are 66 percent free and 34

percent reserve for Naturals and 44 percent free and 56 percent reserve

for Zantes. Free tonnage raisins may be sold by handlers to any market.

Reserve raisins must be held in a pool for the account of the Committee

and are disposed of through certain programs authorized under the

order. The volume regulation percentages are intended to help stabilize

raisin supplies and prices and strengthen market conditions.

Many years of marketing experience led to the development of the

current volume regulation 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 regulation 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 volume regulation for the 1997-98

crop year, the Committee considered the following factors:

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

Naturals* Zantes*

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

Estimated tonnage held by producers, handlers,

and for the account of the Committee at the

beginning of the crop year................... 92,769 1,679

[[Page 11588]]

Estimated tonnage of standard raisins which

will be produced in 1997-98.................. 381,484 4,955

Trade demand for raisins in free tonnage

outlets for 1997-98.......................... 252,398 2,200

Estimated desirable carryout at the end of the

1997-98 crop year for free tonnage........... 58,875 545

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

*Natural condition tons.

The Committee also considered the estimated world raisin supply and

demand situation; the current prices being received and the probable

level of prices to be received for raisins by producers and handlers;

and the trend and level of consumer income.

The Committee's review resulted in the computation and announcement

in October 1997 of volume regulation percentages for Naturals and

Zantes. Naturals are the major commercial varietal type of raisin

produced in California. Volume regulation has been implemented under

the order for Naturals for the past several seasons. With the crop

estimate of 381,484 tons, much higher than the computed trade demand of

252,398 tons, the Committee determined that volume regulation was

warranted.

In comparison, Zante production is much smaller than that of

Naturals. Volume regulation was last implemented for Zantes during the

1995-96 crop year. Volume regulation was warranted for Zantes this

season because the crop estimate of 4,955 tons exceeded the trade

demand of 2,200 tons by a significant amount.

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, as well as weather related factors, cause fluctuations in

raisin supply. These supply fluctuations can cause producer price

instability and disorderly market conditions. Volume regulation is

helpful to the raisin industry because it lessens the impact of such

fluctuations and contributes to orderly marketing. For example,

producer returns for Naturals have remained fairly steady over the last

5 crop years although production has varied. As shown in the table

below, production over the last 5 years has varied from a low of

272,063 tons in 1996-97 and to a high of 387,007 tons in 1993-94, or 42

percent. According to Committee data, total producer return per ton,

which includes proceeds from both free tonnage plus reserve pool

raisins, has varied from a low of $901 in 1992-93 to a high of $1,049

in 1996-97, or 16 percent.

Natural Seedless Producer Returns

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

Production

(natural Producer

Crop year condition returns

tons)

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

1996-97....................................... 272,063 $1,049

1995-96....................................... 325,911 1,007

1994-95....................................... 378,427 928

1993-94....................................... 387,007 904

1992-93....................................... 371,516 901

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

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 regulation is necessary to

maintain market stability. Accordingly, in assessing whether to apply

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

the Committee recommended only two of the nine raisin varieties defined

under the order for volume regulation this season.

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. Small and large raisin producers and

handlers have been operating under volume regulation percentages every

year since 1983-84. There are no known additional costs incurred by

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

are regulated based on the quantity of raisins which they acquire from

producers. 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 and

expand markets even though raisin supplies fluctuate widely from season

to season. Likewise, price stability positively impacts small and large

producers by allowing them to better anticipate the revenues their

raisins will generate.

There are some reporting, recordkeeping and other compliance

requirements under the order. The reporting and recordkeeping burdens

are necessary for compliance purposes and for developing statistical

data for maintenance of the program. The requirements are the same as

those applied last season. Thus, this action will not impose any

additional reporting or recordkeeping burdens on either small or large

handlers. 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. In addition, the Department has

not identified any relevant Federal rules that duplicate, overlap, or

conflict with this rule. Finally, interested persons are invited to

submit information on the regulatory and informational impacts of this

action on small businesses.

Further, 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.

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.

This rule invites comments for a 60-day period on the establishment

of final volume regulation percentages for 1997-98 crop Natural and

Zante raisins covered under the order. All comments received within the

comment period will be considered prior to finalization of this rule.

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 1997-98 crop year apply to

all Natural and Zante raisins acquired from the beginning of that crop

year; (2) handlers are currently

[[Page 11589]]

marketing 1997-98 crop Natural and Zante raisins and this action should

be taken promptly to achieve the intended purpose of making the full

trade demand 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 60-day comment period and any

comments received will be considered prior to finalization of this

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 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 989.251 is added to Subpart--Supplementary Regulations

to read as follows:

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

Regulations.

Sec. 989.251 Final free and reserve percentages for the 1997-98 crop

year.

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

Zante Currant raisins acquired by handlers during the crop year

beginning on August 1, 1997, which shall be free tonnage and reserve

tonnage, respectively, are designated as follows:

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

Free Reserve

Varietal type percentage percentage

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

Natural (sun-dried) seedless.................... 66 34

Zante currant................................... 44 56

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

Dated: March 4, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-6107 Filed 3-9-98; 8:45 am]

BILLING CODE 3410-02-P